Oil,Mining & Energy

Zambia Attracts Joint Ventures In The Mining Sector

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By Alexander Nkosi

Moxico Resources Limited, a British firm, has partnered with a local firm called Mimbula Mineral resources and injected USD100 million into copper mining explorations in Chingola district on the Copperbelt province. A further USD 200 million will be invested into operations before the end of the year.

“Joint ventures” is our preferred investment model. It comes with immense benefits and has a big multiplier effect:

1) Government earns tax revenue from the mining project.

2) Direct jobs are created in the mining project. Indirect jobs are created in the firms supplying goods and services to the mining project. Those directly and indirectly employed pay income tax to government. These workers and local firms also spend their earnings within the economy, thereby stimulating economic activities. At personal level, expenditures could include: mealie meal, relish, cooking oil and other household requirements. Hence, traders have a market to sell their goods and services and the chain goes on.

3) Suppliers of goods and services contracted by the mines also pay tax, thereby increasing government tax revenue.

4) The local firm partnering with the foreign firm gets a share of profits and saves it in local banks. Our banks have more money to lend out to the private sector. The private sector expands production, employs more people and they all pay more tax to government.

  1. This is just one project, the more high value joint venture projects we have, the bigger the multiplier effect and impact on the economy. The impact is even bigger if locals have huge shares in these projects. This is the importance of foreign direct investments. The advantages are not limited to tax revenue government earns. There are also other benefits like technology transfer, regardless of the magnitude.

There is also valuable experience gained by working with those exposed to better ways of doing things at a global stage. A firm that partners with foreign firms definitely gets some experience in production, marketing and other aspects.

In conclusion, local firms forming joint ventures should then move to the next stage of owning and running means of production independently.