Saturday, January 31, 2009

(LUSAKATIMES) Consider civil servants as important, Joyce Nonde tells govt

Consider civil servants as important, Joyce Nonde tells govt
January 31, 2009

The Federation for Free Trade Unions of Zambia (FFTUZ) has appealed to government to start considering the civil service as one of the important sectors in the country.

FFTUZ president Joyce Nonde expressed sadness that government has continued to ignore issues such as the Pay As You Earn (PAYE) that affect the Zambian workers.

Ms. Nonde explained that workers in the civil service play an important role towards the economic development of the country hence the need for government to treat them fairly.

She told ZANIS in an interview in Lusaka today that despite the number of workers increasing, government has not been improving their working conditions. She noted that the civil servants’ take home pay has remained pitifully low despite reduced taxes.

Ms. Nonde disclosed that her organisation was concerned with current global economic recession, noting that this will adversely affect workers in the country.

She stated that the current increase in the PAYE exempt threshold from K600,000 to K700,000 did not bring any change, saying only few people earn less than K700,000 per month.

She added that government should have thought of broadening the tax base further to K1, 000,000 for many workers to benefit.

The FFTUZ president further explained that the tax base unveiled in the 2009 budget does not give hope to workers, adding that it is only targeted at a small number of workers who earn less than K700, 000.

Yesterday, Minister of Finance and National Planning Situmbeko Musokotwane presented the 2009 national budget to parliament in which he said government is committed to providing tax relief to the workers and increased the PAYE exempt threshold.

Workers getting up to K700, 000 will not be taxed while those getting between K700, 000 and K1, 235,000 per month will have their salaries taxed at 25 per cent.
Those going home with K1, 235,001 up to K4, 000,000 will attract tax rate of 30 per cent while those getting over K4, 000,001 per month will pay 35 per cent as PAYE.


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(LUSAKATIMES) Ireland to pump US$35m into Zambia’s development programmes

Ireland to pump US$35m into Zambia’s development programmes
January 31, 2009

The Irish government has this year pledged to give Zambia US$35 million as its financial assistance to the country’s development programmes.

And the Irish government has welcomed the increased allocation of funds and the introduction of other incentives in the agriculture sector in the 2009 national budget.

Irish Ambassador to Zambia, Bill Nolan, said his government will this year give US$35 million to Zambia’s development programmes, particularly in the education, health, tourism, agriculture sectors, governance and HIV/AIDS related programmes.

Mr. Nolan told ZANIS in an interview in Lusaka today that his government has been prompted to increase donor support to Zambia in order to support development in the country’s governance system and make Zambia more viable to respond to corruption issues.

The envoy said that his government was happy with the way the Zambian government was utilizing donor funds.

He said 50 per cent of the funds will go to programmes aimed at improving the education sector in the country.

The envoy has since challenged the Zambian government to prudently use donor funds in order to instill more confidence in the cooperating partners.

He said there was need for the Zambian government to put in place stringent measures to ensure that resources allocated towards economic programmes were prudently and transparently utilised.

And the Irish government has welcomed the increase in the allocation of funds to the agriculture sector and the zero rating of taxes on some agriculture equipment as spelled out in the 2009 budget.

Mr. Nolan said this will help diversify the economy in order to counter effects of the current economic meltdown.

He said it was impressive that the Zambian government has increased funding to the agriculture sector despite the fall in copper prices and the current global economic crunch.

The Irish envoy said improving the agriculture sector would help the country reduce poverty levels and be able to attain the Millennium Development Goals (MDGs) by 2015.

Mr. Nolan has since assured Zambia of his government’s continued support to the country’s economic development programmes.


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(LUSAKATIMES) Shikapwasha urges Zambians to support 2009 budget

Shikapwasha urges Zambians to support 2009 budget
January 31, 2009

Government has called on the people of Zambia to support the 2009 national budget in order to enhance economic development in the country.

Chief Government spokesperson, Ronnie Shikapwasha said there was need for the people of Zambia to fully support this year’s national budget, which he said has placed much emphasis on the economic recovery of the nation. Lieutenant General Shikapwasha was speaking in an interview with ZANIS in Lusaka today.

He said as Members of Parliament and the public begin to debate the budget, there was need for them to support it because it has reflected a number of programmes that would promote economic development in the country.

He further said that the 2009 national budget had addressed a number of development programmes which he said will help to harness economic development in Zambia when implemented well.

General Shikapwasha, who is also Information and Broadcasting Services Minister, cited the mining, agriculture, tourism, health, education and construction sectors respectively as some of the key sectors that needed the full support of Zambian people in order to enhance economic development in the country.

The minister further said people should be happy that the 2009 national budget was focusing on diversification.

He noted that diversifying the country’s economy would help address some challenges associated with the global economic crunch.

He said the budget was reflecting the country’s economic recovery as it was massively supporting education, health, agriculture and tourism sectors.

And General Shikapwasha has brushed aside calls by some opposition political parties that government should institute an independent body that will audit the National Constitution Conference (NCC).

He said there was no need for some opposition political parties to start calling for an independent audit body to audit NCC because the commission had not misapplied resources that were allocated for the exercise.

He however said Zambians and the opposition political parties were free to call on the office of the Auditor General to audit the National Constitutional Conference.

The Chief Government spokesperson said the Auditor General’s office was the right government organ to audit government institutions and departments.

He has since called on the opposition and the Zambian people to support NCC to enable it execute its mandate within the stipulated time.


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Justice Mumba urges enhancement of electoral system

Justice Mumba urges enhancement of electoral system
Written by Charles Mangwato
Saturday, January 31, 2009 11:34:01 AM

ELECTORAL Commission of Zambia (ECZ) chairperson justice Florence Mumba has challenged electoral officers in Southern Province to come up with necessary recommendations that will enhance the electoral system in the country.

During the opening of a post-election review in Choma yesterday, justice Mumba said an improved electoral system could enhance the freedom of choice for the electorate.

She said the commission was ready to receive proposals that even required amending the law as it was committed to achieving a perfect electoral system.

Justice Mumba said laws were made for the betterment of man and not otherwise, hence the need to amend those that were not suitable for a good electoral system.

She reiterated that ECZ was in the process of amending the electoral handbooks as part of measures to enhance the electoral system in Zambia.

She commended officers in the province who participated in conducting the last presidential election for doing their best despite the poll having been held at short notice after the death of president Levy Mwanawasa.

"Some of you were even sleeping on the way in vehicles just to ensure that the election was conducted smoothly," said justice Mumba.

And Southern Province electoral officer Alfred Chiingi thanked ECZ for organising a post-election review meeting to afford electoral officers a chance to correct shortcomings of the electoral system.

Chiingi said this was the first time that electoral officers had been privileged to come up with recommendations and solutions to improve the electoral system based on their observations in the previous elections.

"In the past, we've not had the privilege of conducting an election postmortem," said Chiingi.

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IMF warns of world economic recession

IMF warns of world economic recession
Written by Kabanda Chulu and Chiwoyu Sinyangwe
Saturday, January 31, 2009 11:19:11 AM

INTERNATIONAL Monetary Fund (IMF) chief economist Olivier Blanchard has warned that the world economy is moving towards recession and will only grow by 0.5 per cent in 2009.

Releasing the 2009 World Economic Outlook (WEO) on Wednesday, Blanchard stated that the global economy was expected to come to a virtual standstill this year.

“I am a bearer of bad news, in the last three months, the global economy has taken a turn for the worse, as financial markets have remained under stress and global output and trade have sharply decreased,” Blanchard stated.

“We expect advanced economies to experience their sharpest contraction in the post-war period with the United States’ real economic activity to contract by one per cent, the Euro zone will contract by two per cent and two and half per cent for Japan and emerging and developing economies will also suffer serious setbacks, as a result global growth is projected to decline sharply to 0.5 per cent in 2009.”

Blanchard stated that the global financial crisis had taken an increasingly heavy toll which was penetrating through different channels across countries.

She stated that the crisis had also made it much more difficult and costly for consumers and firms to borrow, hence dragging down activity and trade and in emerging economies.

“Stronger policy actions are needed to restore the financial sector’s viability. We need more aggressive actions through a unified approach involving liquidity provision, capital injections and disposal of problem assets but there should be no ‘one size fits all’ policy mix since all countries have different fiscal and monetary space,” stated Blanchard.

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No relief for workers

No relief for workers
Written by Editor

With some flair, finance minister Situmbeko Musokotwane yesterday presented his first budget speech. Yet again, we have a budget theme with the words “growth, competitiveness and diversification”.

Despite continued failure of the government to fully implement structural reforms, which had begun in 1992, they will try again in 2009 to “promote diversification and enhance national competitiveness through structural reforms, and development emphasis will be placed on agriculture, tourism, infrastructure and manufacturing development”.

Curiously, there is no mention as to what has led to the continued failure over the years to reform nor does the speech indicate how and when. The major themes are the same ones that have been pronounced for many years and once again, the czars at the Ministry of Finance have shown that they are slowly improving in crafting the same sentences in different formats.

On competitiveness, Musokotwane says the government will “step up” regulatory reform. How and when is not answered. Whilst the Private Sector Development Initiative under the Ministry of Commerce, Trade and Industry has stalled and little is being done, these reforms are not only about business licensing. It goes far beyond this and it is multi-sectoral.

On infrastructure development, the government will introduce a Bill to provide a legal framework for Public Private Partnership, which is good but not adequate. On decentralisation, the government, again, says they are committed and, therefore, will this year develop a local government capacity-building programme and that they will work towards adopting the Decentralisation Implementation Plan.

Those who have kept their budget speeches for the past few years will notice that it’s the same thing said over and over again, albeit differently at times and therefore such objectives are rendered meaningless. So much for structural reforms!

The late prime minister of Britain, the Rt Hon Disraeli in 1862 said in the House of Commons:

“I have so often maintained it in this House that I am almost ashamed to repeat it, but unfortunately it is not a principle which has yet entered into Cabinet opinion - expenditure depends on policy and policy is developed through consultations.”

In 2008, there was a deficit of K1, 394.3 billion that was financed through domestic borrowing of K811.6 billion and foreign financing of K582.7 billion. From the new mining taxes, K917.3 billion was expected to be collected, instead only K319.5 billion was collected. The 2009 budget will spend K15, 279 billion, about 25.4 per cent of Gross Domestic Product (GDP). Of this, K10, 645.9 billion (69.7 per cent) will be financed from domestic revenue and the balance K2, 768.7 billion (18.1 per cent) will come from donors as grants, and K1, 069 billion (1.8 per cent) of GDP will be financed through domestic borrowing and further external borrowing of K795.5 billion.

On expenditure for 2009, General Public Service will consume 31.8 per cent, Defence seven per cent, economic affairs 19.8 per cent, environment protection 0.8 per cent, housing and community amenities 3.8 per cent, health 11.9 per cent, recreation and culture 1.2 per cent, education 17.2 per cent, social protection 2.5 per cent of the total budget allocation of K15, 279 billion. The 2009 sector policies on agriculture will see an allocation increase of 37 per cent or K1, 096.3 billion, of which K435 billion will go to the Fertiliser Support Programme (FSP).

Musokotwane says the government is “concerned that FSP has had limited impact on increasing agricultural productivity”, so they will this year initiate “a comprehensive review of the FSP”.

On infrastructure, the government will yet again try to complete the development of the Nansanga Farm Bloc, which is expected to be ten times bigger than the Nakambala Sugar Estates.

On tourism, money will be spent on improving roads and refunding "certain" expenditures incurred in shooting movies that will promote Zambia.

On manufacturing, the government will promote Multi-Facility Economic Zones (MFEZ). To encourage value addition in the cotton sector, cotton income tax rate on profits from exports of cotton will increase from 15 per cent to 35 per cent. Customs duties on several products will be reclassified with a view to assisting local manufacturers and encouraging investment. Further tax incentives are being provided for MFEZ.

However, this still leaves unanswered the question on local industries that are not in the MFEZ, who are not being provided with any relief. On energy, electricity tariffs will continue rising. On transport and communications, the license fees for the International Gateway will be substantially reduced.

On the mining sector, windfall taxes will be removed and generally provide relief through customs duties by K19.3 billion. The Pay As You Earn (PAYE) relief is totally insignificant and the excuse given is that “the government would have wished to provide greater relief to workers this year, but is constrained by the prevailing economic environment”.

This is not correct. We say this because no attempt has been made by the government to cut down costs within itself. Probably, this is why the government is constrained in providing relief to the Zambian worker.

We will, in the course of next few days, examine the detailed expenditure of all ministries to see how constrained they really are and how much of the perennial wastage has been continued. The devil is in the detail, the Yellow Book, and we will examine the 1,645 pages of the “Yellow Book” and all the proposed budgetary legislation that will be tabled in Parliament in the next few weeks, which will provide clarity and intent of what we can expect in 2009.

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Govt unveils K15.27 trillion budget

Govt unveils K15.27 trillion budget
Written by Kabanda Chulu, Chiwoyu Sinyangwe and Chibaula Silwamba
Saturday, January 31, 2009 11:08:37 AM

FINANCE minister Dr Situmbeko Musokotwane yesterday unveiled a K15.27 trillion budget for this year under the theme ‘Enhancing Growth through Competitiveness and Diversification’ aimed at reducing dependence on the copper mining industry.And Dr Musokotwane has proposed to make changes to the 2008 mining fiscal regime following pressure from foreign mining companies which disputed the windfall tax that was aimed at gaining revenue worth K917.3 billion but only K319.5 billion was collected.

Under value added tax (VAT), Dr Musokotwane proposed to zero rate agriculture equipment and related implements to support local manufacturers in order to accelerate economic diversification.

Dr Musokotwane also proposed a 37 per cent increase in the allocation to the agricultural sector this year, providing K1.096 trillion from the K800.5 billion in 2008.

He also proposed to revise Pay As You Earn (PAYE) by increasing the non-taxable monthly income threshold from K600,000 to K700,000 while those getting over K4 million per month would continue paying income tax at 35 per cent, effective April 1, 2009.

Dr Musokotwane has also allocated K41.613 billion to the Electoral Commission of Zambia (ECZ) with K5 billion is earmarked for continuous voter registration.

Presenting the 2009 budget to the National Assembly, Dr Musokotwane said this year's budget of K15.27 trillion represents 25.4 per cent of the Gross Domestic Product (GDP) estimated at K60.16 trillion.

He said of the total budget, K10.64 trillion or 67.7 per cent would be financed from domestic revenues while K2.76 trillion or 18.1 per cent would be financed by grants from cooperating partners.

The balance of K1.86 trillion or 12.2 per cent of total expenditure will be financed through domestic borrowing of K1.069 trillion or 1.8 per cent of GDP and external borrowing of K795.5 billion or 1.3 per cent of GDP.

Dr Musokotwane said the General Public Services functions would remain on top of government priorities and would account for the highest proportion of total expenditure at 31.8 per cent and would be followed by the Economic Affairs functions at 19.8 per cent with the Health and Education functions accounting for significant shares of the budget at 17.2 per cent and 11.9 per cent respectively.

"The General Public Services has been allocated K4.865 trillion while economic affairs will get K3.021 trillion with the education function getting K2.628 trillion and defence will get K1.068 trillion and public order and safety functions will receive K610.7 billion," he said.

Dr Musokotwane said the macroeconomic targets for 2009 would be to achieve economic growth of five per cent and bringing the year-end inflation target to 10 per cent and limit domestic borrowing to 1.8 per cent.

"... In order to achieve this growth objective, the government will promote diversification and enhance national competitiveness through structural reforms and infrastructure development with emphasis on agriculture development, tourism infrastructure development and the promotion of the manufacturing sector," Dr Musokotwane said.

Under concessions for the mining sector, Dr Musokotwane proposed to remove the windfall mining tax but retain the variable profit tax that would still capture any windfall gains that may arise from the sector.

"Among the adjustments to last year's mining fiscal regime include the removal of windfall tax and retain the variable profit tax which will still capture any windfall that might arise in the sector," he said.

On the performance of the mining industry, Dr Musokotwane said despite the turbulence in the latter part of last year, the sector recorded a positive growth of 4.9 per cent in 2008, comparing favourably with the growth of 3.6 per cent in 2007.

He also announced that preliminary estimates indicate that copper production increased by 3.7 per cent to 569, 891 metric tonnes while cobalt production increased by 19.5 per cent from 4, 414 metric tonnes in 2007 to 5,275 metric tonnes.

"Allowing hedging income to be part of the mining income for tax purposes and increase capital allowances to 100 per cent as an investment incentive," he said.

And Dr Musokotwane has proposed to reduce customs duty on Heavy Fuel Oils from 30 to 15 per cent and to remove customs duty on copper powder, copper flakes and copper blisters.

"In addition, I propose to include copper and cobalt concentrates on import deferment scheme for VAT purposes. These measures will reduce the operating costs of mining companies as well as encourage the utilisation of local smelting capacity. These measures will result in revenue loss of K19.3 billion and will come into effect from midnight tonight," he said.

Dr Musokotwane said the government was committed to providing tax relief to workers hence the decision to increase PAYE exempt threshold from K600,000 to K700,000 per month.

Under the current system, monthly income of up to K600,000 is not taxed while monthly income in the range of above K600,000 up to K1.2million is taxed at 25 per cent and those earning between K1.2 million and K4 million per month pay 30 per cent with those earning above K4 million pay 35 per cent.

But in the proposed system, those earning below K700,000 will pay no tax and those getting above K700,000 up to K1.335 million would pay 25 per cent with those earning above K1.335 million up to K4.1 million per month would pay 30 per cent while those earning above K4.1 million would pay 35 per cent.

"... The government would have wished to provide greater relief to workers this year, but is constrained by the prevailing economic environment and this measure will result in a revenue loss of K100.7 billion," Dr Musokotwane said. "... I propose to provide further relief by increasing the tax credit for differently-abled persons from K600,000 to K900,000 per annum; increasing the exempt portion for terminal benefits from K20 million to K25 million and increasing the allowable pension contribution from K135,000 per month to K155,000 per month. These measures will result in a revenue loss of K23.6 billion."

Dr Musokotwane also proposed to increase the period for carry forward of losses for companies operating in the power generation sector from five to 10 per cent for income tax purposes in order to stimulate investment in the power sector.

He also proposed to increase advance income on commercial imports by non-registered traders from three per cent to six per cent.

"This was introduced to encourage them to register for income and value added taxes. However, there is evidence to suggest that traders have opted to remain unregistered, paying the advance income tax at the border rather than a higher turnover tax inland. I therefore propose to increase this tax from three to six per cent in order to encourage registration and improve tax compliance and government expects to raise K75 billion from this measure," Dr Musokotwane said.

He also proposed to increase the income tax rate on profits from export of cotton from 15 to 35 per cent.

"This is to encourage local value addition and improve supply to local processors and where local processing capacity has been reached, government will, under permit, allow income tax rate on profits from export of cotton at 15 per cent and these measures will be effective from April 1, 2009," Dr Musokotwane said. "And government has observed with interest the growing local capacity of manufacturers to produce windmills and maize dehullers and in order to support local manufacturers and I propose to zero rate dehullers and windmills for VAT purposes."

He said with the slump in the mining sector, there was need to accelerate Zambia's economic diversification programme through prioritising the agricultural sector.

"In this regard, I propose to zero rate the following agricultural equipment and spares: two wheel tractor and accessories, tractors up to 60 horse power, ploughs, harrows, planters, seeders, rippers, sub-soilers cultivators, pump sets sprayers among other related agriculture equipment and this measure will result in revenue loss of K38.9 billion," Dr Musokotwane said. "I also propose to remove customs duty on various capital equipment in order to encourage investment and reduce the cost of doing business and these include survey and geophysical instruments, earth working and levelling equipment, refrigerating or freezing equipment for cold rooms, bull dozers, graders, front ended shovel loaders, excavators, fork lift trucks, mechanical horses among other related machines and these measures will result in revenue loss of K22.5 billion."

He said smuggling and tax evasion on certain imports has been a worrying trend hence the need to introduce prohibitive excise duty on certain imports.

"I therefore propose to reduce excise duty on clear bear from 75 to 60 per cent and this measure will lead to tax compliance and as a result I do not expect any revenue loss and I also propose to increase customs duty on cellular phone handsets from five to 15 per cent to encourage local production of handsets and this measure will result in revenue gain of K3.6 billion," Dr Musokotwane said. "Sir, the government introduced an export levy of 15 per cent on cotton-seed in order to encourage local value addition and to increase local processing capacity. I propose to increase export levy on cotton-seed from 15 per cent to 20 per cent and this measure will result in a revenue gain of K282 million."

Dr Musokotwane has proposed for the establishment of industrial parks that were to carry the same incentives as Zambia Development Agency provides under the Multi-Facility Economic Zones (MFEZ).

Dr Musokotwane also announced that the country's narrow manufacturing base had significantly contributed to its high import bills over the years.

He said the move was aimed at expanding the country's manufacturing base and enhances national competitiveness and that measures introduced would enable the country to attract both local and foreign private investors to open up and invest in the MFEZ and industrial parks in the country.

"I propose to remove withholding tax on management fees, consultancy fees, and interest re-payments to foreign contractors. Zero rate supplies to developers of MFEZ and industrial parks from reverse VAT charge, and exempt equipment and machinery imported for the development of MFEZ and Industrial parks from customs duty," Dr Musokotwane said.

However, Dr Musokotwane gave conditions for developers' industrial parks to qualify for the above incentives.

"The layout of the development plan is approved by the relevant planning authority, the park to be developed should be at least 15 acres in size, the park will have paved roads and water and electricity supply within the park is provided," he said.

Dr Musokotwane also made some amendments to the fuel levy paid by Railway Systems of Zambia (RSZ) to ensure that revenue goes towards the support of the rehabilitation of the railway infrastructure and improve rail support unlike currently when it was absorbed in the fuel levy for improvement of road network.

Dr Musokotwane disclosed that the government would this year reduce significantly the fees for the international gateway to regional averages.

Outlining the performance of the transport and communications sector which last year recorded a reduced growth rate of 16.4 per cent compared with 19 per cent in 2007, Dr Musokotwane blamed the decline on the high costs and low quality of service.

"To address these issues, the government will improve the regulatory framework and promote competition in the sector, as it is one of the potential sectors for job creation. In this regard, the government will remove barriers in the communications sector by significantly reducing the international gateway licence fees to regional level," he said.

Dr Musokotwane also disclosed that the government was exploring ways to improve Tanzania Zambia Railways Authority (TAZARA) through identification of a strategic private partner and that RSZ had committed to invest US$30 million over and above their commitment in the concession agreement towards infrastructural development.

And Dr Musokotwane also announced the increase in electricity tariffs in the country that would start this year to reach cost recovery levels by 2010.

Outlining the projections of the energy sector this year, Dr Musokotwane said the government's immediate focus would be to complete the Zesco power rehabilitation project by the end of this year.

"In addition to the K98. 5 billion disbursed in 2008, K16. 8 billion has been allocated this year to ensure the completion of the project," he said. "In an effort to sustain existing capacity as well as attract additional investments in the sector, electricity tariffs will be adjusted this year to reach cost recovery levels by end-2010. With these tariff adjustments, the government expects Zesco to improve its performance and service delivery."

On construction sector, Dr Musokotwane predicted a further sluggish performance as Zambia faced the effects of the economic slow down.

Until recently, the local construction sector had recorded a sharp decline in average growth rate mainly on account of supply constraints, particularly cement and other materials, and had led to a slowdown in residential and commercial construction.

"Average growth rate in the sector reached 15.8 per cent per annum over the past three years, despite growth in 2008 sharply declining to five per cent from 20 per cent in 2008," he announced.

Dr Musokotwane announced a 37 per cent increase in the allocation to agriculture sector, providing K1, 096.3 billion from K800.5 last year.

Dr Musokotwane expressed optimism the increase in allocation to the agriculture sector would work towards improving output in the sector.

He also said during 2006-08, the agricultural sector performed poorly, contracting by an average of 1.2 per cent per annum while last year, crop production declined by seven per cent contributing to a contraction of the agricultural sector by 4.0 per cent.

He also said the decline was followed by a 2.7 decline in 2007.

"This is largely due to the following constraints; high cost of fuel, limited access to credit, inputs and extension services, inadequate infrastructure, poor livestock management, weakness in the Fertilizer Support Program (FSP) and failure to attract adequate private investment in the sector," he said.

He also disclosed that the government would this year increase allocation to the FSP to K435 billion in 2009 and that with lower fertilizer prices, it was expected that a larger number of small scale farmers would benefit from the scheme in the next crop season.

Dr Musokotwane also announced that this year's allocation to the livestock development had been increased from K29.2 billion last year to K70.7 billion this year and that this amount would include the creation of at least one disease-free zone, and at the same time, K56. 6 billion had been allocated for various irrigations projects.

Dr Musokotwane also announced that the government had increased budgetary allocation to the Food Reserve Agency (FRA) to K100 billion from K80 billion while K10 billion had been allocated to continue with the Food Security Pack as part of measures to mitigate the high cost of food and ensure food security at household level.

On tourism, Dr Musokotwane announced an increase of the allocation to the sector to K77.6 billion as a way of reversing the trends, which saw the tourism sector's growth to slow down to 6.3 per cent last year compared with 9.6 per cent in 2007.

He cited inadequate infrastructure and service delivery and limited market access as some of the challenges impeding the growth of the local tourism sector.

"In order to improve access to the Northern tourism circuit, K24 billion has been allocated towards the rehabilitation of the road from Mbala to Kasaba Bay," Dr Musokotwane said. "Additionally, K11 billion has been allocated towards the construction of a terminal building at Mbala airport and the rehabilitation of Kasaba Bay airstrip. An amount of K10 billion has been allocated towards the preparation of an integrated development plan for the Kasaba Bay tourism area and a further K14.7 billion has been allocated for electrification of Kasaba Bay. Once these infrastructural developments were completed, we hope to attract to the area more than 12 world class hotels thereby creating thousands of jobs for our people."

Dr Musokotwane also announced that K59.1 billion had been allocated to the rehabilitation of roads in key national parks while, additionally, K99 billion had been allocated to the Zimba-Livingstone to improve access to the tourism capital.

"K30.6 billion will be used for the upgrading of the Chipata-Mfuwe road, and K24 billion will be used for the Kafue National Park spinal road," Dr Musokotwane said



Budget Address

Budget Address
Written by Honourable Dr. Situmbeko Musokotwane
Budget Address by Honourable Dr. Situmbeko Musokotwane, MP,
Saturday, January 31, 2009 11:06:02 AM

Minister of Finance and National Planning

Delivered to the National Assembly on Friday, 30th January, 2009

1. Mr. Speaker, I beg to move that the House do now resolve into Committee of Supply on the Estimates of Revenue and Expenditure for the year 1st January 2009 to 31st December 2009 presented to the National Assembly in January 2009.

2. Sir, I am the bearer of a message from His Excellency the President recommending favourable consideration of the motion that I now lay on the Table.

3. Mr. Speaker, as I begin this budget speech, I wish to acknowledge the macroeconomic achievements that Zambia attained when the economy was under the stewardship of my predecessor, Honourable Ng'andu Magande, MP. I would also like to pay tribute to the late Honourable Emmanuel Kasonde, who twice served as Minister of Finance, and laid the foundation for the liberalisation of the Zambian economy.

4. Mr. Speaker, I present this budget at a time of great uncertainty in the world economy. The global economy is under severe strain, with recession in several advanced economies, and significantly slower growth in emerging countries. Recent developments in the mining sector have demonstrated that Zambia is also vulnerable to this crisis. These events have had a significant influence on our thinking, and therefore the preparation of this year's budget.

5. Sir, despite these unprecedented challenges, my vision is that of a prosperous Zambia. I see a vibrant and diversified economy where hard work and the spirit of entrepreneurship are rewarded. This economy will be one that provides ample opportunity for every citizen to realize their potential and fully provide for their families. I see all our citizens, in all corners of our country, waking up each morning well nourished, in decent housing, with access to clean water and sanitation. I see our citizens having paved roads that do not flood each rainy season, reliable and renewable energy, and high quality health and education services that are within easy reach.

6. Mr. Speaker, this is the vision of Zambia that I have as I present this budget.

7. Sir, in order to realise this vision, it is critical that we build on the achievements already registered under various economic diversification programmes the Government has pursued over the years. We cannot afford to slow down on these programmes as the risks of dependency on the mining sector have once again come to the fore during the current global economic crisis. Sir, our country has abundant opportunities for diversification, and it is time for us to accelerate our efforts to harness them.

8. Sir, just as we expect citizens to work hard to drive our economy forward, they expect Government to play its role in creating a conducive and competitive environment for wealth creation and poverty reduction in every part of our country.

9. Mr. Speaker, in view of the urgent need for accelerated diversification and enhanced competitiveness, the theme for this year's Budget is "Enhancing growth through competitiveness and diversification."

10. Mr. Speaker, my address this afternoon follows a slightly different pattern from previous years in order to bring together Government's policy objectives and budgetary allocations for 2009. This will enable both Honourable Members as well as the public at large to better appreciate the underlying rationale behind this Budget.

11. This Budget address therefore contains five parts. In Part I, I give an overview of the performance of the global economy during the past year. In Part II, I discuss developments in the Zambian economy during 2008. In Part III, I detail the underlying policy measures that will guide the Budget. In part IV, I present the 2009 Budget and supporting Policy, Expenditure and Revenue measures. Finally, in Part V, I conclude my address.



12. Mr. Speaker, preliminary data indicate that global economic growth in 2008 slowed to 2.5 percent from 3.7 percent in 2007. This was on account of the onset of recession in advanced economies in the last two quarters of the year, triggered by the turbulence in the financial markets of these economies.

13. Sir, emerging economies such as Brazil, Russia, India, and China continued to drive global growth in 2008. However, growth in these economies was significantly dampened as a result of the global economic crisis.

14. Sir, Sub-Saharan Africa's limited integration with the global financial system saw the continent posting more robust growth compared to advanced economies. Growth in the region was projected to be 5.4 percent compared with the 1.3 percent growth recorded in advanced economies.

15. Mr. Speaker, a significant consequence of the global financial crisis was the dramatic collapse of commodity prices in 2008. Oil prices, which reached record highs of US$ 147 per barrel in July, fell significantly to US$ 48 per barrel at the end of the year. Similarly, copper prices reached a record high of US$ 8,985 per tonne in July, before plummeting to US$ 2,902 by the close of the year, representing a 67.7 percent fall. Prices for other key commodities such as fertiliser also followed similar trends during the year.

16. Sir, on the inflationary front, fuel and food prices were high in the first half of the year, contributing significantly to inflationary pressures around the World. These inflationary pressures were acutely felt in developing countries, including sub-Saharan Africa where inflation rose to 11.7 percent from 7.1 percent in 2007. However, by the close of the year, inflationary pressures began to subside, due to the significant shrinkage in global demand.

17. Mr. Speaker, these global developments had some negative effects on the domestic economy, adversely affecting growth, inflation, the exchange rate and the terms of trade.



Macroeconomic Performance

18. Mr. Speaker, in order to reduce poverty, the Government targeted an average annual growth rate of 7 percent over the Fifth National Development Plan (FNDP) period. Over the period 2006-2008, real Gross Domestic Product (GDP) growth averaged 6.1 percent per annum, which while robust, was below the FNDP target.

19. Sir, macroeconomic performance in 2008 was weaker due to unprecedented global and domestic events. As a result, growth was lower than projected, whilst inflation and interest rates were higher. Preliminary estimates indicate that the Zambian economy grew by 5.8 percent in 2008. This performance was mainly driven by growth in the transport, storage and communication; mining; manufacturing; and trade sectors. However, this was lower than the 6.3 percent achieved in 2007. The poor performance of the agricultural sector, and a slowdown in the construction sector contributed to the lower than expected growth.

20. Although the mining sector registered positive growth, it was affected by a sharp fall in world copper prices in the second half of the year, thereby dampening the prospects of higher growth and profitability. The agriculture sector, which employs the largest share of our workforce, experienced negative growth on account of heavy rains that resulted in flooding in some areas, thereby destroying crops. However Mr. Speaker, the country recorded a food surplus.

21. Mr. Speaker, Government policy with regard to inflation in 2008 and over the FNDP period is to achieve and sustain single digit inflation. In the last three years, this has generally been achieved with inflation outturns of 8.2 percent and 8.9 percent, in 2006 and 2007, respectively. However, the pass-through effects of high international oil and food prices resulted in the inflation outturn for 2008 being significantly higher at 16.6 percent against the target of 7 percent. Food inflation in particular, accelerated to 20.5 percent compared with 5.9 percent in 2007.

22. Sir, the exchange rate was also affected by the effects of the global financial crisis. This resulted in the sharp depreciation and increased volatility of the exchange rate of the Kwacha, particularly in the last quarter of the year. The Kwacha depreciated by 27.3 percent against the US dollar to an average rate of K4,882 in December 2008 compared to K3,835 in December 2007. However, the Kwacha appreciated by 6.3 percent and 11.1 percent against the Pound Sterling and South African Rand, respectively, reflecting their weakening against the US Dollar.

23. Mr. Speaker, an important macroeconomic objective over the FNDP period has been to maintain a prudent fiscal policy. In spite of a number of challenges, both domestic and external, I wish to report that the budget deficit for 2008 was favourable and stood at K1,394.3 billion or 2.7 percent of GDP, and was below the projected deficit of 3.0 percent.

Monetary and Financial Developments

24. Mr. Speaker, on the monetary front, broad money growth slowed down to 22.1 percent in December 2008 from 25.9 percent in December 2007. This was a result of a slowing external sector performance, and a lower than expected build up of international reserves. However, growth in credit to the private sector in 2008 remained unchanged at 44 percent.

25. Sir, interest rates on Government securities increased due to the inflationary environment that prevailed for most of the year. This was compounded by reduced demand for Government securities as a result of withdrawals, especially by foreign portfolio investors. The weighted average Treasury-bill interest rate increased to an average of 17.2 percent in December 2008 from 12.9 percent in December 2007. Similarly, the interest rates on Government bonds rose, with the composite bond rate closing the year at an average of 16.7 percent from 15.6 percent in December 2007.

26. Sir, as a result, the average commercial bank lending rate increased in line with the increases observed in Government securities, rising to 26.9 percent, from 24.4 percent in 2007.

27. Mr. Speaker, the performance of the equity market was also affected by the global financial crisis. The Lusaka Stock Exchange All Share Index declined by 29.2 percent during the year. Despite this downturn, market capitalisation increased by 13.9 percent to K20,468 billion, mainly on account of the initial public offering of Zanaco and Celtel shares. Sir, the listing of local companies on capital markets is in line with Government's policy of empowering Zambians to own shares.

External Sector Performance

28. Mr. Speaker, the country's balance of payments position in 2008 was adversely affected by the global economic crisis. Growth in export receipts slowed down significantly in the last quarter of the year. Total exports grew by 7.2 percent, reaching US$ 4,818.3 million, compared to growth of 13 percent in 2007. Imports increased significantly, growing by 29.7 percent to US$ 5,202.1 million. As a result, the current account deficit including capital grants widened to US$ 1,379 million or 9.1 percent of GDP from a deficit of US$ 494.2 million or 2.4 percent of GDP recorded in 2007.

29. Sir, metal export receipts were US$ 3,885.1 million in 2008, representing a growth of 5.9 percent from 2007. Non-traditional exports registered further growth in 2008, growing by 12.9 percent to US$ 933.2 million. The share of non-traditional exports in total export receipts grew to 19.4 percent from 18.4 percent in 2007.

30. Mr. Speaker, the Government continued with its commitment to prudent management of its foreign debt. As a result, the contracting of additional foreign debt was contained within sustainable levels. Preliminary estimates indicate that the total stock of Government foreign debt as at end 2008 was US$ 1,093.5 million, a marginal increase of 3.7 percent from US$ 1,054.5 million recorded at the end of 2007. A total of US$ 132 million in new loans were contracted during 2008, with disbursement commencing this year.

Budget Performance in 2008

31. Mr. Speaker, the overall objective of the Government in 2008 was to continue consolidating fiscal discipline by maintaining lower levels of borrowing and improving budget execution. Despite a number of challenges faced in budget execution during the year, overall budget performance was satisfactory.

32. Sir, the Government was faced with a number of unexpected events such as the larger than planned civil service wage award, the need to hold the Presidential elections, the need to augment resources to the Fertiliser Support Programme in the face of record high fertiliser prices, and the need to finance the ZESCO power rehabilitation project. These events exerted significant expenditure pressures, requiring a reallocation of resources to meet these new demands, while remaining within the planned budget deficit.

33. Mr. Speaker, for the year 2008, total expenditures amounted to K13,402.6 billion against the target of K13,761.4 billion. On the other hand, total domestic revenue collections and foreign grant receipts, excluding revenues from the new mining tax regime, were K12,008.2 billion, and were marginally below the target of K12,106.4 billion. The deficit of K1,394.3 billion was financed through domestic borrowing of K811.6 billion and foreign financing of K582.7 billion.

34. Mr. Speaker, domestic revenue collections in 2008 amounted to K9,918.1 billion. This was above the target of K9,828.5 billion and represented 18.5 percent of GDP. Of this amount, tax revenues amounted to K9,350.9 billion, and were 2.4 percent above target. Non-tax revenues totalled K567.3 billion, and were 18.4 percent below the target of K694.9 billion.

35. Sir, from the new mining tax regime, the Government expected to collect K917.3 billion by end-December 2008. Collections however were much lower at K319.5 billion, representing a 65 percent under-collection. This was mainly on account of administrative challenges in implementing the regime during the year.

36. Mr. Speaker, grant receipts from our cooperating partners totalled K2,090.1 billion against the projected amount of K2,277.9 billion, representing a shortfall of 8.2 percent.

37. Mr. Speaker, total expenditures in 2008, excluding foreign financed projects, amounted to K11,518.0 billion. Categorised by function, General Public Services accounted for the highest share at 33.8 percent, while Education and Health combined followed at 27.9 percent. Economic Affairs accounted for 15.0 percent, while the balance of 23.3 percent went to Housing and Community Amenities; Defence; Public Order and Safety; Social Protection and others.



Macroeconomic Policies

38. Mr. Speaker, as a result of weakening global demand, the global economy will, beyond doubt, negatively impact our economy and constrain our efforts to reduce poverty. Our growth and export prospects will be affected, and job losses may be inevitable..

39. Sir, in the wake of this daunting challenge, we must remain resolute and ensure that the fundamental policies that have contributed to our recent growth and macroeconomic stability are continued. At the same time, we must meet these new challenges by acting decisively to encourage the rapid diversification of the economy, and safeguard vital social services to cushion the impact of the crisis on our people.

40. Mr. Speaker, the broad macroeconomic targets for this year are therefore to:

(a) achieve growth of 5 percent;

(b) lower inflation to 10 percent; and

(c) limit domestic borrowing to 1.8 percent of GDP.

41. Mr. Speaker, in order to achieve this growth objective, the Government will promote diversification and enhance national competitiveness through structural reforms and infrastructure development. Emphasis will be placed on agricultural development, tourism infrastructure development, and the promotion of the manufacturing sector.

42. Mr. Speaker, the performance of the external sector is expected to be challenging in 2009. Our export receipts are expected to be significantly lower than in previous years due to the fall in world copper prices. This will adversely affect our balance of payments. Mr. Speaker, this problem is compounded by our continued dependence on a single major export commodity.

Monetary and Financial Sector Policies

43. Mr. Speaker, monetary policy in 2009 will focus on maintaining macroeconomic stability in the wake of the global financial and economic crises. In this regard, monetary and supervisory policies will be reviewed to take account of ongoing developments in the domestic and global financial markets.

44. Sir, in order to curtail inflationary effects, a key challenge will be to ensure the steady supply of food and fuel in the country. The Government has already begun to make available relatively cheaper maize throughout the country. In addition, oil prices this year are expected to remain lower than those seen in 2008, helping to keep the general price level down.

45. Sir, the Government is cognizant of the risks facing the financial sector as a result of the global financial crisis. In this regard, the Bank of Zambia will continue to closely monitor these developments and take appropriate measures to safeguard the domestic financial system.

Fiscal Policy

46. Mr. Speaker, fiscal policy in 2009 will be geared towards increasing expenditure on infrastructure and social services, in line with the Government's objectives of encouraging diversification and enhancing competitiveness. In light of constrained revenues, this will be achieved through a realignment of resources, and an increase in borrowing. Domestic borrowing will therefore increase to 1.8 percent of GDP from 1.4 percent of GDP in 2008. This modest increase in domestic borrowing reflects the Government's cognisance of the need to borrow prudently in order to preserve macroeconomic stability.

Foreign Debt Policy

47. Mr. Speaker, the Government will continue to borrow from bilateral and multilateral institutions in the form of highly concessional budget support and project loans. These loans will finance key expenditures in priority areas such as water and sanitation, energy, and road infrastructure. Although the Government's preference is to contract concessional loans, non-concessional borrowing will also be considered for commercially viable projects in priority sectors such as energy.

Structural Reforms


48. Mr. Speaker, one of the key pre-requisites for improving the external competitiveness of the economy is reducing the cost of doing business. Currently, the cost of doing business in Zambia is relatively high, and is due to a number of factors, such as a cumbersome licensing and regulatory framework, poor infrastructure, and high transport and communication costs. The policy and commitment of this Government is to reduce these costs. The Government will therefore step up the regulatory reform process this year so as to achieve a simpler and easier business-licensing regime.

Infrastructural Development through Public-Private Partnerships

49. Mr. Speaker, a significant constraint to growth in the economy has been the slow pace of development in large infrastructure projects. This is partly due to constrained public finances and limited participation by the private sector. In order to accelerate the development of infrastructure in the country, the Government launched the Public Private Partnership Policy in 2008.

50. Sir, a Bill will be introduced in Parliament this year to provide the necessary legal framework to support the implementation of this policy. Through you Mr. Speaker, I implore Honourable Members to support this important bill when it is introduced in this House.


51. Mr. Speaker, the Government is committed to extending the benefits of growth and development across the whole nation. The Government intends to achieve this through the devolution of appropriate service delivery functions to local authorities. As emphasised by His Excellency the President in his address to this august House, the Government will work towards adopting the Decentralisation Implementation Plan and craft a new partnership with the local authorities.

52. Sir, in this regard, a local government capacity building programme will be developed this year, equipping local councils with the human, technical and financial capacity to effectively deliver quality and responsive services. This is critical in ensuring that the benefits of growth are shared. Further, work will be initiated to restructure the financial flows between Central Government and local authorities, so that the implementation of the National Decentralisation Policy can be expedited.



53. Mr. Speaker, I now present the overall budget for 2009. First I outline expenditures by function. I then discuss sector policies and supporting expenditures. Finally, I discuss revenue measures.

54. Sir, although we are in the middle of a global financial and economic crisis, there are still large numbers of investors, both local and foreign, that continue to look for potential investment opportunities. It is therefore important that we sustain the higher levels of investment, particularly Foreign Direct Investment that Zambia has seen over the last few years. It is with this in mind that this budget will focus on improving infrastructure and creating a more conducive environment for investors, while reducing wasteful expenditures that do not carry an appreciable social or economic return.

55. Mr. Speaker, in 2009 the Government intends to spend K15,279.0 billion or 25.4 percent of GDP. Of this, K10,645.9 billion or 69.7 percent will be financed from domestic revenues while K2,768.7 billion or 18.1 percent will be financed by grants from co-operating partners. The balance of K1,864.5 billion or 12.2 percent of total expenditure will be financed through domestic borrowing of K1,069.0 billion or 1.8 percent of GDP and external borrowing of K795.5 billion or 1.3 percent of GDP.

Expenditure By Functional Classification

56. Mr. Speaker, the General Public Services function accounts for the highest proportion of total expenditure at 31.8 percent, compared to 32.8 percent in 2008. This is followed by the Economic Affairs function at 19.8 percent, compared to 16.7 percent in 2008. The Education and Health functions account for significant shares of the budget at 17.2 and 11.9 percent, compared to 15.4 and 11.5 percent in 2008, respectively.

57. Mr. Speaker, the detailed expenditures for 2009, categorised by function, are as follows:

2009 Total Budget Allocation by Function and Sub function:


Allocation (K' Billion)
% of Total Budget

General Public Services



o/w National Constitution Conference

General Government Services

o/w Dismantling of Arrears

Domestic Debt Interest

External Debt

Compensation and Awards

Centralised Administrative Services

o/w Public Service Retrenchment Programme


Public Order and Safety

Economic Affairs

General Economic, Commercial, and Labour

Agriculture, Forestry and Fishing

o/w Fertiliser Support Programme



MMD is divided, says Sondashi

MMD is divided, says Sondashi
Written by Patson Chilemba, Allan Mulenga and Katwishi Bwalya
Saturday, January 31, 2009 11:04:36 AM

MMD presidential aspirant Dr Ludwig Sondashi yesterday charged that the ruling party is divided. And MMD spokesperson Benny Tetamashimba challenged party national secretary Katele Kalumba to be courageous enough and tell the National Executive Committee (NEC) meeting on February 7, the people who think that they own President Rupiah Banda.

Commenting on Kalumba's statement that MMD national chairman Michael Mabenga offered the acting presidency to President Banda because some officials tried to create divisions in the party by thinking that they owned the President, Dr Sondashi said Kalumba's comments confirmed that MMD was divided.

"This is what I was talking about. So what the party chief is saying speaks volumes that the party is divided and what NEC members should do is to consider my appeal carefully and with cool minds. I don't speak things from without. If [MMD deputy national secretary Jeff] Kaande thinks I'm useless, let it be so but I will be proved right," he said.

Dr Sondashi said MMD officials who thought they owned President Banda were misleading both themselves and the President. He said some people were advocating for President Banda to be acting party president even when this was against the constitution.

Dr Sondashi urged NEC members to speak boldly against the actions of a few selfish individuals when the NEC meets.

"My view is that they [those thinking they own President Banda] should just enjoy positions given to them without misleading the President. And Mr Banda is misleading himself and must know that people will say 'yes sir, yes sir' just because they need positions and kickbacks," Dr Sondashi said. "Some people who advised me not to aspire for the presidency last time are the same people bringing up issues that Rupiah Banda should stand in 2011."

On Presidential affairs minister Gabriel Namulambe's statement that he contested the presidency but got zero votes during NEC election, Dr Sondashi said he was not the only presidential candidate who did not get any vote. He said even people like Nevers Mumba and Enoch Kavindele did not get any votes but that did not mean that they were not popular. Dr Sondashi said Namulambe had become President Banda's minion.

He further charged that he did not expect some NEC members to admit that they received kickbacks in order to adopt President Banda as interim party president.

And Tetamashimba challenged Kalumba to be courageous enough and tell the NEC meeting on February 7, the people who think that they own President Banda.

Tetamashimba dared Kalumba that should he fail to table the matter before the NEC meeting, he would instead personally do so.

Tetamashimba said contrary to Kalumba's assertion, no minister was closer to President Banda apart from Vice-President George Kunda by virtue of his position.

"If he thinks I am closer to the President, he is lying because I am the newest Cabinet minister he has appointed and then all ministers are at the same level. In my view it is only George Kunda who is closer to the President," Tetamashimba said. "If anything, the people who are complaining are the ones who stand before ministers when welcoming or seeing off the President at the airport. When the President is coming, it is Mabenga and Kaka [Kalumba] and if they are not there it is Kaande who stand before ministers, so what are they saying?"

Tetamashimba hoped that Kalumba got clearance from Mabenga because no one was allowed to issue press statements.

"It is Mabenga himself who directed that no party official should speak to the press without his authority," he said.

Tetamashimba also admitted that the NEC was divided into two camps.

"That is why they are issuing those statements; can't you see? Among the NEC members there are those who are for RB. That include Mulongoti [works and supply minister], Namugala [tourism minister] and myself," said Tetamashimba.

On Wednesday, Kalumba said Mabenga and other senior party officials nominated President Banda as party interim president in order to maintain unity. He said there were party officials who thought they owned President Banda.

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Senior civil servants must declare assets, says Nkole

Senior civil servants must declare assets, says Nkole
Written by Lambwe Kachali
Saturday, January 31, 2009 11:02:45 AM

TASK Force on Corruption executive chairman Max Nkole yesterday said all senior civil servants must declare their assets and liabilities before holding public offices to prevent them from abusing public resources.

And Patriotic Front (PF) spokesperson Given Lubinda said the Anti-Corruption Commission (ACC) in its current framework cannot execute its work effectively.

Meanwhile, Transparency International Zambia (TIZ) president Reuben Lifuka said the fight against corruption was being approached in an ad hoc way.

Featuring on ‘Let the People Talk’ programme on Radio Phoenix yesterday, Nkole said it was worrying that recent reports had continued to reveal that corruption was more rampant in government institutions.

He said there was urgent need to enact a law to compel all senior civil servants to declare their assets and liabilities before holding public office.

Nkole said this would help investigating wings to establish whether such people stole or plundered public money after their tenure of office.

He, however, wondered what Zambian politicians feared to enact such a law when countries like Nigeria and South Africa, among others, had implemented similar pieces of legislation.

“The recent report by the [acting] director general of the Anti-Corruption Commission alluded to the fact that government institutions are the most corrupt and thatís a big indictment. It also pin points the fact that therefore, there is need for us to check the status of these people before they hold public office. And I think I would advocate for a law to be put in place requiring that all senior government civil servants declare their assets,î he said.

Nkole said there was currently no political will in Zambia as far as the fight against corruption was concerned.

He also challenged parliamentarians to tell the nation how they would help fight corruption in the country.

They have a part to play because they are representing the people and the people they represent are the victims of this corruption,î said Nkole.

And Lubinda said unless more funds were allocated to ACC, it would be difficult for the institution to meet expectations of the Zambians in the fight against corruption.

Last time I checked, they [ACC] only had 11 intelligent officers, and 92 investigative officers for the whole country. How do you expect them to be effective? You cannot expect the ACC to go and investigate all those people building mansions,” he said.

He said last year, parliament approved K32 billion for ACC but only K21 billion was released by government, which he said was not enough for the institution to carry out its work effectively.

Lubinda further said although he, together with other members of parliament, attempted to push for the enactment of a law to compel senior government officials declare their assets and liabilities before holding public office, Cabinet ministers opposed the amendment.

“They actually called me nonsensical; they were saying there was nowhere in any democratic society with such laws. Some ministers said this was draconian and my thinking was wacked. As a result of that, my bill collapsed,” said Lubinda. Now, this to me demonstrates that while some members of parliament are committed to come up with laws to fight corruption, there are some people in government who would fight tooth and nail if those laws are not enacted.”

And Lifuka said despite the efforts and money pumped into the fight against corruption, there was no sufficient progress.

He said it was also important to broaden the fight and not focus on a few individuals.

“The late president [Levy Mwanawasa] came into office with the aspect of zero tolerance to corruption, and we all know, he was a disciplinarian in that regard. He wanted to fight corruption. But, can anyone explain to me why in his tenure, there are number of cases, cases in the Auditor Generalís report have increased; are we pouring resources in the right area? Where are we missing the point,” asked Lifuka. “We need to call for revaluation. What is it that we need to do? Are we providing the right leadership? So the challenge is that we need to have a very clear vision, we need to have very clear strategies, strategies that we know can work.

Meanwhile, ACC community awareness officer Festus Chipungu charged that both politicians and the civil society organisations were not doing their part to help curb the scourge.

Chipungu said the civil society was mostly speaking for themselves and not for the people.

“I want to believe that ACC has done its role. The politicians have their role to play but they have not played very well. Let me go to civil society, because these civil society organisations must be the mouthpiece of the public. But you find that civil society in their fight against corruption is much more speaking for themselves than the public. They are much more speaking for the sake of attacking government instead of helping government to solve the problem and as a result there is antagonism between civil society and government and when there is that antagonism, we are not going to find a common solution,” said Chipungu.

“We expect civil society to be more tactical and engage government at round table discussion, and say where do we go, what do we do to reduce corruption?”

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Nsanda opposes cadres taking over markets

Nsanda opposes cadres taking over markets
Written by Margaret Mtonga
Saturday, January 31, 2009 11:01:14 AM

CHIMWEMWE (PF) member of Parliament Willie Nsanda yesterday said Benny Tetamashimba will run down the operations of the transport sector and markets if he allows MMD cadres to control them.

Commenting on MMD cadres who protested at Lusaka International Airport demanding that the government intervenes to ensure that MMD takes control of bus stations and markets in Lusaka from opposition PF, Nsanda said cadres did not have the capacity to run bus stations and markets.

"Calls by the MMD cadres that the bus stations and markets be controlled by MMD and not the PF, that is a non-starter because the bus operators have invested a lot of money in this business," Nsanda said. "It's not by design that the bus stations and markets are controlled by PF, it’s all because we are good investors and a party that people love."

Nsanda said the cadres should source money from the Citizens Economic Empowerment Fund if they needed capital as opposed to looking forward to getting money from bus stations and markets.

"The MMD government should get money from the youth empowerment fund to pay their cadres that they promised during campaigns and not from the bus stations and markets," said Nsanda. "I would like to warn Tetamashimba that he is playing with a very highly and sophisticated business which we don't want him to disturb."

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Friday, January 30, 2009

(IPSNEWS) SWAZILAND: Simple Solution - Save Rainwater

SWAZILAND: Simple Solution - Save Rainwater
Mantoe Phakathi

MBABANE, Jan 30 (IPS) - It's so early, the frogs are still croaking, as women push forward holding firmly onto their buckets while dodging cattle that are also scrambling for water in the pond at Gebeni. It has rained only a few times since the wet season began in October, and competition for water begins as early as 5:00 am.

But not Anna Hlophe, a 68-year-old resident of this drought-stricken community - 55 kilometres outside Swaziland's administrative capital - in the dry middleveld of the Kingdom.

"It hardly rains in this area but, when it does I make sure that I harvest as much rainwater as possible," says Hlophe.

Hlophe's neighbour Neli Mkhabela (50) points at a cylindrical grey structure attached to her cooking hut which she says is saving her - for the moment - from the early morning scramble at the pond. Mkhabela says rainwater is a precious resource to her community which they capture using cement cisterns.

"I've used this (cistern) for five years and it does relieve me at least for a month after rainfall," says Mkhabela who lives in a family of 11 people. "Save for the pond, there is no source of water in this place."

But for Hlophe who stays with only two grandchildren the water lasts for more than two months.

The cisterns are called ludziwo (water jar) in the community, a SiSwati word for the clay pots used for fetching and storing water found in every household. The latter-day ludziwo are helping many families save rainwater for domestic use in dry parts of Swaziland.

"We use the water for only drinking and cooking," insists Hlophe.

The water jars, which are a prominent feature in almost every homestead at Egebeni and surrounding communities, store up to 500 litres of water. Schools, clinics and community centres have bigger versions of the cisterns, with a storage capacity of 40,000 litres of water.

According to Meketane Mazibuko, Lutheran Development Services Gender Coordinator, water jars are benefiting up to 60,000 people in areas where water is a serious challenge.

"We discourage people from using this water for washing and bathing because it will not last for long," says Mazibuko.

LDS has helped with the construction of the water jars by providing communities with building material and also training the people to make these water harvesters for themselves. For a 500-litre cistern, one needs three 50 kilo bags of cement, three wheelbarrows of river sand, a sieve - to sift sticks, grass and stones out of the sand, an old mesh sack for oranges also works - and a tap.

"The construction of water jars is highly replicable which is why each and every homestead in this community has a water jar. After LDS trained a few community members on how to make water jars, people started training one another which is why almost every homestead has this facility although LDS stopped constructing them two years ago," says Mazibuko.

For houses with corrugated iron roofs, a gutter leading to the water jar is attached to channel runoff directly into the container.

"For those who cannot afford to buy a gutter, they can still use old bent corrugated iron sheets," says Mazibuko.

Thatched roofs can also harvest water, says Mazibuko. A kite-like shape is made using a hard plastic and logs.. A gutter or bent corrugated iron sheets is attached to the roof to lead water to the water jar.

"We've trained rural health motivators on how to treat water in the jars using bleach," says Mazibuko.

In the absence of rain, communities in the lowveld, which is the driest part of the country's four geographic regions, frequently go for days without water for drinking.

The Swazi Vulnerability Assessment Committee (VAC), a body that evaluates the extent of poverty in the country, documents the poor state of water and sanitation services in the lowland Shiselweni and Lubombo in its 2007 report.

The report notes widespread problems with both the nature of the water source - such as crocodile-infested rivers and muddy streams - and the distance to the water point and thus time taken to fetch water and bring it to the household; both factors impact negatively on a household's water usage.

According to the report, households with chronically ill adults may face particular constraints in this area. While their needs for water may increase, the adults in the household may be too ill to fetch adequate amounts, if any at all. Children in the household may thus assume the burden of fetching water.

Women and young girls who have to travel long distances to fetch water also risk getting raped in the process.

This situation puts Swaziland in a difficult position in achieving goal seven of the eight United Nations Millennium Development Goals whose other target is to halve, by 2015, the proportion of the population without sustainable access to safe drinking water and basic sanitation.

However, the 2007 Swazi VAC report notes "a remarkable improvement in access to water in the Lubombo region where 56 percent of the households had access to improved sources as compared to just 19 percent in 2006."

But the problem of lack of access to water is far from over because once it stops raining, communities in dry areas go for days without this basic resource, as observed by Matsanjeni Member of Parliament Cedusizi Ndlovu in the southern part of Swaziland, Government needs to build dams to catch water.

"We sometimes receive substantial rain in this place but, because there are no dams built at the rivers that run through here, we watch helplessly as the water runs to South Africa's Jozini Dam," says Ndlovu.


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(LUSAKATIMES) Government unveils a K 15.3 trillion national budget

Government unveils a K 15.3 trillion national budget
January 30, 2009

Government today unveiled a K 15.3 trillion national budget for 2009 under the theme ‘ Enhancing growth through competitiveness and diversification,’ whose larger portion would be financed locally.

This year’s budget represents an 11 percent increase from the 2008 national budget of K 13.7 trillion. The total budget represents a drop in Gross Domestic Product (GDP) from last years of 26.7 percent to 25.4 percent.

Of the total budget, K 10, 645.9 billion ( representing about 69.7 percent ) will be financed locally while K2, 768.7 billion ( 18.1 percent ) would be sourced externally through grants from cooperating partners.

The balance of K1,864.5 billion or 12. 2 percent will be financed through domestic borrowing of K1,069.0 of 1.8 percent of GDP and External borrowing of K795.5 billion or 1.3 percent of GDP.

K2,768.7 billion , K810.1 will be through Direct Budget Zone (DBZ) while K409.6 billion is expected to be funded through sector budget support.

Presenting the 2009 budget to Parliament today, Finance and National Planning Minister, Dr. Situmbeko Musokotwane said government has proposed to spend K 4.865.5 billion on government general services.

He said government has provided K50 billion for the National Constitution conference (NCC) , K248.5 billion for dismantling areas, domestic debt interest K978.8 billion and external debt K372.0 billion and K173.1 for compensation and wards.

Dr. Simukotwane said government has also provided K610.7 billion for public and safety , representing 4 percent of the total.

Government has also allocated 3,021 .2 billion for economic affairs , K117.3 billion for environmental protection , K587.3 billion for Housing and Community amenities and 1,823.4 billion representing 11.9 percent of the budget to the health sector while the education sector has 2,628.0 billion , which is 17.2 percent of the budget.

On Infrastructure government has allocated K1,356.8 billion for roads of which K 250.3 billion will go towards rehabilitation of feeder roads and for provincial rural units that will be used to operate road maintenance equipment procured last year.

And government has this year increased allocation to the Ferliser Support programme (FSP) from K185 billion for last year to K435 billion in this years budget.

Dr. Musokotwane said the measure is meant to empower small scale farmers with inputs in efforts of improve national security .

He has further allocated K 100 billion for the strategic food reserve and K 70.7 billion for livestock development and a further K56.5 billion for irrigation development.

On Transport and Communication, government has allocated K 21.2 billion towards the rehabilitation of Kasama , Solwezi, Mfuwe and Mansa airports and a further K 10.0 billion for the completion of the Chipata Muchiji railway.

Dr. Musokotwane said government has provided K 214.4 billion to the national Rural and urban water supply programme and a further K10 billion towards the improvement of drainage system in Lusaka city.

On the allocated for Public order nada safety, government will send K475.8 on policing services and K35 billion for the construction of houses for defense personnel.

Public service pension fund has been allocated K174.3 billion while a further K128.1 has been allocated as government employer contribution to the fund.

K40 billion has been proposed for the Citizen Empowerment Fund (CEF) while K67.5 billion has been allocated towards the Constituency development Fund (CDF) .

Dr. Musokotwane has revealed that key ministries will publish booklets showing resources allocated for each projects in order to facilitate effective monitoring by stakeholders.

He said the measure is meant is meant to enhance transparency and accountability on the part of government .


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Some MMD officials think they own Rupiah – Katele

Some MMD officials think they own Rupiah – Katele
Written by Patson Chilemba, Lambwe Kachali, Margaret Mtonga and Constance Matongo
Friday, January 30, 2009 1:14:06 PM

MMD national secretary Katele Kalumba yesterday disclosed that Michael Mabenga offered the acting party presidency to President Rupiah Banda because some party officials tried to create divisions in the party.

In an interview, Kalumba said MMD national chairman Mabenga and other senior party officials nominated President Banda as party interim president in order to maintain unity. He said there were party officials who thought they owned President Banda.

Asked if he was referring to people like MMD spokesperson Benny Tetamashimba and works and supply minister Mike Mulongoti among others, Kalumba responded: "These people are on public record, you published them. You have the record to show that these are the people who were advocating that President Banda be the party president. My position is that they have taken a different approach. I don't know who went to organise the district officials in Lusaka to come and demonstrate at our offices. I was not aware. Now that is giving an impression that the party is divided."

Kalumba further said the MMD constitution did not have any clause that subjected the position of acting party president to elections. He said the offer of presidency to President Banda was purely based on administrative advice.

"Those people who are saying that we have violated the party constitution do not know what they are talking about," Kalumba said.

He said as things stood, Mabenga's decision to nominate President Banda as acting party president was just a proposal that could either be rejected or adopted by the national executive committee (NEC).

Kalumba further urged MMD members with presidential ambitions to campaign at the convention to be held next year.

"I urge [former works and supply minister Ludwig] Sondashi and the others to stop quarrelling so as to enhance unity and peace in the party," Kalumba said. "I would like to plead with those who are quarrelling over President Rupiah's offer to stop the bickering because time for campaigning is not now. I find it very disturbing when senior members of the party who are learned and know the history and constitution want to start confusing party issues."

On Sondashi's statement that some NEC members received kickbacks and job offers when they arrived at a decision to adopt President Banda as interim president, Kalumba said NEC members did not engage in any form of corruption.

Meanwhile, Presidential affairs minister Gabriel Namulambe said it was clear that nobody wanted Sondashi to take over the MMD presidency.

"Dr Sondashi ought to know that nobody in the MMD NEC would adopt him for presidency because in 2008, he stood and he got zero votes and that in itself should send a signal to him," Namulambe said. "We have people from North-Western Province in NEC. Surely Dr Sondashi should have gotten a vote from his relatives but his people too rejected him. So he shouldn't expect people that are not his relatives to trust him when his own betrayed him."

Namulambe said Sondashi should not think that he had the monopoly of wisdom to criticise the work of NEC.

"Dr Sondashi must learn to respect the views of other people unlike placing himself above everyone else because if he thinks he is wise then we'll also say we are wiser than him by far," said Namulambe.

The MMD last week announced the appointment of President Banda as interim party president until the next convention. However, the decision was criticised by some MMD members who said it was unconstitutional as the NEC had not sat to discuss the matter.

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Corruption fight isn’t in Rupiah’s blood – Sata

Corruption fight isn’t in Rupiah’s blood – Sata
Written by Patson Chilemba and Lambwe Kachali
Friday, January 30, 2009 1:12:20 PM

RUPIAH Banda does not believe in what he says especially on the fight against corruption, Patriotic Front (PF) president Michael Sata charged yesterday.

Commenting on President Rupiah Banda's warning to dismiss any permanent secretary involved in corruption, Sata said he knew President Banda very well and that the President never believed in most of the things he said.

He said if President Banda was serious with enhancing professionalism in the public service, he would not have appointed MMD cadres to be permanent secretaries.

Sata said the fight against corruption was not in President Banda's blood.

"I have said before, Rupiah Banda speaks and starts thinking later. So in this case he doesn't believe in what he is saying. He believes in shortcuts. We need more serious people to guide us and not Rupiah Banda," Sata said.

He said the people President Banda had appointed as permanent secretaries were failures in life who had nothing to offer for the development of the country.

"If you take [Lusaka Province permanent secretary] Stephen Bwalya, how do you expect people from University of Zambia to get advice from Bwalya who was just a ng'wa ng'wazi [call boy]?" Sata asked. "He was my boy, I know him. Bwalya can't even remember his signature twice. But that's continuity for Rupiah. Continuity is for Rupiah to go and bring Bwalya, to go and bring [Luapula Province permanent secretary] Jazzman Chikwakwa. If he thinks Jazzman Chikwakwa will strengthen MMD in Luapula Province then he's lying. The whole point is that all the people he has appointed, like the senior officials in the Army, are on contract. They have nothing to protect. The ordinary civil servants have to protect their benefits."

Sata charged those appointed by President Banda only had one mission of resuscitating their failed lives at the expense of service to the people.

He said this would even worsen corruption in the civil service because it had been infuriated with people whose preoccupation would be to loot public coffers.

"By the time Rupiah realises, they would have secured whatever they want," Sata said.

He challenged President Banda to translate his utterances on corruption into action by prosecuting those involved in the misappropriation of public funds as revealed in the Auditor General's report of 2007.

"Let Rupiah take action on the K9.6 billion [unaccounted for] in the Ministry of Foreign Affairs," said Sata.

On Wednesday, President Banda warned that he would dismiss any permanent secretary involved in corruption.

Addressing 13 newly-appointed permanent secretaries after they took oath of office at State House in Lusaka, President Banda said he would not tolerate misuse of government funds on unnecessary luxuries which had no value to the lives of Zambians.

President Banda also barred permanent secretaries from undertaking travels abroad and workshops that do not benefit Zambians.

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Mpombo dismisses reports of CIA prison

Mpombo dismisses reports of CIA prison
Written by Mwala Kalaluka
Friday, January 30, 2009 1:11:23 PM

DEFENCE minister George Mpombo yesterday told Parliament that revelations indicating that Zambia is one of the countries hosting the CIA prisons are a product of cadre journalism.

Delivering a ministerial statement, Mpombo said Zambia had not hosted a secret Central Intelligence Agency (CIA) prison and that the article in the UK’s Guardian of Friday, January 23, 2009 where Zambia was highlighted as one of the countries hosting such facilities was not true.

He said Zambia would not tolerate the setting up of military bases that would compromise the sovereignty of the country.

"That article was a product of cadre journalism," said Mpombo in response to a question from Kalomo UPND member of parliament Request Muntanga on what the government would do to correct the misleading article in the Guardian.

When asked by Lusaka Central PF member of parliament Guy Scott if there had never been discussions between the US and Zambian governments pertaining to the establishment of a secret CIA prison, Mpombo said he was only aware of discussions that had taken place during late president Levy Mwanawasa's time regarding the establishment of Africa Command Centre (AFRICOM).

Scott made reference to an article in the Washington Post of November 2005 where it was indicated that there were plans to set up a secret prison at one of the islands on Lake Kariba.

However, Mpombo said the article amounted to some "tasteless concoction".

He added that even former president George Bush had brushed aside questions over the establishment of AFRICOM.

Mpombo said there was no grain of substance in the revelations brought out in the articles.

When asked by Katombola UPND member of parliament Regina Musokotwane on what government was going to do to the UK's Guardian newspaper over the article, Mpombo said he had no powers to tell the newspapers on what to write.

According to the Washington Post article titled 'CIA holds terror suspects in secret prisons' published on November 2, 2005, among the first steps by the CIA was to figure out where they could hold the captives and one early idea was to keep them on ships in international waters but that the idea was discarded for security and logistical reasons.

" CIA officers searched for a setting like Alcatraz Island. They considered the virtually unvisited islands in Lake Kariba in Zambia, which were edged with craggy cliffs and covered in woods. But poor sanitary conditions could easily lead to fatal diseases, they decided, and besides, they wondered, could the Zambians be trusted with such a secret? Still without a long-term solution, the CIA began sending suspects it captured in the first month or so after September 11 to its longtime partners, the intelligence services of Egypt and Jordan," the article reads in part.

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(LUSAKATIMES) PF wants 2009 budget to address effects of global economic downturn

PF wants 2009 budget to address effects of global economic downturn
January 29, 2009

The opposition Patriotic Front (PF) has called on government to ensure that the 2009 budget was designed in a manner that would address the country’s challenges which have come as a result of global economic recession.

PF vice president, Guy Scott, said the opposition party is concerned with the negative impact of the global financial crisis.

Speaking during a media briefing at the party headquarters in Lusaka today, Dr. Scott said there was need for government to heed to calls from his party to cut on its expenditure.

He said cutting government expenditure would help address some of the challenges the country is facing due to the prevailing global financial meltdown.

And the PF vice president has urged government to expeditiously issue a report on the alleged secret Central Intelligence Agency (CIA) prisons in the country as reported in the international media.

Dr. Scott said his party was waiting for a report from government because the American government through its embassy in the country has since denied operating secret CIA prisons in Zambia.

The call for the report follows an order from US President Barrack Obama to close secretly operated CIA prisons in various countries, including Zambia as reported in some sections of the international media.

Meanwhile, PF spokesperson Given Lubinda alleged that most of the Permanent Secretaries which were recently appointed to government were not competent to run the civil service because they did not have the technical knowledge and experience.

Mr. Lubinda charged that the appointments amounted to abuse of office and a campaign strategy by the ruling party for the 2011 elections.

He further alleged that most of those appointed to the position of permanent secretaries are people that campaigned for President Banda during for the October 30th 2008 presidential elections.

Meanwhile two former senior MMD official and ministers in the second republic have defected to the opposition PF.

The duo, who held various portfolios in the Fredrick Chiluba led government are Kuyoto Kunyanda and William Harrington.

They announced their resignation from the ruling MMD to join opposition PF at the same media briefing, citing weaknesses in the MMD leadership.


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(REUTERS) U.N. urges African economies to diversify

COMMENT - Rolling eyes skywards... but at least the UN gets it now.

U.N. urges African economies to diversify
Thu Jan 29, 2009 9:33am EST

ADDIS ABABA (Reuters) - Africa must boost food production and diversify its economies into manufacturing and services to cut the impact of future shocks like the current financial crisis, the United Nations said Thursday.

The International Monetary Fund (IMF) warned this week that sub-Saharan Africa needed to prepare for tough times ahead, saying that there was no guarantee the resilience shown so far to global economic crises will continue.

Major world economies are in recession, stung by a global credit squeeze, and growth is now slowing in developing countries that had at first appeared resilient to the downturn.

Abdoulie Janneh, head of the U.N.'s Economic Commission for Africa, said the current financial crisis would have an impact on investment, trade, remittances and tourism revenues.

Several African nations had also seen volatility in their stock markets and currencies, he told African Union (AU) foreign ministers meeting ahead of a February 1-3 summit in Ethiopia.

"However, we should not panic, but use the current crisis as an opportunity to consolidate recent macroeconomic achievements and for putting measures in place to further diversify our economies," Janneh said.

"We need to increase agricultural production and diversify into manufacturing and services in order to provide jobs ... Diversification will also give our economies the resilience to deal with future economic shocks."

Wednesday, a senior World Bank official told AU officials initial hopes that the world's poorest continent might be spared the worst of the global credit crunch were premature.

Monday, the IMF warned that higher food and fuel costs had put pressure on inflation and external balances in Africa, and said the deepening financial turmoil could curb regional growth through lower capital flows and export revenues.

(Reporting by Daniel Wallis; Editing by Sophie Hares)

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(TALKZIMBABWE) 'Time to turn our swords into ploughshares'

'Time to turn our swords into ploughshares'
Brett Nyakudirwa -- Guest Column
Fri, 30 Jan 2009 01:27:00 +0000

I EAGERLY anticipate the formation of a Government of National Unity. It represents the triumph of African diplomacy and those who wanted former South African President, Thabo Mbeki to fail in bringing Zimbabweans together will have to swallow their pride and congratulate him.

He has remained resolute and focused on the task at hand — a mandate he got from leaders of the region and endorsed by those concerned about the plight of millions of people who have no access to medicare, food or clean water.

The process of the formation of a GNU in Zimbabwe, which effectively started yesterday with a meeting of the rival parties to resolve outstanding issues, should be viewed as a quintessential African solution to a peculiarly African problem.

It is now time for cautious optimism. We all know that it is darkest before dawn. We do not want petty issues to break an agreement that has been in the making for over two years now. Cynics, especially the ones spreading divisive propaganda and self-serving interests should be ignored and shunned.

The voices of those who have expressed cautious optimism and a commitment to the development of this resource-rich, tiny landlocked country should be reckoned with by the major players on the Zimbabwean political scene.

President Mugabe (then new Prime Minister in 1980) once said: “It is time to turn our swords into plough-shares.” MDC leader, Morgan Tsvangirai instructively quoted the same statement on Sept. 15, 2008 in front of Sadc leaders and in front of millions of TV viewers from around the world. They were (are) both right.

It now is indeed “time to turn our swords into ploughshares”; but we should understand our history well to know where we are going. We should not be slaves to cheap propaganda and intimidation.

One newspaper editor said in relation to Zimbabwe: “It is good to look into the future; it is also important to look back so as to know from where the rain started beating Zimbabwe, as they say.”

Our future is shaped by where we are coming from. Unless we understand where we are coming from, we will never truly understand or appreciate where we are going.

*Brett Nyakudirwa is a Masters student in International Diplomacy and writes as a Guest Columnist for The Zimbabwe Guardian. Guest columnists are given the free reign to express themselves and their ideas do not necessarily reflect the editorial policy of The Zimbabwe Guardian.

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