Editor's Comment

Empower local suppliers

ZAMBIA has been built largely from revenue from the mines.  It still does depend on this source for its development, but it is evident that its citizens should be benefiting more from this resource.
Zambia is a major producer of copper and cobalt.  In fact, in terms of copper and cobalt production globally, Zambia is ranked as the seventh and second mega producer respectively.
Besides copper and cobalt, Zambia is also home to precious metals such as gold and silver as well as gemstones (amethyst, aquamarine, emerald and tourmaline), coal and industrial minerals.
This geology, coupled with political stability and the long history of mining, makes the country an attractive investment destination in mining.
It is the reason Barrick Lumwana, First Quantum Minerals, and Mopani, among other mining giants, chose to do business in Zambia.
In the gemstone sector, there are several players but Kagem Mining Limited, based in Lufwanyama, is one of the world’s single largest producing emerald mines.
Mining has since independence accounted for 12 percent of the gross domestic product (GDP) – the hen laying the golden eggs.
Despite being the main contributor to the GDP, the mining sector is engrossed in a lot of issues, which do not only threaten its growth but deprive locals from benefitting.
The stability of the mining and fiscal policy has for a long time been a sticky issue, so has been the development of domestic procurement policies.
For local people, more investment in the mining industry should translate into more jobs with its spin-off benefits.
While some investors in the mining sector have been paying taxes promptly and have been generous through meaningful corporate social responsibility, there are still some grey areas that need to be sorted out.
This concerns the empowerment of local suppliers and contractors.
Some investors seemingly have their preferred contractors and suppliers for certain goods and services which are exclusive to foreigners.
So the decision by Cabinet to come up with an SI to restrict certain businesses to local contractors and suppliers is welcome.
The SI will go a long way in putting more money in people’s pockets. Currently, most of the monies are being externalised as the beneficiaries are foreigners.
The SI will boost the economy in the sense that cash will circulate internally and so it could be used for boosting various businesses and domestic income.
In a country that lacks a vibrant manufacturing industry, consumer spending is key to economic recovery. So the more locals participate in mining activities, the better.
The SI is welcome news but it must be backed by compliance by mine owners.  It is one thing to have very good laws on paper and totally another matter to ensure enforcement.
Another question is: what inputs do mines need?
Other than small things such as stationery and foodstuffs for their staff canteens, mines need heavy-duty equipment and after-sales services. Does Zambia have industries that can manufacture these and their spare parts?
The mines import these because they are not available locally. Even if they gave a local supplier a contract to supply them, they would have to import them from outside where a large chunk of the money will go. Government must encourage local manufacturing in materials that go into mining so that the country creates a value chain.
In the absence of this manufacturing base, Zambia will not reap maximum benefits from mining.

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