Editor's Comment

Mining must spur other sectors

AN open pit mine.

OWING to Zambia’s large resource base of minerals such as copper, cobalt and even gold, mining has for a long time been the country’s economic mainstay, accounting for much of the direct foreign investment.The sad reality, however, is that despite mining being the main source of foreign exchange, it has not stimulated the much-desired growth particularly in other sectors.
This is why President Edgar Lungu is saying, “It is time massive investments in mining began to stimulate growth in other sectors.” We could not agree more.
It is illogical for a country that is richly blessed with a vast mineral resource base to remain poor and economically challenged.
President Lungu is particularly concerned that over US$13 billion investment in the mining sector over the last 18 years has not translated into growth in other sectors.
The head of State observed, and accurately so, that despite the positive outlook of the sector, it has not stimulated corresponding growth with other sectors.
US$13 billion is huge investment and 18 years is a long period to allow for tangible economic growth in other sectors.
However, the challenge, as observed by the head of State, is all these years, mining has been narrowly taken to be a mere source of revenue for Government and not a catalyst for economic growth.
Certainly there is need for a paradigm shift in the way Zambians view the mining sector.
Revenue from the mining sector should not narrowly be used for consumption but invested in other sectors to spur development.
If well harnessed, the mining sector can become a cash cow to drive growth in sectors such as manufacturing.
The sector can stimulate economic growth through value addition and support to local suppliers.
Given that mining investors are mostly foreign and therefore externalise most of their profits, which is within their right, the best way the country should benefit from mining is through taxes paid to Government and contracts awarded to local suppliers and contractors.
Sadly there have been complaints from local suppliers and contractors that mining firms are depending more on foreign supplies and services as opposed to local ones.
This certainly disadvantages not only the individual suppliers and contractors but the country as a whole.
Even in the absence of regulation that binds them, we expect mining firms, out of good business ethics, to support local businesses.
If we are to grow other sectors in the value chain, there is need for mining firms to source their supplies and services from local suppliers.
A World Bank report indicates that in 2016, 95 percent of goods and services used by the mining industry were imported.
Such practices deny the country an opportunity to derive significant benefits from its natural resources.
We know that if suppliers and contractors are empowered with big business contracts more money will be reinvested into the local economy and more jobs created.
Zambia would also benefit more from copper if it had a well-established and improved processing capacity. This, therefore, calls for establishment of industrial units to add value to copper before it is exported to increase foreign exchange and job creation.
It is commendable that Government is not sitting idly by but working round the clock to ensure that the mining sector contributes to the growth of other sectors.
For instance, Government has enhanced linkages of sectors in the Seventh National Development Plan and is working to increase participation of Zambians in the mineral value chain process.
However, to succeed in this agenda, Government needs the support and participation of the mines and private sector.
Local businesses need to come on board and participate in the mining value chain process, particularly value addition.
If as a country we fail to derive maximum benefits and value from our mineral resources, which are a diminishing resource, posterity will judge us harshly.

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