Implications for Zambia’s Economy for Introducing Mining Taxes in Yuan

Zambia’s decision to allow mining companies to pay certain taxes in China’s yuan is an economic development that deserves careful attention. While the announcement has attracted political and geopolitical commentary, its importance lies mainly in how it affects revenue collection, currency management and the broader performance of the economy. For a country where copper remains central to public finances, even technical policy shifts can have wide economic effects.

From a practical standpoint, the policy follows existing trade and investment patterns. China is Zambia’s largest buyer of copper and a major source of investment in the mining sector. Many mining firms already earn, borrow and spend in yuan, particularly for machinery, construction and logistics. Allowing tax payments in the same currency is expected to reduce conversion costs and ease pressure on dollar demand, especially during periods of foreign exchange shortages. In the short term, this introduction will likely help smooth cash flows within the mining industry and government revenue systems.

The move also fits within a changing global environment. Many developing economies are looking for ways to reduce exposure to sudden currency swings and external financial pressures. Heavy dependence on the US dollar can complicate budgeting, debt servicing and import financing when global conditions tighten. Accepting part of mineral revenues in yuan is expected to offer Zambia some room to manage currency risks more carefully, particularly where trade links with China are already strong.

That said, currency choice alone will not fix Zambia’s fiscal challenges. The main issue in mining taxation has long been the size and reliability of revenues collected, not the currency used. Tax incentives, profit shifting, weak monitoring and disputes over production figures have limited the benefits of mineral wealth. In the absence of stronger enforcement and clearer rules, changing the payment currency may have little effect on the total resources available to the state.

There are also economic management concerns to consider. The yuan is not freely traded like major reserve currencies and its value is shaped by policy decisions outside Zambia’s control. This raises questions about how easily these revenues can be converted to fund domestic spending, repay external debt or build reserves. Amini Centre for Policy Research calls on the government to properly plan, otherwise holding revenues in yuan would complicate fiscal operations rather than simplify them. Clear guidelines on conversion, savings and reporting will therefore be necessary.

The broader economic test is whether this policy supports development priorities. Mining taxes are expected to fund public services, infrastructure and economic diversification. Such new changes affecting revenue flows in this country should therefore be aimed at improving openness and oversight, ensuring that public resources are used efficiently. Stronger reporting systems and continued legislative scrutiny is recommended to prevent confusion or misuse.

For now, what remains true is that, the value of this policy will be determined by measurable economic outcomes rather than intent. Its success will lie in whether it delivers more predictable mining revenues, eases pressure on the public finances and improves Zambia’s ability to manage and regulate the mineral sector in the national interest. If it contributes to stronger revenue collection and better fiscal planning, it will support wider development goals. If it does not, it will stand as a technical adjustment with little bearing on Zambia’s economic direction. The central task therefore remains unchanged: ensuring that mineral wealth is translated into sustained growth, improved public services and a more resilient economy that benefits society as a whole.