Zambia reduced its estimate for economic growth this year as mining output in Africa’s second-biggest copper producer shrank.
Preliminary real gross domestic product expanded by 6 percent, Finance Minister Alexander Chikwanda said in an e-mailed statement today. In October, he predicted growth of 6.5 percent, while the International Monetary Fund on Dec. 18 estimated the economy grew by 5.5 percent, the slowest pace in 12 years.
“For the long term, it is the desire of the government to sustain and increase this growth trajectory to double digits in order to ensure greater impact on poverty reduction,” Chikwanda said.
While he didn’t give industry data, the minister attributed the 2014 mining contraction to unspecified operational problems. A new tariff system and the non-payment of value-added tax refunds to companies may threaten future growth in an industry the country depends on for 80 percent of export earnings. The Zambia Chamber of Mines said last week a shift starting Jan. 1 to higher royalties instead of profit tax may cost 12,000 jobs and 158,000 metric tons of copper output next year.
Zambia’s kwacha retreated 0.5 percent to 6.3764 per dollar by 4:35 p.m. in Lusaka, extending its 2014 decline to 13 percent, Africa’s worst performance this year after Ghana’s cedi.
The government “fully recognizes” the concerns of some mining companies and will talk to them once presented with information on how the new system threatens operations, Chikwanda said.
“There is no cause for alarm,” and the government will ensure mines are profitable while also giving due consideration for Zambians to benefit from their resources, he said.