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Saturday, 25 October 2014

Zambia's Sovereign Wealth Fund

Alexander Chikwanda in the Budget 2015 announced that Government is establishing a Sovereign Wealth Fund [SWF] :
A culture of living hand-to-mouth does not safeguard the interest of posterity. We have the duty and responsibility to secure the future of the next generations. In this regard, I have allocated K100 million for the establishment of a sovereign wealth fund. Going forward, a significant proportion of the dividends from state-owned enterprises that will fall under the Industrial Development Corporation [IDC] will form part of the fund" 
There’s currently no publicly available government policy document that explains the nature, purpose and governance framework of the new SWF. A scan through the revised Sixth National Development Plan (SNDP) mentions the IDC but says nothing on the new SWF. The only information we have is what is stated in Chikwanda's budget statement.

Friday, 24 October 2014

Draft Constitution of Zambia

The Government has now published the draft Constitution of Zambia after persistent demands by civil society and other members of public. There is no roadmap on what happens next. What is clear is that we are not going to have a new constitution before 2016 because the time has run out. The Patriotic Front (PF) may choose to pursue a selective amendment approach if they can reach consensus with the opposition. However, the most optimistic outcome would be a referendum at the same time as the general election. That too is highly unlikely because the current draft is still quite a flawed documents in many parts. And of course PF disagrees with many parts within it. 

Friday, 17 October 2014

Zambia's Sixth National Development Plan

I have been forgetting to share this document, though I suspect many of you may already have downloaded it from other sources. This is the plan that defines what the Patriotic Front are allegedly aiming for in Zambia as they seek re-election in 2016.



Copyright © Zambian Economist 2014

Wednesday, 15 October 2014

A new mining tax regime

Finance Minister Alexander Chikwanda last week delivered the Budget Statement 2015. As the Post newspaper already revealed, government is reducing its share in ZCCM-IH to 60%. Chikwanda also appeared to signal that the contentious VAT rule is here to stay. The big one of course is the redesign of the tax regime for mining operations by replacing the current two tier system with the following mining tax structure:

(a) 8 percent Mineral Royalty for underground mining operations as a final tax;
(b) 20 percent Mineral Royalty for open cast mining operations as a final tax.
(c) 30 percent Corporate IncomeTax rate on income earned from tolling; and
(d) 30 percent Corporate Income Tax rate on income earned from processing of purchased mineral ores, concentrates and any other semi-processed minerals, currently taxed as income from mining operations

Effectively what the measures do is increase underground mining royalties to 8 percent from 6 percent. It has also introduced a 30 percent corporate processing and smelting tax. Another 30 percent tax would be applied to income earned from “tolling”, industry-speak for an agreement to process another producers raw materials.

Sunday, 12 October 2014

2015 Budget in Words

A visual representation of the Budget yesterday as delivered.  I thought it was worth showing how the word "continue" stands out. The main surprise is how often the word governance is used!


AUTHOR 
Chola Mukanga 
Economist | Researcher 
Copyright © Zambian Economist 2014

Friday, 10 October 2014

Zambia Budget 2015

Finance Minister Alexander Chikwanda delivered the Budget Statement 2015 earlier today. I have read through it but not fully process it. Everything in the Budget was leaked to the Post newspaper. There are no surprises in that sense. In short it a budget short of new things - the word "continue" seems to be all over it. However it does contain important proposals relation to the mining fiscal regime and ZCCM-IH. More discussion on the proposals in due course. 



AUTHOR
Chola Mukanga
Economist | Researcher
Copyright © Zambian Economist 2014