Councils can access funds from banks, says fundanga
Councils can access funds from banks, says fundangaBy Joan Chirwa
Tuesday January 08, 2008 [03:00]
Local authorities can access funds from commercial banks for the provision of basic services before allocating plots to individuals, Bank of Zambia governor Dr Caleb Fundanga (right) has said. And Dr Fundanga said Zambia needed a well-coordinated construction sector to avoid coming up with shanty compounds following the increasing demand for housing.
Dr Fundanga, in an interview, said greater effort is needed in helping people to have decent accommodation, including upgrading of shanty compounds. He further noted the need for massive investment in water and sewerage, drainage and road infrastructure.
“We can invest in sewerage and clean drinking water as well as drainage and access roads. My experience in other countries has shown that councils can actually organise funding to put up roads, water and sanitation facilities.
They cost everything and announce the cost of the plot, reflecting services which are going to be provided,” Dr Fundanga said.
“We can have that system in Zambia where roads in particular areas are adequately tarred, water pipes installed and sanitation and sewerage put in place and through this, the value of a plot also increases and the council can end up having good revenue. Councils only need to access funding from banks to do projects for communities.”
Dr Fundanga also said the increasing demand for housing in the country had necessitated growth in the construction sector.
“We need to properly organise what is happening in the property sector so that we accommodate the fact that people want decent accommodation,” Dr Fundanga said.
“If this is not controlled, we will end up having very expensive houses in a shanty compound environment. The cost of building materials such as cement has also gone up because of the growing construction sector, so we should capitalise on this so that we build in an orderly manner.”
Dr Fundanga said the recent rise in demand for houses has pushed up the value of property across the country.
“Property value is quite high at the moment. Individuals are building houses and there also big housing projects such as the Lilayi Housing which is targeting those in the low and medium income brackets,” Dr Fundanga said.
“The low and medium income groups are the most affected when it comes to decent accommodation and if we invest more, we can help these people have decent accommodation.”
And a financial expert Miles Sampa said Zambia has recorded good returns as far as the estate industry is concerned, with growth reaching around 30 per cent in recent years. “Prices on houses have been appreciating to levels of 30 per cent. The property market has grown over the years. Houses have been revaluing and there is a lot of re-pricing of property,” Sampa said. “If someone has got money for investment, it is important now to invest in houses.”
Sampa said the property market, which has become one of Zambia’s economic indicators, is performing well owing to the collapse of the industry in the United Kingdom and USA.
“The property market is booming in Zambia. Investment in property markets is among the best in Zambia,” said Sampa.
Apart from the Lilayi housing project which is private sector driven, the government, through the Ministry of Local Government and Housing, will build houses in a number of towns in the country through the National Housing Bonds Trust (NHBT).
The housing bonds trust, set up last year as a special purpose vehicle (SPV) of the Ministry of Local Government and Housing, seeks to assist in solving the accommodation crisis in the country in collaboration with local authorities in five pilot districts namely Chipata, Kitwe, Lusaka, Livingstone and Solwezi.
Government identified the option of borrowing money from the public through the issuance of housing bonds on behalf of the local authorities so as to deliver periodic housing infrastructure to all the 72 districts in Zambia, within the targeted period, with a primary goal of providing about 800,000 quality and affordable housing units to Zambians by 2015.
According to recent statistics, the country is currently short of about 1.5 million housing units, a situation that has pushed up rentals especially in urban areas.
Labels: CALEB FUNDANGA, COUNCILS
posted by MrK @ 6:44 PM
1 Comments:
Of course I agree with Caleb Fundanga's sentiment, but he is caught inside the neoliberal mindset.
Borrowing for infrastructure would leave councils with huge debts. Now we all know how neoliberals are in love with debt, and are allergic to taxes on businesses (but apparently not on workers).
The problem is that it doesn't work. Half of state revenues should be funneled into local government, and there is no way around it. If local government is going to do what only it can, which is deliver basic services where people live, then they need income from national revenues.
However, even that would not be enough to finance all infrastructure. For that, Zambia needs taxes from the profits that the mines are making. And there is no way around that either. Either Zambia taxes the mines, or it will not have the money to build the infrastructure it needs.
Borrowing and putting local councils in debt is not an alternative. In the end, how will councils pay off that debt? By raising local taxes and levies. The increased value of the plots can only work after the plots have been sold - if there are enough people to buy these houses at these higher prices. Which would exclude the majority of the population, who are poor. Most likely, councils will make up the difference by increasing local taxes and levies.
In other words, the people pay massive income tax so the corporations won't have to. Then, they will pay local taxes, to build the infrastructure that not only they, but the corporations use.
In other words, in the neoliberal mindset, it are the workers who will pay for everything.
“We can have that system in Zambia where roads in particular areas are adequately tarred, water pipes installed and sanitation and sewerage put in place and through this, the value of a plot also increases and the council can end up having good revenue.
In theory, that would work. In practice, Zambia is still stuck with only 30% of the population earning more than a dollar per day. That is a very narrow base on which to pin development, or the financing of public amenities through the sale of municipal bonds.
In the long run, a developed economy could run like that. However, until then, there are no shortcuts to getting the basics right.
- tax the mines to the max
- fiscal transfer to local councils
Borrowing is what caused America to be where it is now - with a massive debt, and a looming recession.
I would be extremely leary of basing a policy on borrowing, especially when it is not necessary. Tax the mines to build infrastructure.
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