GOVERNMENT will introduce policy measures to stop companies from externalising all their export earnings, Finance Minister Alexander Chikwanda has said.
Mr Chikwanda announced in Parliament yesterday that the move would help create a conducive environment for both investors and Zambians.
He said the MMD administration erred during its reign to allow investors, especially in the mining sector, to externalise all export earnings, placing the country at a disadvantage in terms of benefitting from exports.
He was responding to concerns raised by Sinazongwe Member of Parliament, Richwell Siamunene (UPND), on what measures Government was taking to ensure that not all profits were externalised.
“We are in the process of enforcing policy to ensure that export companies including the mines do not externalise all their export earnings.
“This has been disadvantaging the country. This enabling environment was introduced by our colleagues in the opposition who we replaced, but we want to correct this and introduce an enabling environment for both the investors and the people,” he said.
He said total earnings from copper, cobalt and gold exports during the interval March 2009 to February this year hit more than US$18.2 million.
He said among other measures to help boost mining performance in contributing to the treasury, was the already implemented mineral royalty tax increased from three per cent to six per cent, adding that this was sufficient to help bring about development.
The other measure was to strengthen capacity of monitoring and ensure that all taxes related to mining were adhered to.
Mr Chikwanda said the taxes would help the country to improve infrastructure, social amenity provision and help boost the performance of other sectors such as the processing industries.
He assured that a different economic scenario would avail itself once the measures were in full effect.
On calls for the re-introduction of windfall tax, Mr Chikwanda firmly said the Government would not bring back the measure.
[Times of Zambia]
CNP at work.Guess work
Thats a very dumb decision that will be opposed strongly by the investment community.Good luck attracting foreign investments with such shortsighted decisions and even more worrying is keeping the current investors.This PF govt has a knack for shooting itself with incosistent and unwise policy decisions especially when it comes to managing the economy.
Good move. but rushed. The intention is good and this move will certainly lend support to demand for the Kwacha because all foreign earning will have to be converted into Kwacha and this is a plus for keeping the Kwacha, stable and tied to the country’s exports and am sure my favourite Minister in this Government was care to use the word earnings and not profits to just appear palatable to investors.
Having said the above, I think this move will inconvienience most companies because of the bereacracy in handling inter-bank payments tranctions because of the poor electronic infrastructure in our country. I think Government should first focus on fixing this first.
For example, try receiving small money in Zambia using PAYPAL a world standard for small business is impossible.
Meaningful contribution, unlike the first 2 foreigners who only care about themselves! These measures are present even in other far better developed countries than Zambia and that’s the direction we must be heading.
@Ziget
And you think those developed countries got there by such laws? Please read about the Asian Tigers – you only put these laws in place when the economic cost of capital flight is greater than any loss sustained by maintaining the capital in country.
@Slasher, lack of these measures in the interim, have had an adverse effect on the kwacha’s performance on the forex market. Let the kwacha bully its way through the market forces than Government’s control in the money market besidesretained earnings will enhanced reserves bettermore build up USD holding within the Country. Therefore, we need to strike a balance in a way. We have to manage the foreign capital injection and capital flight as alluded to bearing in mind that other countries have successfully managed it like South Africa and Botswana. Hence the idea sounds good, let us wait and see.
The other day MCS told potential investors that they can come to Zambia to do their business and take out all the money they make.
Yes he said that! In London or somwhere like that. Does HEMCS confer with his Finance Minister?
Please hurry up! Can this guy continue acting till further notice……..Viva Graduate!
The payments and money movement systems at the electronic level needs to be fixed first and seen to be reliable. Sometimes it;s not just the big companies bring in big money that can lend support to our currency, even small companies and individuals can contribute their individual small amounts which if aggregated can match what the big guys bring in just like diaspora remittances match the copper industry contribution to forex inflow.
There are a lot of individual companies in Zambia who can sell their services abroad and services like received money using PAYPAL should really be standard and would give our citizens access to world markets in a small way.
You’re talking sense. Am impressed that you’re being objective unlike people who will just start barking with no tangible argument. Thank you!
I am glad you are becoming more objective and offering good advice than just pandering to Sata anti-semantics. You have raised good observations though.
Good move Chikwanda,you see what education can do to you.
Who makes the final decision in the government. Ukwa told investors in the UK that they could externalise all the profits. Alexander as acting President says the policy is changing. Frankly Alexander is correct and just maybe for the seek of mother Zambia, let him continuing acting as President until 2016.
He said earnings and not all profits. Which country would survive all earnings coming from its natural resources were consistently taken out? Every nation has the mandate to protect themselves from being ripped off like what the MMD ascribed to. No wonder all the mining towns now look like shanty compounds because of lack of capital injection into social services by the mining firms. Just go to Nkana stadium and see for yourself because the place look worse than some of the primary school grounds.
This is a good move but this should have been on the table back in January…please come back and don’t tell us that you are consulting the mines first.
Good move..investors or infestors have had it on a silver plate for too long. In countries like south africa investors are not allowed to externalize there profit why should zambia allow them boers to take all earnings to SA..
Good move but is he talking about revenue or profits when he says earnings? The $18 million dollar earnings are those what government has received from the mines in that period. Because in a year KCM alone sales copper worth over $1 billion.
Lundazi Dweller,
Please educate the government officers about the true exports by all the mining companies so that these officials can tax the correct amount of money $18,000,000 ???????since 2009 is a joke!!!!!!!!!!!!!!.
Dollar
Don’t even waste time in protracted drafting of such a wonderful policy. If you take too long they will have done the business, depleted the ore reserved and you will left only with hollow spaces underground with no meaningful national development. Let some earning remain in Zambia. Thats how you will improve the economy, strengthen the Kwacha and bring more confidence in the nation and attract respect from others. We have the resources, but why let all earnings from our resources externalised? If part of their earnings is kept in Zambian banks that will strengthen our country. Move fast on this policy. Quick Quick Quick Chikwanda, don’t waste time in mere speeches, make it practical. Speeches are just procrastinations. You know how to do it but you delaying it.
MMD Chief Bootlicker
As someone who runs an Online business, I can assure you that the problem is with insurance; Postal Insurance to be specific; if a seller sends something to a buyer in Zambia using Paypal payment and for some reason the package doesn’t arrive there is no way of checking for proof of delivery/ signature online meaning that PAYPAL would end compensating buyers and sellers for non delivery under its Buyer and Seller Insurance Cover. Where proof of delivery and signature is available, only the costly couriers offer such services like DHL or UPS which is very uneconomical for an Online SME…so we have to sort out our postal system first if we want to trade Online.
There is also the other issue of Credit-card Chargebacks and Nigerian Scammers!!
Sense!!! The acting Presido said, “We are in the process of enforcing policy to ensure that export companies including the mines do not externalise all their export earnings”. I’d assume part of the issues being looked into are what you people are putting across here. Let’s put our house in order and implement these policies for the good of our nation. This is one policy that will bring about long term benefits to the common Zambian on the street!
tell him well thought.\:d/
Zampost or whatever the Post office in Zambia is called is full of thieves. I have sent a number of parcels to Zambia and they never arrived. Certainly its not on the UK side, its on the Zambian side. Thieves!
So international trad and payment by Paypal for instance cannot work in Zambia due to such criminal behaviour by post office workers.
One More thing, Boma has to build up a sort of Team for Bank Transactions Intelligence for all outgoings transactions for these corporate transactions now being executed online. This must expediously be incorporated or enacted as a watchdog team to help seal off all smart dealings beyond the public domain. Banks can become handy in this all set up, for setters.
This is a sure way of strengthening our local currency but unfortunately some people on this forum just want to argue just for the sake of it. How could I forget, those arguing are the culprits!!! lol Just across the Kazungula border (Bostwana), you can’t externalise like people do here. Mwanya fye!!! Chalo chesu chino!!!
I feel for all, too greedy looking at the short term thinking that this will somehow benefit Zambia. Trust me it will not and investors will purely move their money elsewhere where they can reap the relevant rewards. Investors will go to other countries in the region that are rich in natural resources and still in economic slumber – Angola/Mozambique/Zimbabwe (starting to recover); these are direct competitors for any wealth that may be destined for Zambia. Without foreign investment it will be back to the days of having to cross the boarder to buy coke from our neighbors – this with the current proposed company act we shall see that we are not so special. The PF will cook in its own juices.
All saying this that and other country you cannot externalise are living in lala land and lying. FDI by its very nature requires externalisation – please stop with bedroom economics!
Hey, this is a good move, I just urge the government to be cautious so that no one is taken by surprise (openness and consultation are key). All the best.
However, I am surprised that since March 2009 up to Feb 2011 export earnings are a mere $18 million!!?? billion could make some sense.
this is good.they should be banking in zambia
The best country that has put investors in their rightful place is Zimbabwe…we should learn something…. take and give capitalist mind will never work because of a number of reasons one being the world itself has minimal resources molested by the West and environmental effects are great despite all the technology…. 51% share of government in any foreign investment is the way forward…since independence all capitalistic free trade economy has failed poor nations and keeps on failing. Poor people have increased moving faster than the befits of privatization. Today Japan has nationalized it utility power after capitalists investors pull out… Don’t be scared to take decision or worse live like the western mind…Viva PF…Viva Africa
Zampost or whatever the Post office in Zambia is called is full of thieves. I have sent a number of parcels to Zambia and they never arrived. Certainly its not on the UK side, its on the Zambian side. Thieves!
So international trad and payment by Paypal for instance cannot work in Zambia due to such criminal behaviour by post office workers.
Small businesses in Zambia could participate in the global market if they were able to send and receive both money and goods.
PF you always talk sense but you dont implement.So this is another useless comments ,unless it is done
#19 i totally agree………this corruption or unaccountability, check and balances at very sector of the economy has being left unchecked….send a parcel pa Zed either the whole package goes missing or something stolen after it arrives….everyone wants to be a politicians forgetting that what we do in our respective jobs counts to a better society and country at large including international ratings….. all SA insurance companies don’t include Zambia as it was proved partners in Zed never pay out claims…its high risk business place… we lie that we driving to Malawi just to get covered by insurance…honestly Zambia remains a threat in Southern Africa yet we boss of being Christians and intellectuals…Shame
I support this move too.
Minister,
are we realising this anomaly only now? One would have thought that if this regime had plans, this one would have been one of the most glaring mistakes they should rectified soon after forming government!
Exrernalising all export proceeds – where on reasonable earth? The Minister should move shiftly on this one to restrict exrenalisations to DIVIDENDS , after due consideration of any outstanding statutory reverves, and only repatriating realised revenue reserves [profits].
The submission is for all export earings to be receivable through the Bank of Zambia or such other alternative and dedicated financial institution or bank, so that all exports are monitoted and bankable locally.
NO EXTERNALISATION OF EXPORT PROCEEDS! NO EXTERNALISATION OF PROFITS, but dividends only!
Jay Jay @ 13, you have me completely lost. MMD Chief bootlicker is talking about the Electronic Funds Transfer (EFT) System being enhanced but you ring in mail and parcel service delivery – great thinking?!!
For once, I agree with MMD Chief Bootlicker. An efficient electron fund transfer is essential the effective implementation of the ‘new policy’. Ever tried to initiate a wire transfer from Zambia – it is closer to a nightmare and may take up to 5 days for the funds to be transferred – standard Chartered and the best I have used so far.
Ukwa just told investors in London that they can take all their money out….. CNP
Its seems like its a free day in the monkey field anyone can say what they feel like
It was just a week or so ago, that the President was telling investors, ‘we shall allow you to remit all your profits.’ Who really runs this country mwebantu?
Very amusing! All this think tanks in Zed moreover this brilliance. Why is Zed in the state it happens to be in today? People, these Politicains are getting away with this absurd handling of policy matters not to mention their implementation. Why, because we are not asking them to give us time lines and road maps to their so called good policy statements or purported ideas. Worseoff, there seem to be no consistency in policy statements eminating from these Government Leaders.
This is an excellent move. I am in support of the Minister’s move long overdue. This should have be the first PF score in terms of redressing the fall of the kwacha just to help mitigate the external pressures exerted on the kwacha in the recent past. Progressive move, 100% in support!
Ni down
Yangu
A colleague had used Bank Account Money transfer from his Zambian based bank account to my UK account just last month, it was in my account within 3 days, if you supply IBAN codes and BIC codes this shouldn’t be a problem beats using costly Western Union….so this is not a knee-jerk response. Let me refer you to part of MMD Chief bootlicker’s post
“.There are a lot of individual companies in Zambia who can sell their services abroad and services like received money using PAYPAL …”
Please you tell me isn’t he referring to the ease of doing business for SMEs online as PAYPAL is connected to your email Bank account and Paypal account?
this is what strong economies like that of the UK do. i remember reading about the owner of shoprite being arrested in the UK for being in possession of money exceeding the prescribed amount. if more Forex stays here, the value of kwacha will increase and the surplus money will further push down the interest rates and improve our macroeconomic outlook. anyway, that’s how i see it as an engineer. i would love to be enlightened by those who are experts in this field
Yangu
FYI …. Paypal has nothing to do with Electronic Funds Transfer as per se but more to do with selling goods on eBay and Website. When you transfer money from one paypal account to another you are basically transferring money with one account hence the reason it appears instantly. Try to transfer from your Paypal account to your current a/c and it takes 4 days and 7days to do it vie versa..
*edit to;-…. transferring money WITHIN one account hence the reason it appears instantly…
Finally the Zambians are waking up, all those oposing this move surely are ignorant, progressive countries, including south africa will not just let you pull out cash anyhow.
what did the big BOSS say in Europe? You can externalise all the profits? who is telling the truth? what does an investor take?
Policy inconsistencies and unpredictability does not inspire confidence in an economy! Its important to have clear policy positions!
Investors or foreign residents residing in Morocco are not allowed to externalise all their income held in moroccan banks. Europeans who have bought homes there are forced to stay there because even if they sell their properties they cannot externalise the monies. hahahaha, so once in you are in, you are in baba. This has helped to reduce speculation in the housing business. Otherwise people would buy homes, renovate them and sell them for a killing and externalise the profits. This trend is common in most clever and BOLD countries !
@41. The last don. Stop mixing up stuff. The shoprite boss you are referring to was carrying half a million dollars in his lagagge . He never declared the money at the Airport and the money was confiscated. This is the same fate that befell Sata in South Africa. In all countries around the world people are required to declare the amount of money they are carrying when it exceeds a certain amount. It has nothing to do with the communist nonsense chikwanda is talking about.