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People need to change their attitude towards dealing with difficulty – Rupiah

People need to change their attitude towards dealing with difficulty – Rupiah
Written by Patson Chilemba and Ernest Chanda
Sunday, April 05, 2009 7:51:43 PM

PRESIDENT Rupiah Banda yesterday said people need to change their attitude towards dealing with difficulty for transformation to be achieved. And World Bank vice-president African region Obiageli Ezekwesili said agricultural productivity needs more than fertiliser to thrive.

During the official opening of the national indaba themed 'Mitigating the Effects of the Global Economic Crisis on the Zambian Economy', President Banda said it was not correct that when the country was faced with a challenge, people should quickly look around for a scapegoat.

"Rather, every responsible citizen must look towards contributing to the solution for the good of the country. It is time for us to inculcate in our society and in particular, in our youth a new culture that respects hard work, which respects education, which shows respect for others and that respects law and order," President Banda said.

"A lawless society with no culture can only lead to self-destruction, misery and poverty. So as we think about how to address the issues surrounding the economy, let us not forget that we as people have to change to succeed."

President Banda said he had noted that there was a tendency to look at investment and call it investment only if people were dealing in millions of dollars.

He said there should be a realisation that those millions of dollars came from small investments that had grown to become million-dollar investments.

He said the purpose of the gathering was to share experiences and ideas to better the life of the people, to raise broad-based growth by fully exploiting the vast resources available in the country and empowering the people.

President Banda said it was the expectation of all well-meaning Zambians that the indaba would identify immediate policy interventions and explore opportunities that the crisis presented.

He said the crisis had adversely affected the country's growth prospects, with the most impact being felt in the mining sector.

President Banda said a number of investors had been squeezed and many of the people had lost their jobs in the mines.

He said other industries such as tourism, manufacturing and agriculture had equally been affected.

President Banda said the crisis quickly translated in the depreciation of the kwacha as a result of a decline in foreign exchange inflows.

He said farmers witnessed increased prices of fertiliser, agro-chemicals and farm machinery.

President Banda said Zambia needed to face up to the realities associated with the downturn and take measures to minimise the negative impact on the economy and chart the way forward.

And Ezekwesili said there had to be renewed focus on agriculture.

She said with the abundant land and water resources, there was little doubt that Zambia could emerge as a bread basket for the region and beyond.

"Why has this potential not been utilised?" she asked.

Ezekwesili said despite massive increases in the expenditure of the Fertiliser Support Programme (FSP), agriculture productivity had not increased.

She said in fact during the past five years, the rate of growth of agriculture was less than one per cent per year and was actually negative during some of those years.

"I am not saying that fertiliser is not important. It is! But agriculture needs more than fertiliser to strive," Ezekwesili said.

She said it needed irrigation, research and extension, rural roads, clear and transparent trade policies that allowed farmers to sell their produce in the most profitable markets.

Ezekwesili said the government should put in place policies that encouraged private investment in agriculture.

She said the new agriculture marketing Act, now under preparation, was an important step in that direction.

Ezekwesili said the World Bank's 2008 Development Report highlighted that Gross Domestic Product (GDP) originating in agriculture was four times more effective in raising incomes of the extremely poor than GDP growth originating outside of the agriculture sector.

She further urged Zambia to take advantage of its location by thinking regionally and invest in roads and rail network to minimise transit time.

Ezekwesili said countries over the world had found that improving telecommunications was another effective way in which to reduce distances and telecommunication reform considered low hanging fruit, ready for the picking.

She said Zambia had unfortunately not been able to address the challenges it faces in the telecommunications sector and telecommunication costs were high while access was low.

Ezekwesili said despite the huge potential to tap into clean, renewable energy sector, including hydroelectric power, access to energy was still very low at just three per cent of the rural population.

She said no new investment in generation had taken place in Zambia in 30 years.

"Why? Only a third of electricity users are metered, resulting in losses of about 27 per cent of total output of Zesco. More than half of Zesco's operating expenses go to wages and salaries and it does not perform efficiently. Tariffs are not sufficient to cover the cost of new generation. There are significant problems with billing and collection and arrears are large," Ezekwesili said.

"All these issues will need to be addressed if Zambians want access to electricity. A 2007 study conducted by the Bank revealed that state-owned utilities in developing countries incurred losses of about $180 billion a year in the early 1990s due to inefficiencies in water, railroads, electricity and roads - this loss was nearly as much as the annual investment taking place in those sectors. At a time when resources are scarce, can Zambia afford inefficiency?"

Ezekwesili said the surest route to sustainable development and growth was investment in human capital. Ezekwesili said Zambia remained a very high cost business destination that limited its ability to be competitive. She said improving the business environment must therefore be high on Zambia's policy agenda.

Ezekwesili said this included licensing procedures; cost and time to export goods; lack of access to finance especially for female entrepreneurs; and stringent labour laws that encouraged casualisation.

Minister of Finance Dr Situmbeko Musokotwane said the government had instituted some measures in the 2009 budget for mining, which included the removal of the windfall taxes on copper incomes while retaining the variable income tax.

Dr Musokotane said customs duty on heavy oil fuels, a major fuel in the mining industry had been reduced from 30 per cent to 15 per cent and that value added tax (VAT) deferment on copper concentrate imports had been introduced.

However, Dr Musokotwane said the measures were too late for some mines that had already closed such as Luanshya Copper Mines (LCM).

Dr Musokotwane said the government intends to conclude the discussions as quickly as possible so that miners could get back to work.

He also said the reduced inflows of copper export proceeds and the repatriation of portfolio investment led to a quick depreciation of the kwacha amounting to over 60 per cent between July and end December 2008.

Dr Musokotwane said the Bank of Zambia (BoZ) took steps to moderate the rate of depreciation through strong market interventions in the context of allowing an orderly depreciation of the currency rather than preventing one.

Dr Musokotwane said Zambia had been particularly vulnerable to the current crisis because of high dependence on copper.

Dr Musokotwane also highlighted the government’s plans in the country’s agriculture, tourism and manufacturing sectors as provided for in the national budget.

Labels: FSP, GOVERNANCE, INFLATION, OBIAGELI EZEKWELISI, RUPIAH BANDA, SITUMBEKO MUSOKOTWANE, World Bank

posted by MrK @ 6:52 PM