THE announcement by Finance Deputy Minister, Miles Sampa that the Government is drafting a Statutory Instrument (SI) to compel foreign companies to bank their earnings locally and control externalisation of export earnings will help grow the economy.

It will grow the economy and reduce poverty levels as it will curb capital flight.

The development will be seen as a relief because SI number 34 will not only compel exporters, especially the mining firms to bank their earnings locally, but will also enable the Government ascertain how much revenue these companies acquire.

In the process, these companies will be compelled to pay substantial revenue to the Government, in form of tax, in respect of their total earnings.

Those who have evaded tax before will this time around be caught up in this dragnet.

As of now, it is amazing that despite being the world's copper powerhouse, which at one time was only second to Chile, Zambia is considered to be one of the world's 25 poorest nations.

The major reason is that copper, which is supposed to benefit the owners, the Zambian people, instead goes out to benefit outsiders.

Figures show that the copper industry provides about 80 per cent of foreign exchange earnings, yet mining employs just 10 per cent of salaried workers.

In addition, the sector contributes just 2.2 per cent of revenue to the Zambia Revenue Authority (ZRA), the Government's tax agency, and 9.7 per cent to the gross domestic product (GDP).

Mining experts say that the drastic increase in copper prices witnessed after the mining companies were sold was primarily due to China's increased copper needs, and at one point rose to a high US$10,000 per tonnes.

The bulk of copper in our country is exported to Switzerland - but this is only on paper as very little or none shows up in Swiss customs data.

This a few years ago raised questions from Christian Aid, an international development charity, about transparency in the mining sector.

Way back in 2008, Christian Aid even inquired as to who actually received copper generated from Zambia.

The other area of concern by Christian Aid was the vast difference in pricing between copper exports to Switzerland and the drastically increased price which that country received when exporting almost identical copper products.

Concerns were raised that under the previous administration of former president Rupiah Banda, there had been little oversight over the destination of Zambia's metal exports, among other allegations of corruption that emerged.

This forced the new Patriotic Front Government to temporarily suspend metal export permits ahead of the release of new guidelines.

The idea was to try and increase transparency in Africa's top copper producer.

We consider the latest move by the Government to compel foreign companies to bank their earnings locally and control externalisation of export earnings to be a new type of transparency measure aimed at making mining companies disclose far more information about their operations than is currently required.

For instance, as a result of the 'development agreements' leading up to the privatisation of Zambia's copper mines, foreign firms that bought the mines were accorded a legal confidential status which was equivalent to the Zambian Constitution.