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Friday, 6 December 2013

Annual Sabbatical

Dear Friends,

As is customary since I started this blog in 2007, I am taking one month off to recharge the batteries and switch off from social media and active blogging.  Over the years I have come to value this period. 

This means that I wont be reached through this website, Facebook or Twitter. I also will not be able to respond to non-urgent emails or queries or requests for interviews until after 15 January 2014.

Many thanks for your continued readership. Particularly thankful to those who actively take time to feedback on which articles have been helpful / not helpful - and those who always sending across important information. Special thanks to those who have supported the website through donations! The contributions go a long way in keeping this blog going! 

It's never too late to help!  If you share the vision of this website to provide independent analysis and information on pressing economic issues facing Zambia and want to make it sure it continue, please feel free to contribute towards via the "donate" button on the right.

Wishing you a very special Christmas! 

Chola Mukanga | Economist
Copyright © Zambian Economist 2013

Zambia on Strike, 3rd Edition

The Zambia Congress of Trade Unions (ZCTU) has warned that President Sata's decision to fire nurses that took part in a recent strike may soon plunge us in an industrial crisis that could paralyse the entire country :
"Let it be made clear that the labour movement is not weak. We have chosen the option of negotiation rather than industrial action but government should not take us for granted...Whoever advised President Sata to fire the nurses made a huge technical error which they will regret....It is highly immoral for Dr Kasonde to start attacking us in Parliament knowing fully that we cannot defend ourselves. If he thinks we are irrelevant, let him not push us. We will not be intimidated. The labour movement does not answer to anyone expect the worker"
It was always obvious that if you fire one worker, others will rightly feel they will be next next time they go on strike. More importantly as long as the fired workers are unionised the union must defend them. Otherwise the unions are not worth the membership.

Thursday, 5 December 2013

A Note on Mining Taxation Policy

Editor's note: This is a guest post by Kaela B Mulenga (PhD), a resident contributor to Zambian Economist. He is an economist and development consultant based in Canada. You can find him on Facebook and via email
Mineral taxing issues for Zambia have been exhaustively discussed in several of my previous articles. I normally make comments to complement the excellent tax debate found on Zambian Economist (ZE). But somehow the message I propound hasn't sank in with our taxing authorities. Let me elaborate.

I do realize that copper prices do sometimes rise and other times they fall. And that consumer preference does change. Indeed things do happen. With no investors and when customers turn away from buying copper, we lose revenue. I know that. Therefore I am quite concerned about the dependence on copper, which after all one day may no longer be in demand.

Zambia on Strike, 2nd Edition

Government has fired more than 250 nurses and midwives for going on strike. Health Minister Joseph Kasonde has informed Parliament in a ministerial statement that the dismissal of nurses and midwives is a lesson to other workers. He says normal operations has been restored at all affected hospitals in spite of the dismissal of some workers as new nurses were being recruited. (Source: The Post)

Those affected are from UTH, Kasama General Hospital, Livingstone General Hospital and Levy Mwanawasa. The nurses, who staged a 10-day strike are demanding 100 per cent salary increment, as opposed to the 4 per cent that was awarded by government. They also want equal work and equal pay, and extra patient allowance, K2,000 monthly housing allowance and K2,000 night duty allowance as well as harmonisation of salaries in comparison with other classes of health workers.

Policy Direction on Transport and Communication

This speech is a useful resource on the current policy direction of the government on transport and communication. There are a number of projects I was not aware of until I read this. 

Thank you for giving me this opportunity to outline the policy direction of the Ministry of Transport, Works, Supply and Communication for the year 2014.

As the House may be aware, this ministry is charged with the responsibility of facilitating the construction and maintenance of public infrastructure. It is also responsible for promoting the development of the transport and communication sector in order to contribute to the socio-economic development of our country. It is further responsible for the control of Government transport, office equipment and Government printing. It also provides meteorological services.

Wednesday, 4 December 2013

Politics of Windfall Tax

MMD MPs led by Catherine Namugala are now crying for the windfall tax that they worked very hard to scrap against the wishes of all Zambians :
"We have time and again asked the government to introduce windfall tax, if you need to raise revenue, tax those that are creating massive wealth in this country...Tax the mines because we all know that when they create wealth, this wealth goes out of this country, we all know that when a poor person creates wealth in Zambia, they will use it to increase productive capacity of our economy." 
A bit of history might help us to put things in perspective. In January 2008 President Levy Patrick Mwanawasa (LPM) announced that Zambia was breaking the huge milestones hung around her neck by the Chiluba administration. Mining Development Agreements (DAs) were going to be abolished and replaced by a new fiscal regime. Under the LPM changes the corporate tax rate for mines was set at 30%, mining royalties on base metals at 3% of gross value (up from 0.6% in most DAs), and withholding tax on interest, royalties, management fees and payments to affiliates or subcontractors in the mining sector were set at a rate of 15%.

Monday, 2 December 2013

Windfall Tax Debate Returns

Mbita Chitala has joined an increasing band of people that have resumed the call for the reintroduction of the windfall tax on minerals to capture large profits being made by mining companies. He is urging Zambians to continue demanding the reintroduction of windfall tax if we want the country to develop :
"For us to have money to do everything we want to do, windfall tax should be reintroduced, and that's the only way we can get money from our copper. We cannot tax them Pay As You Earn tax; they will always declare losses, so there is no tax on that. So the only way these resources are taxed is by windfall tax. Anywhere in the world, whether it is in Botswana or America or Norway, it is that turnover tax which is done, even in the oil industry...Minister of Finance Alexander Chikwanda called those calling for the reintroduction of windfall tax as lunatics, but he is wrong. All over the country, all the economists have said it should be done...Even the PF in their campaign they advocated the same thing." (The Post, November 2013)

List of Prominent Zambians For A "Windfall Tax" On Mining

This post is regularly updated with quotes from leading analysts and public figures urging the government to reintroduce the windfall tax. Please scroll to the bottom to see the latest contributor  :
"It is an injustice for the government to only collect US$ 77.6 million from copper exports valued at US$2.9 billion. And I do not see that the mines themselves in their heart of hearts would consider it an injustice to pay extra more" 

Sunday, 1 December 2013

Zambia on Strike

The Government is facing increasing industrial strikes by public sector employees. Nurses and midwives in many parts of the country, including major cities of Lusaka, Livingstone and Ndola have been on strike again just over a month after calling off a 7-day strike. The workers resumed work last month believing that government had promised to address their grievances, only for Health PS Peter Mwaba to refute any promises. (Source: ZNBC, MuviTV)

The nurses alongside other public sectors workers who were promised by GRZ wage increases of up to 200 percent. But somewhere along the line the political promises and the final written bargaining package did not match. What politicians hailed the "unprecedented rise" in public sector wages, for some people it turned out to be a mere 4% rise. That is what sparked off the protest. According to Leonard Hikaumba (ZCTU) the workers are willing to go back to work "as long the government comes out clearly on the position of what they had promised".