Issued by Chamber of Mines
The Zambia Chamber of Mines has commended Government for enacting Phase 1 of the COVID-19 economic plan and securing funding from the international community.
The implementation of economic relief measures originally announced over a month ago, and the securing of approximately $150 million in funding from international partners, are “welcome signs of action, holding out the real possibility of more to come”, according to the Chamber of Mines.
The enactment of the relief measures provides companies across the private sector with much needed certainty as to how and when they will apply, as well now giving businesses the cash flow benefit that was intended. .
“The repeal of parts of the recently introduced Statutory Instrument (SI) 90, in particular, is welcomed by the industry and reflects positively on the active engagement between the industry and the Government on this issue”, said Sokwani Chilembo, CEO of the Chamber of Mines.
The statement by the Ministry of Finance on 29th April announcing the ZMW 2.7bn in initial funding being secured from America and the United Kingdom, and multilateral institutions, to help in Zambia’s fight against COVID-19, is another encouraging step towards mitigating the economic impact of the pandemic and provides Zambia with some much-needed financial firepower. .
According to the Chamber, the big question now is how these funds will be deployed. Zambia has been late to act, but one advantage is that the government can now learn from those countries further ahead.
“Zambia has so far been spared the worst of the virus, but not the economic shock from the global lockdown. We must look to best policy practice elsewhere, particularly on our own continent, as we seek to protect lives and livelihoods. Many African countries have acted swiftly; the African Tax Administration Forum has published useful guidance too. We must make sure that our economies are in a position to bounce back when the contagion eventually subsides,” said Mr. Chilembo.
In the early stages of the COVID-19 pandemic the Chamber of Mines submitted a broad three-phase economic plan to Government, to urgently manage the economic impacts arising from the pandemic. The Chamber outlined firstly, immediate relief measures (phase 1), followed by an emergency support package (phase 2) for which financial support could be sought from the IMF and World Bank, and lastly, a ‘fight back’ fiscal regime (phase 3) to be implemented once the COVID19 pandemic has abated and investment is needed from which to rebuild the economy.
Last week’s announcements show clear progress on this three phased plan with implementation of some of the key immediate relief measure as well as securing initial financial support. However, it is vital that measures to be implemented for phase 2 and phase 3 remain at the top of the Government’s agenda in order to continue to manage the economic impacts of this pandemic. Two of the key items on the phase 2 agenda are deferral of the new employment code, to ensure job preservation, as well as prioritising the repayment of VAT refunds to provide businesses with much needed cash for operations.
The Chamber believes therefore that the government will need to secure further financial support if it is to be able to fully address both COVID-19 prevention and economic survival post-crisis.
“We therefore strongly support further engagement with multilateral lenders, and efforts to secure temporary relief on our sovereign debt repayments – which swallow up a huge portion of our national income. If our creditors postpone repayments over the period of this crisis, then all that money could be re-purposed towards our national survival by restoring growth. This is surely in their interests, as well as our own”, concluded Mr. Chilembo.