GOVERNMENT must state its position and engage the mines on why it has not yet started paying them back the Value Added Tax (VAT) arrears in order to settle down the uncertainty surrounding the closure of some mines, says financial analyst Maambo Hamaundu.
Mr Hamaundu in an interview said some mines were threatening to close down while others were threatening to lay off workers because they did not have enough money to sustain their operations.
“If Government does not have the capacity to pay mines back the money, they should just open up and tell the mining entities that they do not have the money to pay but and this is the plan we have to eventually pay you,” he said.
He said the mines were showing all those uncertainties because Government had not communicated to them what was going on and what its plan was.
“A business is a business and they have cash to project and if they are not told, they cannot plan and if they are not being communicated to it becomes a problem where they are expected to paid their VAT refund at a particular time
“If VAT does not come through it creates complications in terms of operations because some of that money is what is used to sustain their operations,” he said.
Mr Hamaundu said there would be a further decline in Gross domestic product land a great reduction in revenue collection if the mines closed.
“It would be a very horrible situation for the country; mining is a big industry in Zambia. We receive 78 percent of our forex earning from it; it’s something not taken lightly. The Government should engage them and not be confrontational,” he said.
He said shutting down some mines would become a huge challenge to Zambia as it would lead to massive job losses especially to people on the Copperbelt who depended on mining for their livelihood.
He advised Government not to be confrontational when dealing with mine entities which had threatened to shut down and lay off some workers.
Mr Hamaundu said confrontation did not solve anything but worsened the existing problem.
“Confrontation does not solve any problem, it actually worsens the situation, what should be appreciated is that investors are in business to make money and return. They are in a situation where they want to minimize their losses,” he said.
He said Government should instead engage the mines and get their point of view and see if there was something that could be done to mitigate the challenges they were facing.
“Most of the people on the Copperbelt are dependent on the mines for their livelihood. And if they shut down, where are they going to get money to send their children to school and meet other basic needs? It will become a huge challenge to them.”