Govt debt sinking ZSIC - PAC
Govt debt sinking ZSIC - PACBy Mwala Kalaluka
Saturday October 20, 2007 [04:00]
THE Parliamentary Public Accounts Committee (PAC) on Thursday said Zambia State Insurance Corporation (ZSIC)’s competitive age and profitability is nose-diving following failure by the government to clear its debt with the parastatal. And Finance Permanent Secretary Dr Mbikusita Wamundila Lewanika told PAC that the government opted to deal with private insurance companies other than ZSIC in order to comply with tenets of a liberalised economy.
Dr Lewanika was making submissions on the report of the Auditor General on the accounts of ZSIC for the financial year ended March 31, 2003 to 2005.
Following Dr Lewanika’s submission, Mbabala UPND member of parliament Emmanuel Hachipuka charged that the government was the major reason behind ZSIC’s problems.
Hachipuka said there was need for Dr Lewanika to assure PAC that the K25 billion that the government owed ZSIC would be paid back to resuscitate the corporation’s operations.
“If you (government) pay back the money, you will be stocking up money and you will be stopping them from having these overdrafts,” he said. “Forget about the issue of how much you owe Professional Insurance and these others.”
But ZSIC finance director Stanley Phiri explained to PAC that the corporation’s profit margin was indicating a negative slant because of the on-going restructuring process.
He pointed out that following a change in the insurance sector’s legal framework, ZSIC was moving away from offering insurance services in a composite manner.
Phiri said ZSIC was unbundling the composite insurance structure through the formation of two companies that would serve general and life insurance services separately by January 2009.
He also expressed hope that once the board-approved business plan for the corporation had been conclusively dealt with, the profit margin would take a positive slant.
Hachipuka, however, noted that restructuring could never affect the profit regime of an institution.
He also urged ZSIC management to avail PAC with the copies of the business plan, which it intended to use to get back the institution to its feet.
Contributing to the discussion, PAC chairman Charles Milupi said ZSIC could contribute significantly to the country’s coffers, amidst the competition it was getting from emerging insurance companies, if the government debt was liquidated.
Milupi also advised ZSIC to look inwardly and see how it could become a fully commercialised entity.
Responding to some of the concerns, Dr Lewanika said the debt the government owed ZSIC was a historical one but that efforts were being made to pay it off following verification.
PAC members also wondered why the government had stopped doing business with ZSIC.
Siavonga UPND member of parliament Douglas Syakalima raised concerns over why the government opted to deal with other private insurance companies other than its ‘baby’ and Dr Lewanika said this was done to comply with tenets of a liberalised economy.
“If the government only does business with ZSIC, it would kill the spirit of competitiveness,” said Dr Lewanika.
Dr Lewanika said ZSIC’s performance had improved as reflected in the corporation’s turnover in September 2006, which had exceeded the turnover for the whole 2005.
Labels: DOMESTIC DEBT, EMMANUEL HACHIPUKA, PAC, ZSIC
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