Land, Natural Resources and Conflict Prevention: From Curse to Opportunity
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Zambia


Photo Credit: UNEP

For over a century, Zambia has been an exporter of copper. The country’s mining sector has undergone significant changes during this period. In the colonial era, mining was a private sector venture; after independence, mining was undertaken by the public sector; and then came back into the private sector during the wave of liberalization in the 1990s. Under both ownership modalities, revenues accrued to Zambia were in decline. The limited revenue generation under state ownership has often been attributed to poor management of the mines, exacerbated by the decline in copper prices. Under private ownership, meagre revenue streams— even during favourable market conditions—resulted from taxation policies that provided overly generous terms to companies, as well as companies exploiting transfer pricing processes. A new law was passed in 2008 to capture a greater share of revenues. This paper presents an estimate of revenues that could have been generated had the reforms been implemented earlier. It also provides estimates for the higher levels of revenue that the new fiscal regime is expected to generate in the future. If the reforms had been applied earlier, an additional 3.7 percent of GDP in revenue would have been raised. The calculations show that, from 2013 to 2025, on average, 5 percent to 7 percent of GDP can be raised from mining operations.

Capturing Mineral Revenues in Zambia: Past Trends and Future Prospects