Zambia, Africa’s biggest copper producer, plans to introduce a rule requiring foreign companies to keep earnings from exports in local banks for 30 days, Deputy Finance Minister Miles Sampa said.
The government will announce the law “in the next few weeks,” Sampa said in a telephone interview today from Lusaka, the nation’s capital. It will help track the amount of tax it should receive from exporters, he said.
The southern African nation’s government estimates only 15 percent of export sales return to the country. The planned statutory instrument will require companies to deposit all export sales in a local bank. Companies including Glencore International Plc, Canada’s Barrick Gold Corp. and First Quantum Ltd. operate mines in the country.
Mining companies, which sell most of their products in dollars, won’t have to convert the income into kwacha, unless they need to make local payments, Sampa said. “It’s not an exchange control of any sort,” he said.
The currency has appreciated 7 percent against the dollar since the government on May 18 introduced legislation banning local transactions in foreign currency, forcing companies to accumulate kwacha. It strengthened 0.3 percent to 4,875 a dollar by 10:20 a.m. in Lusaka.
The currency’s current trading level is acceptable for both exporters and importers, as “anywhere between 4,000 and 5,000 is a good equilibrium,” Sampa said.
The government plans to re-base its currency, lopping off three zeros, by the end of the year, he said. The Bank of Zambia had previously planned to introduce the new currency in June.