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.
Objectives of beneficial ownership transparency in Zambia
- Promoting good governance and accountability in the extractive sector
- Deterring corruption in the allocation of extractive rights
- Preventing abuse of Zambia’s tax and incorporation rules
- Support of efforts to address money laundering and other financial crimes in the economy
- Promoting Zambian citizens’ participation in the monitoring of extractive activities, including local content provisions
- Promoting citizens getting the full economic benefit of the nation’s natural resources, especially in communities where extraction is taking place
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.
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.
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.
- EITI reports include social payments, payments to the Environmental Protection Fund, and employee taxes. The latest report includes disclosure of collaborations with the Patents and Companies Registration Agency (PACRA) on beneficial ownership disclosure.
- The Zambian EITI has worked with the government to explore the use of financial modelling in informing discussions on the mining fiscal regime
- The Zambian EITI is undertaking a project to explore the potential for systematic disclosure of extractives data.
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:
- Full disclosure of information on the mineral value chain in order to enhance transparency and accountability in the governance of natural resources.
- Better management of revenue from the natural resources in order to ensure that it contributes towards socio-economic development and improved livelihoods.
- Available information on the mineral value chain and natural resource governance in order to create awareness and stimulate informed decision making.
- To monitor and evaluate the effectiveness of the natural resource governance framework and systems in order to assess their impact on the socio-economic development of the country.
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 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.