LUSAKA: A controversial decision to hike mining royalties in copper-rich Zambia has not only spooked investors but has become an unlikely presidential election issue in one of Africa's two biggest producers.
Zambia tripled mining royalties to 20 percent from six percent on January 1, putting the government at loggerheads with mining firms already buckling under a fall in global commodity prices.
"How can any knowledgeable government in today's world impose a tax like that?" a leading opposition presidential contender in Tuesday's election, Hakainde Hichilema, asked AFP in an interview.
It is a question that the ruling Patriotic Front party's candidate, Edgar Lungu, has been wrestling with -- leading him to tell a TV interviewer "nothing is cast in stone".
Some workers' representatives, fearing a loss of jobs if the tax reforms lead to the closure of mines, have joined the chorus criticising the move.
"It will be difficult for government to collect revenue from closed mines," said Chishimba Nkole, president of the Zambia Congress of Trade Unions.
They fear the new regulations might scare off investors, who could turn their attention to the neighbouring Democratic Republic of Congo (DRC).
Zambia, for decades Africa's top copper producer, was shunted down to second place when the DRC's output grew by 50 percent in 2013.
The rich "copper belt" straddles the two neighbouring countries.
The fact that copper is a mainstay of Zambia's economy has seen the tax become an unlikely issue in the election to replace president Michael Sata, who died in office last October.
The tax will "choke" the mines, said unemployed university graduate Fines Muyumba, urging the government to "reduce this or else many people will join us on the streets."
Comments
Comments are closed.