'Govt hasn't approved budget proposals for most councils'
By Namakau Nalumango
Friday June 06, 2008 [04:00]
LoCAL government minister Sylvia Masebo yesterday said the government has not approved most of this year’s budgets for the councils countrywide because their proposals were unrealistic and unattainable. Announcing the 2008 councils’ annual estimates of income and expenditure, Masebo said budgets for Lusaka, Ndola and Kitwe city councils were not approved, among others.
However, Masebo said budgets of all the municipal councils were approved but with amendments. These included Mongu, Mufulira, Chililabombwe, Chingola, Mansa, Mbala, Chipata, Solwezi, Kabwe, Kasama, Luanshya, Choma, Mazabuka and Kalulushi.
She said of the 54 rural councils, only 51 councils’ budgets had been approved across the country but with some amendments.
“We have, however, rejected the 2008 budgets for three councils in North-Western Province, namely; Mwinilunga, Mufumbwe and Kasempa district councils because the budgets were not prepared according to the local government standards. The budgets were also found to be unrealistic and unattainable,” she said.
Masebo said the councils whose budgets were approved with amendments or not approved had made proposals for improved salaries and conditions of service without taking into account their capacity to pay the proposed salaries and allowances. She said in certain cases, the proposed increments were meant to benefit senior officers than the ordinary workers. She said there would be no salary increment and any improvement of conditions of service this year because councils have to first clear the backlog of salary arrears and other outstanding statutory obligations and suppliers of goods and services. Masebo said it was not government’s responsibility to clear such debts.
She said, however, it was important to note that in the approved budgets, the issue of proposed salary increments and improved conditions of service had been considered on council-by-council basis based on last year’s budget performance. She said negotiations for improved salaries and conditions of service for unionised and non-unionised staff should be within the council’s capacity to pay and also provide services to communities where the revenue comes from.
Masebo also said most councils had proposed sharp increases in fees and charges without taking into account the local communities’ ability to pay. She said that property tax was the major source of revenue for the councils. However, Masebo said it had since been observed that some councils were basing their budgets in anticipation of a valuation roll which had not yet been approved.
“For these councils, we removed this component as it was not within the provisions of the law. Until the roll is approved, it must not be effected,” Masebo said. “This will also apply to personal levy. As councils, they need to know how many people are in their districts and are eligible to pay personal levy and have a register in place for follow ups.”
She urged all councils to strengthen their revenue collection capacity because at the moment, the collection efficiency of revenue was very low almost in all councils.
“They seem to be good only at overcharging their communities without corresponding service delivery,” she said.
Masebo said in preparing their budgets, councils were directed to adhere to guidelines which included realistic sources of revenue, payments of statutory obligations such as ZRA income taxes and LASF/NAPSA pension contributions. The councils were also expected to ensure that 40 per cent of their total budgets went towards provision of services.
Masebo said the budgets were delayed because it was in national interest that they were scrutinised to ensure legal compliance and that only budgets with a vision to carry out service delivery were approved because it is only such budgets that the government can use to foster development and service provision to the local communities.
Masebo said a careful scrutiny of all budgets revealed that Southern Province met all the budget guidelines with Mazabuka Municipal Council’s budget being approved without any amendments while North-Western, Luapula and Northern provinces ranked lowest in terms of meeting the guidelines.
Masebo said the government through her ministry had produced a standard template for fees and charges to be applied by all 72 councils although in some cases sources of revenue based on levies, fees and charges would be council-based and would be approved as such. She said any revenue outside this template must be in consultation with her ministry in order to rationalise or standardise revenue sources and also to protect the community from paying various license fees and charges which are exorbitant or a nuisance.
Masebo said the government has noted with satisfaction that most councils were now generating more revenue from rates. She said for this reason, the government would financially support selected councils to update their valuation rolls this year and funding for selected services such as water and sanitation and markets constructions. Masebo said four city councils would also be assisted to pay off outstanding retirees benefits.
She also warned councils against failure to produce monthly receipts and payments saying that was an offence which could result in forfeiture of grants by the offending councils. Masebo further warned provincial local government officers against underperforming. She said even some budgets which were poorly done could have been detected if officers involved were more effective in their duties.
Labels: 2008 BUDGET, COUNCILS, LOCAL GOVERNMENT, SYLVIA MASEBO
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Levy authorised disbursement of 2008 budget, says Chibiliti
By Chiwoyu Sinyangwe
Thursday April 17, 2008 [04:00]
PRESIDENT Mwanawasa on April 1, 2008 signed the general warrant authorising the treasury to start disbursing the 2008 national budget, Secretary to the Treasury Evans Chibiliti has said. And Chibiliti also said his office was in the process of appointing controlling officers for this year’s budget.
“The budget was approved a couple of weeks ago and I have received the general warrant from the President, and so the disbursement of this year’s budget has started,” said Chibiliti in an interview.
Chibiliti also expressed optimism that the year’s budget would be expended better than last year’s.
He expressed confidence government programmes and projects would be implemented as early as possible.
Last year, Chibiliti revealed that about K900 billion of the budgeted money in the 2007 Budget was not spent.
The Secretary to the Treasury attributed the slow budget implementation to what he called structural deficiencies which shortened the implementation cycle.
And Chibiliti also said he would soon be appointing controlling officers.
“We will be advising the controlling officers on the public finance Act so that this year we receive less criticism,” he said.
The government’s failure to spend the money received a lot criticism from a number of stakeholders who said there was no justification for the Treasury not to disburse such a huge amount of money when the government had failed to attend to a number of obligations.
Labels: 2008 BUDGET, EVANS CHIBILITI, MWANAWASA
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Magande pledges to release budgetary allocations on time
By Lambwe Kachali
Saturday March 22, 2008 [12:00]
FINANCE minister Ng’andu Magande has pledged to release budgetary allocations to all ministries and spending agencies on time in order to accelerate implementation of economic projects. But Kabwata Patriotic Front member of parliament Given Lubinda said it was disheartening that Magande had continued to use the contingency fund to balance the budget.
Parliament on Thursday approved the 2008 national budget with a caution to ensure transparency, accountability as well as reduction on over expenditure is seriously taken into account.
Magande said the ministry was conducting continuous analysis to reduce borrowing.
He said the government was working on mechanisms to harmonise debt service for both internal and external.
Magande said with regards to this year’s budget theme of “Unlocking Resources”, it would be prudent that Zambians benefited from such resources.
He said the major task ahead of the country was budget implementation and realisation of its expenditure.
Magande urged members of parliament to support the budget and that those attending the National Constitution Conference (NCC) should read the budget provision and ensure that resources were spent efficiently and effectively.
He further said that the government would continue with its tax agenda, besides improving the budget execution. But Lubinda said although the budget had passed with least amendments, there were a lot of underhand methods.
Lubinda said Magande was using the money allocated for unseen circumstances (contingency fund) to balance the budget.
“Mr Speaker, this House allocated K12 billion as contingency fund but Hon Magande came to this House again and sought K90 billion as supplementary expenditure, and yet this K12 billion was not used. The same happened last year where K25 billion was allocated as contingency fund but Magande mobilised K41 billion for the floods disaster instead of using the required vote,” Lubinda said. “Sir, what is the use of contingency vote? What is the major purpose for allocating this money?”
Meanwhile, Bweengwa member of parliament Highvie Hamududu advised Magande to use the contingency vote to create structural mechanisms to deal with floods.
Parliament adjourned sine die after approving the budget and passing the appropriation Bill.
Labels: 2008 BUDGET, GIVEN LUBINDA, MAGANDE
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Parliament urges govt to increase tax threshold
By Mutuna Chanda
Friday March 07, 2008 [03:00]
THE Parliamentary Committee on Estimates has described as inconceivable government’s proposal of K600,000 as tax threshold and proposed to have it increased to K1 million. And chairperson of the committee Godfrey Beene has expressed concern over the use of the anticipated income from the mining sector after the new tax regime is effected.
Presenting the committee’s report on the proposed Income Tax Amendment Bill of 2008 in which finance minister Ng’andu Magande proposed to increase the tax-free threshold on employees’ incomes from K500,000 to K600,000 and the new mining taxes in Parliament on Wednesday, Beene said the government seemed not to have a criteria on which to base the minimum taxable amount of workers’ incomes.
“Research Mr Speaker, shows that the essential food basket for a family of six in Lusaka currently stands at K1,835,300,” Beene said. “Your committee urges government to move an amendment so as to increase the threshold to at least K1 million.”
But Magande said while many people had advocated a higher increase in the tax threshold, this could not be achieved in a single year.
And Beene urged the government to consult stakeholders including members of parliament over the utilisation of the revenue from the mines.
“Mr Speaker while commending government for this initiative, your committee is concerned about the utilisation of the anticipated income from the mining sector especially that it is not provided for in the 2008 budget,” Beene said.
He however said the new tax regime on the mines should be implemented immediately.
And when the Value Added Tax (VAT) Bill came up for second reading, Beene recommended that the VAT rate be reduced to 14 per cent instead of the proposed 16 per cent.
The government in this year’s budget reduced Value Added Tax rate from 17.5 per cent to 16 per cent.
But Beene said reducing the VAT rate further to 14 per cent would discourage tax evasion, especially at border entry points.
The Customs and Excise Amendment Bill also came up for second reading.
All the three bills passed the second reading and come up today at committee stage.
Labels: 2008 BUDGET, INCOME TAX AMENDMENT BILL 2008, WINDFALL TAX
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Budget cut threatens small-scale farmers
By Bright Mukwasa
Monday February 25, 2008 [03:00]
NIRAS managing director Twisema Muyoya has said small-scale farmers will be hardest hit by government’s decision to reduce budgetary allocation to the agriculture sector this year. In an interview during the launch of Niras Scanagri Zambia, Muyoya said small-scale farmers would have to seek donor support for the sustainability of their programmes.
In this year’s budget, finance minister Ng’andu Magande announced a reduced allocation to agriculture from 8.8 per cent last year to 6.6 per cent.
“Definitely this year’s reduction in the budget in the budget allocation would put pressure on the sector, as you know there are small-scale farmers who are partly supported by the government but since this means reduced support, they would panic looking for donor support in order for them sustain their programmes,” Muyoya said.
Muyoya also called on the government to efficiently utilise the unspent money in last year’s budget allocation to the agriculture sector in order to cushion the pressure on small-scale farmers.
Last year, the government failed to spend about K900 billion of the budgeted money.
Muyoya also disclosed that with the support of the Finnish government, his organisation had embarked on a 10 million euro agricultural programme in Luapula Province.
Labels: 2008 BUDGET, FARMERS
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Ministry of Foreign affairs fails to account for K3.6bn
By Chibaula Silwamba
Tuesday February 19, 2008 [03:00]
THE Ministry of Foreign Affairs recorded financial irregularities totaling about K3.6 billion, most of which was abused by missions abroad. And the Auditor General’s report has revealed that the National Assembly contracted a company to install a digital security system without following tender procedure.
Auditor General Anna Chifungula’s report for the financial year ended December 31, 2006, indicated that the Ministry of Foreign Affair’s financial irregularities included about K1 billion unsupported payments, K795 million unretired imprest, K238 million unaccounted for stores, K959.7 overpayment and about K100 million was misapplied.
According to officials from the Auditor General’s office, misappropriation of funds refers to the theft or use of public funds for personal gain while, misapplication is use of funds on unintended projects and unretired imprest is when someone fails to submit receipts after using the money.
The Auditor General’s report stated that during the period under review, the Ministry of Foreign Affairs purchased a fridge, a microwave oven and an electric stove at a total cost of about K13.6 million for the deputy minister’s official residence.
“It was observed, however, that the former deputy minister went away with the items. In this regard, the ministry wrote to the former deputy minister on the matter, who in turn paid an amount of K5,000,000 in August 2007 towards the cost of the items leaving a balance of K8,690,000,” read the report. “There were no receipts and disposal details in respect of store items costing K75,383,500 procured during the period under review contrary to public stores.”
The report further stated that imprest totalling about K615.5 million involving 115 transactions had not been retired as of March 2007 contrary to Financial Regulation number 96(1).
“An amount of K5 million paid to an officer in December 2005 had not been recovered as of August 2007 and the officer had since been dismissed from the civil service and his terminal benefits were paid in full,” the report stated.
“Fourteen cheques in respect of third party payments amounting to K284,438,642 prepared during the period under review had not been collected by the recipient institutions as of November 2007.”
The report also named most embassies and High Commissions for failing to account for public funds and other resources.
At the Zambian mission in Lubumbashi in Democratic Republic of Congo (DRC), the report revealed that due to constant power failures in the area where the residence for the consular general is situated, the mission in February 2007 requested for authority to purchase a 5.5KVA diesel electricity generator which was granted.
“In this regard an amount of US $2,606 (K8,790,058) was paid to a local supplier and the generator was delivered. A physical inspection of the generator and an inquiry made in March 2007 into its effectiveness revealed that it was inadequate in that it could not generate enough power. The decision of the mission to buy the 5.5KVA generator amounted to wasteful expenditure,” the report noted. “The mission had a locally engaged staff establishment of 11.
A review of records and a physical count of locally engaged staff, however, revealed that the mission had employed 19 local staff, eight over the approved establishment without authority. In this regard, the mission incurred unauthorised expenditure of US $24,410 (K113,716,679) in respect of the eight local staff irregularly engaged.”
The report further stated that US $33,265 (K154,968,674) was recovered from 23 mission staff during the period from January 2005 to March 2007 but documentary evidence was produced to show that the money was either receipted or banked.
“Although the mission accountant explained that the cash recovered from salary advances was used at source, no expenditure details were made available for audit. In addition, it is not clear why advances were recovered in cash when this could be done at computation,” the report stated.
“The mission has seven properties comprising the chancery, the residence and five other houses. However, title deeds were not made available for audit scrutiny. It was further observed that the properties had not been insured as of March 2007 contrary to Foreign Service Regulation number 99.”
The report stated that a physical inspection of the properties carried out in April 2007 revealed that with the exception of a house at 25, Biayi Avenue, the properties were in a general state of disrepair and needed attention.
“In this regard, the third secretary – accounts who was occupying the house at 1332, Kapenda Avenue abandoned the house in November 2005. As of April 2007, the house had not been rehabilitated and the Mission had spent amounts totalling US $27,000 (K125,782,480) in rentals for the officer,” the report stated.
In Kinshasa, during the period January 2005 to February 2007 a total amount of US $15,771 (K73,470,944) was collected as revenue out of which US $1,004 (K4,677,245) was utilised by the mission without treasury authority contrary to established procedures.
“In November 2004, the mission entered into a one year lease agreement for the rent of a house for the Consular for which a security deposit of US $10,500 (K48,915,409) was paid.
It was however observed that when the Consular vacated the house in October 2006, the Mission did not recover the security deposit. As of April 2007, the security deposit had not been recovered,” the report stated.
“It was observed that the Chancery building is located in the town centre along a street leading to the centre market thereby making the offices very unsecured in times of civil unrest. It was further noted that the street also experiences flooding during the rainy season.”
The report also disclosed that in August 2005, the mission in Lilongwe (Malawi) decided to construct a wall fence around the Chancery in order to enhance security.
“The initial plan was to construct a solid wall fence around the Chancery. In this regard, a design of a solid wall fence was made and a bill of quantities totaling Malawi Kwacha MK2,565,407.50 (K89,789,2450) was prepared based on this design. When the mission sought for permission from the Lilongwe City Assembly to build the fence, the Assembly did not approve the design,” the report stated.
“Consequently, the design was changed to a palisade type. It was observed that instead of preparing a new bill of quantities for the palisade fence, the contractor used the bill of quantities for the solid wall type and included an additional cost for steel works without a corresponding reduction on the cost of the brickwork.
This increased the cost of the steel works from the initial MK98,027.50 (K2,940,825) to MK1, 111,256.05 (K33,337,681.50) but did not reduce the cost of the brick work pegged at MK877, 975.00 (K26,33,9,250). It is evident from the above that the Mission did not exercise due care and diligence to ensure that the works were properly costed prior to awarding the contract.”
The report revealed that in October 2003, the mission engaged a contractor to rehabilitate the roof of the Ambassador’s official residence at a contract price of US $19,945.98 (K89,7546,910) for a duration of sixty (60) days from the date of commencement.
“It was however observed that the Mission paid the contractor amounts totaling US $27,709.84 (K124,694,280) resulting in an overpayment of US $7,764.86 (K34,941,870),” the report revealed. “A physical inspection of the residence carried out in October 2006 revealed that the ceiling boards were falling out of place.”
The report further stated that the Kabula Hill House in Blantyre was dilapidated because it had not been maintained for a long time.
“This state of affairs resulted in the house fetching as little as MK14,850 (K396,000) in monthly rentals in an area where houses fetch as much as MK228,000 (K6,000,000) per month resulting in government losing revenue,” the report stated.
The report disclosed that the Mission in London (UK) had irregularly paid the High Commissioner and the first secretary- protocol amounts totaling US $20,493.81 (K72, 529,953) as air time allowances.
“It was however observed that the High Commissioner was paid US $11,826.87 (K40,985,095) in excess of his entitlement while the First Secretary Protocol, who was not entitled was paid US $7,466.94 (K27,189,146),” the report stated.
“The mission engaged 16 local staff against an approved establishment of 11 resulting in an excess of five staff contrary to Foreign Service Regulations and condition of service for 2004. In this regard an excess of Pound 89,808 (K608, 032,333) was paid as personal emoluments in 2006.”
The report further stated that the mission had outstanding bills totaling
£316,868.31 (K2,471,572,818) out of which £276,379.85 (K2,155,762,830) was paid leaving a balance of £40,488.46 (K315,809,988) outstanding.
“A total amount of US $190,368.83 (K694,601,764) was paid as rentals between January and December 2006 exceeding the Mission staff entitlements by US $38,218.92 (K133,766,220). As of October 2007, only US $1,000 had been recovered leaving a balance of US $37,218.92 (K130,266,220),” the report stated.
“Contrary to the terms and conditions of service which stipulate that an officer shall not obtain an advance while one is running, five officers were paid subsequent advances in amounts totalling £65,981.15 (K527,633,043) while previous advances were still outstanding.”
The report stated that in 2006 the mission engaged a contractor to rehabilitate the Chancery building at the contract price of £225,690 (K1,309,938,614).
“It was however observed that no formal (written) contract was entered into with the contractor,” it stated.
The report revealed that the mission owns four properties namely 2 Palace Gate, Kensington W8 5NG, 17 Courtenay Avenue, Highgate N6, 13 Fostcote, Hendon NW4 and 12 Chelmsford, Wilesden Green but they were developing cracks and required urgent rehabilitation.
The report also disclosed that the mission in Egypt delayed to bank revenue collections totalling about K5 million ranging from five to 16 days.
“A total amount of US $15,271 (K53,295,790) involving six transactions was paid to five officers as salary advances during the period from June 1989 to August 2000 but had not been recovered as of February 2007 contrary to the terms and conditions of Service of the Civil Service,” the report.
“There were no receipt and disposal details in respect of stores items costing US$7,690 (K26,838,100) procured during the financial year ended 31 December 2005. Although in her response dated 19th November 2007, the Controlling Officer stated that the items were eventually recorded as required, no documentary evidence was provided.”
The report indicated that according to Foreign Service Regulations and Conditions of Service for 2004, in the absence of an official residence, the Mission was obliged to pay for the Ambassador’s rentals up to US $4,000 (K13,960,000) per month.
“However, contrary to the regulations, the Mission paid up to US $4,650 (K16,228,500) for the Ambassador’s accommodation for the period from January 2004 to August 2006.
Consequently, an amount of US $132,900 (K463,821,000) was paid resulting in an overpayment of US $16,900 (K58,981,000),” the report stated.
“In August 2005 the mission entered into a lease agreement for the rental of House No. 188, El Nile Street, Agouza, Giza, sixth floor, Second Apartment as the Ambassador’s residence at the monthly rental of US $4,500 (K15,705,000).
According to the agreement, the house was to be ready for occupation by 1st September 2005 after renovations.
In this regard, an amount of US $9,000 (K31,410,000) was paid to the landlord on 16th August 2005 (being one month rental deposit and one month security deposit). It was, however, observed that on 1st September 2005 the house was not ready for occupation.
Consequently, the lease was terminated and the mission claimed a refund of US $9,000 (K31,410,000). As of February 2007, the mission had not obtained the refund from the landlord.”
The report revealed that during the period from May 2002 and May 2004, the mission leased out part of the Chancery to eight tenants at an average rent of US $1,270 (K5,715,000).
“A review of the lease agreements and receipts revealed that although the tenants were still occupying the premises, the tenancy agreements had expired and had not been renewed.
It was also noted that as of December 2006, three tenants had rent arrears totaling US $5,935 (K26, 707,500),” the audit report stated. “In May 2002, the mission sold two motor vehicles, a Leyland truck and a Mercedes Benz Car at a total of US $18,000 (K81 million). In this regard an amount of US $14,250 (K64,125,000) was received from the buyer between May 2002 and December 2005 leaving a balance of US $3,750 (K16,875,000).
However, as of October 2006, the balance had not been received.”
It stated that there were no receipt and disposal details in respect of stores items costing US$4,781 (K21, 514,500) procured during the period from February to August
2005.
It further stated that the mission had employed 22 local staff as a result, the mission irregularly paid wages amounting to US$ 11,225.25 (K50, 980,278) between January and December 2005 on the extra seven staff engaged without authority.
The audit report also stated that at the embassy in Moscow (Russia) about K4.3 million were transferred in June 2005 from the revenue account to the operations account without Treasury authority.
“As of July 2007, the revenue had not been reimbursed,” the report noted. “Contrary to Financial Regulation No.128, visa fee collections totaling US$4,515 (K18, 511,500) for the period from November 2006 to June 2007 though banked were not entered in the general revenue cashbook.”
The report further stated that a cash count carried out on June 29, 2007, revealed a cash shortage of K15,407,800 (US$3,758).
“Further enquiries revealed that the money had been irregularly paid to the children of a senior government official who were stranded in Russia. As of July 2007, the money had not been reimbursed,” it stated.
“Contrary to Financial Regulation No. 45(1), cash payments totaling US$498,860 (K2, 045,326,000), were not vouched in that accounts Form two: wages payment voucher, accounts Form five: general payment voucher and accounting form 44: claim and payment voucher were not used.”
The report observed that the Mission had stopped preparing and sending monthly returns to the ministry of foreign affairs headquarters since January 2006.
“Out of the total payments of US$498,860 (K2,045,326,000) made during the period under review only a total of US$219,671.08 (K900,651,428) was supported by expenditure receipts leaving a balance of US$279,188.92
(K1,144,674,572) unaccounted for,” it revealed.
“Between February and September 2006 the Mission irregularly paid $4,228.54 (K14,691,083) for graduation parties for government sponsored students who were graduating from Universities. There were no receipt and disposal details in respect of stores items and fuel costing K59,468,315 (US$ 16,923) purchased during the period.”
It noted that the inventory for the Chancery and the Ambassador’s residence had not been updated since October 1999 as such furniture purchased in the last seven years had not been recorded making it not possible to account for the furniture.
“Imprest in amounts totaling US $7,600 (K25,371,100) issued to various officers had not been retired as of July 2007,” it stated.
Records at the mission in Addis-Ababa in Ethiopia indicated that in 1965 and 1971 the embassy procured a chancery situated at Nifas Silk Ketema, Woreda 23 Kebale 12 and the Ambassador’s residence Nifas silk Lafto woreda 23 Kebele 10 at costs of US$3,400 (K15,300,000) and US$13,428.71 (K60,430,500) respectively.
“However, as of February 2007 the titles of the two properties had not passed to the Zambian government.
In June 2006, the Mission was allocated 2,000 square metres of land situated at Bole Sub City Worda 17 Kebele 23 for which title was issued,” the report observed. “The plot was to be developed within 18 months effective June 2006.
However, as of February 2007 no development had taken place and the mission risks forfeiting the plot.”
The report further indicated that a about K11.9 million was paid to 15 officers as salary advances for the period from June 1989 to June 2003 but had not been recovered as of September 2007.
“Imprest in amounts totaling K29,079,690 involving six transactions issued to four (4) officers during the period from 1997 to 2004 had not been retired as of September 2007,” the report stated.
Labels: 2008 BUDGET, ANNA CHIFUNGULA, AUDITOR GENERAL, MINISTRY OF FOREIGN AFFAIRS
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‘No turning back on taxes’
By JERRY MUNTHALI
PRESIDENT Mwanawasa says the interests of Zambians will remain paramount in the dispute mining companies have raised over the revised mining tax regime because citizens are merely asking for a fair share of their own wealth. Dr Mwanawasa said this yesterday at Lusaka International Airport on his arrival from Madagascar. Dr Mwanawasa was concerned that the mining companies were criticising Government for asking for a fair share of the country’s resources when the people who voted Government into power have welcomed the new taxes.
“At the beginning of my administration, I said where there is conflict between the people of Zambia and something else, the interests of Zambians will be paramount,” President Mwanawasa said. “I am unable to understand how they can criticise us when we are asking for a fair share of our resources.”
The President said his was a listening Government and he was, therefore, inviting the mining companies to meet the Minister of Finance and National Planning, Ng’andu Magande, and Minister of Mines and Minerals Development, Kalombo Mwansa, to discuss the matter.
“Mining companies should be prepared to show that Zambia’s rate of taxation was higher than the other countries in the world,” he said.
“We are a listening Government. Instead of shouting on the hill, I invite them to see the Minister of Finance and the Minister of Mines. Let them come prepared; let them show that our rate of taxation is higher. Some countries have taxation as high as 51 per cent, 47 per cent, while we are at 31 per cent.”
The President was concerned that the mining companies were using Zambians to complain on their behalf when they were reluctant to give them jobs, claiming they were incapable.
“When we say give jobs to Zambians, they say they are incapable; when they have to fight battles, they use Zambians to fight the lot.
They might be happy now with the salaries they are getting, what of the majority Zambians? Is it wrong for Zambians to ask for more so that we can improve the living conditions for all Zambians?” he asked.
Meanwhile, KASUBA MULENGA reports that a parliamentary watchdog committee has urged Government to relentlessly pursue the new mining tax regime so that Zambians benefit.
Presenting the final report on the 2008 estimates of revenue and expenditure, chairperson of the expanded committee on estimates, Godfrey Beene, told the House that the equitable sharing of benefits between mining companies and Zambians was an immediate imperative.
“In this vein, your committee wishes to strongly urge the House to support the new legislation that will provide for the new mining tax regime,” he said.
Mr Beene, who is Itezhi Tezhi member of Parliament, said there should be a clear and transparent mechanism for the utilisation of funds that will be raised from the new tax measures.
He said Parliament, as the people’s representative, should play a prominent role in decision-making as regards the usage of the resources.
Mr Beene told the House that several stakeholders who appeared before his committee supported the new mining tax regime on grounds that it will benefit many Zambians.
And Mr Beene said since the Central Statistical Office indicated that the basic food basket costs were between K700,000 and K1.5 million, the tax exemption threshold should be raised to at least K700,000 from the proposed K600,000.
The committee also recommended that Government should look into the high cost of doing business in the country because this entailed that Zambian products were expensive, yet not competitive.
Some stakeholders that appeared before the committee said it was a costly venture to doing business in Zambia mainly as a result of the high cost of finance, fuel and poor infrastructure.
Mr Beene said his committee was concerned about the small number of citizens contributing to national revenues. It, therefore, recommended a widened tax base.
The committee also recommended that due to the continued energy problems the country was facing, Government should find alternative sources of the resource, such as coal.
Stakeholders were also concerned about the reduction in the budgetary allocation to the agricultural sector from 8.8 per cent last year to 5.8 per cent this financial year.
Mr Beene said Government should increase the budgetary allocation to the important sector, especially under the fertiliser support programme.
And Minister of Finance and National Planning, Ng’andu Magande, said the ministry appeared before the committee three times so that issues raised in the budget could be clearly explained. Mr Magande appealed to the House to support this year’s budget.
He said Government’s objective was to continue providing tax relief although it could only do this systematically as the economy improved.
Labels: 2008 BUDGET, GODFREY BEENE, MWANAWASA, WINDFALL TAX
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Brook no nonsense from the mines
By Editor
Wednesday February 13, 2008 [03:00]
We make a clarion call to all Zambians to rally behind the government and actively support its taxes on the mines. The changes the government has made to the mining taxes are very modest and it is very surprising that the transnational corporations running these mines want to make a big issue out of this move.
It is very clear that those who come to mine our minerals and sell them abroad for gigantic profits are not cooperating or development partners of ours.
They are fortune seekers who have come with no other intention but to rape our nation. The behaviour of these corporations doesn’t seem to have changed in any way from that of the British South African Company that started mining activities in this territory in the early 1900s. They still want to have everything their way and to enrich themselves totally at our own expense. This cannot continue; things have to change.
It is sad that mining companies come here and want to dictate everything, from taxes to labour laws and so on and so forth. These are things they can’t do in their home countries. But the world is changing, and they shouldn’t think what is happening in Venezuela and other Latin American countries will not happen here. There is a new global awakening. We haven’t yet fully caught up with it but this awareness is coming. They can’t continue to blackmail our government whenever it wants to do something that is in the interest of the people and the country.
No one can deny that Zambia has not gotten a good deal from the transnational mining corporations that are exploiting or have exploited its natural resources. What this country is getting in terms of mineral royalties and other taxes from the mining industry is too low to have any meaningful impact on this economy. It doesn’t matter how the mineral prices move internationally, the benefits to this country have continued to remain low.
Well, one can argue that the benefits from the mining industry should not only be seen in terms of taxes and royalties but also in the numbers of jobs being created and maintained. No one can dispute that there is some employment being created and other secondary benefits being generated.
We even have some Zambians being employed to help these mining companies thoroughly exploit us. We don’t know how much they are paid to do that, but they are paid something – probably not less than the biblical 30 pieces of silver.
But let's look at the extent of these benefits in relation to the total earnings of these corporations. An honest assessment will reveal that what is paid to our people as wages and salaries is an insignificant portion of these corporations' total earnings, leaving huge profits for themselves. We should consider ourselves very lucky to have all these mineral resources in our country. But as it often happens, it is not what one has that separates him from the other but what one does with what he has.
The curse of being born with a copper spoon is the most common explanation of Zambia's poor economic development. We believe that this curse is just a big hoax to wish away a more serious analysis of the reasons for Zambia's poor economic management. We could go as far as to argue that the fact that Zambia is endowed with copper resources is a big asset that the country could have used to develop not only the mining industry but also the other sectors of the economy. What has eluded our planners are sound mining and mineral development policies. Having rich minerals can never be a curse.
If one doesn't appreciate being endowed with rich minerals what does one really want from nature: dollars to be dropping from the skies like rain? The Russians have built a very interesting legend to describe their mineral rich Siberian region. The legend goes something like this: after creating the world in seven days, God began to hide some mineral troves fairly all over the world and after he was done, he remained with a handful of minerals which he cast all over Siberia.
From a mineralogical point of view, Zambia qualifies to be called a highly metallurgenic country. However, the scandal lies in our country's failure to beneficially exploit its mineral potential to the full. The great majority of our country's mineral resources remain less known, unexploited and without an adequate policy framework for their exploitation. And this has helped trans-national corporations have a field day in their dealings with us. There are many reasons things have turned out this way.
These range from ignorance to corruption and bureaucratic ineptitude that has given the large mining companies inordinate influence on our country's mineral development policies. The trans-national corporations get what they want and not what we want to give them. As far as ignorance is concerned, this is only true in the sense that those that know the potential and what can be gotten out of our minerals for the benefit of our people are not in a position to influence development. Conversely, those that could influence development often do not care to know. In other words, they are very strong filters between the geological survey, the policy makers and business community.
There's no serious analysis of what our mining industry is doing. Bureaucratic ineptitude in the mineral sector is very real. A lot of people who have to make policies regarding the mining industry are very ignorant of the dynamics of this industry. Most of the policies are designed to favour large trans-national corporations, and from the history of Zambia, we know why the industry was designed in such away.
What our policy makers have failed to grasp is the basic fact that what may be good for KCM, in its international corporate strategy, is not necessarily good for us. There's no need for us to waste these minerals by allowing trans-national corporations to continue mining when there are no meaningful benefits accruing to the country. These are wasting assets and they will not be there for future generations if they are exhausted senselessly now. This in itself means that whatever mineral resource comes out of our soil should not only be for the benefit or convenience of the current generation but also the future generations.
Therefore, if it is not beneficial to mine any mineral let's not waste that resource, let's leave it for the future Zambians who may be more wiser than us so that they can make best use of them. If we are getting nothing or very little from the current mining activities, there is no point in continuing to mine. Doing so is robbing the future generations of the resources they will need to survive in what increasingly appears to be a very difficult and complicated future world. We shouldn't forget that the future is not built in the future, it is built on today's threshold.
The future our children will have will depend much on what we ourselves are doing today. What we are trying to say is that let's not give away for nothing the minerals of this country; if there are no meaningful benefits accruing to the country from mining, let's stop it until we are able to do it in a beneficial way. If we continue on this path of wasting, of giving away for nothing to trans-national corporations, future generations will put us on trial. Let's review everything we are doing in the mining sector and ensure that everything benefits the nation.
It is good that our government is starting to wake up and do that which needs to be done to ensure that our people benefit from the natural resources of their country. And on this score, the government deserves the support of all; the support of the unions, the entire civil society and of all our politicians. These taxes, which are very modest in our view, should not be reduced in any way.
The government should continue to have the power to set and collect taxes as it deems fit. The government should treat the mining corporations like all other businesses operating in the country and should brook no nonsense from them. Those who want to go can go. They certainly can be replaced.
Labels: 2008 BUDGET, WINDFALL TAX
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Improve budget execution - Kanganja
By ANGELA CHISHIMBA
SECRETARY to the Cabinet, Joshua Kanganja, has directed permanent secretaries to improve the execution of national budgets. And Secretary to the Treasury, Evans Chibiliti, has called upon permanent secretaries to start planning for procurement and tendering processes so that the implementation of projects could start as soon as the budget was approved by Parliament.
Dr Kanganja noted that Zambians expected services to be delivered and were in a hurry to see the country develop and move forward. He said this yesterday in Lusaka in a speech read on his behalf by his deputy, Likolo Ndalamei, during the official opening of a workshop for permanent secretaries on Treasury and Financial Management.
“I expect to see a major improvement this year in terms of budget execution, treasury and financial management. At the end of this year, we should receive a positive report that resources released have been properly spent and results achieved,” Dr Kanganja said.
He directed the Ministry of Finance and National Planning to start rating ministries, departments, provinces and spending agencies in treasury financial management and budget execution.
Dr Kanganja said the reports would be examined at the end of each year so that departments which performed poorly would be known and appropriate action taken.
“I therefore call upon all the implementing agencies to quickly put their respective houses in order and ensure that there is effective supervision,” he said.
Dr Kanganja said permanent secretaries should also take appropriate action including disciplinary measures against supervisors who certified shoddy civil work.
He said budget execution remained a major concern of many Zambians and government leaders.
He also said misapplication and misappropriation of funds had continued in spending agencies as attested by the Auditor General’s reports.
Dr Kanganja said there was need to review and examine whether contractors had the required capacities and competencies to effectively execute developmental programmes.
“The budget pronouncements are noble.
However, the real issue is whether implementation will take place in a manner that will achieve positive results and meaningful change to the lives of our people,” he said.
And Mr Chibiliti said government decided to hold the workshop before the approval of the national budget to plan its execution.
He said the treasury was concerned about the poor cash planning in ministries.
He said a number of ministries were still unsure that the Ministry of Finance and National Planning would fund them when they requested for resources at the time they were ready for spending.
Mr Chibiliti said as a result, the ministries made financial requests in advance which however remained unutilised until later.
He said requesting for resources in advance caused unnecessary accumulation of cash balances in commercial banks.
Mr Chibiliti called upon permanent secretaries to prepare budget execution profiles aligned to procurement plans.
He also said the use of electronic cash transfer should be accelerated this year in settling payments.
Mr Chibiliti said those with business contracts with government should be paid through the electronic cash transfer system for amounts exceeding K20 million.
He also said government was concerned about poor performance in many of the civil contracts awarded by the government.
Mr Chibiliti said government would review the way performance bonds for civil works were being given, including that of advance payments to contractors.
He said permanent secretaries should agree on whether it would be better for contractors to fund their works and get paid after they completed the job.
The workshop would come up with resolutions on how to prepare for the implementation of the 2008 budget programmes.
Labels: 2008 BUDGET, JOSHUA KANGANJA
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‘Mines Should pay more’
By NKOLE CHITALA
ECONOMIC consultant, Bob Sichinga, says mining companies must contribute a lot more than the anticipated K1,660 billion (US$415 million) indicated in the national budget. Mr Sichinga noted that the estimated income from the mining sector fell far short against a turnover estimated at K18,800 billion. He said tax contribution from the source would represent
a paltry 9.6 per cent effective tax rate.
“Mining companies must contribute a lot more than indicated in the budget measures at US$415 million equivalent to K1,660 billion. The estimated income still falls far short against a turnover estimated at K18,800 billion,” he said.
Mr Sichinga was speaking during the Zambia Institute of Chartered Accountants (ZICA), Chartered Institute of Management Accountants (CIMA) and Association of Chartered Certified Accountants (ACCA) post 2008 National Budget Tax Review workshop in Lusaka recently.
Zambia Revenue Authority (ZRA) commissioner-general, Chriticles Mwansa reiterated that it expects to collect US$415million from the mining sector this year.
“This money is what would be earned from the new tax system, we have been collecting tax from the mines, but we are expected to collect US$415 million from the measures that were announced,” Mr Mwansa said.
He also said that small-scale miners were not left out in the new tax system.
He said he was certain that with small-scale mining companies making concentrates, this would result into positive effect to the national economy.
Mr Mwansa said the organisation was also working closely with the registrar of companies, National Authority Pension Scheme Authority and local councils on capturing information on companies and individuals that should pay tax.
Zambia Chamber of Commerce Trade and Industry (ZACCI) commended Government at the workshop for allowing mortgage interest to be deductable for tax purposes saying the move would encourage home ownership.
Chief executive officer, Justin Chisulo, said ZACCI welcomed the positive measures on percentage on savings and Withholding Tax, trailers, export levies, books, infant formula, reduction in value added tax rate, Pay As You Earn, domestic and external debt payments and import cover of 3.6 months.
Meanwhile the Zambia Association of Manufacturers (ZAM) expressed disappointment over national budget.
The association said most of the budget proposals submitted to Ministry of Finance and National Planning were not considered.
ZAM president, Dev Babbar said there was need for Government to reduce the cost of production and doing business in the country.
Mr Babbar cited the proposal on duty reduction on raw materials, forestry equipment, shoe manufacturing materials, paints, among others as some of the submissions that were not considered.
Labels: 2008 BUDGET, CHRITICLES MWANSA, ROBERT SICHINGA, WINDFALL TAX
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UNZA budget allocation disappoints Prof Simukanga
By Patson Chilemba
Wednesday February 06, 2008 [03:00]
UNIVERSITY of Zambia (UNZA) vice-chancellor Professor Stephen Simukanga has said the university may opt to increase school fees if government does not reverse the K74 billion allocation in the 2008 budget. Commenting on the allocation to UNZA, Prof Simukanga said he was disappointed with government’s allocation to the country’s highest institution of learning.
“We are equally concerned because this is not even enough for our net. For instance, the net pay for this month is K8 billion. So we have to find about K2 billion to subsidise,” Prof Simukanga said. “That’s why you find that our outstanding bills stand at K250 billion. K120 billion is for ZRA (Zambia Revenue Authority). The rest is for the retirees and contractual obligations.”
Prof Simukanga said he agreed with finance deputy minister Jonas Shakafuswa that UNZA be turned into an autonomous institution so that it could charge ‘cost reflective fees’.
He said running a public university was very difficult.
“Although there is this issue that usually when the budget is out, it’s unlikely to make changes, for me an option would be to increase the fees,” he said.
On University of Zambia Lecturers and Researchers Union (UNZALARU) president Evans Lampi’s statement that there would be trouble at the campus if the K74 billion is not reversed, Prof Simukanga said management was equally disappointed with the funding.
“But my appeal is that let’s sit down and look at the issue together and if it means increasing the fees, then we can do that,” he said.
However, Prof Simukanga said UNZA management had raised the issue with the Ministry of Education and hoped that something positive would come up.
Labels: 2008 BUDGET, STEPHEN SIMUKANGA, UNZA
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2008 budget
By Kazhila Chinsembu,Windhoek
Wednesday January 30, 2008 [03:00]
I have just finished reading the 2008 Budget speech that hopes to unlock more fattening resources for the political hosts in government and their ectoparasites. Under education, the speech does not mention the University of Zambia, yet we all know how deplorable the infrastructure at UNZA is. And hopefully, the government will this year pay UNZA retirees their terminal benefits which they have been owed for 5 years now.
With the looming electricity crisis, coupled with the anticipated impacts of climate change (natural disasters like floods and drought), the 2008 budget has no specific allocations that answer to the high levels of preparedness required to mitigate these threats. But that is budgeting the Zambian style, a country where the biggest disaster is the government, whose policies have hiked rural poverty to 80 per cent.
http://www.postzambia.com/post-read_article.php?articleId=36896
VAT
By Dereck Fee
Wednesday January 30, 2008 [03:00]
On your front page of the Sunday Post I was quoted as condemning the reduction in VAT in the minister of finance's Budget. During a lengthy interview, I praised the minister for a very balanced budget and one which will contribute to the economic growth in Zambia.
I expressed surprise at the reduction in VAT while stating that in the European Union VAT is an internal part of the fiscal system which is usually not reduced.
http://www.postzambia.com/post-read_article.php?articleId=36897
One Zambia, One nation
By Concerned citizen
Wednesday January 30, 2008 [03:00]
I wish to say something about to the story you carried on January 21, concerning Saki's comment on the slogan One Zambia, One Nation. I wish to agree with him in his observation, but I beg to look at it from a different perspective.
Recently, there was a publication of names of newly-recruited teachers in all the nine provinces of Zambia, and I was quite disturbed with the criterion used, which does not promote the unity we all desire to have. I noticed that the deployment had not at all promoted the One Zambia adage, as it was clear that those from Eastern, Western, Northern, Luapula and Southern provinces were being posted back to their provinces.
In my view, the Kaunda era did better on this one and in a way it helped to promote the spirit of unity, as Tongas could be sent to Eastern, Easterners to Tongaland, Bembas to Ngoniland or Loziland and vice-versa. Now with the current trend, we will one day lose the unity we seem to have. Thus, change must start with the government policies on deploying its employees in the interest of service and national unity. Saki's obsevation goes beyond politics and let us consider it seriously.
Labels: 2008 BUDGET, DEREK FEE, VAT
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Lumwana seeks clarification
By Times Reporter
LUMWANA Mining Company (LMC) is seeking clarification from the Government on whether changes to the mining fiscal and regulatory regime in the 2008 Budget will affect the development agreement signed two years ago. Lumwana managing director, Harry Michael said in Solwezi that his firm wanted to clarify whether the measures would affect the development agreement.
“If the development agreement is intact, then we can continue with our obligations,” said Mr Michael, who is one of the vice-presidents at Equinox Minerals, developers of the project.
“We are reviewing our perimeters to see if LMC are affected by the changes, we won’t be haste as we wait for confirmations on whether the changes include Lumwana,” he said.
Mr Michael said Lumwana and the 12 international banking institutions lending to the US $762 million project, which on completion would become Africa’s largest single copper mine, were doing separate internal financial revaluations on the changes.
“We and the international banks lending to the project are doing internal financial revaluations, and in the meantime we are just seeking clarifications from the Government if changes would affect Lumwana,” he said.
He said with shareholders having used up their money, the project, scheduled for commissioning mid this year, was now depending on the international banks, which were spending $1.5 million per day.
Finance Minister and National Planning Minister, Ng’andu Magande announced last Friday when he presented the 2008 Budget in Parliament the introduction of a new fiscal and regulatory regime in order to bring about an equitable distribution of the mineral wealth between the Government and the mining companies.
The move, among others, has seen the Government raise mineral royalty tax to three per cent, peg corporate tax at 30 per cent and introduce windfall taxes to be triggered at different price levels.
Labels: 2008 BUDGET, DEVELOPMENT AGREEMENTS, EQUINOX, LUMWANA MINING COMPANY, MINING CONTRACTS
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Fundanga, Milupi profiles inspirational
By David Chisenga, Lusaka
Tuesday January 29, 2008 [03:00]
Your recent profiles of Luena independent MP Charles Milupi and BoZ Governor Caleb Fundanga are truly inspirational. Reading through their respective backgrounds, one gets a sense that these men are truly gifted, genuine, selfless, caring and committed sons of our land. Their intellect and rationale is also way above average. I wish we had more great minds like these in our political and governance setup.
The only sad thing is that our political system as it stands today makes it very difficult for honest, rational and hardworking men/women to reach top leadership. Instead, rhetoric, corruption, nepotism and tribal prejudice seem to be a sure way to make it to the top.
Fellow Zambians, let's all come together and demand greater accountability from our leaders and change the 'cadre thug' mentality that characterises our politics today.
We collectively have the power to change and with a common will, nothing will stand in our way. Neither Milupi nor Fundanga is my tribesman (and that's immaterial) but they definitely have the credentials to play a leading role in the future of our country.
I like it when Milupi illustrates the fact that you don't have to be the president to make a meaningful contribution to the nation. These men will surely be invaluable assets to us in whatever capacity they serve in the near future.
I wish the two gentlemen good health; and to Amos Malupenga at The Post, please keep up the good work of profiling Zambia's high-calibre men/women. We really appreciate the great insight and inspiration we derive from reading their stories.
In future, I'd be interested to read profiles on other accomplished individuals like Willa Mung’omba, George Sokota, Lombe Chibesakunda (assuming you haven't already done so).
http://www.postzambia.com/post-read_article.php?articleId=36855
Magande's budget
By Mwewa Yamba
Tuesday January 29, 2008 [03:00]
There is a lot of anxiety whenever the national budget is presented by the Minister of Finance, and over time the public is never convincingly told how the previous budget was implemented.
We are good at announcing figures but very poor at implementing the budget except for programmes that are meant to suit and benefit politicians.
When one looks at the social sector; education and health sectors, one sees serious neglect on the part of the government. How many schools and health centres does the government build or renovate to match the population increase each year?
What about human resource development? Of course politicians and the government leaders will tell lies over such as they do not care to know what actually prevails on the ground. Is the government not ashamed that the roads are damaged due to neglect?
Why do we even want to appear on television giving unrealistic statements as though we care? Indeed, a budget whose implementation is defective is not worth the publicity it is given during presentation.
http://www.postzambia.com/post-read_article.php?articleId=36856
HH's timely warning
By Chali Chewe
Tuesday January 29, 2008 [03:00]
The letter by Jensen from Germany (The Post 27/01/ 08) condeming HH's timely warning about the Kanyama roads rehabilitation cannot go unchallenged. Perhaps our dear Jensen has been away too long in Germany or has been consumed by the European standards of living.
I am neither HH's spokesman nor a UPND sympathiser, but HH's warning and likening the conduct of the MMD government's rampant attempts at corrupting voters during by-elections to the Kenyan scenario cannot be ignored and I believe this is what a responsible opposition leader ought to be saying to the government and alerting people about.
We must learn from the mistakes around us. The Kenya situation is a sad one and I do not think HH, by saying what he said, was longing for what is happening there to happen in Zambia.
On the contrary, I found the statement to be a reminder to all of us that we should not be taking things for granted. If Kenyan politicians had taken the trouble to learn from the situation in Sierra Leone, Liberia or Ivory Coast, they would have avoided this senseless bloodbath currently afflicting their nation. Herein lies HH's message.
I do not believe HH, with his investments and roots in Zambia and the wealth that mother Zambia has endowed him with, would wish for all that to be wiped away.
He could have easily taken residence in a foreign country like Jensen but he has stuck in here with us and we are the ones seeing the deception and experiencing the crookedness of the ruling party, especially during by-elections like the one about to take place in Kanyama.
It is so annoying, Jensen, for those in power to think of citizens as fools and people who cannot reason and hence can easily be bought.
I am sure the Kenyans did not wish to be where they are now, but perhaps nobody took the trouble to remind them of the consequences of tolerating vote buying and rigging. By the way, Kanyama is not the only place with bad roads and flooding.
In terms of flooding, the southern region is worse than Lusaka and most roads in compounds are in a terrible state. Why the concentration in an area where there will soon be a by-election? Much as it also requires attention, one need not be a political scientist to deduce the sudden interest to quickly fix the shared problems of Kanyama.
Only a person who is not living in this country and is detached from the realities on the ground can describe HH’s statement as careless and saddening as Jensen judged it. I am just a simple Zambian voter with no affiliation to any party, but I would say hats off to HH. Indeed we do not want to end up like Kenya.
http://www.postzambia.com/post-read_article.php?articleId=36854
Chief Zombe's interest in Maureen's presidency
By Jenkins Chisoni, Glasgow
Tuesday January 29, 2008 [03:00]
The debate whether first lady Maureen Mwanawasa should contest the MMD presidency and eventually the Republican presidency in 2011 has become very interesting, more so when we start witnessing royal establishments taking sides on the subject.
In all fairness to the first lady, I wish to acknowledge the position of Paramount Chief Chitimukulu and MMD deputy secretary Kande that the debate should not arise at all in the absence of the first lady's personal declaration of interest to run for presidency.
I am a supporter of the idea of a female president (especially after having had the experience of a male president like Chiluba) but not just for the sake of having a woman at plot one.
I can understand the excitement of MMD party cadre Chibombamilimo in suggesting Maureen for MMD presidency, but I cannot fathom the interest of His Royal Highness Chief Zombe and the royal establishments of the Mambwe and Lungu's interest in Maureen only, given the fact that Zambia has so many eligible female leaders, some of whom have vast experience in understanding local and international issues.
My apologies to the Royal Highnesses if they are already MMD sympathisers as they have the right to talk about leaders for their party only. But if they are not MMD, then I suggest they should remain neutral and be able to look at other female leaders in all the political parties in the country.
Let us wait for Maureen's say on the matter and those of other women who may be interested in leading our country before the debate can really start.
Labels: 2008 BUDGET, CALEB FUNDANGA, CHARLES MILUPI
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Good on mining taxation, but the rest is rhetoric
By Editor
Monday January 28, 2008 [03:00]
Ng’andu Peter Magande, last Friday presented his 2008 budget speech amid the usual pomp and ceremony. To start with, let us look back to last year. The 2007 budget theme was “From Stability to Improved Service Delivery”. To be candid, we are not at all sure if there was any significant improvement in any service delivery for the common man.
The annual budget themes, as sad as it may be, have become mere titles with little significance on either intent or delivery. Every document needs a title, so this year’s budget is titled: “Unlocking Resources for Economic Empowerment and Wealth Creation”.
As we go into the analysis of the 2008 budget, it is important to bear in mind that the legal framework for the fiscal or budget management is derived from the 1996 Republican Constitution. Civil society knows, but the government it seems does not, that there is an urgent need for constitutional reform on budget and fiscal matters.
In the year 2000, the Parliamentary Committee on Estimates tabled a constructive report on the required budget reform in Zambia. This report, like many others unanimously adopted by Parliament, still sits on the shelf without any intention to implement.
Why then, does Parliament every year go through the process of discussing and adopting Parliamentary Committee reports? Parliament alone has the constitutional authority to impose or alter taxation (Article 114(1), and to appropriate money (Article 117).
Although the Constitution does not limit the power of Parliament to amend the budget, the legislature adheres to precedence “reductions only” rule. Parliament has effectively functioned as a “rubberstamp” in budgetary matters, and currently, there is no value added, while the Public Accounts Committee is toothless.
Other than the budget speech and the economic report, there is no supplementary analysis provided with the budget. We hope that the members of the National Constitutional Conference will examine all the Parliamentary Reports on budget reform, among many other issues and seriously look into these issues when they recommend the draft constitution.
Legal and constitutional provisions should be made for the formal engagement of Parliament with policy framework that underlines budget planning well in advance of budget presentation.
This could take the form of budget policy statements presented to Parliament prior to the tabling of the budget. Only if members of Parliament are informed about ministry, departments and other policies, and how they are reflected in the budget, will they be able to assess independently whether the budget is indeed congruent with government’s stated policies. If Parliament were able to undertake shifts between votes through the amendment process, ministries and departments would be forced to justify their spending plans publicly and transparently.
The Ministry of Finance should also table cash releases figures for each subhead on a monthly basis, based on projections of actual disbursements against the approved estimates.
The new constitution is not only about presidential powers, Bill of Rights, but equally about all facets that govern the daily lives of our people, which importantly includes the way government is tasked to manage fiscal affairs through the budget process.
In analysing the 1,558 pages of the budget “Yellow Book” which carries the scanty details of the budget, what strikes us as most obvious is that it is more of the same - full consumption of our own money and mostly development with donors and loan money. Most of the social and capital projects are funded by donors and most of our own resources are spent on consumption.
Had it not been for donors and others, most of the major development and infrastructure projects and programmes of the ministries of health, education, works and supply (roads, bridges), local government, public sector reform, private sector development, agriculture, the new stadium, among other projects and programmes would not have been funded from our resources. So, where does the money go?
The total budget in 2008, including donor support, amounts to K13.761 trillion, of which K12, 525,329,778,454 is for personal and non-personal emolument programmes and K1,236,071,115, 984 for constitutional and statutory expenditures (such as paying foreign and local debts).
During 2007, both the Minister of Finance and the Secretary to the Treasury showed serious concern about budget implementation, in particular unspent balances on capital projects. Yet, the budget speech or the budget “Yellow Book” makes no mention as to what is being done or will be done to improve budget implementation.
We begin our analysis with the revenue side. Income tax, excluding mineral royalty tax is projected from K3,764,732,290,339 in 2007 to K4,081,380,000,000 in 2008. Mineral royalty tax is projected from K67,503,453,250 in 2007 to K72, 000,000,000.
The good news is that the mines are now going to be taxed in a variety of areas and in a manner that brings substantial revenue.
However, in public interest it would be good if the Minister of Finance could also give us the downside - what if the price of copper is below $2.50/lb? What would be the projected revenue for the government?
The allocation of K50 billion for financing the Citizens Economic Empowerment programme is also a good beginning. However, no one knows how this will work. And whether this will help create equity in companies for a large number of workers or a few select citizens is yet to be seen.
We do not want to see empowerment for the elite few. The devil is always in the detail, which details unfortunately are not spelt out in any budget document.
On expenditure, it all begins with the official opening of Parliament which costs the taxpayers K352 million in 2008. In addition, the budget sittings (from January to March) alone will cost the taxpayer K7,835,630,600 and K8,367,917,099 for sittings during the rest of 2008.
Most of the expenses for sittings are allowances for members of parliament. The 20 oversight parliamentary committees have been allocated K7,452,802,000 and another K8,309,247,750 for running of the Parliamentary Constituency offices.
This is now all possible, because the taxpayers in 2007 financed K19,488,047,502 to purchase motor vehicles for all members of parliament.
State House spent just over K5 billion in 2007 for transport management and have again been allocated K6 billion in 2008. This certainly is not justifiable.
What does State House, and the rest of government, do with all these motor vehicles they purchase every year? An average citizen who buys a vehicle keeps it for at least a few years, but in government there is no end to buying vehicles.
Is that development? In 2007 the Ministry of Works and Supply spent over K18 billion on buying VIP vehicles and this year another K2 billion has been allocated. Obviously the priorities are with VIP vehicles!
What is government up to? Rehabilitation of the Lusaka Independence Stadium has been allocated K28 billion. Under Cabinet Office, public affairs and summit meetings gobbled up K65 billion in 2007, and in 2008 K42 billion is allocated
A total of about K6 billion was sent for the Salaries Commission of Inquiry, whose findings are unknown as of now. Perhaps the Civil Servants and Allied Workers Union need to have a look at this before they conclude any negotiations.
In 2007 the Ministry of Home Affairs spent K21 billion to purchase motor vehicles for Zambia Police and in 2008 have been allocated another K17 billion for more motor vehicles.
The Ministry of Foreign Affairs is opening up a new embassy in Kuala Lumpur, Malaysia when all our existing missions are already badly funded and most of the buildings are an eyesore and embarrassment to Zambia. Instead of maintaining our missions, the Ministry of Foreign Affairs thought it prudent to spend K2.1 billion in 2007 for lobbying, we assume for our candidate Inonge Lewanika at the African Union. This is a very weird choice of priorities. The Ministry of Finance has allocated K5 billion for the Financial Sector Development Plan (presumably for meetings and sitting allowances) and K58 billion for “other financial restructuring” - whatever that means.
After being allocated K15 billion in 2007, the Zambia National Building Society get a further K9 billion in 2008. There is a need for a full explanation as to why the government is pouring billions into the building society? Is it technically bankrupt?
Why is the regulator of banks, the Bank of Zambia quiet on the issue of the Zambia National Building Society? Zambia Wildlife Authority (ZAWA) is also allocated K23 billion for re-capitalisation, and donors are giving an additional K13 billion funding.
So what has ZAWA been doing with the money it makes from fees and other charges? Under the Ministry of Finance, the Finance and Management Accounting department were allocated just over K1 billion for office administration in 2007 but instead spent over K7 billion and this year have allocated themselves K748 million.
Why such disparities? Under the Human Resources department of the Ministry of Finance, K12.8 billion was spent for inducement allowances and this year have allocated K14.5 billion.
Why are some selected few at the Ministry of Finance better paid than the rest? The Ministry of Justice spent over K5 billion on office administration in 2007 and in 2008 has allocated itself K1.7 billion.
The National Constitutional reforms and NCC spent K165 billion in 2007 and another K288 billion has been allocated for use in 2008. By the time this exercise is completed, Zambia is going to have one of the most expensive constitutions!
In 2007, K30 billion was allocated for the Youth Empowerment Fund. This year there is nothing. This tells us that either the money was not released on time, or the money has not been allocated for such projects. Why? We need an answer.
The Ministry of Defence headquarters in 2007 was allocated K2.67 billion for office administration, but instead spent K16.66 billion and this year have been allocated K2.7 billion. If it was for the Joint Permanent Operations, then in 2007 they had spent K12.6 billion on that, instead of the budgeted K100 million.
At Zambia Airforce, K1.7 billion was budgeted for office administration in 2007, but instead they spent K11.7 billion and this year they have been allocated K2.55 billion. Zambia Army, in 2007 was allocated K90 million for office administration but instead spent K10 billion, and this year it has been allocated K176 million. The Zambia National Service in 2007 was allocated K309 million for office administration, but instead they used K6.3 billion and this year they are allocated K498 million. There is something really fishy about all these “office administration” expenditures.
The Zambia Intelligence Service was allocated K186 billion in 2007 and this year they get K209 billion. Why on earth do they get so much money? Compare that to students’ loans awards at UNZA of K28 billion and K11.5 billion for CBU in 2008.
Clearly, there are so many such instances in the Yellow Book that require full explanation, and it is obvious to us that this is not how one unlocks resources for economic empowerment and wealth creation.
And what would be the explanation here? The answer is simple. The budget has done nothing to look at industrial input tariffs for our industry; instead government tinkered around with dyestuff and musical instruments. One cannot develop a textile industry by tweaking dyestuff tariffs!
All that sweet talk from the Minister of Commerce, Trade and Industry on industrialisation and private sector development has been simply sweet talk. One cannot charm and sweet talk, without delivering on something tangible. This is not how we are going to industrialise and maintain export competitiveness of our local industry.
Poverty reduction programmes (PRPs), as in the past, feature prominently across all ministries. However, it is highly questionable if programmes such as field trips, purchase of vehicles, personal emoluments, monitoring and evaluation, office administration, drawing up policy documents among other absurdly defined programmes can under any stretch of imagination be regarded as poverty reduction programmes.
And this is where the budget falls apart. PRP programmes should be such that they assist the poor to improve their lives and help create sustainable wealth and provide the much-needed social services. Looking at all this consumption, office administration expenditure, among others, it is no wonder that over 70 per cent of the people of Zambia still live on less than a dollar a day.
We hope that all members of parliament and civil society organisations will take time to scrutinise the Yellow Book so that they can help influence the much-needed amendments to the 2008 lopsided budget allocations.
Labels: 2008 BUDGET, DEVELOPMENT AGREEMENTS, MINING CONTRACTS, TAXATION
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2008 budget is not pro-poor, says Saki
By Mwala Kalaluka
Monday January 28, 2008 [03:00]
United Liberal Party (ULP) president Sakwiba Sikota has said the 2008 budget is not pro-poor because it does not give hope to people that are eligible for social protection. In an interview immediately after the presentation of this year’s budget at Parliament last Friday, Sikota who is also Livingstone member of parliament said while there was some form of tax relief to the low income earners in the budget, the budget does not encompass the plight of the vulnerable people in rural and urban areas
He said there was need for the government to consider scaling out the social protection scheme through the formulation of a universal cash transfer scheme in order to cater for the 10 per cent of the population that are not able to fend for themselves.
“In terms of actual monies, which are going to be used in terms of social protection, I wish finance minister Ng’andu Magande he had given a better break down. It would appear that most of it is going to go in the traditional areas.
There are things such as the cash transfer scheme which I think is very important for the bottom 10 per cent in our society,” Sikota said. “These are the ones that have been forgotten in this budget.”
He said in order to make that into a universal scheme, it would cost only in the region of about K122 billion. “Sadly, I do not see the ‘One Zambia, One Nation’ motto being realised in this budget,” Sikota said.
“There are certain people who seem to be left out of the mainstream of our economy, of our society and this budget has done nothing to bridge that gap.”
He said the gap between the haves and have-nots must be bridged to reduce the loss of vital installations through vandalism.
“It is very shortsighted for the minister and the government to not look at those aspects,” Sikota said.
He also said the threshold for non-taxable pay, which has been moved from K500,000 to K600, 000, is equally very minimal.
When you consider that this is over a year and it is going into so many thousands of workers, it is in fact very little for the individual.
On the reduced Valued Added Tax (VAT), Sikota said they expected a further reduction of the tax to about 15 per cent from 17.5 per cent and not the 16 per cent which was announced.
Labels: 2008 BUDGET, POVERTY, SAKWIBA SIKOTA, ULP
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