Zambia Makes History With Yuan Mining Tax Policy – Economist Lubinda Haabazoka

Lusaka -Zambia has become the first country in Africa to allow mining companies to pay statutory taxes and royalties in the Chinese Yuan, a move prominent economist Dr. Lubinda Haabazoka has described as “a pragmatic and forward looking economic policy shift with far-reaching implications.”

In an analysis released this Morning, Dr. Haabazoka said the decision marks a significant milestone in Zambia’s fiscal and foreign exchange management, arguing that the policy is rooted in sound economic logic rather than political symbolism.

“This is not a symbolic or political gesture. It is a pragmatic policy milestone grounded in economic logic, trade realities, and the need to reduce structural pressure on the United States dollar,” Dr. Haabazoka said.

Currency Matching and Fiscal Efficiency

Dr. Haabazoka explained that the policy is anchored on the principle of currency matching, which strengthens economic resilience when government revenues are collected in currencies aligned with trade, investment, and debt servicing obligations.

“Zambia has deep trade and investment ties with China, particularly in mining, infrastructure, machinery, and project financing. Allowing mining taxes to be settled in Yuan reduces unnecessary currency conversions, lowers transaction costs, and improves efficiency in public finance management,” he noted.

He added that the new framework eliminates the need for multiple conversions involving the Kwacha and the US dollar when meeting obligations linked to China.

Strengthening Foreign Exchange Reserves

The economist further highlighted that the Chinese Yuan, officially known as the Renminbi, is now a globally recognised currency and forms part of the International Monetary Fund’s Special Drawing Rights (SDR) basket.

“Collecting and holding a currency that is part of the IMF’s SDR basket strengthens the quality of Zambia’s foreign exchange reserves and enhances confidence in the country’s external position,” Dr. Haabazoka said.

Reducing Pressure on the US Dollar

According to Dr. Haabazoka, one of the immediate benefits of the policy is lower transaction costs in debt servicing and trade.

“Each currency conversion comes with fees and exchange-rate risks. By collecting Yuan directly, Zambia can more efficiently service obligations linked to Chinese financing and pay for imports such as mining equipment, machinery, pharmaceuticals, and infrastructure inputs,” he explained.

He added that this approach reduces Zambia’s dependence on sourcing scarce US dollars from international markets.

Aligning With Trade Realities

China remains one of Zambia’s largest trading and investment partners, particularly in the mining and infrastructure sectors. Dr. Haabazoka said settling taxes and trade-related transactions in Yuan allows these flows to circulate more efficiently.

“This will ease pressure on the foreign exchange market and support greater stability in the Kwacha,” he said.

Opening the Door for Regional Settlements

Dr. Haabazoka also pointed to the potential for Zambia to extend similar currency settlement arrangements to regional trade.

“There is scope for Zambia to explore bilateral currency settlement with key partners such as the Democratic Republic of Congo and South Africa. Partial settlement of trade in Yuan or local currencies would significantly reduce pressure on the US dollar and deepen regional financial integration,” he said.

Forward-Looking Economic Leadership

Dr. Haabazoka praised the government for what he termed decisive and forward-looking economic leadership.

“This decision acknowledges that global finance is moving toward a multipolar currency system. African economies must adapt if they are to protect macroeconomic stability,” he said.

He said the move by President Hakainde Hichilema and his economic team at the Ministry of Finance, the Bank of Zambia, and the Zambia Revenue Authority positions Zambia at the forefront of Africa’s evolving trade and financial architecture.