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Zambia must move away from over-dependence on aid

Zambia must move away from over-dependence on aid - Lungu
By Kingsley Kaswende
Monday March 05, 2007 [02:00]

ZAMBIA must move away from heavy dependence on foreign aid, a Copperbelt University researcher has advised. Professor John Lungu, a lecturer in the School of Business, said over-dependence on foreign aid and grants compromised the country's sovereignty. "It means that we always have to be good boys. Being a good boy means you don't have to complain even if you are slapped," he said. Prof Lungu, analysing the impact of the 2007 National Budget at a ZICA/ACCA tax review workshop, said while debt relief had been granted to Zambia by the major multilateral institutions such as the World Bank, International Monetary Fund and African Development Bank, the country had continued borrowing externally.

"Heavy reliance on foreign aid or grants compromises sovereignty. This requires correction," he said. "We should be looking to a year when we shall work a budget that will be financed from domestic resources."

Prof Lungu said the principal problem was that the government had squandered the readily available sources of revenue through development agreements signed between 1997 and 2000 in the mining sector. "Unfortunately, even the proposal to review some of the provisions in the development agreements will not affect those that are already operating. The legal status given to the development agreements remains morally questionable," he said.

Prof Lungu also suggested the need to reduce recurrent departmental charges (RDCs) in the budget. He noted that RDCs had risen from K1.852 trillion to K3.042 trillion, a rise by K1.191 trillion. "Two things can happen to this colossal rise in recurrent departmental charges. Either the government can reduce it by K600 billion and does not have to borrow internally or they can reduce it and allocate it to infrastructure development," he said.

Prof Lungu said infrastructure development aptly generated more spread effects than spending on administrative requirements. "Alternatively, if the government reduces its administrative expenditure and avoids internal borrowing, the private sector can then access loans from the banking sector. So long as the government does not borrow, there is also a likelihood that interest rates can fall. Either way, the government will help stimulate the private sector and help in employment generation.

This way the budget can have a considerable impact on the economy," he said. Prof Lungu stressed that the attainment of economic goals in the budget required discipline in implementing agreed programmes. He said discipline also required transparency in the way government did its business.

Labels: BUDGET, CORRUPTION, LOCAL GOVERNMENT

posted by MrK @ 4:46 AM