Friday, December 21, 2007

Sichinga urges minimum re-investment on profits

Sichinga urges minimum re-investment on profits
By Chibaula Silwamba
Friday December 21, 2007 [03:00]

Business consultant Robert Sichinga has said there must be a minimum percentage of foreign investors’ profits that must be re-invested in the Zambian economy to yield more profits. Commenting on government’s incentive for foreign investors to have full and unrestricted repatriation of 100 per cent of thier profits, Sichinga said although he was not against 100 per cent repatriation of profits, the foreign investors must re-invest a certain percentage in the Zambian economy.

“I am not against investors repatriating 100 per cent of their profits so long this is backed by law. I would have thought that they would have used Zambia Development Agency Act of 2006 to give effect on that,” he said.

“It’s necessary that mechanisms are put in place to make sure that 100 per cent is not a reduction in capital that has been invested. There must be a minimum threshold for which the investors need to keep within for it to start yielding its profits.”

He also said there must be room for investors to plough back into the economy because the country needed long term investments.

“We need to have long term benefits of that investment,” Sichinga said. “In my opinion, 100 per cent repatriation of net profit will not be bad if there is local participation.”

Sichinga said externalisation of money earned from foreign exchange should be stopped.

“If they (foreign investors) are taking the money, the earnings of the forex proceeds and keep them outside the country then that is definitely wrong because it will not create the profitability and employment and investment that we require, that has to be stopped right away,” he said.

He said the Citizens Economic Empowerment (CEE) would empower Zambians to participate in the improvement of the economy.

“We need to implement the Citizens Economic Empowerment Act of 2006 as quickly as possible so that part of that amount is given to Zambians through the stock exchange,” he said. “So that there is local ownership, not just something that is going to stay for a short while but there must be a good percentage to be held by Zambians.”

Last week, University of Zambia head of Development Studies department Chrispin Matenga said there was need to enact a law that would compel foreign investors to keep at least 50 per cent of their profits in the Zambian economy for a stipulated period.

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