Saturday, November 12, 2011

PF in govt honours campaign promise, reduces tax

PF in govt honours campaign promise, reduces tax
By Chiwoyu Sinyangwe
Sat 12 Nov. 2011, 12:10 CAT

THE Patriotic Front government has honoured one of its election promises of putting "more money in people's pockets" by lowering Pay As You Earn (PAYE). And the PF government's budget has revealed that it will squeeze more money out of mining companies by increasing royalties to six per cent from three per cent as it proposes to spend 50 per cent of the K27.7 trillion budget on social sectors and infrastructure development.

The proposed 2012 national budget themed "Making Zambia a better place for all" has jumped from the K24 trillion spent this year, which is 18.8 per cent higher than the budgeted K20 trillion.

The government has proposed to double the exempt threshold for PAYE to K2 million per month.

Finance minister Alexander Chikwanda yesterday announced an ambitious pro-poor budget for 2012 with a focus on cutting tax obligations of the perceived ‘over-taxed' employers while the vast mining sector expected to bridge the deficit of revenue losses from the concessions for the poor.

Key macroeconomic targets for next year include increasing domestic revenues to 19 per cent of the gross domestic product (GDP), achieve GDP growth of above seven per cent, attain end-year inflation of not more than seven per cent, limit overall fiscal deficit to 4.3 per cent of GDP and limit domestic and external borrowing to 1.3 per cent and three per cent of the GDP respectively, commit at least 50 per cent of the budget to social sectors and infrastructure development and maintain gross international reserves of at least four months of import cover.

The government expects to raise resources of K27.698 trillion or 26.5 per cent of GDP to support the 2012 budget.

Domestic revenues will constitute 19.1 per cent of GDP while grant receipts from donors will be 1.8 per cent.

The balance of 5.6 per cent of GDP will be total borrowing out of which 1.3 per cent of GDP will come from domestic borrowing and the balance of 4.3 per cent of GDP will be external financing.

According to Chikwanda, workers earning K2, 000, 000 and below per month would be exempted PAYE, while workers in the K2, 000, 000 - K2, 800, 000 per month bracket would pay 25 per cent PAYE.

Workers earning between K2, 800, 000 - K5, 700, 000 per month would be taxed at 30 per cent while those above K5, 700, 000 per month would be taxed at 35 per cent.

"The PAYE restructuring increases disposable incomes of the workforce by about K1 trillion which can only be salutary for the economy," Chikwanda said.

However, the 16 per cent Value Added Tax has stood.

Chikwanda also announced that government had proposed to abolish the 40 per cent upper corporate tax rates for banks to the standard rate of 35 per cent.

Within 30 days of being in office, the PF government lowered the statutory reserve ratios for both local and foreign currency deposits to five per cent from eight per cent previously, while the core liquid assets ratio has gone down to six per cent from nine per cent.

The move is aimed at improving liquidity of commercial banks as a desirable objective to facilitate low cost borrowing by enterprises.

The reduction of corporate tax which commercial banks have continued to complain against is expected to incentivise lenders to lend more.

"This measure will result in revenue loss of K65 billion and I expect the banks to pass on the benefits of this measure to the borrowers by lowering lending rates further," he said.

He also said to achieve pro-poor growth in the agriculture sector, the government had proposed to lower corporate income tax applicable to the agricultural sector from 15 to 10 per cent to spur investments and raise productivity.

A decision, Chikwanda said, would make available K10.6 billion for re-investment into the farming sector.

"Mr Speaker, in order to compensate the revenue loss arising from the above measures, I propose to increase the mineral royalty rate to 6 per cent from 3 per cent and 5 per cent for base and precious metals, respectively," Chikwanda said. "I also propose to separate income from mining activities for income tax purposes."

He said the Treasury is expected to raise K981 billion from the two measures.

Chikwanda did not make drastic changes to the existing mining fiscal regime or succumb to populous calls for the government to introduce the 25 per cent windfall tax on the mining sector.

Chikwanda also proposed to reverse the VAT deferment scheme on copper and cobalt which was introduced in 2009 to promote utilisation of the country's excessive smelting facilities following the decline in copper output.

"However, with the increase in local production of copper and cobalt ores, it is no longer justifiable to retain these products on the scheme," he said. "I, therefore, propose to remove copper and cobalt ores and concentrates from import the VAT deferment scheme. This measure will generate an extra K6.9 billion."

Chikwanda also abolished the "discriminatory" 15 per cent export duty on export of copper and cobalt concentrates introduced in 2006 to encourage local value addition to create employment.

"This policy is discriminatory as it does not apply to other minerals thereby creating an uneven playing field," he said. "In the spirit of making this tax less burdensome and its application non-discriminatory, I propose to reduce export duty to 10 per cent but also extend it to all unprocessed or semi-processed mineral ores. This revenue gain as a result of this measure is K70 billion."

And Chikwanda revealed that there was pressure on the PF government to deliver on its campaign populous promises of the "less taxes, more jobs and more money in your pocket."

Riding on the desperation of the over 1.2 million new voters who comprised mainly "job-starved" youths, Chikwanda was under pressure to unveil a pro-poor budget, and spread more widely the benefits of annual economic growth that had averaged six per cent over the last five years.

"Now that we are in government, we have not, and will never distance ourselves from our people. His Excellency the President and his entire cabinet have committed themselves to work tirelessly so that the government respond in practical ways, to ensure that the economy is put on a path of rapid growth and that its benefits are widely shared by every Zambian.

We are not a government that basks in the empty glory of statistical euphoria but one that seeks a transformational shift in society to make it more just and equitable," said Chikwanda. "Mr Speaker, to the unemployed youth who feels this nation has little for his energies, it means more opportunities for appropriate skills training and thus greater prospects for income-earning activities through which he can positively contribute to the development of his nation."

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Leaders are there to serve God's people

Leaders are there to serve God's people
By The Post
Tue 08 Nov. 2011, 14:00 CAT

An authority is needed to guide the energies of all towards the common good.

The government is the instrument by which people cooperate together in order to achieve the common good. Therefore, those who are elected or selected to lead us, to administer the affairs of our government must be people who are known for their honesty, ability, dedication and concern for the welfare of all.

What our people are seeking is genuine democracy in which the leaders are servants of the electorate and not their masters. And good governance only occurs when we have intelligent, honest and humble leaders who see politics as a vocation to serve the people. No one deserves to be in any government position unless they love their country more than themselves.

We are also aware that political leadership is an area of great importance for promoting justice, peace, development and community among all. We regard political leadership as a vocation, a way of building up society for the common good.

We are reminded in Romans 13:4 that the ruler is God's servant working for your own good. We are also reminded in Mark 9:35 that whoever wishes to be first among you must be slave of all. And this fits in very well with the teaching of Telesphore Mpundu, the Archbishop of Lusaka, when he says that a political leader who forgets that leaders are there to serve God's people is offside. Leadership is about service. And the proper role of government is to serve citizens. It does this by creating opportunities that benefit all citizens without discrimination. Overall, citizens should be concerned with the way leaders lead them and administer public affairs.

A person chosen for political responsibility as a leader must remember that he is simply a servant or steward entrusted to offer humble service to others as opposed to owning power or the people he is serving. The owner of authority and people is God. Leaders, who are servants, are accountable to the people who chose them; they work for the common good.

And the Lord sets the example of leading by being a servant: "I, your Lord and Teacher, have just washed your feet. You, then, should wash one another's feet. I have set an example for you, so that you will do just what I have done for you. I'm telling you the truth: no slave is greater than his master, and no messenger is greater than the one who sent him. Now that you know this truth, how happy you will be if you put it into practice!" (John 13:14-17).

Clearly, we need saintly politicians who profoundly love their own people and wish to serve rather than to be served. Truly, leaders should exercise stewardship and uphold the common good. This is very important because the greatest challenge to bringing about justice and peace in our country consists in good administration of public affairs in politics and the economy.

The common good is the reason for the existence of political, social and economic institutions. It enables people to express commitment and concern for each other as well as attain the fullness of love. Common good calls upon all persons to contribute and commit themselves responsibly to building a peaceful and just society for all.

And the best way for a leader to fulfil his obligations to the electorate and indeed his obligations of justice and love is to contribute to the common good. Political office, and political power in general, must have as its aim the achievement of the common good. This is so because the whole reason for the existence of civil authority is the realisation of the common good. We are again reminded in Mark 12:31: "The second most important commandment is this: ‘Love your neighbour as you love yourself'…"

Our leaders should view themselves as being our representatives. And as such they should listen to the people, respect the people and work for the welfare of all the people. Leaders who consider themselves to be servants of the people rule with care.

Our leaders should not forget that in truth, their authority does not come from a document, some piece of paper, a constitution. It comes from the people who have the power to elect their leaders. It is the people who give them the authority. And that authority is given to them not to do wrong but to love and serve the people.

Political leadership is an effective way of serving others and working for integral development of one's country. And this being the case, political leadership should be exercised in the most honest and responsible way and within the limits of the moral order.

Our politicians often don't like to be reminded of the fact that they are our servants, and not our masters. And that they have a duty to do as we please and not as they want and must always hold themselves accountable to us.

They would like to see themselves as our bosses, our masters, the givers of everything we have, the dispensers of favours to us, the chief human resource managers whose duty is to employ and fire us as and when they wish. This is where their importance seems to lie. When you remind them that they are servants and not masters, you become enemies because you are challenging their authority, their power.

But this is the understanding, these are the values that brought us together, that made us friends before they got into power, before they assumed public office. And now that they want to move away from these values, these standards, they get annoyed when we remind them about who they are, about their role as servants of the people and start to call us all sorts of names. They forget that we are simply adhering to the values and standards that we once shared with them. They have moved on, they have changed but we are still where they left us and we haven't changed our values and our standards.

This is where the problem lies. This is where the differences stem from. We encourage other religious leaders to join Archbishop Mpundu in reminding our political leaders not to forget who they are and what their role is as servants of God's people. They need to hear this more often, so repeatedly. They may not like it but they have to continue to listen to this message if they are to serve the people in a manner that will truly serve and promote the common good.

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Sata accuses UPND of lies against him

Sata accuses UPND of lies against him
By Bright Mukwasa
Sat 12 Nov. 2011, 12:10 CAT

PRESIDENT Michael Sata says he is surprised that the opposition UPND always wants to survive on his blood. And President Sata has dissolved the Zambia National Building Society board with immediate effect and appointed a commission of inquiry to investigate alleged impropriety in the institution.

President Sata made the remarks yesterday at State House when he swore in prominent Lusaka lawyer Mumba Malila as Attorney General and Rosewin Wandi as director general of the Anti-Corruption Commission.

He directed Malila to scrutinise the mushrooming of various publications which he accused of peddling lies against him and his health.

"Last year when we were coming for these elections up to this year, these unregistered newspapers, unregistered Internet said Mr Sata has collapsed, Mr Sata is very sick, Mr Sata is dying and yesterday the whole Eastern Province and Kamwala Mr Sata was dead. I am not asking for witchhunt but you as Attorney General let's enforce the laws of this country because these Internet they are all orchestrated by UPND. Last year…, the Watchdog is UPND. Who is talking Sata has collapsed, Sata has died, Sata is too sick, it's UPND," President Sata said.

"I am not going to start a witchhunt and as they are saying now, yesterday I was dead, today I am standing here. I think I have got so many lives, even before the elections I was dead, come to the elections I am standing here. And this Mr. Malila reminds you in 2009, our brothers got some fake doctor who told them Mr Sata would die before 2009 so they came into a pact, come 2009 I didn't die, 2010 they pull out of the pact and now they are still peddling. What type of politicians who always want to survive on other people's blood?"

President Sata also said the government would only go to court on various offences when it was certain it had a solid reason to do so to avoid injustice and using the courts for politics.

"How do you send a person on forced leave for more than three years at the same time continue paying that person who is on forced leave, continue paying the permanent secretary salary, he is still getting all the benefits? In my opinion that is corruption. You send a person on forced leave and continue paying them, who is cheating who?" he asked.

"And you remember Mr Malila and Madam Wandi the so-called Task Force for seven years, people were going to court, seven years and the so called prosecutors were getting K100 million a month for three convictions, three convictions for seven years these are things which we have to improve on. Let's go to court only when we are ready to say we have a case to go and present to the courts. Let's not use courts, or use the police for politics but I congratulate you and I know you are going to do well."

President Sata said he did not believe in victimisation and the duo deserved the appointments and he was sure they would do a good job.

And President Sata dissolved the ZNBS board citing corruption.

"Zambia National Building Society is not doing any business. I can't see how the board can appoint a woman and give her K56 million a month. Now K56 million for a month for an organisation which is not making money and that's an organisation where somebody irregularly pumped US$98 million," he said.

"I have with immediate effect dissolved the board of Zambia National Building Society and appointed a commission which will be headed by Mr Mwila Lumbwe. Members will be Mr Nonde of Ernest and Young, Mr Jere, we will have one person from Anti-Corruption Commission and one person from DEC and I want Mr Secretary to the Cabinet to arrange for their swearing in so they can begin their function."

Meanwhile, Attorney General Malila said he was ready for the challenge again.

"I'm getting back to the office already with my sleeves folded. There's work to be done and we are ready to start. It's a big challenge but I think we are equal to the challenge," Malila said.

Malila's contract could not be renewed by former president Rupiah Banda when it expired on December 1, 2009.

"He President Sata spoke very passionately about enforcing the law and so what we can do obviously is review areas where we think the law is being disregarded and take action through appropriate agencies. Of course there's requirement for registration of all publications in whatever form. I think the President's concern is that there are so many of them that are appearing on the market without proper registration," he said.

"What we shall do that's a directive we shall go and sit down and look at the various publications that are on the market and see whether they are complying with the law."

And ACC director general Wandi said she would ensure the commission fought corruption with vigour.

"I feel happy to take up the challenge to effectively fight corruption in Zambia. I will not betray that confidence that has been placed upon me. I will conduct the affairs of the commission within the confines of the law and if we do any investigations, they will be done without fear or favour whoever commits the offence."

Foreign affairs minister Chishimba Kambwili said the appointment of Attorney General Malila and ACC director general Wandi was a manifestation that President Sata was not vindictive as claimed by MMD.

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Parliament ratifies Malila's appointment as Attorney General

Parliament ratifies Malila's appointment as Attorney General
By Roy Habaalu
Sat 12 Nov. 2011, 08:30 CAT

PARLIAMENT yesterday unanimously ratified the appointments of Mumba Malila and Rosewin Wandi as Attorney General and Anti Corruption Commission director general, respectively. The parliamentarians overwhelmingly supported the motion for ratification of the appointments, saying Malila and Wandi were the right people for the positions.

Seconding the motion, justice deputy minister Ngosa Simbyakula said the duo who also worked under late president Levy Mwanawasa's administration served the country with diligence.

He said Wandi, during her 28-year career in fighting corruption, had proved that she cannot be controlled by any political power.

"Her employment at the Anti Corruption Commission was prematurely terminated by the immediate past government because of her allergy to corruption," said Simbyakula.

And MMD Chisamba member of parliament Moses Muteteka said the choice of Malila was a credible one as he has what it takes to hold the office of Attorney General.

He said the two should act on behalf of Zambians in carrying out their duties and not on behalf of the government or the appointing authority.

Muteteka further urged them to stand up for what is correct and be ready to resign when victimised by the appointing authority as long as the decisions were in favour of the majority Zambians.

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Kavindele calls for thorough probe of former leaders before arrests

Kavindele calls for thorough probe of former leaders before arrests
By Chiwoyu Sinyangwe
Sat 12 Nov. 2011, 08:10 CAT

THERE is need to thoroughly investigate former leaders alleged to have looted public funds before effecting any arrests to avoid embarrassing them, says Enoch Kavindele. There have been growing calls from key stakeholders that the MMD's last three years in power be investigated and culprits prosecuted for corruption.

Commenting on the calls, Kavindele cited the persecution of Dr Kenneth Kaunda by late president Frederick Chiluba as one case in which the former leader was embarrassed for nothing.

"I would like to urge government to do their investigations thoroughly before they find themselves in an embarrassing situation such as what happened to Dr Kenneth Kaunda after he had lost (power)," Kavindele said.

"The government of Zambia then after Kaunda, came up with allegations that he had stolen US $7 billion and had also taken some State House items including books, and indeed, the police officers went to open all his boxes, I was there with his late son Wezi, and Maurice Kaulung'ombe Dr Kaunda's aide and KK sat there and they checked every box and they found nothing."

Kavindele described as "humiliating to the man who had served a country so diligently" the decision by late president Chiluba's regime to hire Scotland yard, to investigate alleged siphoning of US $7 billion from Zambia.

Kavindele also claimed that late president Chiluba had his immunity from prosecution removed for alleged crimes that he was later cleared of.

The London High Court found Chiluba and his allies guilty of embezzling about $46 million and ordered him and his associates to repay $58 million to Zambians but the Zambian government did not register the judgment for it to be enforced in Zambia.

However, in other corruption cases, after over seven years of trial, Chiluba was in 2009 acquitted of embezzling $500,000 during his presidency, in circumstances many questioned.

Kavindele said: "My appeal is that please investigate quietly and establish the truth or otherwise of what transpired. Investigations should not be carried out in public and it is very embarrassing when they end up not finding what they are looking for."

Kavindele claimed that some of the crimes allegedly committed by former president Banda could have been committed by his aides without his knowledge but just in his name

"Even for president Banda and his government, government should quickly investigate everything that is being alleged as opposed to trying him in the press," said Kavindele who is also former republican vice-president. "I have been out of government for nine years now, I do not know what happened but having been in government at the level I was, I noticed that many individuals can do all sorts of things in the name of the presidency and yet it is not true. Rupiah Banda is a very likeable man and a gentleman."

And Kavindele opposed calls for removal of former president Banda's immunity from prosecution so that he faces the law for alleged crimes committed under his reign.

"The immunity of the (former) president from prosecution should not be lifted. Let the investigations be carried out first and thoroughly, those other issues can come later because we don't want a situation where late president Levy Mwanawasa came and pleaded that we lift late president Chiluba's immunity and after that we discovered there was no way of restoring it even after he had been found more or less innocent," said Kavindele. "Therefore, investigate thoroughly even before attempting to remove the immunity."

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William Banda's charge changes to assault, unlawful wounding

William Banda's charge changes to assault, unlawful wounding
By Maluba Jere
Sat 12 Nov. 2011, 08:30 CAT

CHIEF resident magistrate Joshua Banda has substituted William Banda's charge of proposing violence to four counts of assault occasioning actual bodily harm and unlawful wounding. When the matter came up yesterday, Division Prosecution Officer Christopher Kanema told the court that the matter was coming up for mention and possible application.

Kanema then applied to have Banda's indictment substituted and that he should take plea with other accused persons he is now charged with. Magistarte Banda then re-allocated the case to another court.

William and four MMD cadres appeared before magistrate Rodgers Kaoma where they pleaded not guilty to four counts of assault and unlawful wounding.

In count one, William, Patrick Chungu, Somili Mushiku, Simon Banda and Sebastian Mainde are charged with assault occasioning actual bodily harm contrary to Section 248 of the Laws of Zambia.

It is alleged that William, Chungu, Mushiku, Banda and Mainde on September 3, 2011, in Chongwe, jointly and whilst acting together assaulted Priscilla Ndhlovu thereby occasioning her actual bodily harm.

In count two, the five are alleged to have on September 3 this year, in Chongwe, assaulted Andrew Lombe thereby occasioning him actual bodily harm.

In count three, William and his four co-accused are alleged to have jointly and whilst acting together assaulted Precious Malama thereby occasioning him actual bodily harm.

In count four, William, Chungu, Mushiku, Banda and Mainde are charged with unlawful wounding.

In this count, it is alleged that the five on September 3 this year in Chongwe jointly and whilst acting together with others unknown unlawfully wounded Lackson Kabimbi.

All the accused persons told magistrate Kaoma that they understood the charge but pleaded not guilty.

One of the defence lawyers Hobday Kabwe applied for bail pending trial, saying all the charges against his clients were bailable.

Another defence lawyer Sunday NKonde informed the court that apart from William, his four clients in the matter were unlawfully detained by the police from as far back as October 11 this year.

But the state, conceding that the four accused were in detention for that long, said it was not deliberate but that the accused could not be taken to court earlier because their co-accused William was not being availed at the police station by his lawyers.

Ruling on the matter, magistrate Kaoma said as rightly observed by Nkonde, issues of detention were not for the lower court and as such he could not delve into them.

However, magistrate Kaoma granted the four accused K15 million bail each in their own recognisance with two working sureties in the like sum as well and ordered the accused to produce proof of residence.

The matter comes up for mention on November 29 while trial is expected to commence on December 7.

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MMD will bounce back to power, says Mutati

MMD will bounce back to power, says Mutati
By Bright Mukwasa
Sat 12 Nov. 2011, 08:20 CAT

MMD will bounce back to power after the 2016 general elections, declares Felix Mutati. Mutati, the former commerce minister in the MMD regime and now head of the opposition in Parliament, said his party had learnt lessons and was reorganising itself after its loss in the September 20 presidential elections which saw President Michael Sata of the PF beat his main rival Rupiah Banda of the MMD.

"We are down but we are not out, and we know that we will bounce back to power. We are truly coming back and when we come back, we will have tested both sides opposition and ruling and nothing makes you better than testing both sides," Mutati said in his maiden speech to Parliament on Tuesday.

Mutati, who is also Lunte Constituency member of parliament, said the opposition had no dispute with President Sata's pledge to rule based on the Ten Commandments.

He said the opposition would support President Sata's efforts in developing the country, saying Zambians deserved better.

"We have no dispute with the Ten Commandments but that should include tolerance, humility and selflessness," he said.

"We shall give them space to govern on the principle that we put the aspirations of the people of Zambia first and move as their beacon of hope and we shall remain and preserve our allegiance to provide checks and balances so that governance does not meander. We shall embrace what President Sata said that the Zambian people deserve better," he said.

Mutati said the opposition would criticise the government on its performance but bearing in mind the realities of governance.

"In governance, you are going to face realities and those campaign messages may not find residence in those realities. When the Minister of Mines says no windfall tax, that is the reality of governance that requires deep reflection. When the Minister of Justice spells out the constitutional roadmap, that is the reality of governance," he said.

Mutati said the opposition would not give up the task to ensure those in power deliver services to the Zambian people.

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(NEWZIMBABWE) Mugabe, Tsvangirai, Ncube condemn political violence

Mugabe, Tsvangirai, Ncube condemn political violence
Calling for peace ... Tsvangirai, Mugabe and Ncube attend Friday's meeting
11/11/2011 00:00:00
by MacDonald Dzirutwe I Reuters

ZIMBABWE'S three main political leaders stood together on Friday to condemn political violence, and said parties should freely hold meetings at a time when tensions are rising ahead of possible elections in 2012. Last week, MDC-T president Morgan Tsvangirai said violence was on the increase and Zanu PF leader Robert Mugabe's supporters and state security agents were to blame.

On Friday Mugabe, Tsvangirai and Welshman Ncube, who leads a faction of the MDC, addressed a joint meeting of senior members of their respective parties and said "endemic" political violence had to end ahead of the next elections, likely to be both parliamentary and presidential.

Zimbabwe's votes over the last decade were marred by political violence, largely blamed on militant supporters of Mugabe's Zanu PF party.

[Largely blamed by whom? - MrK]

"We have committed heart and soul that we ensure that our country is without violence. We want to live in a peaceful country," Mugabe said.

The 87-year-old leader

[How old is Morgan Tsvangirai? And what is his physical condition? I'll bet that President Mugabe is in better shape than PM Tsvangirai, who is grossly overweight, and in late middle age, is looking for a very stressful job. - MrK]

said he had been discussing the issue with Tsvangirai during weekly meetings, adding that parties should set up inter-party committees across the country to stop violence.

Tsvangirai and Mugabe said their relationship had changed from one of hostility to one of friendly opposition and urged party supporters to emulate this.

"Let us differ with dignity. Violence is a collective national shame," Tsvangirai said at the same meeting.

Talk of a possible election next year has reignited violence, which had decreased after Zanu PF and the two MDC factions formed a unity government more than two years ago following a disputed election in 2008.

Under the agreement, Mugabe stayed on as President while Tsvangirai became Prime Minister. Ncube is the Industry and Commerce Minister.

Police have in the past few weeks disrupted Tsvangirai's rallies in the western Matabeleland region where his MDC-T won the majority of parliamentary seats in 2008.

Suspected Zanu PF militants last Sunday forced Tsvangirai to cancel a rally when they attacked MDC-T youths in Chitungwiza town outside Harare.
Mugabe said he was sincere in calling for an end to violence and parties should not force people to attend rallies.

He also said the police should protect all citizens, noting that there were complaints some officers stand by when Zanu PF members attack Tsvangirai's supporters.

"Let us walk the talk of peace. This is our sincere plea from our hearts," Mugabe said.

"People must hold their meetings freely. Don't stand in the way of those who are holding a meeting."
The parties also agreed on a code of conduct against political violence.

Mugabe has ruled Zimbabwe since independence from Britain in 1980 and critics say the veteran leader has clung to power by using violence against opponents and through coercion and patronage to retain support within Zanu PF.

He is Zanu PF's presidential candidate in the next vote.

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(NEWZIMBABWE) Vicious racist attack blinds Zim PHD student

Vicious racist attack blinds Zim PHD student
11/11/2011 00:00:00
by Staff Reporter

A DUBLIN man has been jailed for a vicious racist assault on a Zimbabwean PhD student which left him permanently disfigured and blind in one eye.

Luke Casey, 25, beat Mapfumo Chidzambwa, 30, with a hurley while his co-accused, Stephen Mooney, 24, struck his head a number of times with a golf club, breaking the unarmed victim's facial bones and sinking his right eye into its socket.

Witnesses to the assault later told police that Mooney could be heard shouting "Do you want to see me crack a n****r's skull?" Mooney was jailed for four years last July.

Casey was jailed for three years and nine months by Judge Patricia Ryan after she twice emphasized that the maximum penalty available to the court was five years.

She said she had to reduce the sentence on the basis of Casey's guilty plea and also took into account the State's evidence that it was Mooney who had inflicted the serious injuries and who had instigated the attack.

Both men pleaded guilty at Dublin Circuit Criminal Court to assaulting Chidzambwa causing him harm and criminal damage of two cars in the early hours of 1 October, 2006.

Detectives said Mooney and Casey had been at the same house party as Chidzambwa in Clondalkin, a suburb located some 10 km west of Dublin, along with a number of Zimbabwean nationals.

Mooney was asked to leave after he made unwelcome advances to a number of the women at the gathering. He took exception to this and both he and Casey damaged a number of vehicles that were parked outside the house.
The party-goers went out to investigate but Chidzambwa was heading for home with his uncle when he was set upon.

Chidzambwa had moved to Ireland from Zimbabwe in 2001 to study electronic engineering at the University College of Dublin. He was studying for a PhD in wireless communication at the time of the attack.

His victim impact report stated that he had to live with the horror of the assault on a daily basis and is reminded of it every time he sees his facial scars whenever he passes a reflective surface.

Chidzambwa said he had to take a year out from his doctorate studies and when he returned there was no longer funding available and he was forced to scale down to a Masters Degree.

He said he has since had to "scavenge" for jobs that are meant for people with disabilities and he feels intimidated seeking jobs like cleaning and waiting tables to help his finances because he believes employers may be prejudiced.


"All the dreams I had have vanished and all the aspirations I had were snatched away by a golf club," Chidzambwa said.

Chidzambwa told the court at Mooney's sentence hearing that he had struggled financially from when he started college but the scholarship had given him a "glimmer of hope" and he had believed his financial future would be bright.

Since the attack he gets headaches, his injuries have inhibited his working ability and his concentration has suffered.

He added that the loans he has accumulated to a total €20,000 are like a noose around his neck.
"If I hadn't suffered the vicious attack, my prospects would be different," he said.

He said he had to stop participating in all physical sports, he can only sleep on one side and though doctors managed to seal leaking spinal fluid after the attack, he now can't do any strenuous activity.

Doctors have also advised him against taking flights because of potential aneurysms and the heat in Africa causes headaches, which means he cannot enjoy a trip home.
He added that he has become a loner and must live with the attack for the rest of his life.

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(NEWZIMBABWE) Zimbabwe by book: the good, the bad and the dire

COMMENT - Morgan Tsvangirai: "the social agenda that Mugabe had pursued from independence faltered under ESAP [an International Monetary Fund-prescribed neoliberal policy], with devastating results." See here, what the MDC means with 'mismanagement by Mugabe' - the World Bank's Enhanced Structural Adjustment Programme (ESAP), otherwise known as austerity. It is the MDC that wants to return to austerity, without telling the Zimbabwean people, of course.

Zimbabwe by book: the good, the bad and the dire
11/11/2011 00:00:00
by Percy Zvomunya I Mail & Guardian

At the Deep End by Morgan Tsvangirai (Penguin)
Dzino: Memories of a Freedom Fighter by Wilfred Mhanda (Weaver Press)
Mugabe and the White African by Ben Freeth (Zebra Press)

One might take it as a sign of approaching normality in Zimbabwe that activists and politicians are taking a break from fighting President Robert Mugabe to sit down and write autobiographies and memoirs.

Most notable is Prime Minister Morgan Tsvangirai, leader of the Movement for Democratic Change (MDC), who worked with his spokesperson and ghostwriter T William Bango on a 550-page autobiography, At the Deep End.

It is a text that should have been half its size -- the first few hundred pages are forgettable. The book lights up around 1999, the year the MDC was formed, which is about chapter 10. So, if you are pressed for time, skip the first 200 pages. I assure you, you are not missing much.

All right, what's covered between pages one and 200? It's a social history of Zimbabwe, the subregion and the world through Tsvangirai's eyes. But who really wants to view the world through his eyes? Tsvangirai writes about the fall of the dictatorship in Portugal that resulted in independence in Mozambique and the guerrilla war against Ian Smith's government gleaned from the "avid" reading of Rhodesian newspapers.

Then there are Robert Mugabe's early years and he even throws in the fall of the Berlin Wall.

The result of this is, at times, unfortunate and unschooled. For instance, writing about the relations between Pretoria and Harare in the 1980s, Tsvangirai says:

"He [Mugabe] played into Pretoria's hands by adopting an aggressive stance and the entire nation paid as a result."

What was Mugabe supposed to do? Engage in sweet pillow talk with apartheid South Africa so soon after Mugabe, the Zimbabwe African National Union (Zanu) and the Zimbabwe African People's Union (Zapu) had been generously hosted by Kenneth Kaunda's Zambia, Julius Nyerere's Tanzania and Samora Machel's Mozambique?

Tsvangirai also criticises Mugabe for sending Zimbabwean troops to Mozambique in the early 1980s to help fight the apartheid-sponsored Renamo insurgency. That operation can't be compared with Zimbabwe's questionable participation in the late 1990s war in the Democratic Republic of Congo, for instance.

Mugabe, eschewing Durban as a port, had to help secure access to the Indian Ocean via the port of Beira. "The operation in Mozambique cost Zimbabwe an average Z$2-million a day when the economy could hardly sustain it; nor were there any benefits from such extravagance, apart from giving Mugabe the political mileage he needed as a donor and powerful regional leader.

Wooden prose

"I was born a few months before the white settler administration formed the federation of Rhodesia and Nyasaland," Tsvangirai writes in the first chapter of a book, which can be read as a social anthropological study of life in Zimbabwe after World War II. By page 24, I was struggling to get into its mostly dense, wooden (apologies to all the trees out there) prose. There is an explanation of sorts on page 24: "Although I was extremely competent with figures, arithmetic and mathematics, I had difficulties with both spoken and written English."

Then there are the strange sentences and weird thought processes. What, for instance, does the following mean? "People felt their former liberators were now preying on them, riding roughshod over basic graciousness after having fallen hard into the trappings of power, ambition and avarice."

Or this: "Zimbabweans live in a world dominated by symbols. In fact, symbolism is so deeply embedded in our culture that it can be seen as second nature." Which people don't value symbols and symbolism?

"My life was destined to be closely interwoven with political, economic and social changes in Zimbabwe." I don't know what this means. I could understand it if Mugabe or one of the nationalists said it, but as Tsvangirai joined Zanu-PF at independence in 1980, its meaning is not immediately clear.

Tsvangirai's liberation war CV is sparse, involving attending "several secret political meetings at which black people sought to assure themselves that Zimbabwe was destined for freedom".

Early on in the book he gives us a reason why, unlike some young men of his age, he did not go to the bush to join other guerrillas. "Perhaps I would have become a political activist but my parents needed financial help to support the other children through school."

To people who are not from the subregion, this might sound like pointless nostalgia, but the liberation war is a big deal in Mozambique, Angola, Zimbabwe, Namibia and South Africa. It's not a coincidence that where the liberation movements have been voted out, for instance in Zambia and Malawi, wars were not waged to push for independence.

Flawed arguments

Tsvangirai's nostalgia for the liberation war recalls what Zimbabwe's generals told him in 2000 -- we won't allow you to take power even if you win the elections. It was a message repeated by Constantine Chiwenga, Zimbabwean military supremo, who said a few years ago:

"I would not hesitate to go on record again on behalf of the Zimbabwe Defence Forces to disclose that we would not welcome any change of government that carries the label 'Made in London', and whose sole aim is to defeat the gains of the liberation struggle."

I have no space to point out the holes in Tsvangirai's argument that "the social agenda that Mugabe had pursued from independence faltered under ESAP [an International Monetary Fund-prescribed neoliberal policy], with devastating results." Mugabe was able to expand social services, education and infrastructure originally meant to cater for a few hundred thousand whites. Even after a decade of decline, Zimbabwe was last year listed by the United Nations as the most literate country in Africa. Love him or hate him, that's part of Mugabe's legacy.

So what new details does this autobiography put in the open? That former president Thabo Mbeki was "financing the Ncube group to destabilise the MDC", thus the splitting of the MDC into two factions -- Tsvangirai's and that led by university man Welshman Ncube.

Tsvangirai also traces the roots of the anti-intellectualism in the MDC.

"If the political project was to succeed, I told myself, it had to be led by ordinary workers, peasants ... not theorists, but doers".

Being one doesn't preclude being the other; Mugabe is a classic example. He's very erudite and is a man of action (some would say too much action).

One of the problems that faced the MDC after a few years in existence was its lack of ideological cohesion. Apart from being opposed to Mugabe, one was sometimes not sure what the MDC's vision for Zimbabwe entailed. But Tsvangirai writes that the MDC was "even more ideological" than the ruling party. "Zanu-PF was just a nationalist movement whose agenda ended with independence in 1980." Just a nationalist movement?

Tsvangirai writes about the perception that the MDC is a front for the West.

"While trying to rescue the white farmers, London created an impression that the MDC was its vehicle for regime change."

It's not clear whether this impression has gone away because people who dislike Mugabe and Zanu-PF will still tell you that they find the MDC's positions wishy-washy. Still, Tsvangirai insists, "for all the Zanu-PF hype, neither Zimbabwean whites nor Britain influenced the MDC and me in any way".

Savage attacks

If you like to see blood, Tsvangirai uses his lance to get at his rivals. About Ncube, he writes: "I had spent the better part of my tenure babysitting some of my highly unpopular colleagues, including Ncube." He notes that Ncube is a "superb boardroom idealist but lacks a popular or grassroots insights". These politicians insisted that "I should never address a meeting alone. They all wanted to be where I was, especially at mass rallies, in order to benefit from my personal political brand."

About Arthur Mutambara, the man invited from South Africa to head the Ncube faction of the MDC, Tsvangirai says: "After perusing a copy of his inaugural speech I realised that one could pass a university and still come out unfinished as a human being." He describes Mutambara (holder of an Oxford doctorate in robotics) as a "politically illiterate newcomer" and a "lay intellectual".

Tsvangirai is, obviously, a brave man, conscious of his abilities and pulling power. He is, perhaps, the most illustrious hero of the democratic cause.

Yet he uses the "I" voice in places you would expect him to speak in the collective "we". Writing about the delay in the release of election results in 2008, he writes: "I was positive that if I had won control of the legislature, there was no way I could have lost the presidency." And there are other instances of this arrogant "I" voice, as in "finally I had dismantled the monolith to its last pebble".

What about the contributions of the hundreds who died for the democratic cause and the thousands who were tortured?

At other times he speaks about himself in the third person: "Given Mugabe's fiery rhetoric and his deep personal hatred for Morgan Tsvangirai " (Mutambara also does this quite a lot.) I think that's part of the problem with Zimbabwe now, how everything revolves around Mugabe.

When I told a close friend who has worked in Zimbabwe's civil society for decades that I wanted to give her a copy of the biography as a Christmas present, she said I should rather get her Julian Barnes's Man Booker-winning novel, The Sense of an Ending. When I pressed her further that, as an activist, she should read At the Deep End, she said Tsvangirai shoud have written more than one paragraph on the National Constitutional Assembly and also mentioned Tawandah Mutasa and Deprose Muchena. (Muchena is briefly mentioned; Mutasa is not.)

Strange turns of phrases

My friend asked: "Does he finally come out on his polygamous situation?" No, he doesn't, instead portraying himself as a single parent following the 2009 death in a motor vehicle accident of his wife, Susan, whom he describes as "my pillar and holistic stabiliser".

Tsvangirai has such strange turns of phrases. On page 542, he writes: "I wish to acknowledge the lack of space in this memoir for me to go into detail about my new experience in the changed political arena." I wrote in the margin: "No, Morgan, you had over 500 pages to do this."

In contrast, Wilfred Mhanda's 300-page autobiography, Dzino: Memories of a Freedom Fighter, is one of the most important works to come out of Zimbabwe. It has authority because it was written by a senior combatant, a liberation war aristocrat, once a member of the high command of the Zimbabwe African National Liberation Army (Zanla), which was the armed wing of Zanu.

In an arena where war credentials are important Mhanda's CV is sterling. He went to high school at Dadaya, the institution founded by New Zealand-born missionary and former prime minister of Rhodesia, Sir Garfield Todd. Todd was accorded the title mwana wevhu (son of the soil) and billed as the "rallying cry of African nationalism".

From early on Mhanda wanted to be a politician. Among the most treasured gifts he got from his parents were Ndabaningi Sithole's tome African Nationalism and a transistor radio (to younger readers, that was the iPhone of its day).

A bright student, Mhanda was accepted in 1971 at the then University of Rhodesia for a bachelor of science degree, majoring in zoology, botany and chemistry. While there he joined the university's underground Zanu branch. After taking part in protests, he was arrested. He skipped bail and went to Botswana, before proceeding to Tanzania for military training.

Multifaceted account

Mhanda's account is part war diary, part scholarly tome, part insider/outsider account of one of the most interesting episodes in Zanu history. The book is so authoritative that, not a few times, he disputes what other nationalists, historians and scholars have put out. He was one of the chief protagonists when nationalists such as Mugabe and Edgar Tekere were locked up in Rhodesian prisons and when Josiah Tongogara, Zanla's supremo, was in detention in Zambia following the suspicious death of lawyer and Zanu chairman Herbert Chitepo.

Mhanda's book is a clever critique of the uniform nationalist historiography ("patriotic history", as British historian Terence Ranger called it) that has become staple since 2000, sometimes known as Mugabeism.

Some of the information might not be of interest to the general reader but would be to scholars of that period. For the general reader, what's noteworthy is the rise of Mugabe. He wasn't well known in the training camps in Mgagao, Tanzania. "At the time we knew nothing about Mugabe except for the fact that he was the party's secretary general." Rugare Gumbo, one of the few guerrillas who knew him, "spoke highly of him and described him as articulate".

When Mozambique gained independence in 1975, Zanla moved to the east. When Machel asked them to submit a list of their political leaders, Mugabe topped it. Mhanda writes that "Machel leapt from his chair in disgust. He was clearly not happy that we had included Mugabe, let alone as the leader." Mugabe was then living in exile in Quelimane, on the Mozambican coast. "He loves the limelight," Machel said prophetically about Mugabe.

"We lived to regret the day we had put forward Mugabe's name," writes the man who later spent three years in a Mozambican prison for his dis-agreements with Mugabe, who was taking control of Zanla at the time.

Selective amnesia

Mhanda is strange bedfellows with Ben Freeth, in whose company he travels to the west of Zimbabwe in a section of Freeth's Mugabe and the White African.

"Deeply moving" and "fascinating", writes Archbishop Desmond Tutu in the foreword to the book. As I read Freeth, however, I wondered how much of the memoir the bishop had read. It's about the struggles of the British-born farmer fighting off war veterans, thugs and politicians who are after his farm.

The most maddening feature of the book is its amnesia about the genesis of the Zimbabwe crisis. "In Zimbabwe none of the white exploiters will be allowed to keep a single acre of their land," the book declares on page seven. "From 1973 to 1979, 320 white farmers were murdered. This counted for more than the total number of white civilian deaths over that whole period."

Why the farmers are being killed is never explained. Freeth doesn't mention the 50 000 blacks who died in the same period. It's almost as if apropos of nothing black "terrorists" (his word) started killing white farmers.

Ghost of Ian Smith

The book is written in the spirit of the Unilateral Declaration of Independence announced by the late Rhodesian prime minister, Ian Smith, on November 11 1965. When Britain was "granting" independence to its colonies in the 1960s, Smith unilaterally declared independence from Britain.

The ghost of Smith suffuses every page of Freeth's book -- so much so that I wouldn't be surprised if Smith's brood argued for a share of the royalties.

Early on in the book Freeth tells us about his encounters with "tribesmen" in Ethiopia, "terrorists" killing the whites. The traditional healer is a "witch doctor". On a visit to a white-run farm, Freeth is impressed by the commercial operation, "an oasis of irrigated crops and productivity". In contrast the black-populated areas are "dry and barren", even though both sections receive the same amount of rainfall.

The Land Apportionment Act of 1930, the cornerstone of laws that began the impoverishment of black people, is written of affectionately. The law was meant for the "security of tenure" it provided, argues Freeth. "Contrary to the repetitious propaganda, every serious farmer knows that land in these communal areas can be made to produce every bit as well as other land in Zimbabwe," Freeth writes of the rocky, infertile land to which black people were driven by Rhodesian administrations.

Freeth, who is an evangelical Christian, quotes the Bible so liberally that at some point I had to check whether his book was put out by a religious publisher. But his idea of Christianity is one with no empathy for others except his fellow "white Africans". The Munhumutapa dynasty, whose seat was at Great Zimbabwe, is described as one of "master pillager[s]" and "dictator[s] of the time". Freeth and his Christian God seems to care only about white people.

The black men's traditions are "evil practices" and even animals are not spared. The crocodile, Mugabe's totemic animal, is described as "ugly and evil-looking". Can't a crocodile be allowed to be, well, a crocodile? "When I think of African tyrants, I think of the crocodile, because crocodiles are absolute tyrants." The continent is in a big mess because "the spirit of the crocodile has been roused by many of its leaders". I will admit that African leaders have messed up but we have to factor in the centuries of colonial rapine and plunder.

Lawless Africa

Before the advent of the white man, the land was a "place of insecurity and hunger and escaping from invading, looting tribes", Freeth writes. This is another way of saying that before the white man's arrival Africa was formless and without order, with no history. Freeth also writes about the first Chimurenga, a war that involved "attacks on the white people". There is no mention of the dispossession that preceded that heroic struggle.

Freeth's narrative of dispossession and legal fights is, to be sure, touching and heroic. He stoically fights off an assortment of hoodlums and politicians. After being rebuffed by Zimbabwean courts, he took his case to the Southern African Development Community regional court in Windhoek. The court ruled that "white people could be African".

If they so wish, whites can be black, too. The American liberation theologian James H Cone argued that "to be black means that your heart, your soul, your mind and your body are where the dispossessed are". It is never about pigmentation.

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(TALKZIMBABWE) Malema suspended from the ANC

Malema suspended from the ANC
Posted by By Our reporter at 10 November, at 13 : 10 PM

AFRICAN National Congress youth leader Julius Malema has been axed from the revolutionary party for bringing it into ‘disrepute’. Malema was suspended for five years, and must step down as president of the ANC’s youth wing, a party disciplinary committee ruled. He has 14 days to appeal the decision.

The charges against him referred to calling for regime change in neighbouring Botswana calling President Ian Khama a western puppet, comparing president Jacob Zuma to his predecessor Thabo Mbeki and storming into a meeting of top ANC officials.

Derek Hanekom, head of the ANC disciplinary panel, said Malema had been found guilty of sowing serious divisions in the party and of bringing the 99-year-old liberation movement into disrepute.

“Malema damaged the standing of the ANC and South Africa’s international reputation,” Hanekom said, describing his remarks on Botswana as “reckless and baseless”.

Malema, 30, has said he joined the ANC when he was nine years old. He has called for the nationalisation of South African mines and demanded to retake land from ‘white criminals’.

The unexpectedly harsh sentence imposed on Malema, a significant power broker in the ANC, could provoke an anti-Zuma backlash.

It is also a blow to struggle stalwart Winnie Madikizela-Mandela, who testified on Malema’s behalf at the disciplinary hearings.

The party said Malema had the right to appeal to the ANC disciplinary body. He can also appeal against the outcome to the ANC’s national executive committee – headed by Zuma.

Malema was writing a university exam on Thursday.


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(TALKZIMBABWE) Zimbabwe, Namibia in trade talks

Zimbabwe, Namibia in trade talks
Posted by By Our reporter at 10 November, at 06 : 54 AM

The Namibian and Zimbabwean governments are meeting in Walvis Bay to discuss matters of trade between the two Southern African Development Community (Sadc) member states.

Ministers of trade from both countries are present, and alongside business delegations from the Namibia Chamber of Commerce and Industry (NCCI) and the Zimbabwean National Chamber of Commerce are holding talks on how best to bolster the trade agreements that exist between the two countries.

Representatives attending the meetings are from the manufacturing, construction, food and retail sectors as well as a representative from the Namibia Manufacturers Association (NMA).

The visit creates an ideal environment for the exploration of opportunities and business-to-business exchanges between the two business communities.

Zimbabwe and Namibia signed a Preferential Trade Agreement (PTA) in 1992 that provides for the exclusion of customs duty for goods with 25 percent local content.

However, trade between the two countries is still very limited in contrast to the cordial relations the two governments have, which is also reflective of intra-regional trade in the rest of the Sadc region.

Sadc trade is still heavily skewed in favour of developed economies despite a push for regional countries to trade amongst themselves.

South Africa being the economic powerhouse derives major trade benefits from the countries in the hinterland – despite a push by Sadc principals to encourage trade beyond South Africa.

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(SUNDAY MAIL ZW) ZEC in dodgy deal

COMMENT - EISA on it's wikipedia page, lists the National Endowment for Democracy, USAID and the DfID as among it's funders. EISA also list the notorious and CIA interlinked NED on their links page, although it is not clear what their exact relationship is.

ZEC in dodgy deal
Saturday, 05 November 2011 22:36
[Picture: downrangereport] Sunday Mail Reporter

THE Zimbabwe Electoral Commission (Zec) has requested assistance from the Electoral Institute for Sustainable Democracy in Africa (EISA) in the running of next year’s national elections, in a dodgy partnership analysts fear could influence the poll outcome. Last month, the two organisations signed a memorandum of understanding (MoU) that will see them “work closely” on voter education.

They also intend to make the office of the chairperson of Zec and that of EISA’s executive director the focal points of the joint operation. Political analysts quickly warned that the involvement of EISA could open the door to the West to interfere with the electoral process.

Zec acting chairperson Mrs Joyce Kazembe, however, maintained the partnership was above board. She said EISA would only provide technical support while ZEC remained in the driver’s seat.

“Yes, we signed the agreement after they approached us, but simply for the purpose of tapping into their experience of handling various facets of elections such as the media and political parties,” she said.

“Let me make it clear that we are driving the process. We went through all the various approval processes, which include consulting with our line ministry, which is the Ministry of Justice and Legal Affairs.

“It is clear we are in charge of the whole process. If anybody thinks that by signing an MoU with us they are in charge, they are day-dreaming. We are an independent body and we will not be influenced by anybody.”

EISA was founded in 1996 to “promote credible elections, participatory democracy and human rights culture”. It also claims to advocate the strengthening of governance institutions for the consolidation of democracy on the continent.

It is the mother body of the Zimbabwe Election Support Network (Zesn).

Among the organisation’s main financiers are the Swedish International Development Authority (Sida), the Belgian government, Norwegian Centre for Human Rights and the European Union, all of which have for long been pushing for regime change in Zimbabwe.

According to the MoU, the initial activities under the partnership will be funded by a grant provided to EISA by Sida and the Royal Norwegian Embassy.
The implementation of all activities under the MOU will also be subject to further grants provided to EISA by other donors, including Sida and the Royal Norwegian Embassy.

Part of the document, co-signed by Mrs Kazembe and EISA acting executive director Ms Ilona Tip, reads: “Should ZEC secure funds and solicit EISA’s technical assistance in collaborative activities under this MoU, EISA will avail itself based on mutual consultations.

“The MoU enters into effect on the date of signature of this memorandum and concludes on December 31 2012, subject to extension based on mutual agreement between the two parties.”
A political analyst who preferred anonymity said donors pour funds into EISA which, in turn, routes the money to Zesn. The analyst said the West was working to influence the outcome of the impending elections via Zec.

“It is the mandate of the Zimbabwe Electoral Commission to conduct voter education as provided for by the Constitution. Enlisting the services of EISA, therefore, raises eyebrows,” said the analyst.
“They (EISA) want to appear to be working with ZEC while, in fact, working against the establishment. It would appear they want to effect regime change between now and 2012.”

Zimbabwe is due to hold elections following the expiry of the lifespan of the inclusive Government.
Zanu-PF insists the polls should proceed in line with the stipulations of the country’s Global Political Agreement while the MDC-T appears to be dragging its feet.

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Friday, November 11, 2011

(REUTERS) (LUSAKATIMES) PF Government unveils budget with big social spending and farming subsidies, doubles minerals royalties

PF Government unveils budget with big social spending and farming subsidies, doubles minerals royalties
TIME PUBLISHED - Friday, November 11, 2011, 3:57 pm

Government has unveiled an expansive 2012 budget on today, with big increases in social spending and farming subsidies to be paid for by a rise in mineral royalties and a debut $500 million Eurobond.

In the first budget since September’s election upset, Finance Minister Alexander Chikwanda put flesh on the bones of new President Michael Sata’s promises to spread the benefits of strong growth in Africa’s biggest copper producer.

Overall spending would rise to 27.7 trillion kwacha ($5.5 billion), or 26.5 percent of gross domestic product (GDP), from 21 percent in 2011, Chikwanda said.

Domestic borrowing for the year would amount to 1.3 percent of GDP and foreign financing would be 3.0 percent, giving an overall deficit of 4.3 percent of GDP, Chikwanda said. Foreign grant aid would amount to less than 2 percent of GDP.

Analysts said the budget certainly qualified as “pro-poor”, although the extra spending did not mean the southern African nation was loading up on debt.

“Even though the budget outlined slightly more spending than had been anticipated, it’s still taking place against a backdrop of increased revenue collection, and an effort to raise more meaningful receipts from previously undertaxed sectors,” said Razia Khan, head of Africa research at Standard Chartered in London.

Most of the extra spending would go on 45 percent and 27 percent increases for health and education respectively, and a 38 percent boost for a farming subsidy programme that has underpinned nearly a decade of 6 percent-plus annual growth.

“The Patriotic Front (PF) won the 2011 election because it listened to the needs of the people at all levels,” Chikwanda said in his budget speech. “Now that we are in government, we have not and will never distance ourselves from the people.”

PF leader Sata, a gruff populist who spent 10 years as opposition leader, has caused slight nervousness among foreign investors, not least for his vitriolic criticism of Chinese mining firms.

However, he toned down his rhetoric in the latter stages of campaigning, and since coming to office has been at pains to build a working relationship with a sector that accounts for more than 70 percent of all foreign exchange earnings.

However, Chikwanda put some pressure on the mining firms, raising minerals royalties to 6 percent from 3 percent for base metals such as copper, and to 6 percent from 5 percent for precious metals.

He also said Lusaka would resurrect the previous administration’s plans to tap international capital markets to raise infrastructure funds, with the launch of a debut $500 million 10-year Eurobond during the year.

However, he made clear that Zambia, a nation of 13 million people, would not get sucked into unsustainable debt.

“As we spend more on our socio-economic infrastructure, our ability to meet our debt obligations should not be ignored,” he said. “In this regard, the government will target concessional borrowing as the first option.”

He also assuaged fears of looser monetary policy, saying the Bank of Zambia would continue to target single-digit inflation through its control of money-supply growth, a move that should support the kwacha currency.

“Investors will be encouraged by this, and we expect the kwacha, impacted by global volatility in recent days


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(LUSAKATIMES) Government increases funding to the health sector, abolishes primary health services fees

Government increases funding to the health sector, abolishes primary health services fees
TIME PUBLISHED - Friday, November 11, 2011, 4:16 pm
By Staff Reporter

The government has increase its funding to the health sector by 45 percent from this year’s K 1,772.9 billion to K2579.9 billion in 2012. The government has also abolished primary health services fees, meaning Zambians could now access free health services in clinics.

Speaking during the announcement of the K25 trillion 2012 budget, Finance Minister Alexander Chikwanda said the government will run the health sector in line with the Abuja Declaration to which Zambia is a signatory.

The Aduja Declaration demands that signatories commit 15 percent of their national budgets to the health sector.

The ministry is the largest recipient of donor funding but has in the past two years been hard hit by withdrawal of grants following poor accountability issues.

In the Abuja Declaration adopted at the 24-27 April 2001 summit, African leaders declared that AIDS was a state of emergency in the continent and pledged to place the fight against the pandemic at the forefront and as the highest priority issue in their respective national development plans.

They also committed to take personal responsibility and provide leadership for the activities of the National AIDS Commissions or Councils.

In his address, Mr Chikwanda announced also announced that the government has allocated K301.7 billion to the purchase of drugs and medical equipment.

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(LUSAKATIMES) 2012 Full Budget address speech by Finance Minster Alexander Chikwanda

2012 Full Budget address speech by Finance Minster Alexander Chikwanda
TIME PUBLISHED - Friday, November 11, 2011, 7:04 pm

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 2012 to 31st December, 2012 presented to the National Assembly in November 2011.

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.

Mr. Speaker, as I begin this budget address, I wish to acknowledge the macro-economic achievements that the country has attained when the economy was under the stewardship of my predecessor, Hon. Dr. Situmbeko Musokotwane, MP. I would like to pay tribute to him and the previous administrations for laying a strong foundation upon which this Government will build.

Mr. Speaker, 2011 is a landmark year. In September, we held successful elections and had a peaceful transition of power, a rare feat on the African continent. As Zambians, we should be justly proud of this achievement. In October, we celebrated 47 years of independence, regrettably amidst persistently high and unacceptable poverty levels.

Sir, in his address to Parliament, His Excellency, the President outlined an ambitious programme of action to begin his administration’s vigorous and unrelenting fight against poverty. As we embark on the path to transform our nation, hard work is required and difficult choices will have to be made. But, as a nation, we have collectively chosen this path. With this unity of purpose, we are confident that the challenges before us may be intractable but certainly not insurmountable. It is our duty to ensure that the benefits of our recent economic success are felt by every Zambian. Thus, the theme of the 2012 budget is “Making Zambia a better place for all.”

Sir, my speech this afternoon is in four parts.

In Part I, I review the global and domestic economy. Part II outlines the macro-economic objectives, policies and strategies for the 2012 budget.

In Part III, I present the 2012 budget and I conclude in Part IV


Mr. Speaker, in 2011, the global economy continued its recovery. Annual growth is projected at 4.0 percent slightly lower than the 5.1 percent recorded in 2010. Economic growth was strong in the emerging and developing economies, with growth in Sub-Saharan Africa of 5.2 percent in 2011. In contrast, growth in the advanced economies, at 1.6 percent, continued to be sluggish largely on account of unsustainable sovereign debts in some Euro zone countries and weak demand in the United States of America.

Mr. Speaker, strong growth in emerging economies and political unrest in North Africa and the Middle East have kept international commodity prices high. The average price of copper in the first ten months of 2011 was US $8,704 per tonne, compared to US $7,538 per tonne in 2010. The price of oil has averaged US $109.9 per barrel in the first ten months of 2011, higher than the US $79.0 in 2010. International food prices have also been generally high in 2011 mainly on account of supply constraints.

Sir, high commodity prices present both opportunities and risks to the domestic economy. High copper prices can boost export earnings, facilitate investment and support the fiscal position. Similarly, high food prices present an opportunity for the country to enhance agricultural production, and diversify the export base. In contrast, high oil prices could increase the cost of production thereby increasing inflationary pressures in the domestic economy.


Growth and Inflation

Mr. Speaker, preliminary estimates indicate that the economy will grow by 6.5 percent in 2011. This is in line with the initial projection of 6.4 percent. Agriculture, manufacturing, construction, and transport and communications are the main drivers of this growth. Growth could have been significantly higher had the mining sector performed according to projection. I am concerned that the mining sector data do not fully reflect actual production.

Sir, annual inflation has remained in single digits and was 8.7 percent in October, 2011 compared to 7.9 percent in December 2010. The increase in inflation reflected the slight rise in annual food inflation despite a high maize harvest. However, non-food inflation has been fairly unchanged at low double digit levels. The recent reduction in fuel prices, effected by the PF Government, should reduce inflation by the end of the year.

Monetary and Financial Sector Developments

Mr. Speaker, economic activities in 2011 have continued to drive growth in money supply. The annual growth in money supply was 26.8 percent up to September 2011 compared with 23.6 percent during the corresponding period of 2010. This was mainly driven by increased lending to private enterprises, reflecting high confidence and opportunities in the economy.

Sir, with regard to interest rates, returns on Government securities rose mainly on account of higher Government borrowing. Interest rates on Treasury bills increased to 14.2 percent in October 2011 from 8.2 percent in December 2010. Similarly, interest rates on Government bonds edged upwards to 16.2 percent from 11.3 percent. Sir, lending rates in commercial banks have remained high and are not in line with low inflation and relative macroeconomic stability. At the current level, commercial bank interest rates are 300 percent the inflation rate.

Mr. Speaker, high interest rates are a serious constraint to lowering the cost of doing business, increasing access to credit and accelerating private sector growth. This is particularly true for the small and medium scale enterprises which account for the bulk of employment opportunities and growth. In addition, small and medium scale enterprises offer the most powerful weapon to reduce poverty and create a just and equitable society.

Sir, Government’s legitimate expectation is that interest rates will continue the downward trend that started within the first 30 days of the PF assuming Government. The Bank of Zambia has taken steps to enhance the liquidity available to banks by lowering the reserve ratios. This can only be justified with a lower interest rate regime.

Mr. Speaker, the financial sector’s overall performance has been favourable. In the banking sector, asset quality improved due to a reduction in gross non-performing loans. With respect to the non-bank financial institutions, performance and financial condition was rated fair as at end-September 2011. The sector has continued to record growth with the number of institutions increasing to 95 as at end-September 2011 from 87 at end-September 2010.

Sir, with regard to developments under the Financial Sector Development Plan, access to financial services has increased through the promotion of microfinance services, mobile banking, money transfer services, and rural banking for the financially excluded districts. The number of mobile money service providers increased to 57 as at August 2011 from 29 in December 2010. In addition, the number of districts without banking services declined to 7 as at end-September, 2011 from 14 in December 2010.

Mr. Speaker, in line with the positive economic performance, the Lusaka Stock Exchange is poised to register another year of impressive growth. In the first nine months, the share price index increased by 9.3 percent to 3,823.1, while market capitalization rose by 44.9 percent to K44,802.1 billion. This outturn was partly due to an improvement in net portfolio inflows of foreign capital amounting to US $13.0 million, compared to a net portfolio outflow of US $8.2 million over the same period in 2010.

External Sector Developments

Mr. Speaker, the external sector remained strong. The current account surplus is projected to rise by 54.7 percent to US $951.0 million in 2011 from US $614.7 million in 2010. This is mainly on account of high copper export earnings of US $8.4 billion, up from US $5.8 billion in 2010. Non-Traditional Exports are again expected to register robust growth and are projected at US $1.5 billion in 2011 from US $1.2 billion last year. Consequently, gross international reserves rose to US $2.6 billion as at end-September 2011, representing 4.3 months of import cover.

Sir, the exchange rate of the Kwacha against major currencies exhibited resilience. It depreciated marginally by 4.5 percent to K4,949.8 per US dollar at end-October, 2011 from K4,735.7 per dollar as at end-December 2010. This was despite uncertainties prior to the elections and the strengthening of the US dollar.

Mr. Speaker, the performance of the budget in 2011 has generally been satisfactory with end year revenues expected to be above target. However, there have been large pressures on expenditure arising from the need to fund the general elections, increased maize purchases and procurement of fertilizer, among others. Consequently, the overall deficit is expected to be 3.1 percent of GDP, compared to the projection of 2.9 percent.

Sir, preliminary figures as at end-September indicate that domestic revenues at K14,580.2 billion have over performed. This trend is expected to continue and will result in an over performance of 23.2 percent by the end of the year. This performance is mainly attributed to payment of mining tax arrears and improved tax administration.

Sir, general budget support receipts from cooperating partners were projected at K586.5 billion in 2011. As at end-September, K298.8 billion was received and the balance is expected to be received in full by the end of the year.

Mr. Speaker, total expenditure by the end of 2011 is expected to be K24,041.2 billion, 18.8 percent higher than budgeted. This is against the total expected revenues and grants of K20,657.1 billion. The difference will be financed through borrowing.

Domestic and External Debt

Mr. Speaker, as at end-September 2011, Government contracted external loans of US $504.8 million to finance the implementation of infrastructure projects in the roads, energy and agricultural sectors. A net amount of about US $200.0 million was disbursed on new and existing loans. Consequently, external debt rose to US $1.6 billion as at end-September, 2011 from US $1.4 billion in 2010. At this level, the external debt stock is 8.2 percent of GDP, well within sustainable levels.

Sir, as at end-September, 2011, total domestic debt amounted to K13,876.8 billion or 16.1 percent of GDP. Of this amount, K12,820.9 billion is accounted for by government securities while the balance of K1,055.9 billion is accounted for by other public liabilities such as pension arrears, awards and compensation, and arrears to suppliers of goods and services.


Macroeconomic Objectives

Mr. Speaker, macroeconomic policy under the new administration will be geared towards maintaining a stable macroeconomic environment conducive to investment, inclusive growth and employment creation.
Sir, the specific macroeconomic objectives in 2012 will be to:

a)achieve real Gross Domestic Product growth of above 7.0 percent;
b) attain end-year inflation of no more than 7.0 percent;
c)limit overall fiscal deficit to 4.3 percent of GDP and domestic borrowing to 1.3 percent of GDP; and
d)maintain gross international reserves of at least four months of import cover.
Monetary and Financial Sector Policies

Mr Speaker, monetary policy in 2012 will remain focused on the maintenance of single-digit inflation. In line with this objective, the Bank of Zambia will continue to use market-based instruments to limit money supply growth. The Central Bank will also continue to work towards enhancing the effectiveness of the monetary policy. In this regard, the option of adopting an interest rate-based framework will be explored further.

Sir, a flexible exchange rate regime has worked well forZambia by absorbing external shocks that could have been harmful to trade, employment and inflation. In this regard, the Government will ensure that determination of the exchange rate remains market based while supporting the competitiveness of our exports. To minimize the impact of rapid movements in the exchange rate, the Bank of Zambia will maintain its policy of intervention to smoothen volatility.

Mr. Speaker, maintaining a sound financial system is essential to investment and economic growth. To this effect, the Bank of Zambia will continue to promote stability of the financial sector through strong supervision of financial institutions and by ensuring compliance with regulations.
Fiscal Policy

Mr. Speaker, the objective of the Government in 2012 is to continue with effective fiscal management and supportive fiscal policies so as to attain high and inclusive economic growth. This fiscal stance entails increasing domestic and external resource mobilisation to support our development agenda and deliver on our commitment to “Make Zambia a better place for all.”

Sir, our fiscal policy objectives in 2012 will be to:

a)increase domestic revenues to 19 percent of GDP;
b)limit domestic borrowing to 1.3 percent of GDP and net external borrowing to 3.0 percent of GDP; and
c) commit at least 50 percent of the budget to social sectors and infrastructure development
Debt Policy

Mr. Speaker, the Government is aware that even as we spend more on socio-economic infrastructure, our ability to meet our debt obligations should not be ignored. In this regard, the Government will target concessional borrowing as the first option. In order to meet the huge infrastructure financing needs, the Government will also consider non-concessional borrowing for projects with high economic and social returns.

Sir, this Government will ensure transparent and accountable use of loans by strengthening parliamentary oversight. Further, the capacity to appraise projects in the Ministry of Finance and other ministries implementing major projects will be strengthened. The Government will also review the existing legal framework in order to strengthen debt management.

Mr. Speaker, early this year,Zambia was assigned a B+ rating by two reputable international rating agencies. This has opened up the opportunity forZambia to diversify its external financing sources to support our commitment to improve infrastructure, particularly in the road and energy sectors. To this end, the Government plans to proceed with the issuance of a ten-year sovereign bond worth US $500 million in 2012.

Sir, the issuance of this bond will establish a pricing benchmark for future bond issuance by both the private and public sectors. Furthermore, it will enhance the visibility of the country as a favourable destination for investment. This will “crowd-in” private sector investment and ease competition for domestic savings.

Mr. Speaker, the PF Government recognizes the efforts of previous administrations in establishing strong growth. However, indicators of human development inZambia are dismal, with poverty remaining consistently above 60 percent. In rural areas, the situation is even worse at 77.9 percent. Unemployment levels have remained unacceptably high especially among our youths. According to the 2011 Human Development Report,Zambia is still ranked among the poorest at 164th position out of 189 countries.

Sir, this tells us that we must never focus exclusively on macroeconomic stability. A mother in Gwembe is not interested in lower inflation if she can’t take her child to school; an unemployed youth in Kaputa is not empowered by songs of praise about stability of the exchange rate but by being provided with skills and job opportunities; our hard working farmers across the country have no interest in real GDP growth if their farm produce lies uncollected, they are not paid on time and they do not receive a reasonable and fair recompense for their labour.

Mr. Speaker, to address these concerns, the PF Government will focus on social justice and equity while sustaining macroeconomic stability. This will be achieved through diversifying the economy, enhancing productivity, promoting employment opportunities and pursuing sound financial management while investing in supportive infrastructure.

Sir, let me now provide brief details on each of these strategies.
Diversification and Productivity

Mr. Speaker, for far too long, our economy has continued to be over reliant on copper which has delivered limited benefits for the majority of our people. This Government recognises recent efforts made towards diversifying our economy. We are determined to accelerate these efforts by promoting growth in the agriculture, tourism and manufacturing sectors.

Sir, in the agricultural sector, we will extend support to crops beyond maize, strengthen research and extension services, invest in irrigation, develop and rehabilitate livestock infrastructure and promote disease free zones. In addition, the Government will reform the agricultural marketing system, promote agro-processing and forward linkages including through the development of farm blocks. Other strategies will include technological transfer and land development.

Sir, in the tourism sector, we will promote and expand tourism products and develop key infrastructure. The Government will also open up areas for private sector investment including the northern circuit. Further, with His Excellency’s bold decision to relocate the provincial capital to Choma, Livingstone will now be able to devote all its energies to enhancing its status as the tourist capital ofZambia.

Mr. Speaker, in the manufacturing sector, the Government will facilitate private sector development, promote the growth of Micro Small and Medium Enterprises and develop rural based enterprises. In this regard, the Government will continue with the development of the Multi-Facility Economic Zones.

Sir, to enhance private sector productivity, the Government has, within 50 days of taking office, lowered the cost of credit. The Bank of Zambia will continue to engage the financial sector to ensure that innovative ways of providing affordable financing are identified and implemented. In addition, the Government will accelerate business licensing and regulatory reforms to further reduce the cost of doing business inZambia. We will also invest in vocational and technical education in order to equip the labour force with the appropriate skills that meet the demand of the private sector.

Public Financial Management

Mr. Speaker, Government’s ability to effectively promote pro-poor growth through the budget is dependent on the efficacy of its public financial management (PFM) practices. Consultation, transparency and accountability are cardinal principles upon which this Administration will manage public finances. Adherence to these principles will reduce the space in which misuse and abuse of public resources can thrive, thereby enhancing the development orientation and service delivery impact of public expenditure.

Sir, to this effect, in 2012, the Government will finalize and begin to implement a revitalized PFM strategy that practically integrates these core principles into its PFM practices. Further, Government will bring to this House a Planning and Budgeting bill and an amendment to the Public Finance Act to place these cardinal PFM principles on a legal footing.

Public Private Partnership

Mr. Speaker, the Public Private Partnership (PPP) framework provides a mechanism to employ private financing and expertise for delivering public goods and social services that would ordinarily be funded from the budget. The PF Government will collaborate with and encourage the private sector to participate in financing key public sector projects for the benefit of our people. The experience from the already implemented PPP projects will be used to strengthen project identification, development and implementation. We will also ensure that the implementation of PPP projects does not give rise to unsustainable contingent liabilities. There is a compelling need to guard against fraudulent schemes.

Provision of Statistics

Mr. Speaker, effective formulation and evaluation of public policies depends on the availability of good quality and timely provision of statistics. In the past, inadequacies in the statistics have hampered well informed decision making. It has come to my attention that a number of organizations that are obliged to provide statistics have often not complied with the law.

Sir, we cannot allow this to continue and every organization operating in this country must avail Government with relevant information and statistics from time to time. Currently the Central Statistical Office is conducting an economic census. I implore the business community to cooperate with Government agencies collecting statistics as we all stand to benefit.



Mr. Speaker, I now present the budget for 2012 which focuses on promoting economic and social development through an appropriate balance between government expenditure, taxation and borrowing.

Mr. Speaker, the Government proposes to spend K27,698.3 billion or 26.5 percent of GDP projected at K104,462 billion in 2012. Of this amount, K19,976.0 billion or 72.1 percent will be financed from domestic revenues. K1,894.4 billion or 6.8 percent will be financed by grants from Co-operating Partners. The balance of K5,827.9 billion or 21.1 percent of total expenditure will be financed through domestic borrowing of K1,324.3 billion or 1.3 percent of GDP and gross external financing of K4,503.6 billion or 4.3 percent of GDP.

Sir, in line with the PF manifesto, the 2012 budget prioritises expenditures in the four core development areas of agriculture; education and skills development; health services; and local government and housing. In this regard, the budget allocations to these core programme areas have significantly been increased compared with the 2011 levels. Mr. Speaker, let me now discuss policies and budget allocations.
Agriculture Development

Mr. Speaker, over the past three years, there has been an increase in agricultural output. However, the sector continues to face constraints such as low productivity, dependence on rain-fed agriculture, lack of appropriate and affordable breeding stock, low value addition, poor marketing and low investment. In addition, the competitiveness of the sector has been adversely affected by poor transport infrastructure, inadequate storage facilities and limited access to electricity. Further, Government policy has encouraged the growing of maize to the detriment of other crops.

Sir, these constraints mean that the benefits of improved agricultural output have often not reached the poorest rural households. As a result, the sector’s potential to significantly reduce poverty has not been tapped.

Mr. Speaker, in order to address these constraints, the Government will redesign the Farmer Input Support Programme, refocus market guarantees and differentiate extension service provision to support the production of crops which are appropriate to each agro-ecological zone.

Sir, alongside these reforms, action will be taken to improve crop productivity and production as well as soil and water management. The input provision and crop marketing systems will be streamlined and the sector’s competitiveness will be enhanced through infrastructure development and enhanced extension services.

Mr. Speaker, to the agriculture core programme, I have increased the allocation by 37.9 percent to K1,698.0 billion in 2012 from K1,231.6 billion in 2011. Of this amount, K500.0 billion is for the Farmer Input Support Programme and K300.0 billion for crop purchases for the strategic food reserve. The balance will cater for irrigation infrastructure, livestock development, fisheries and aquaculture development, and other programmes.

Education and Skills Development

Mr. Speaker, educating our children is an important prerequisite for long term growth and reducing inequality. Currently, there is minimal early childhood education, poor quality primary and secondary education, dilapidated infrastructure and limited access to vocational and tertiary education.

Sir, we must, therefore, strive towards the attainment of high quality, universally accessible and development oriented education for all. In particular, greater emphasis will be placed on early childhood education as it is a critical requirement for the social and intellectual growth of our children. This will lay a firm foundation for our children to develop into productive and innovative citizens.

In this regard Mr. Speaker, I propose to increase the sector’s allocation by 26.7 percent to K4,850.5 billion in 2012. Out of this amount, K796.4 billion has been set aside for various infrastructure projects including construction of more than 2,000 additional classroom blocks. I have also provided K126.0 billion to upgrade Chalimbana and Palabana colleges into universities and commence works on a new university at Lubwa Mission. In addition, the Government will undertake a net recruitment of 5,000 teachers and update the curriculum to improve the quality and relevance of education to bridge the nation’s skills gap.

Sir, in the area of skills development, the Government will scale up youth skill development programmes through the construction of nine, and rehabilitation of 12 Technical Training Institutes. This is aimed at empowering our youths and making them active participants in the development of the country

Health Services

Mr. Speaker, many families across the country today are struggling to care for their sick. For these families, the hours are long, the responsibilities daunting, the demands unrelenting and costs significant. When they visit their nearest health centre, clinic or referral hospital, their anguish is only minimally diminished, as they face a health provision system that struggles to provide adequate medicines, beds and other basic health requirements.

Sir, we cannot allow this situation to continue. Provision of more resources to the health care system will therefore be an important starting point. Today, I am making a commitment to the Zambian people that the budgetary allocation to the health sector will progressively increase in line with the Abuja Protocol.

Mr. Speaker, in 2012, I have increased the allocation to the health function by 45.0 percent toK2,579.9 billion. Of this amount, K301.7 billion will be for drugs and medical supplies. With these resources, we will scale up the provision of essential drugs, and procurement of equipment and other medical supplies especially to the under-serviced rural areas.

Sir, a provision of K77.9 billion has been made for the net recruitment of 2,500 front line medical personnel while K389.3 billion has been provided for infrastructure and medical equipment. Key programmes under infrastructure development will include the completion of 8 district hospitals and the construction of 5 new district hospitals including the requisite housing for medical personnel.

Mr. Speaker, health care provision cannot only be judged in terms of resource allocation, but also by improving access and health outcomes. In order to increase access to health services, the Government will remove all financial barriers to accessing health services by abolishing all user fees for primary care services not only in rural but also in urban areas.

Local Government and Housing Development

Mr. Speaker,Zambia’s communities, towns and cities are the places where our people live and work, raise their children, and want to retire in dignity and security. Each council is responsible for delivering services that are central to the everyday lives of our people. However, the functionality of the local governance system has been severely eroded thereby compromising local service delivery.
Sir, it is a priority of this Government to decentralize appropriate functions to councils over the medium term. The focus in 2012 will be to build capacity at local level in preparation for the phased devolution of functions from 2013. The Government will also restructure financial relations between the centre and the local level. This will ensure that these extra mandates devolved to the councils are adequately financed, in line with the principle of “finance follows function”.
Sir, in 2012, I have increased the grants to councils by more than 100 percent to K257.1 billion. This is to demonstrate the PF Government’s commitment to capacitate councils ahead of devolution.
Mr. Speaker, the provision of safe, potable drinking water and sanitation services in our communities requires our immediate attention. This will be addressed through the rehabilitation of more than 850, and construction of about 3,000 boreholes in rural areas. In urban areas, development and rehabilitation of water supply and sanitation infrastructure systems will be undertaken. In addition, the Government will facilitate the strengthening of the capacity of utility companies and other institutions in water and solid waste management.
In light of what has been outlined in the four core programme areas, the overall functional allocation of expenditures is as follows:

2012 Expenditure by Function

Function and Sub-Function

Allocation (K’ Billion)

% of Budget
General Public Services Executive




o/w Grants to Local Authorities


Constituency Development Fund




General Government Services


O/w Domestic Debt Interest


External Debt


Compensation and Awards


Centralised Administrative Services




Public Order and Safety


Economic Affairs8,120.0


General Economic, Commercial and labour


o/w Empowerment Fund


Agriculture Forestry and Fishing


o/w Farmer Input Support Programme


Strategic Food Reserve


Food Security Pack


Fuel and Energy


O/w Kafue Gorge Lower Power Project


Rural Electrification Programme




o/w Roads






Environment Protection


Housing and Community Amenities


o/w Water Supply and Sanitation




o/w Infrastructure Development


Recreation, Culture and Religion




o/w Infrastructure Development


Social Protection


o/w Public Service Pension Fund


Social Cash Transfer


Grand Total



Mr. Speaker, the detailed expenditures for 2012, categorised by function are as follows:
General Public Services

Mr. Speaker, under the General Public Services function, the Government has made a provision of K8,304.8 billion or 29.9 percent of the budget. Out of this amount, I have allocatedK2, 091.9 billion to service domestic and external debt and K336.3 billion for payment of arrears to suppliers of goods and services. In addition, K257.1 billion has been provided for grants to local authorities, and K120.1 billion for the Constituency Development Fund.

Sir, other provisions include K200.0 billion for compensation and awards for payment of litigation cases ruled against the Government. A further K120.0 billion has been provided for contingency reserve meant to cater for unforeseen and unavoidable expenditures. The remainder of the resources will go towards regular Government operations.
Economic Affairs

Mr. Speaker, expenditure on the economic affairs function is projected to rise by 54.6 percent to K8,120.0 billion. Notable programmes include those in the agricultural sector, which I have already discussed, together with large investments in the energy and roads sectors. In the energy sector, I have allocated K864.0 billion as Government’s contribution to equity in the construction of the Kafue Gorge Lower power project while K437.1 billion is for the Rural Electrification Fund.
Sir, for the road sector, I have provided K4,481.0 billion, the bulk of which will go towards ongoing projects. Out of this amount, K101.0 billion has been allocated for feasibility studies and design for new projects including Leopards Hill to Chiawa, Kasempa-Kaoma, Kawambwa-Mporokoso and Luwingu-Kaputa roads. In addition, K60.0 billion has been provided for preparatory works on the Lusaka Ring-Road project. Other road projects that will be undertaken in 2012 include Mongu-Kalabo, Nyimba-Sinda, Nakonde-Mbala, Kalulushi-Lufwanyama, Kabompo-Chavuma, Bottom road and Mumbwa-Landless corner.
Mr. Speaker, with regard to the tourism sector, I have provided K21.1 billion for tourism marketing and promotion and K15.0 billion to recapitalize Zambia Wildlife Authority.
Sir, I have also provided K30.0 billion to facilitate the initial works of establishing the new provincial headquarters for Muchinga Province and the relocation of the provincial capital for Southern Province to Choma.
Public Order and Safety

Mr. Speaker, the Government intends to spend K1,017.4 billion or 3.7 percent of the budget on the Public Order and Safety function. Of this amount, K55.8 billion has been set aside for infrastructure development projects which include police housing units, police stations and forensic laboratories. In order to improve policing, K30.0 billion has been provided for the Zambia Police modernization programme and K16.7 billion for the net recruitment of 1,000 police officers. Further, an allocation of K50.0 billion has been made to continue with the programme of court construction and rehabilitation.
Housing and Community Amenities

Mr. Speaker, I have allocated K352.9 billion to this function. Of this amount, K150 billion has been provided as Government contribution to the water and sanitation sector, representing an increase of 26.1 percent from the 2011 provision. The funds will be used to improve access to clean and safe drinking water in rural and peri-urban areas.
Social Protection
Mr. Speaker, a total of K655.6 billion has been allocated for social protection programmes. Of this amount, K474.2 billion has been provided for grants to the Public Service Pension Fund. In addition, K90.0 billion has been provided for various social safety nets which include the Public Welfare Assistance Scheme, food security packs and social cash transfers.

Mr. Speaker, in the economic objectives and policies that I have just outlined, it is very clear that the PF Government has a very ambitious plan to transform the Zambian economy. To do so, we need to carefully balance the demands of our citizens for lower taxes against the demands for higher spending, especially on poverty reducing programmes. This means that we must rebalance the burden of taxation, providing tax relief for those who have borne a disproportionate burden in the past while at the same time generate more resources from those areas of the economy that have benefited most from our strong macroeconomic performance.
Sir, under these circumstances, the Government expects to raise resources of K27,698.3 billion or 26.5 percent of GDP to support the 2012 Budget. Domestic revenues will constitute 19.1 percent of GDP while grant receipts from our cooperating partners will be 1.8 percent. The balance of 5.6 percent of GDP will be total borrowing out of which 1.3 percent of GDP will come from domestic borrowing and the balance of 4.3 percent of GDP will be external financing.
Mr. Speaker, the summary of the revenue estimates and financing to support the 2012 expenditures is as follows:

Resource Envelope for the 2012 Budget

(K’ billion)
Total Tax Revenues

Income Tax


Company Income Tax




Withholding & other


Mineral Royalty


Value Added Tax


Domestic VAT


Import VAT


Customs and Excise


Customs duty


Excise duty


o/w Fuel Levy


Non-Tax Revenues

Fees & Fines




Medical Levy


Dividends & On-lending


Domestic Borrowing


Total Domestic Revenue and Financing


Total Foreign Grants and Financing



General Budget Support


Sector Budget Support


Project Grants


Foreign Financing


Programme Loans


Project Loans





Mr. Speaker, during the run up to the election, the PF Government made a promise to the people ofZambia that it will streamline the tax system, lower tax rates and promote tax compliance. One of the commitments we made was to put more money in people’s pockets. I wish to assure this august House that we remain as committed to this cause as we were then.
Sir, as a first step to honour our commitments, I propose to double the exempt threshold for PAYE from the current K12 million to K24 million per annum. This translates into tax free income ofK2 million per month and will result in more than 80,000 low paid workers moving out of the taxable brackets. In addition, I have provided more relief by adjusting the tax brackets as follows:

Current PAYE System

Income Bands

Tax Rate

K1,000,000 and below per month

0 %

K1,000,001 – K1,735,000 per month

25 %

K1,735,001 – K4,200,000 per month

30 %

Above K4,200,000 per month

35 %

Proposed PAYE System

Income Bands

Tax Rate

K 2,000,000 and below per month

0 %

K2,000,001 –K2,800,000 per month

25 %

K2,800,001 – K5,700,000 per month

30 %

Above K5,700,000 per month

35 %

Sir, the PAYE restructuring increases disposable incomes of the workforce by about K1.0 trillion which can only be salutary for the economy.
Mr. Speaker, the Government believes that growth should be largely private sector driven. However, the cost of borrowing for investment has inhibited most of the private sector, particularly our local entrepreneurs, from engaging in gainful ventures. In order to compliment the efforts that we have already undertaken to reduce the cost of money, I propose to abolish the 40 percent upper corporate tax rate for banks. With this measure, banks will now be required to pay the standard corporate tax rate of 35 percent. This will help to make banks more liquid, a desirable objective to facilitate low cost borrowing by enterprises.
Sir, this measure will result in a revenue loss of K65.0 billion and I expect the banks to pass on the benefit of this measure to the borrowers by lowering lending rates further.
Mr. Speaker, agriculture is at the centre of our pro-poor development agenda. Sustaining the gains which have been registered in this sector over the recent years requires that we continue to increase capital formation and investment in this sector. I, therefore, propose to reduce the corporate income tax that is applicable to the agricultural sector from 15 to 10 percent. The proposed reduction is meant to increase investment and thereby raise productivity, output and incomes of our farmers. This measure will make available K10.6 billion for re-investment into the farming sector.
Mr. Speaker, in order to compensate for the revenue loss arising from the above measures, I propose to increase the mineral royalty rate to 6 percent from 3 percent and 5 percent for base and precious metals, respectively. I also propose to separate income arising from hedging activities from core mining activities for income tax purposes.
Sir, I expect to raise K981.0 billion from these two measures.
Mr. Speaker, in order to align the treatment of commission payments to non-residents with that of other income streams such as royalties, interest and management or consultancy fees, I propose that commission payments made to non-residents be deemed to have a source in Zambia and therefore taxable at 15 percent. This measure will result in a revenue gain of K24.0 billion.
Sir, all the above measures will come into effect on 1st April, 2012.

Mr. Speaker, in 2009, the Government introduced a policy to include copper and cobalt ores and concentrates on the VAT deferment scheme. This was done to promote the utilization of excess smelting capacity following the decline in the country’s mineral production. However, with the increase in local production of copper and cobalt ores, it is no longer justifiable to retain these products on the scheme. I, therefore, propose to remove copper and cobalt ores and concentrates from the Import VAT Deferment Scheme. This measure will generate an extra K6.9 billion.
Sir, this VAT measure will come into effect on 1st January, 2012.

Mr. Speaker, in 2006, Government introduced an export duty of 15 percent on the export of copper and cobalt concentrates in order to encourage local value addition and create employment. This policy is discriminatory as it does not apply to other minerals thereby creating an uneven playing field. In the spirit of making this tax less burdensome and its application non-discriminatory, I propose to reduce export duty to 10 percent but also extend it to all unprocessed or semi-processed mineral ores. The revenue gain as a result of this measure is K70 billion.
Sir, in 2007, the Government removed customs duty on light passenger aircraft to promote tourism. I propose to extend this concession to cover helicopters and micro-lites. This measure will have a minimal revenue loss.
Mr. Speaker, I propose to increase the duty rebate threshold on travelers’ effects from US $500 to US $1,000. This will benefit travelers coming with accompanied personal effects from outside of the country. This measure will have a minimal revenue impact.
Sir, all the above Customs and Excise measures will take effect on 1st January, 2012.

Mr. Speaker, I propose to amend the income tax Act so as to harmonize the fiscal year and the charge year. In this regard, the Charge year for 2012 will run for nine months from 1st April to 31st December, 2012 so that the succeeding charge years from 2013 will run for a full twelve months from 1st January to 31st December
Sir, I also propose to amend the Customs and Excise, Income Tax and the Value Added Tax Acts to update and strengthen provisions and remove ambiguities in certain sections of these pieces of legislation.


Mr. Speaker, the process of granting additional incentives under Section 58 of the ZDA Act provides discretion and lacks transparency, thereby creating opportunities for corruption. I, therefore, propose to remove Section 58 in the ZDA Act in order to prevent leakages in the tax system and strengthen the quest for enhanced revenue mobilization.



Mr. Speaker, the Patriotic Front won the 2011 Elections because it listened to the needs of the People at all levels. Now that we are in Government, we have not, and will never, distance ourselves from our people. His Excellency the President and his entire Cabinet have committed themselves to work tirelessly so that Government responds, in practical ways, to ensure that the economy is put on a path of rapid growth and that its benefits are widely shared by every Zambian.

Sir, we are not a Government that basks in the empty glory of statistical euphoria, but one that seeks a transformational shift in society to make it more just and equitable. In this regard Mr. Speaker, allow me to briefly summarize what this first budget of the PF Government means to ordinary Zambians.

Mr. Speaker, to the unemployed youth who feels this nation has little use for his energies, it means more opportunities for appropriate skills training and thus greater prospects for income-earning activities through which he can positively contribute to the development of his nation.

To the peasant farmer who only seeks to feed his family through his toil in the field, it means the provision of extension services and farm inputs that are tailored to the agricultural conditions of his area and to improved access to markets for his produce.

To the promising pupil who learns in a makeshift classroom with no desk and not a single text book, it means an improved learning environment which can better equip her for a bright and productive future.

To the grandmother who is looking after her deceased daughter’s sick orphan, it means free access to health care so she can buy the food they need.

To the enterprising businesswoman who lacks the funds to embark on her great ideas, it means access to cheaper capital that can be the catalyst to make her dream a reality.

To the hard pressed resident in a compound whose home and property is threatened with floods each rainy season and whose environment is strewn with refuse, it means the laying of the foundation for an empowered local council which can provide the basic local services he and his family deserve.

To the hardworking copper miner, the committed artisan and the industrious businessman, it means more money in their pockets from which they can raise their living standards and those of their families.

To civil servants, it means an environment where professionalism is reinvigorated and impropriety repudiated.

Mr. Speaker, to all taxpayers, the PF Government promises to manage public finances in a fully accountable and transparent manner so that all abuse of taxpayers’ money is identified and dealt with and all scope for corrupt practices eliminated.
Finally Mr. Speaker, allow me to enter a passionate plea to all Zambians to resolutely and unequivocally rally behind our President, the custodian of our interest, especially those of the disadvantaged segments of our great country, to put Zambia’s development on a sustainable trajectory.
Mr. Speaker, I beg to move.

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