ZAMBIA LOSES US$ 9 BN IN ILLICIT TRANSFERS

Almost US$ 9 billion has illicitly been siphoned out of the Zambian economy, in the last decade, Global Financial Integrity, a US anti-graft watchdog has revealed.

The Reuters reports that the amount is almost half of Zambia’s current Gross Domestic Product,

Channelling of profits to offshore banks and tax havens, are among the notable avenues of illicit financial outflows, of resource wealth, often squandered in the developing world.

Global Financial Integrity’s latest report further indicates that the southern African nation lost US$ 8.8 billion to capital flight, between 2001 and 2010.

The Zambian government said the report was in line with its own findings and vowed to crack down on culprits.

 “Of that,US $ 4.9 billion can be attributed to trade mis-invoicing, which is a type of trade fraud used by commercial importers and exporters around the world,” GFI economist Sarah Freitas said.

The way this typically works is that an importer pretends to pay more to foreigners than they actually spend, with the difference put discreetly into banks or other assets abroad.

Major commodity producers seem especially susceptible to these trends because of the often opaque nature of resources industries.

And Finance Deputy Minister, Miles Sampa has welcomed the report, stating that it is in line with what the Zambian government has previously expressed concern, as regards, tax avoidance and income leakages in general.

The GFI’s findings on Zambia, come ahead of the release, on Tuesday of its full report, measuring illicit financial flows out of 150 developing countries and emerging economies in the last decade.

JSE TO OFFER ZAMBIAN MAIZE PRICE HEDGING INSTRUMENTS

The Johannesburg Stock Exchange – JSE- is soon to offer derivative contracts for Zambian maize grain, starting next year.

Chris Sturgess, Director of Commodities at the JSE, says the development will help local farmers hedge the market prices of their produce against global economic volatility.

Amid concerns of global food prices instability, Sturgess has explained in an email statement that the JSE will offer either futures or option contracts to help farmers manage the price risk for their maize.

‘A Zambian farmer ... would like to, while the crop is maturing, lock in favourable prices that they will achieve once they harvest the product.

‘In the current environment the farmer really only finds out the price of the grain at harvest time’, Sturgess has explained, adding that with derivatives both farmers and millers are able to hedge themselves and lock in favourable prices.

In the advent of this, Sturgess also says the JSE will expect farmers to have increased access to finance from the banks, as well as other additional financial products.

‘So the ability to finance grain on a warehouse receipt will also be so much easier for the farmer or any other participant who has access to stock’, Sturgess has further explained.

EXPERTS MEET TO DISCUSS SME TAX REGIME

Informal sector taxation is top of the agenda as experts, from selected African countries, meet in the Zambian capital, Lusaka, at a 3-day symposium.

African tax experts are set to discuss critical factors, surrounding the design of a specific tax regime for small and medium Enterprise -SMEs-sector, which makes up the majority of African economies.

Among the experts are those from Ghana, Rwanda, Kenya, Nigeria, Zambia and South Africa, countries, which share common SME taxation challenges.

And Zambia Revenue Authority Commissioner-General, Berlin Msiska has noted that the symposium will devise tools for understanding particular sectoral strategies for effectively taxing SMEs.

Msiska was speaking at the official opening of the symposium.

Since 2011, Zambia has piloted a consultancy study on SMEs taxation, with support from the German government.

The study has operated under what is called the Domestic Resource Mobilisation mechanism, which is aimed at enhancing tax administration.

BOZ WARNS OF HEIGHTENED YEAR-END INFLATIONARY PRESSURE

Zambia’s central bank has warned of an upward risk of inflation for the month of December 2012.

The Bank of Zambia’s monetary policy committee has however noted that year-end inflation is projected within the 7 % target for this year.

The committee says the global maize grain deficit may induce higher inflation on the local front.

The recent depreciation of the local currency, the Kwacha, against the United States dollar, is another risk, which might precipitate increased year-end inflation.

But the kwacha, at end of business this week, closed at between 5,235 and 5,255 against the dollar.

However, the central bank has explained that keeping inflationary pressures will lie in stabilising the local price of the maize grain, as the Food Reserve Agency releases some of its stocks to the millers.

The annual rate of inflation, as recorded at the end of November 2012, was recorded at 6.9 %, up from 6.8 %, as at end of October.

Meanwhile, the Bank of Zambia has opted to maintain the policy commercial bank interest rate at 9.25 % for the month of December 2012.