Economist Lubinda Habazooka has this to say:
First Zambia doesn’t make any mining equipment so talking about the multiplier effect in the Zambian economy because of $1.2bn is pure naivety.
Most of this money will be spent abroad but a mine in Zambia will have to bear the cost of refunding.
Once you inject $1.2bn into a mine, it means no more paying tax because the expense becomes deductible under capital allowance.
Mind you in this year’s budget, the period for capital allowance was increased from 5 to 10 years of am not mistaken. In simple terms, copper worth $1.2bn will first have to be mined to payback the $1.2bn before the mine considers paying any income tax!
So it is safe to say that we should even forget about thinking of benefiting from high copper prices!
Then the $1.2bn is definitely a loan from somewhere so we also expect the interest payment burden to fall on copper that sits in Northwerstern province.
We have seen these billions announced before at Mopani. I think it was $1.3bn but no one in Kitwe and Mufulira saw that money.
I think we should not be naïve. This is 2022. We have a well-educated citizenry. But if you look at this from political lenses, you won’t pick anything.
Switzerland will continue developing while you continue having kandolo at breakfast.
The illicit financial flows and transfer price plus accounting tricks used to go around tax payments in Zambian mining sector is far much more than those tuma small corruption cases we pursue against our own citizens!