‘Commercial banks not willing to support mines’

BoZ Building.

THERE are very few commercial banks that are willing to support-the mining industry when the companies’ profitability is not assured, Lusaka-based economist Oliver Saasa has said.
Professor Saasa said the financial lending institutions will also have to look at the Government’s mining policy regime on whether it allows the stakeholders to make profits before giving out loans.
“The commercial banks, before they give out loans to mining houses, look at the mine’s profitability assurance and the Government’s policy, if they are supportive to the mining industry,” he said.
Prof Saasa, who is Premier Consult Limited director, was speaking in Kitwe at the Copperbelt Mining Trade Expo and Conference when he presented a paper titled: ‘Upgrading the new fiscal architecture for mining sector’.
He said this is the more reason why Government should negotiate with the mines on how to conduct business in the country.
“I congratulate Government for reversing the tax policy in the mining sector which could have crippled the entire Zambian economy,” he said.
He was quick to point out that even if Government has effected a reversal on mining tax, unfavourable copper prices on the international market can have a negative bearing on the mining sector, hence the need for consultation with the stakeholders.
Prof Saasa said the mining sector is a powerhouse especially when the pay as you earn collected from employees is also considered.
“You might not collect more revenue to the treasury if the mines have not employed those people. This means that the mines contribute more than often admitted.”
“And when you go beyond mining sector’s contributions, inclusive of contractors in the industry, it also contributes more to the mining labour,” he said.
Prof Saasa said mining is a very important player in the Zambian market.
He has since called on Government to build capacity on how to monitor and collect tax from the industry, especially with the two-tier tax regime.
“ There should be clarity in the tax policy monitoring system,” he said.
Prof Saasa also recalled that at one point it was difficult to introduce the windfall tax regime for the mining sector by Late President Mwanawasa’s administration.
He further said that mining is a strategic industry that contributes to the growth of the country and whatever happens can have a negative effect on the national treasury.

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