Budget will only benefit Rupiah and his friends, says Sata
Budget will only benefit Rupiah and his friends, says SataWritten by Mwala Kalaluka and Chibaula Silwamba
Sunday, February 01, 2009 3:48:02 PM
PATRIOTIC Front (PF) leader Michael Sata yesterday said the 2009 national budget will only benefit President Rupiah Banda and his friends in leadership at the expense of ordinary Zambians.
And UPND president Hakainde Hichilema has described the 2009 national budget as a failure, saying it does not have an economic stimulus plan to overcome the current crisis the country is facing.
Analysing the K15.27 trillion national budget presented to Parliament by finance minister Dr Situmbeko Musokotwane on Friday, Sata said the items of action in the budget did not tally with the pronouncements made by President Banda during his address to Parliament two weeks ago.
“I did not expect much out of this budget. This is not a national budget but a personal Rupiah Banda budget. There are so many contradictions from the President's address to Parliament,” he said.
Sata said the budget did not give hope to ordinary Zambians that were losing jobs following the collapse of some prominent companies.
“There is no future because the future is bleak and so we are in for a big ride,” he said. “We should prepare for our own local crisis created by this government.”
Sata also said President Banda's maiden budget had not addressed the governance issues.
“Anything where there is sangwapo for the leaders, money has been provided,” he said. “For example, K50 billion to NCC, between now and June when Chifumu Banda promises to produce a mere draft, all the leaders attending the NCC are receiving an illegal K550,000 a day. You see what they have done is when Parliament is sitting, they sit in the morning, they receive K550,000 per day tax-free. The same leaders still go to Parliament to receive tax-free allowances and at the end of the month; they receive salaries as ministers, deputy ministers and ordinary parliamentarians.”
Sata further wondered why the government was insisting on protecting a cellular phone manufacturing company which is yet to be established when they had failed to bail out existing companies that were collapsing.
“Their friends in the US and Britain are bailing out existing companies not imaginary companies…we did not hear anything from this government to save these companies but they are only saving an imaginary company, which is only by Musokotwane and Rupiah Banda,” he said.
“We have not seen any company, we have not seen any advertising…if they would have given those benefits to other people, we would have started exporting our own cooking oil here.”
Sata questioned why the government intended to use taxpayers' money to establish a multi-facility economic zone in Lusaka South when the investors should provide their own resources.
He also said the government's decision to divert funds from some projects in Northern Province towards the development of Kasaba Bay was not a proper move, given the belief that the province had been the most marginalised in terms of road infrastructure over the last 44 years.
Sata said the insistence by the government to provide money towards the tarring of the Mfuwe-Chipata road was enough confirmation that the 2009 budget was going to benefit President Banda and friends, because his farm was located on the same road.
Sata said there were other roads in Eastern Province that needed urgent attention.
“If Rupiah Banda wants to improve infrastructure, let us improve all the roads,” Sata said. “What we have seen in his budget is corruption and they have already earmarked who is going to do the roads.”
Sata said Musokotwane's announcement that the government would provide funds towards the construction of hospitals in Shangombo and Mumbwa was questionable since there were already outstanding projects in the two districts.
“Musokotwane is lying to us that he is going to provide money to build a hospital in Shang'ombo…which hospital are they building? They should say that they are going to complete the hospitals but first all they must tell us what happened to Shangombo and Mumbwa and what happened to that money,” said Sata.
And Hichilema said this year's national budget was ordinary and would fail to counter the global economic crisis that had led to closures of companies and massive job losses in Zambia.
“For me, this budget is really a lost opportunity. We have been presented with an ordinary budget to deal with extraordinary circumstances. We are in an economic crisis, we expected the government to deliver an extraordinary budget that will deal with the crisis the country is going through,” said Hichilema in an interview.
“On this score, the budget the government has presented has failed the yardstick. We expected a budget that clearly outlined an economic stimulus plan and one of the major elements of the policy shift should have been seen in the budget.”
He said the analytical part of the budget should have been centered on the economic stimulus plan.
“…we should have then seen that through into the financial allocation in the 2009 budget that would address thousands of job losses that we are experiencing now,” Hichilema said.
“A budget is an instrument of directing resources in the country in terms of resource generation and expenditure. That is why I call it a lost opportunity.”
He said those who praised the budget as being a good one did not analyse it in detail.
“There is no mention on how to reduce interest rates. If interest rates are not clearly targeted for reduction, they will trigger an increase in the cost of borrowing and poor people will not be able to access money and, therefore, if you can't access money you can't trigger economic activities and you can't increase jobs,” Hichilema observed.
“They are also planning to increase electricity costs, it means that households are going to suffer more. This is how poor the 2009 budget is, there is nothing to celebrate about.”
Hichilema observed that because of the planned increase in electricity tariffs, fewer people would have electricity in their homes.
“The cost of production of any commodity will increase. When you increase the cost of electricity, inflation will increase,” Hichilema said.
“You are aware they have targeted to reduce inflation to 10 per cent. How will it come down if you are triggering inflation measures like electricity costs? This is lack of understanding.”
On Pay As You Earn (PAYE) tax, Hichilema said the tax free threshold in this budget from K600,000 in 2008 to K700,000 in 2009 was insignificant to increase disposable incomes.
“Let's analyse this; this is only K100,000 increase, this is peanuts. There is no relief for households,” he said.
“It also means that with increase in inflation, it means that households now will even buy fewer commodities than they were able to buy last year with an increase of K100,000 tax free incomes only.”
He said the tax free threshold should have been increased to about K1.3 million.
“A minimum food basket cost for a family of six people is between K1.3 million and K1.5 million. If we were in office, we would have given a tax free income of at least K1.3 million per month. This would have given reasonable relief to workers and they would have been able to buy reasonable basic commodities,” Hichilema said.
“Those that are taxed highly should have also received a relief. We expected the tax to reduce from 35 per cent to 33 per cent. This would have increased disposal income, in other words purchasing power. In an economic depression you want to increase purchasing power of the households.”
On agriculture, Hichilema said the assumption that the agricultural allocation had been increased by 37 per cent was misleading.
“You can analyse increase on a certain basis, from last year's allocation of K800.5 billion in agriculture to K1.096 trillion. This is only seven percent of the total budget. So they should not mislead the people of Zambia and farmers to think that now they have been allocated a lot of money. Just take a calculator, they call me a calculator boy, you will find that K1.096 trillion allocated to agriculture is just seven per cent of the total budget of K15.27 trillion,” Hichilema said.
“This does not send a clear message that the government want to see agriculture as a sector of diversification away from copper.”
He said the seven per cent allocated to the agriculture sector was below the Maputo Declaration, to which Zambia is a signatory.
The Maputo Declaration urgesAfrican governments to increase the allocation to the agriculture sector to 10 per cent of their national budget.
Hichilema said: “Those of us who read between the numbers know that the allocation falls short of the Maputo Declaration.”
He said there was need to increase the allocation to the agriculture sector to at least 12 per cent of the national budget.
“In our view as UPND, we should have given 12 or 13 per cent of the total budget to agriculture. At 12 per cent it would have meant K1.9 trillion to K2 trillion would have gone to agriculture,” Hichilema said. “Such an allocation would have helped us increase food production and lower the cost of food to the consumers.”
On the National Constitutional Conference (NCC), Hichilema said the money [K50 billion] allocated to it was a misallocation of resources.
“We would have liked to see a situation where there could have been close to only K25 billion allocated to the NCC so that the government sends a clear signal to the NCC to conclude the process by 30th of June, 2009,” Hichilema said. “The other K25 billion or so could have gone to working on subsidiary Act such as the electoral Act so that we have an independent Electoral Commission. This is what we expected but it hasn't happened.”
Hichilema further said the K5 billion allocated for continuous voter registration exercise was not enough.
“K5 billion can only do one province and this is where political gimmick comes in, the MMD will choose one province which they believe they are strong in and do voter registration there. We want countrywide voter registration so that there is no discrimination in areas where the opposition political parties are strong,” he said. “I expected that more money will be allocated.”
Hichilema said there was also need for the government to allocate more money to the National Registration Office.
“You can't register as a voter without an NRC, so you need the allocation to increase to the National Registration office because the two go hand in hand,” Hichilema said.
On education, Hichilema said the government should have allocated more money because economic growth was dependent on an educated citizenry.
“You have not seen anything talking about standards of education,” Hichilema said.
He said the budget did not demonstrate that it could spur economic growth.
And World Bank country manager Dr Kapil Kapoor said Dr Musokotwane had set for himself very optimistic targets. Dr Kapoor said what was encouraging in the budget was that government intended to diversify the economy and make business competitive.
“All the priorities that were identified were clearly the correct ones. I think the key challenge right now is to face ahead and implement those key areas that were identified,” Dr Kapoor said.
“I think he set for himself and for Zambia very optimistic targets. I think the target is achievable, but I think that something has to be done to achieve that. It will not happen on its own. They need to put emphasis on agriculture and make sure it grows. This is important because government admitted that the agriculture sector has been declining over the years.”
He said there was need to grow the tourism sector by up to about 12 per cent if the sector was to form a significant part of the diversification process.
Dr Kapoor said the five per cent anticipated growth in the economy was attainable but said it should be supported by implementation.
Bank of Zambia governor Dr Caleb Fundanga said the five per cent growth was tenable.
“I think it is possible to achieve it if you take into consideration that the minister has tried to stimulate investment into agriculture,” said Dr Fundanga. “I do not think it is impossible to achieve that five per cent growth. The global crunch is certainly biting but it gives somebody an opportunity to do something.”
And PF Kabwata member of parliament Given Lubinda said this year’s budget was unrealistic and uninspiring.
“It cannot be achieved because in the budget speech itself you have heard the contradictions. In a year of global financial recession, where you anticipate that the global economy will not grow less than three per cent, how on earth does he [Musokotwane] expect this fragile economy to grow by five per cent? What measures is he going to use to grow the Zambian economy by five per cent when there is a global recession?” said Lubinda. “So the starting point altogether is wrong. What is there for me is that all the figures that he was talking about are not going to be attained…this is a budget that does not inspire me. What I would have expected the minister to do is to be realistic and say that Zambia is not an island. The Zambian economy is so dependent on the global economy and if the global economic growth is expected not to grow more than three per cent, he should have been realistic and say that we anticipate the economy to grow not less than 2.5 per cent and build figures based on that anticipated growth of two and half per cent.”
Labels: 2009 BUDGET, HAKAINDE HICHILEMA, RUPIAH BANDA, SATA
posted by MrK @ 3:48 PM
1 Comments:
As much as I like both Sata and Hichilema, as much as their proposals are better than the present budget, neither of them STILL go far enough.
What are needed, are measures that seriously pare back unemployment. That is the only proper response to this economic crisis. The thousands who are laid off in the mining industry and their dependents need new income, not tax relief. They need high paying jobs, and the country needs them to have high paying jobs, if only to keep demand for goods high.
The only way to do this is to massively investing in economic sectors that will create gainful employment on a mass scale, which are agriculture and infrastructure. With food prices high, that is the way to go.
Then, there is this INSANE emphasis on tourism. Message to all politicians: You cannot have tourism without tourists. The western consumer is tapped out with credit, and they are about to lose their jobs if they haven't already. They are not going on holiday to Zambia, or anywhere else. Last Christmas, they didn't even go on holiday in the Unites States itself, or even go to the local store to buy gifts for their families. Until their credit is sorted out, there is very little that they are going to buy. Doing anything about tourism right now is a waste of resources.
Besides, it is evidence of a seriously detached and spoiled mindset, to think of tourism at a time when people are on the brink of starving. The entire budget should be themed on how we can build up agriculture in a way to give people incomes, so no one is going to starve in the next few months or years.
Those sacked miners need jobs, and the only option is agriculture.
Here is my prescription:
1) Land redistribution
2) Security of tenure through title deeds with limited saleability, and legally securing the right of usufruct as it is given out in the communal areas
3) Revamping NCZ to reduce the cost of fertilizer by PRODUCING MORE OF IT
4) Rural infrastructure works projects, which use the resources of traditional leadership and the National Service to build roads, irrigation works and FRA storage facilities.
5) Extension services, to help farmers in organic farming techniques, marketing, transport and general farming information like weather patterns and crop prices
6) Revamp the old farm blocks and cooperatives
We need to create low cost on-farm rainwater catchment systems, so farmers can have year-around harvests and are no longer dependent on rainfall only; eliminate flooding; eliminate land degradation and erosion; secure the food supply.
Those are the only priorities the country needs to occupy itself with in the next coming years.
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