Zambia is the world’s largest exporter of emeralds, yet for decades, the industry has been dominated by foreign entities, leaving Zambians with limited participation. Since the era of Kenneth Kaunda, Zambians have largely been excluded from the lucrative gemstone trade, with only a few managing to gain access through informal and often illegal means.
Due to the capital-intensive nature of emerald mining, most Zambians, who lack generational wealth, are unable to break into the sector. Foreign investors and multinational companies have taken advantage of this, reaping immense profits from Zambia’s rich gemstone deposits while local entrepreneurs struggle to find a foothold. Ideally, the government, with its financial resources, could have facilitated the participation of Zambians in this sector or empowered state-owned enterprises such as ZCCM to manage the industry for the nation’s benefit.
The Fight Against Tax Evasion
One of the key challenges Zambia faces in the emerald sector is tax evasion. Many foreign companies auction their gemstones abroad, underreporting their earnings to avoid paying corporate taxes in Zambia. In response, the government implemented mandatory local auctions to curb this practice, but foreign firms showed little enthusiasm for participating.
To further ensure Zambia benefits from its own resources, the government introduced a 15% export tax on gemstones. However, rather than complying, many foreign companies announced work stoppages and suspensions of mining activities. Their lobbying efforts seem to have paid off, as the government has since backtracked on some of these measures.
Disparities in Tax Policy
The government’s decision to ease tax burdens for foreign mining firms contrasts sharply with the heavy taxation imposed on Zambian-owned businesses. Small businesses in Zambia face rising costs due to increased turnover tax thresholds, exorbitant council fees, and additional regulatory charges, many of which have surged by over 300% in the past three years. While local entrepreneurs continue to voice their concerns, their grievances appear to be falling on deaf ears.
High personal income tax further exacerbates the situation, discouraging businesses from offering competitive salaries and reducing the disposable income of ordinary Zambians. For years, Zambia has struggled to create a sustainable formula for economic empowerment, with the current tax structure doing little to support local wealth creation.
The Urgent Need for Policy Reforms
The Zambian government must reconsider its approach to taxation and business regulations before it completely alienates local entrepreneurs. Instead of overburdening the same group of taxpayers, efforts should focus on expanding the tax base by formalizing more businesses and making compliance more attractive.
Business laws should be designed to encourage growth rather than impose punitive restrictions that stifle innovation and investment. Both local and foreign businesses are feeling the strain of excessive taxation and regulatory hurdles, signaling the urgent need for reforms that balance revenue generation with economic sustainability.
Zambia stands at a critical juncture. If policies continue to favor foreign interests while making it difficult for local businesses to thrive, the country risks missing out on the full benefits of its natural resources. A fairer and more inclusive approach is necessary to ensure that Zambians are not mere spectators in their own economy but active participants in wealth creation.