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‘RISING COPPER PRICES PANACEA FOR ZAMBIA’

By BUUMBA CHIMBULU

ZAMBIA will need more than a widened tax revenue base for the benefits of rising copper prices to trickle down to citizens effectively.

Copper prices this week rebounded as investors renewed their buying spree, hoping that supply constraints and buoyant demand would push the market to new peaks.

Three-month copper on the London Metal Exchange (LME) gained 1.5 percent to US$10,533 a tonne in official trading after a volatile session the previous day, when it touched a record high before retreating to close in the red.

Commenting on this, Economics Association of Zambia (EAZ) National Secretary, Mutisunge Zulu, said a higher copper price meant more in tax proceeds for Government which would help absorb debt obligations.

Mr Zulu explained in an interview that more tax proceeds would in turn address narrowing of fiscal deficits.

“Not to diffuse the hype for Zambia but for the benefits to trickle down to citizens effectively, the Southern African nation will need more than a widened tax revenue base.

“One would argue that for maximum benefits, mining ownership will be a key factor for the copper producer a topic which Zambia has been on the receiving end of a hard bargain for over 25 years due to privatisation mistakes,” he said.

Mr Zulu said other opportunity areas copper was signalling were the value addition chain and the downstream business which leveraged when production was high.

He explained that Zambia’s smelting capacity was second to none in the region and that countries such as the Democratic Republic of Congo could cause an influx of its concentrates into the country for processing.

“Zambia is well poised for strong economic recovery on condition that it doubles its efforts in using the mining sector as long hanging fruit to increase its earnings capacity.

“Effects of copper price rally have filtered through the dollar bond yields and spreads but remain weighed by its default rating whose position change with successful debt will restructure, when the deal on the cusp is inked,” Mr Zulu said.

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