Zambia 2019 EITI Report
This EITI Report covers Zambia's EITI sector in 2019. It was published in December, 2020.
Zambia, Africa’s second-largest producer of copper, is highly dependent on mining as its major productive industry. Mining contributes to 77% of total export value, and 27.77% of government revenues according to the latest EITI reporting. Zambia has made changes to its mining taxation policies over the past decades, giving rise to much debate and discussion in the sector. In December 2018, the government recently changed its minerals tax regime for the 10th time in 16 years in an attempt to maximise both revenues and foreign investment. Zambia EITI can provide data on the country’s extractive sector to inform the tax debate as it adjusts to fluctuating commodity prices.
Zambia’s tax regime has undergone various changes over the past years. In 2014, the government increased mining royalty rates and temporarily removed the 30% corporate income tax for mining companies with the aim of generating an immediate stream of revenue once mining production starts. This “royalty only” regime led to increased production costs for companies, did not boost government revenue, and made revenue collection more complex for revenue authorities. As a result, the government made new changes to the tax regime in 2015; royalty rate has been lowered to 9% and corporate income tax of 30% was been reintroduced. In December 2018, the government announced another raise of 1.5% on mineral royalties which came into force on 1 January 2019.
Regarding the oil and gas sector, the fundamental law governing upstream activities is the Petroleum (exploration and production) Act of 2008.
The Director of Mines Development Department is responsible for granting mineral rights. There are two cadastre offices set up – one at the central level (to process applications for mining rights) and one at the provincial level (to forward applications to the central office). Normally, prospecting licenses are granted by the Geological Survey Department, but auctioning may be undertaken in areas where known mineral resources exist.
Regarding the oil and gas sector, the main regulator is the Minister of Mines and Mineral Development, who is also the issuing authority of all petroleum rights under the Act.
Objectives of beneficial ownership transparency in Zambia
Progress on implementing beneficial ownership disclosure
In November 2017, the Government of Zambia amended the Companies legislation to include beneficial ownership disclosure. The Companies Act No. 10 of 2017 provides for the disclosure of beneficial owners and also the creation of a register of beneficial owners that will be kept at the Patents and Companies Registration Agency (PACRA). The government developed regulations for the implementation of the legislation in March 2019.
In the past, Zambia has made several attempts at disclosing beneficial ownership, including in their EITI Reports as well as in a separate beneficial ownership report. Despite capacity building and outreach to companies, the response rate has been low. The report notes that PACRA is in the process of developing a beneficial ownership register and will work with the Zambia Mining Cadastre with respect to extractive companies.
EITI Report information is intended to increase citizens’ understanding of the mining sector and help them contribute to informed public debate.
Zambia is highly dependent on mining as its major productive industry. In 2018, the country was the world's 7th largest producer of copper. The four largest mining companies account for over 80% of copper production in the country. According to the latest EITI reporting (2019), Zambia’s mining sector contributed 77% of total export value and registered a decrease from USD 7,1 billion in 2018 to USD 5,5 billion in 2019 largely due to a decrease in copper export earnings.
The oil and gas companies are still in the exploration phase.
Initializing chart.
The Zambia Revenue Authorities (ZRA) collect over 98% of total extractive sector taxes, and transfers these to the national budget. Other payments from the mining sector (such as property rates and annual business fees) are made to local councils, where mining companies are based, to the Ministry of Lands and the Ministry of Mines and Mineral Development.
Zambia’s EITI Reports have highlighted the need for the enactment of an EITI law that provides sufficient legal authority to ensure that all selected companies for reporting provide necessary information. The latest EITI report has recommends the development of a public beneficial ownership register as provided for by the Companies Act (No. 10 of 2017), the disaggregation of payment data by project and full compliance with the law with respect to the award, transfer and monitoring of mining rights.
The EITI encourages multi-stakeholder groups to explore innovative approaches to make the EITI more relevant and useful.
A ZEITI Strategic Plan (2016-2020) was adopted in 2016. The Strategic Plan provides a guide and identifies priority activities, which will be essential in the effective implementation of EITI to achieve its objectives.The Plan has also taken into account the challenges ZEITI has encountered since inception in its quest to live up to its goals and objectives.
Their objectives include:
EITI in Zambia is implemented by the Zambia EITI Council, ZEC. The Council is composed of three stakeholders, the Government, Mining Companies and the Civil Society Organisations. ZEC coordinates and oversees the implementation of EITI. ZEC has a total of 18 members and is chaired by the Minister of Mines and Mineral Development. Each of the three stakeholder group is represented by six members. The ZEC is serviced by a Secretariat which is located in the Ministry of Mines and Mineral Development. The Secretariat includes the National Coordinator, Ian Mwiinga and three other full-time staff.
Recognising the ongoing challenges associated with the COVID-19 pandemic, the EITI Board agreed the extension of measures to provide flexibility in EITI implementation and reporting.
Flexible EITI reporting MSGs may prepare reports based on information disclosed by government and/or companies, subject to MSG endorsement and providing that the flexible reporting requirements are met.
Zambia is preparing its 2019 report using the flexible reporting approach. The report will also include a risk-based approach to reconciliation. To cover the impacts of Covid-19, ZEITI is administering a questionnaire that is covering government relief measures for companies, asking whether companies benefited from these and what are the priorities for recovery, among other issues.
Zambia's second Validation against the 2016 Standard commenced on 25 April 2019. Zambia was found to have achieved meaningful progress with considerable improvements in implementing the EITI Standard in December 2019.
Zambia's Validation commences on 1 April 2021.
This EITI Report covers Zambia's EITI sector in 2019. It was published in December, 2020.
This EITI Report covers Zambia's extractive sector in 2018. It was published in June, 2020.
This EITI Report covers Zambia's extractive sector in 2017. It was published in December 2019.
This EITI Report covers Zambia's extractive sector in 2016. It was published in December 2018.
General assessment of year’s performance
Training for ZEC on mainstreaming and beneficial ownership
The training for the Zambia EITI Council (ZEC) focused on mainstreaming and beneficial ownership. The session on mainstreaming focused on exploring ways of how information that is already publicly available on government and company systems can be disclosed in line with the EITI requirements. The session established that most of the information is being published online in varying intervals ranging from quarterly reports to annual reports.
Social and economic contribution
According to the latest EITI reporting (2019), the extractive sector accounts directly for 9.9% of GDP and 78.4% of exports in Zambia. Indirectly, the mining sector may contribute as much as half of the GDP. The mining sector directly employs about 73,203 people representing 2.4% of total employed persons in Zambia.