Donors challenge govt over economic dependency

Donors challenge govt over economic dependency
Written by Kabanda Chulu
Monday, March 30, 2009 3:39:31 PM

COOPERATING partners yesterday challenged the Zambian government to demonstrate continued political commitment towards the governance agenda and reduce economic dependency on the copper mining sector.

And finance minister Dr Situmbeko Musokotwane has said the effectiveness of aid in Zambia must be examined to ensure that it is targeted during the next national development plan.

During a High Level Policy Dialogue in Lusaka, Cooperating Partners Group chairperson and World Bank country manager Dr Kapil Kapoor said there had been a gradual strengthening of oversight institutions and increased transparency in public financial management.

He said despite improved macro economic growth, there had been slow progress in addressing key policy constraints such as reducing the cost of doing business and improving productivity and competitiveness of non-mining sectors.

"While we acknowledge progress being made in several areas, the majority of Zambians continue to live in poverty and only three per cent of rural population has access to energy and some businesses need as many as 50 licences to operate," Dr Kapoor said.

"Accelerating growth, reducing poverty and improving service delivery will require implementing reforms across several sectors, especially agriculture, energy, telecommunications and the public service and we are encouraged by the policy intentions expressed in the Presidential address to parliament that was reinforced by commitments made in the 2009 budget but it will be important for government at the highest level to demonstrate continued political commitment towards the unfinished governance agenda."

He observed that diversifying out of copper has been a much stated objective of Zambian leadership for several years.

"The goal of diversifying the economy away from copper has not been achieved and over 70 per cent of foreign exchange earnings still come from copper hence being vulnerable to cyclical price fluctuations," Dr Kapoor said.

"The dependency on mining and the limited progress made in developing sectors like tourism and agriculture has also meant that large sections of the Zambian population have not been able to benefit from the commodity boom, resulting in a growing service delivery gap between urban and rural Zambia."

And Dr Musokotwane said the role of aid has been critical in Zambia's national development efforts hence the need to ensure that it is channelled towards development goals.

"As we begin creating the sixth national development plan, the effectiveness of aid must be examined to ensure that it is optimally targeted since a large number of projects continue to be funded outside the budget and this continues to pose difficulties in measuring both the impact if such aid as well as its effectiveness and alignment to national development goals," said Dr Musokotwane.