Govt is under pressure to manage budget - Magande
By Henry Sinyangwe
Thu 13 June 2013, 14:01 CAT
FORMER finance minister Ng'andu Magande says the government is under pressure to manage this year's budget following its unplanned expenditures. And Magande says the government is likely to U-turn on the increased wages for civil servants because the increment was not budgeted for this year.
Commenting on the Economics Association of Zambia's warning that Zambians should expect more stringent measures on the revenue and expenditure side of government as there is likely to be upward adjustments in the next budget, Magande said he anticipated tax increases.
"We anticipate increases in some taxes because there are so many capital projects being started and we do not know where the money is going to come from. Apart from the capital projects, there are also a number of recurrent expenditures, which are increasing because of all these appointments of new people in different positions. So I can imagine the Ministry of Finance might even be having problems on how to balance the recurrent budget already," he said.
Magande said the government would have no choice but to adjust some of its revenues upwards.
"Where will they get the money, unless they adjust some of their earnings by increasing taxes. So that definitely is going to happen," he said.
Magande said there was no consolation in talking about the maize and fuel subsidies because they were covered by loans which must be paid back to the lending institutions.
"There is no consolation in talking about the subsidies because already, the Minister of Agriculture Robert Sichinga explained that these subsidies have been covered by loans which have not been paid and are already over K2 trillion. So there is no savings to be made there. What will happen now is any savings that will be made will go towards settling the loans which are owed by FRA and the government to the various financial institutions," he said.
"Even when we are told the savings from the subsidies are going to capital projects, I don't think that will be possible for the next two, three years because the banks have to be paid their money."
And Magande said there was lack of planning on the part of the Ministry of Finance because the planning department had been dissolved.
"The first thing the PF government did at Ministry of Finance was to dissolve the planning department, so who is the Minister of Finance going to consult on how things have to be? The people who are there now are just Treasury people who look at the bank statement from Bank of Zambia to see what money is there and that is not the best way you can run a development agenda…," Magande said.
Asked on the wage agreement for civil servants which is supposed to be effected this September, Magande said the situation was turning negative for the government and might not materialise.
Labels: EAZ, NG'ANDU MAGANDE
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EAZ warns of higher taxes, tough measures on revenue
By Henry Sinyangwe
Tue 11 June 2013, 14:00 CAT
ZAMBIANS should expect more stringent measures on the revenue and expenditure side of government as there is likely to be upward adjustments to taxes in the next budget, warns Economics Association of Zambia president Isaac Ngoma.
And Ngoma says subsidies on fuel and maize needed to go as phasing them out also carries risks.
Responding to a press query, Ngoma stated that the problem would arise because the government recently approved a new wage agreement which was not budgeted for this year.
"Data from Ministry of Finance indicates that this will increase the wage bill in 2013 by KR890 million. In 2014, the full impact of the wage increment will according to Ministry of Finance, increase the wage bill by KR4 Billion. There is also the ambitious infrastructure projects which are gobbling huge sums of money beyond what is available. Certainly, the big budget item is due to the new government salaries, which we suspect will push the salary bill to 50 per cent of government expenditure or some 11-12 percent of GDP. If correct, it means the salary bill is far too high. The norm for a developing country would be closer to 4-6 percent of GDP," he stated.
Arising from this, Ngoma stated that it would not be surprising to see some adjustment to taxes, including pay as you earn (PAYE) or corporate taxes in the next budget.
On the fuel and maize subsidies, he observed that the government had been budgeting less for the subsidies but ended up paying more.
"In 2013 alone, the government budgeted for KR300 million for FRA subsidies and nothing for fuel subsidies. The projected expenditure is KR1.2 billion for maize subsidies and KR1.1 billion for fuel. A similar situation is obtaining regarding foreign reserves. Apparently, it seems BoZ has been using some reserves to cushion the depreciation of the kwacha. Since 2013 BoZ reserves have been declining not increasing. BoZ estimates that if the measures to support the kwacha continue, reserves will reduce by US$750 million in 2013 from the current 2.8 months of import cover to 1.9 months of import cover," Ngoma stated.
He stated that there was need for compensatory measures, especially expanding the cash transfer system, as recommended by a recent World Bank report.
"Some issues for government consideration include keeping the subsidy on kerosene, which is mainly consumed by low-income consumers though currently in short supply. Are there some charges paid by transporters and minibuses that could be reduced to help offset the fuel price increases? Another area for government consideration is to put more money into targeted measures like livestock production (dipping, restocking, creating disease free areas). They should also improve the extension services and boost irrigation to foster increased agricultural production," Ngoma stated.
On by-elections, he stated that the cost was nowhere near the subsidy bill and the amount being spent on government salaries.
On the new districts being created, he stated that the government needed to explain whether and how this would improve service delivery in rural areas and whether other options were looked at such as better use of the Constituency Development Fund and beefing up ward level services.
"We shouldn't encourage an approach to public spending where this or that item is exchanged ad hoc. All public expenditure, current and capital, should be scrutinized carefully both during budget formulation and implementation for cost effectiveness and rate of return," stated Ngoma. "The lack of a strong system to do this in the government is a serious and much under-discussed problem."
Labels: EAZ, ISAAC NGOMA, NEOLIBERALISM
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Standards & Poors team in Zambia to review economic performance, structural issues
TIME PUBLISHED - Thursday, January 19, 2012, 11:26 am
A TEAM from Standard and Poor’s (S&P), a renowned international rating agency is in Zambia to review the country’s economic performance and structural issues. This is the first time that S&P team is in the country to assess Zambia’s performance following the rating of B+ last year.
Secretary to the Treasury Fredson Yamba confirmed in an interview that the team arrived in Lusaka over the weekend. The delegation is expected to hold meetings with various Government ministries and the private sector among them the Economics Association of Zambia and the Bankers Association of Zambia.
Mr Yamba said the team is expected to wind up its assessments on Zambia by Friday and present a report to Government. In a separate interview, Standard Chartered Zambia, head global markets dealing, Stanley Tamele said economic fundamentals in Zambia are strong and positive, adding that the re-evaluation of the country’s performance should not worry anyone.
Mr Tamele said assessments of a country’s performance by rating agencies are routine. He said Zambia can be rated with a B+, upgraded or downgraded depending on the performance. He said the rating and proposal by Government to issue a US$500 million euro bond targeted for infrastructure development is a good sign for economic growth.
He said by and large, the economic outlook for the country is very positive considering that last year Zambia went through an election in September that had an element of political risk but not so big considering that there is a new Government and things are stable.
“There is confidence back in the economy, we see the Kwacha in the short-term reducing to K5,050 from where it is (K5,200) and steadily making progress to about K4,900 levels,” he said.
Mr Tamele said the assessment of Zambia by S&P should not cause anxiety considering that some European countries that have had their rating were downgraded due debt crisis and defaulting on debt.
“The outlook for our economy is very positive, sub-Saharan growth is expected to be very high compared to Western where it’s expected to be very minimal…the fundamentals look good and positive and I don’t think there is much to worry especially in relation to what is happening in the Euro zone,” he said.
Some countries in the Euro zone have had their rating downgraded due to the debt crisis.
[Zambia Daily Mail]
Labels: EAZ, NEOLIBERALISM
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COMMENT - " government is still struggling in ensuring that the wealth of the country is distributed to benefit everyone equally " - to say they're 'struggling' implies that they are trying.
Zambia’s economy good on paper – EAZ
Saturday, December 18, 2010, 11:51
Economic Association of Zambia EAZ executive director, Alexander Chileshe says the country’s economic performance only looks good on paper and has no reflective effect on the lives of the poor Zambians.
Mr. Chileshe says the inequality gap in the nation’s economy has continued to widen with the relatively good economic performance Zambia has recorded over the last few years having no impact in people's lives.
He notes that government is still struggling in ensuring that the wealth of the country is distributed to benefit everyone equally.
He also observes that government’s control of the inflation rate and other factors of the economy has not yielded up to anything because the people on the ground are still living in abject poverty.
Second republican president Frederick Chiluba shopping at Pick N Pay suppermarket in Lusaka
Mr. Chileshe says while the economy looks fundamentally good, there is need to make some reviews to how government gets the nation%u2019s wealth distributed across the country.
He has also proposed that government begins o evaluate which sectors are performing well and which ones are not so that the right sectors beneficial to the people receive more support.
Labels: ALEXANDER CHILESHE, EAZ, GDP
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EAZ urges govt to re-visit windfall taxes
By Fridah Zinyama
Sat 09 Oct. 2010, 13:50 CAT
ECONOMICS Association of Zambia (EAZ) president Noel Nkoma has urged government to re-visit the issue of windfall taxes, saying government is losing out on revenue collection from the mining sector through the lack of re-introduction of this tax regime.
Copper has now reached a high of $8,285 per metric tonne, the highest level since the beginning of this year.
The high copper prices have again spiked the debate on whether government should re-introduce the windfall so that the country could benefit from the high prices of the red metal on the international market.
Commenting on the 2011 national budget presented to Parliament by finance minister Dr Situmbeko Musokotwane on Friday under the theme ‘A people’s budget, from a people’s government”, Nkoma said government had made no mention on whether they would re-introduce the windfall, an omission which was very costly to the country.
“Government should have just mentioned even the intention to resolve the windfall tax issue but they have remained silent over this very important issue,” he said. “It’s not too late to make amends on the windfall tax now that prices are high again.”
On the K43 billion which has been allocated to the Ministry of Agriculture for irrigation, Nkoma said the amount was not enough to adequately deal with the issues which might arise due to the effects of climate change.
“With the way the weather pattern has been changing, it is important for government to take issues of improving the irrigation system in the country so that we can reduce dependence on rain for crop production,” he said. “We should not take the bumper harvest that we have produced this year for granted, the weather can change and therefore affect maize production for the coming years.”
Nkoma said it was therefore important that government increased the allocation to irrigation so that the country reduced its dependence on rain for crop production.
On the reduction on budget support from the donor community from 14.5 per cent to 7.7 per cent, Nkoma said it was a welcome move which showed that the country’s economy is growing hence its ability to look after itself was improving as well.
On the budgetary allocation of K12.8 billion to the Ministry of Tourism for marketing Zambia’s tourism sites, Nkoma said the amount should have been increased to deal with issues of re-stocking of game in the national parks.
“Government has allocated enough funds for the building of roads and bridges in next year’s budget, will lead to an increase in tourists coming to visits Zambia,” he observed. “But the problem is that there is not enough game in the national parks across the country hence the need for money to re-stock.”
Nkoma said government was shooting itself in the foot by not allocating enough funds to deal with game re-stocking in next year’s budget.
And Millers Association of Zambia (MAZ) chairman Peter Cottan has expressed happiness with government’s decision to increase the PAYE exempt threshold by 25 per cent from K800, 000 to K1 million per month.
Cottan said the increased PAYE exempt threshold would put more disposable income in people’s pockets.
[Not necessarily. The reduction of PAYE is pretty much offset by the borrowing of $500 million, which is a burden on the Kwacha and results in worse exchange rate, which means higher prices for imported goods in the shops. The government sees a reduction in donor funds, and their answer is: let's borrow half a billion US dollars. - MrK]
“By taking so many workers out of the tax bracket, more people will have disposable income in their pockets to spend on the other things,” said Cottan.
In next year’s budget, the proposed PAYE system is: from K1,000, 000 and below- zero per cent; K1,000,000 to K1,735,000 per month- 25 per cent, K1,735,000 to K4,200,000 per month - 30 per cent and above K4,200,000 – 35 per cent.
Dr Musokotwane said government would further provide relief by increasing the exempt portion of income paid at termination of employment from K25 million to K35 million and increasing the tax credit for differently-abled persons from K1.92 million to K3 million.
And Cottan commended government for allowing agriculture to remain a priority in next year’s budget.
Labels: EAZ, NOEL NKOMA, PETER COTTAN, WINDFALL TAX
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Lusaka economist calls for EAZ to be turned into a statutory body
By Mutale Kapekele
Mon 23 Aug. 2010, 04:00 CAT
THE Economics Association of Zambia (EAZ) constitution lacks sharp enforcement teeth and should be turned into a statutory body, Lusaka economist Kelvin Kamayoyo has suggested.
Kamayoyo yesterday said the EAZ constitution, which was passed on March 5, 2002, lacked sharp enforcement teeth capable of enhancing and strengthening monitoring mechanisms and keep a bird’s eye-view of the conduct of its general membership, and effectively collect membership subscription fees.
“It is against this backdrop that EAZ should be turned into a statutory institution like many other professional bodies namely; Engineering Institute of Zambia, Health Professionals of Zambia and Zambia Institute of Marketers,” Kamayoyo said.
“EAZ with an Act of parliament would ensure that the general public is cautioned that it was an offence under the Economics Professions Act of the Laws of Zambia to impersonate any economics practitioner or to employ unregistered economics practitioner in both the public and private sectors for purposes of providing economic planning and management, and other services in Zambia.”
He said that once EAZ was turned into a statutory body under the relevant Act of Parliament, the Association would then have the jurisdiction to monitor all “economic activities taking place in the country, sustain itself financially through statutory fees legally collected and be able to undertake all the programmes outlined in its strategic plan.
On August 28, EAZ will be holding an Annual General Meeting (AGM - 2010) and is expected to outline the strategic direction of the Association, framing the policy and strategy for managing the secretariat.
Kamayoyo advised the EAZ to use the AGM to determine its direction in terms of development and growth within the provisions of the association’s constitution and the mandate given by the executive committee as well as general guidelines.
He observed that through an Act of Parliament, the Association would be provided with authority to register all economists and other economics related disciplines in order to qualify to practice as an economist in Zambia.
“It is pertinent that we all support this timely and unique transitional path towards making the EAZ a statutory body because whatever we establish as economists belongs exclusively to us and the general economic agents, and it is our fundamental responsibility to ensure that structures and legal framework put up does not adversely affect the economy in general nor the national vision,” Kamayoyo said.
“In addition, for economists to proactively and reactively safeguard the character of economics discipline in Zambia, the penalties or sanctions for anyone who abrogates the would be Act of Parliament to regulate economists should be stiffer and the disciplinary procedures equally ought to be unconcealed and brisk because justice delayed is justice denied.”
Labels: EAZ, KELVIN KAMAYOYO
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EAZ urges translation of reduced inflation rate into benefits
By Fridah Zinyama
Tue 06 July 2010, 18:00 CAT
THE Economics Association of Zambia (EAZ) has said the drop in rate of inflation should translate into a meaningful improvement in the lives of poor citizens.
And University of Zambia (UNZA) economics lecturer Webby Wake said the reduction in the rate of inflation from 9.1 per cent in May to 7.8 per cent in June is going to strengthen the purchasing power of the general citizenry.
The reduction in the rate of inflation in June is mainly attributed to the decrease in some food prices such as mealie-meal, maize grain, fresh vegetables and dried Kapenta.
The annual rate of inflation recorded in June is the lowest rate that the country has recorded in a long time.
In an interview, EAZ national secretary Isaac Ngoma said although the reduction in inflation was a positive development, it should translate into the growth of the economy, job creation and a reduction in poverty levels in the country.
“It is also important that ways are found in sustaining this low inflation rate,” he said, adding that inflation targeting was worrisome as it does not affect the people on the ground.
Ngoma said the low inflation rate was good for the country as it would attract investment in key sectors of the economy.
“Inflation is a major macro-economic indicator which is used to attract investment,” he said. “But the worrisome thing that might take away from this positive development is the high pump price for fuel which the country is currently experiencing.”
Ngoma said it was worrisome that production was being affected by the high fuel prices which the country was currently experiencing.
“Something should be done about the high fuel prices such that if inflation drops it should also be due to a drop in the cost of production and not just a decrease in food prices,” he said.
Ngoma observed that the drop in inflation in June was mainly attributed to the decrease in food prices as this is the harvesting period and not to any other factor in the process of production.
“We have produced a bumper crop and people are still consuming what they have harvested but if the country offloads the surplus crop, we might experience higher prices once the harvesting period is over,” he said.
Ngoma said it was very important for the country to diversify its agricultural production to other sub-sectors like livestock and dairy production which can be used to grow the economy.
“It is also important that our currency also appreciates so that it has compounding purchasing power in order to allow the ordinary people to buy basic needs,” said Ngoma.
And Wake said the drop in the rate of inflation for month of June was good for the business community, as a high inflation rate was very disruptive to planning.
“Due to an increase in the purchasing power, there is going to be an increase in demand for imported goods which might affect the country’s balance of payment if the country is not exporting more goods than it is importing,” he pointed out.
Wake said this might also affect the local currency, as demand for the dollar might increase as people wish to import more products.
“But this might not be the case if all goods were produced locally,” he said.
Wake added that the drop in inflation in the month of June was an indication that the country’s economy was on a path to true recovery.
The effects of inflation on an economy are manifold and can be simultaneously positive and negative.
Negative effects of inflation include a decrease in the real value of money and other monetary items over time; uncertainty about future inflation may discourage investment and saving, or may lead to reductions in investment of productive capital and increase savings in non-producing assets like selling stocks and buying gold.
This can reduce overall economic productivity rates, as the capital required to retool companies becomes more elusive or expensive.
And high inflation may lead to shortages of goods if consumers begin hoarding out of concern that prices will increase in the future.
Positive effects include a mitigation of economic debt relief by reducing the real level of debt.
Labels: EAZ, UNZA
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EAZ urges govt to develop local human capital
By Kabanda Chulu
Thu 27 May 2010, 04:00 CAT
ECONOMICS Association of Zambia (EAZ) Copperbelt chapter chairperson Prof John Lungu has challenged government to put in place strategies to develop local human capital since Foreign Direct Investment (FDI) will never develop this country.
Commenting on the various interventions government has been putting in place to attain economic development over the past few years, Prof Lungu said other countries were getting there but Zambia was still lagging behind.
“We need to put money into young people because they are the entrepreneurs of the future so that when they are educated, they will be in a position to partner with those bringing FDI, you know multinational companies are very crafty they will just make money and leave and in the absence of human capital this country will not be developed,” Prof Lungu said.
“Look at the Asian Tigers, they realised many years ago that their countries can only develop if people embrace education and when FDI started coming, people were ready to do things the right way. So government should be talking about quality of jobs and not just job creation under FDI. Actually government should start thinking about strategies that will develop human capital as a way of developing this country.”
Under the MMD’s policy of economic liberalisation which is anchored on privatisation of state-owned entities, Zambia has seen massive investments under FDI that has resulted in stable macro-economic indicators but this development has not been translated into tangible issues that could benefit ordinary people.
Labels: EAZ, JOHN LUNGU, LABOUR
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World Bank urges Zambia to improve livestock industry
By Fridah Zinyama
Tue 25 May 2010, 04:01 CAT
Increasing cattle production is good at reducing poverty in rural areas
ZAMBIA will be able to raise about US $1.5 billion per annum if it matches Kenya cattle production, a World Bank consultant Sunil Sinha has said.
Countries like South Africa, Bostwana and Kenya have taken advantage of their livestock industry and are earning large amounts of money from both beef and milk exports.
In a presentation during a symposium organised by the Economics Association of Zambia (EAZ) and the World Bank last week titled ‘What would it take for Zambia’s cattle industry to achieve its potential’, Sinha said Zambia’s cattle industry had a lot of potential which was still underutilised.
“Zambia has four times more grazing than arable land, three agricultural zones which are suited to livestock and the country if it matched Kenya’s cattle population would have about US $4.5 billion additional value in assets,” he said.
“Furthermore, the cattle industry would increase its GDP contribution to the national treasury to 10 per cent instead of the current one per cent.”
Sinha said once Zambia improved its cattle production, which would lead to the production of more beef and milk, it could export its products to neighbouring countries like the Democratic Republic of Congo (DRC) which is a huge market.
“Zambia could emulate countries like Namibia and Bostwana which supply beef to South Africa and export to Europe,” he said. “Apart from Congo, Angola is also a good market for beef products.”
Sinha observed that the local market was currently very small as Zambians consume very little beef and diary products.
“Apart from the regional markets, Zambia could take advantage of the international markets which are huge and very competitive,” he said.
“At the moment world beef and dairy trade is worth about US $50 billion and above, a share which Zambia could be a part of if it got its act together.”
Sinha said apart from the financial benefits, increasing cattle production was good at reducing poverty in rural areas.
“At the moment for rural households, cattle are the largest asset which they own,” he said. “There is need to help the traditional cattle farmers to improve on their farming techniques so that they can take advantage of their assets cattle.”
Sinha added that if the cattle industry was to grow in Zambia, there was need to reduce the cost of production as it undermined competitiveness.
“At the moment, the cost of feed, drugs and medicines costs higher in Zambia than in South Africa,” he said. “Other factors like access to veterinary services are also affecting the increase in cattle population in Zambia.”
Sinha said high fuel costs and constant power outages contributed to the high cost of doing business in Zambia.
“Lack of infrastructure like rail-lines and the use of road transport made Zambia to be three times more expensive than countries like South Africa,” he said. “And financial inaccessibility also made it difficult for farmers to access the much needed finances to grow their businesses.”
Sinha said despite the challenges which have to be overcome for the livestock industry to grow in Zambia, the sector was growing and attracting more investment.
He added that the environment was currently not very enabling as there was poor policy and lack of institutional framework.
“Government also has to ensure that disease outbreaks are controlled and other infrastructures like dipping tanks are availed to ensure total disease eradication in the country,” he said. “Breeding services should be improved and government should invest more into research.”
Sinha said both the beef and the diary sectors could be improved if bottlenecks which farmers faced were dealt with.
And a Zambeef agronomist Felix Lupindula said there was need for the government to improve the land tenure system for farmers which would allow them to invest in their land.
“At the moment it is very difficult for farmers to invest in dip tanks and wire fencing as they do not own their land,’ he said. “Owning land will help farmers to practice better land management such as crop rotation which will ensure that the land is not over grazed.”
Lupindula said traditional cattle farmers should be compelled to dip their animals at a particular time every year, so that animal diseases are reduced.
And Hiefer Zambia executive director James Kasongo said the government should put in place a strategy to curb animal diseases in the country instead of always fire fighting.
“Government should also come up with a livestock development policy which will help to chart the future of the industry,” Kasongo said.
Currently, Zambia’s low level of competitiveness has been constraining its growth, diversification and prosperity.
According to the World Economic Forum’s Global Competitiveness Index, Zambia is not a competitive place in which to do business as it ranks 112th out of the 133 countries included in the 2009 index.
Few Zambian industries are internationally competitive, only 10 per cent of the labour force is employed in the formal sector and rural poverty is increasing.
There is urgent need, heightened by the global financial crisis, to reduce obstacles to business formation, growth and employment.
Labels: CATTLE, EAZ, World Bank
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Economic gains under threat –EAZ
By Fridah Zinyama, Chiwoyu Sinyangwe and Mutale Kapekele
Tue 02 Feb. 2010, 10:20 CAT
A visiting Japanese delegation led by Japanese Ambassador to Zambia Hideto Mutamura touring Konkola Copper Mines in Chingola last Wednesday – Picture by Abel Mambwe
ZAMBIA’s recent economic gains are under threat from the recovering global economy which is expected to trigger an increase in international oil prices, the Economics Association of Zambia (EAZ) has observed.
And foreign exchange market expert Paul Kalumba has said the resurgent global economic environment is not likely to benefit the local economy as the key industry, the mining sector, is privately-owned with limited tax contribution to the Treasury.
The Word Bank and International Monetary Fund (IMF) have stated that the global economy has recovered from the worst global economic recession since the great depression, quicker than previously estimated.
The IMF stated that the rebound is being actualised much faster than initially projected and this year the world is expected to witness a 3.9 per cent growth – a significant bounce-back from negative growth projections given last year.
The World Bank, on the other hand, stated that the global economic crisis was largely over and a modest recovery was underway but it could quickly lose steam as governments pull back some of the extraordinary liquidity they pumped into markets.
The World Bank said the global economy was likely to resume growth this year at around 2.7 per cent and then strengthen in 2011 to 3.2 per cent.
This compares to an economic contraction last year of 2.2 per cent and that combined, projected growth this year in developing countries should reach 5.2 per cent.
Commenting on the recovering global economy, EAZ national secretary Isaac Ngoma said while Zambia stood to gain from the global economic recovery, its gains might be threatened because Zambia has the highest fuel prices in the southern African region.
“The most important aspect for maintaining the gains that Zambia is likely to benefit from the global economy through increased copper and cobalt exports is to ensure that an improvement is made over its economic management,” Ngoma said.
Ngoma said the rise in copper prices was good for the country as it would lead to an increase in revenue for the country.
“But the increase in oil prices might not be good for Zambia,” he said. “Although something can be done about it, such as ensuring efficiency in the procurement system and eliminating taxes and charges that compound the pump price.”
Ngoma said although oil prices were a delicate external factor which the country had no control over, local pump prices needed to be managed to sustain any notable economic gains.
“If this is not well managed, we shall have increased cost of production therefore consumers of goods and services will pay high prices,” Ngoma said. “This will inevitably lead to an increase in inflation levels which the government has been at pains in trying to reduce since last year’s attainment of a single digit inflation level.”
Ngoma said an increase in inflation would lead to decreased investment output and economic growth.
He said it was gratifying to note that the global economy was recovering as this would positively contribute to Zambia’s economy.
Ngoma also said demand for commodities like copper would increase as the consumption of finished products was slowly being stimulated by the improving economic outlook.
“The recovery of the global economy will enhance trade and the loosening and movement of investment funds by investors will increase the prospects for Foreign Direct Investment (FDI) in emerging and developing markets,” Ngoma said. “This will increase our export earnings and foreign reserves.”
And Kalumba said there was need to address local economic dynamics if the country was to benefit from the predicted global economic recovery.
Kalumba, who is also president of the Association of Bureau de Change of Zambia, said the IMF and World Bank predictions were based on the fact that many countries had put up stimulus plans to boost their local economies.
Kalumba said there was need to increase tax revenues from the mining sector to enable the country benefit from the current high metal prices.
”If you look at the USA stimulus plan, it is focused on primarily creating local jobs and local spending, meaning that while the global economy is forecast to improve, the real beneficiaries will be those countries which have some stimulus plan of some sort,” Kalumba said. “Therefore, we need to address our local situation if we are to be part of the beneficiaries of the predicted global economic growth.
So far we have a number of factors working in our favour. The high copper prices favour us. However, we must remember that the copper mines are mainly privately owned and most are enjoying tax holidays. This means that there isn't much benefit to Zambia. We need as a matter of urgency to reinstitute the windfall tax. This will help us benefit from the high prices… So we have great potential to benefit from the predicted global growth, only if we can get our act together quickly on the windfall tax issue.”
Kalumba said there was need to invest part of the over US $1.8 billion foreign reserves at Bank of Zambia (BoZ) into infrastructure development to stimulate the local economy.
“Last year, we benefited from the increased IMF Special Drawing Rights SDR allocation to Zambia. However, we have used much of this to build our reserves,” said Kalumba. “My view is that you never get credit just to improve your reserve account. The IMF funds are credit to Zambia albeit at very good rates. What we need to do is to invest this money in infrastructure development as opposed to having a healthy reserve. In any case, even the IMF recommends reserves for three months cover, but our reserves cover more than three months. It is therefore prudent that we begin to apply these funds to our infrastructure development. At a basic level, what good is it for me to borrow money and keep it in the bank when my children need school fees? This is what we are doing by being happy with our reserves when our needs on the ground are dire.”
Separately, Lusaka business consultant Bob Sichinga said Zambia would continue to experience the effects of the global financial crisis if the exchange rate does not come down.
Sichinga said the devaluation of the kwacha meant that imports would be more expensive.
“Even when some recovery took place, the value of the kwacha did not get back to K3,300. It only came down to K4,600 where it has kind of stuck because now the exporters realise that they can have a crisis and decided to keep their money, the proceeds of copper,” Sichinga said. “They are holding those proceeds in safe havens, the so called flight-to-safety capital.”
Sichinga said this was a big challenge for the country as the current interest rates had pushed up the cost of doing business.
“For as long as that situation is maintained, for as long as that situation is obtained, it will be very difficult for Zambia to reduce the cost of doing business because what you pay for, for imports, what you pay for, for fuel - the price of fuel had to increase because you cannot expect to pay the same price for fuel as when the exchange rate was K3,300, it’s not possible,” Sichinga explained. “Not only that, even the United States dollar price overseas has also recovered, so you have no choice but to increase the price. As to whether to increase by that margin or not, that’s another matter. So this means that we have increased our operating costs. We have been impacted negatively; the cost of doing business has gone up because of that devaluation.”
Sichinga said recurrent goods, capital and imported goods had been impacted negatively in the aftermath of the global financial crisis.
“That is why we should be insisting that everybody that comes to invest in Zambia must not carry out everything, they can take capital in and out but foreign exchange regulations are important and need to be reviewed because you cannot allow people to carry out capital, profit and much more,” he said. “We need to keep a balance.”
On the World Bank projected 2010 economic growth of 4.8 for sub-Sahara and the Bank of Zambia’s 6.3 per cent growth projection for Zambia, Sichinga said the country could do more.
“In mature economies, if a country’s economy grows by even two per cent, it’s very good… but for developing countries like ourselves, we expected growth to be very high because there is so much poverty such that when you add value, it has got a higher percentage,” Sichinga said. “It is fair to say 4.8 might not be excessive an expectation. And if what the governor of the Bank of Zambia (Dr Caleb Fundanga) has told us is anything to go by, then at 6.3 per cent economic growth, we are way above the projected growth for the region.”
He said the country should not be concerned about the expected positive growth prospects.
“I am not so much concerned about the level at which we are but where we could be and my argument is that if you have been very inefficient in the past, and you show some growth you may look like you have achieved a lot and get a pat on the back,” he said. “But when you stop to think about it, you realize that you could have been at eight per cent, you were only at three per cent because you were inefficient so when you reach seven you won’t tell everyone you are doing very well. It is important not to emphasise where we are but also we should be talking about where we should be given the resources that we have.”
Sichinga also questioned where the reported drop in inflation was derived from as nothing much had changed.
“In December, inflation was said to have dropped to single digit. It was said to be conveniently 9.6 and I’m asking myself, where did this drop take place? Because fuel did not come down, the exchange rate did not come down to the level we could have expected and since Zambia’s business with the outside world is still costly… 50 per cent of our goods are from South Africa and their rand is not doing badly to give us an advantage over them,” said Sichinga. “Was the drop in the maize prices? Mealie meal has not come down! In which area did the price of commodities drop? Electricity went up. Are you feeling it in your pocket? I am not! Because of that, I cannot say inflation has gone down in as far as the cost of living is concerned.”
Labels: EAZ, HIDETO MITAMURA
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HH accuses Rupiah of scheming food crisis
By Staff Reporters
Wed 21 Oct. 2009, 15:31 CAT
UPND leader Hakainde Hichilema yesterday said President Rupiah Banda wants the current fuel crisis to cause food shortages so that his sons can supply GMO maize to the government.
And Economics Association of Zambia (EAZ) immediate past national secretary Chibamba Kanyama has observed that the current situation in the energy sector has clearly shown that Minister of Energy Kenneth Konga does not know what is going on.
Hichilema said the current fuel shortage was a huge cost to the country’s economy and on ordinary life of Zambians. Commenting on the current fuel shortage, Hichilema warned that if not checked, the fuel crisis would result in food shortages.
“Rupiah is directly responsible because of his meddling in the awarding of the fuel tenders. Things are now coming out so he is just deceiving himself,” Hichilema said.
“Fuel is the engine of the economy. When fuel runs out itís going to cause shortages in food including job losses. He (Rupiah) is directly responsible because of meddling in the awarding of tenders. They want to give tenders to their sons so that they bring in Genetically Modified Organisms (GMO) maize when there are food shortages as a result of the fuel crisis.”
He said President Banda’s irresponsibility and corruption was beginning to negatively affect the lives of Zambians.
“Rupiah’s corruption and incompetence has come here to roast. Initially the minister of energy (Kenneth Konga) said there was enough fuel. He must come out and apologise,” he said.
He insisted that President Banda was behind the current fuel crisis.
“Because of his desire to favour certain persons he is causing this fuel crisis. The fuel situation has been going on well until he started to meddle in this sector. Just look at the queues around town, look at the lost production hours. All this is caused by an incompetent head of state,” Hichilema said.
“Then he is coming out to say nobody should be blamed. He is basically saying he is not the President of Zambia. If somebody did a calculation of the cost arising from the fuel shortage, loss of production, loss of man hours, it’s a huge cost to the economy of the nation and on ordinary life.”
Hichilema said President Banda was guilty over the current fuel crisis.
“The guilty are always afraid, he is guilty. Rupiah Banda thinks he is very clever,” said Hichilema.
“He is now worried and saying nobody should be blamed because he knows where this thing is going. It’s pointing and directing a finger to his corruption.”
And Zambians for Empowerment and Development (ZED) president Dr Fred Mutesa yesterday stated that the stance by the government on the on-going fuel shortages, which have caused chaos in the nation, reveals serious confusion and lack of truthfulness on their part.
“It is irresponsible for the Head of State to say that nobody is to blame for the paralysis in this vital sector of the economy. Does he know how many man-hours have been lost by sleeping on queues at filling stations which could have been spent on more productive things?” Dr Mutesa asked.
And Kanyama regretted that the country lacked institutional mechanisms to respond to serious crises like the one witnessed in the energy sector.
Since the start of the energy crisis about two weeks ago, Konga has been issuing statements assuring the nation that the energy crisis was under control.
But on Monday, Konga told the nation that the country had enough fuel stocks and urged motorists not to panic despite the deteriorating situation which is characterised by long queues both during day and night.
“In oil there are politics involved, key players. Within the political structures, we have who is answerable to who? What are the penalties involved, what are reporting processes? They are not in control of the chain and that is where the problem is,” he said.
Kanyama said the risk profile emanating from the shock in the energy sector was too high to be left to chance and that accountability was paramount.
“It is very important to have a power-risk profile in any given country. Energy has a higher impact on the economy, then copper,” Kanyama said.
“The question is how prepared are we as country to manage that risk? What kind of risk management processes have we put in and you want to look at what is that you cannot control and of course, there should be a process of strong accountability.”
Kanyama also supported Bank of Zambia governor Dr Caleb Fundanga who warned that the current fuel crisis was a threat to the domestic economy and economic fundamentals such as inflation were going to be negatively impacted.
He said without clear signals to solutions, the danger to economic harm was higher than the danger to the reduction of copper prices.
“If the solution is there, it is not communicated to the key stakeholders. It has come out clearly that the minister doesn’t know what is going but all he was told is the fuel is on its way. If it there, it is just lying with one of the players,” said Chibamba.
And the Energy Regulation Board said the strategic reserves of the Oil Marketing Companies (OMCs) have depleted owing to the current acute shortages. ERB acting executive director Lukonde Mfula stated that most OMCs had continued to comply with the regulation requiring them to stock 15 days fuel at any one time to respond to crises like the current one.
Mfula also defended ERB, saying the regulator had been implementing its oversight role, contrary to public perception that the current crisis could have been averted if the OMCs kept the statutory regulated quantity of fuel.
He claimed that most OMCs generally complied with the statutorily requirement on storage reserves and were up to date as at end of August 2009.
Mfula stated that all OMCs were expected to re-establish the 15 days working stock and be fully compliant by end of November 2009. And a check in Livingstone yesterday revealed that only Vuma service station had petrol.
Engen and Kobil only had diesel while Gawula, formerly Caltex Service Station and BP Zambia had completely run out of both diesel and petrol.
On the Copperbelt, the shortage of petrol has continued with long queues forming at service stations where the commodity was being rationed.
On Monday evening, taxi ranks were deserted and many vehicles had camped at different service stations that were either expecting petrol or were rumoured to have petrol.
The few taxis that had petrol and were operating had a field day charging twice the normal fares.
Taxi fares between the city centre and Riverside which were normally between K20,000 and K25,000 had shot up to K40,000 and K50,000 on Monday evening.
Labels: CHIBAMBA KANYAMA, EAZ, ERB, FOOD, HAKAINDE HICHILEMA, RUPIAH BANDA
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Non-projection of mining revenue reflects govt’s failure - Simuusa
Written by Chiwoyu Sinyangwe and Fridah Zinyama
Thursday, October 15, 2009 5:56:50 PM
FINANCE minister Situmbeko Musokotwane’s non-announcement of the projected mining revenue for 2010 reflects a dismal failure by the government to manage Zambia’s main economic stay, PF chairman for mines Wilbur Simuusa has charged.
And the Economics Association of Zambia (EAZ) has observed that the implementation of the national budget will remain a challenge despite changes in its cycle.
During the presentation of the 2010 national budget, Dr Musokotwane did not announce the projected revenues from the mining sector, a shift from the custom that had become a tradition in the last few years.
The closest Dr Musokotwane came to was announcing that the sector was going to grow from 2.2 per cent this year to 13.7 per cent.
But Simuusa, who is Nchanga member of parliament said the ‘omission’ confirmed lack of direction of the government and that currently the country did know what it was doing in terms of mining policy and ministry of mines.
“This is evidenced by the fact that despite mining being the backbone of this country, nothing was said about the sector in the budget,” Simuusa said.
“It is an admission that things are not as good as they point them to be in the mining sector. The fact that we don’t know what the total revenue coming from the mines is, is a total failure on the part of the government because those mines are our resources as a country… go anywhere, Botswana, they have a proper grip on diamond revenues.
"You can get a report and see proper revenues of almost 50 per cent and they are doing by far better than us but we have got much more resources than Botswana. This is a dismal failure by the government to manage and extract the benefit from these resources for the Zambian people.”
Simuusa, a mining engineer, also charged that the failure by government to make revenue projection was borne in its quest to avoid being held accountable by the people.
“Since we are not bringing back windfall tax, applying the variable profit tax, he should have said ‘we are projecting so much revenue which is going to our coffers.’ And every month, we would be asking that how much have we collected…and by the end of the year,” he said.
“But the way I know this government, we are again playing hide and seek. They do not want to be held accountable to any of the high-sounding words about the mining sector.”
Simuusa said the failure by the government to improve revenue collection from the country’s lifeblood was going to compound spending on social services following the drastic reduction in overall treasury revenues owing to the effects of the global economic crisis.
And Dr Imakando, in an interview, said there were certain elements which government should have put in place to ensure that budget implementation was successful as a result of the changes that had been made in its presentation.
He however observed that government had managed to come up with a good budget despite the global financial crisis and other challenges that Zambia experienced.
“I would like to urge the Zambian public to take advantage of the good budget that has been presented. It was not easy, seeing as we were coming from a challenging year where we lost president [Levy Mwanawasa] and had to hold elections and then overcome the effects of the global financial crisis,” he said.
“I would therefore like to urge the Zambians to take full advantage of the good business climate that government has created.”
Dr Imakando said the year 2009 had a lot of uncertainties which the government tried to overcome in the 2010 national budget.
“This is why they have maintained the 2009 budget theme ‘Enhancing Growth through Competitiveness and Diversification’ because they know that they did not do enough...,” he said.
Dr Imakando said an admission of this nature showed that government was committed to ensuring that they made Zambia competitive while diversifying its economy.
And Dr Imakando said government should have increased funding to social sectors such as education and health.
The government has allocated K1.3 trillion to the health sector, representing a 25.3 per cent reduction from the allocation in the 2009 national budget while the education sector has been allocated K3.3 trillion. The reduction in funding to the health is as a result of a suspension in funding by some co-operating partners.
Labels: EAZ, MINING, MWILOLA IMAKANDO, TAXATION, WINDFALL TAX, WYLBUR SIMUUSA
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Sale of zamtel likely to be fraudulent – zukas
Written by Chiwoyu Sinyangwe and Florence Bupe
Tuesday, August 11, 2009 5:31:24 PM
VETERAN politician Simon Zukas has said the sale of Zamtel is likely to be fraudulent because the process preceding the transaction has not been transparent.
Meanwhile, most participants to the Economics Association of Zambia (EAZ) public discussion under the theme ‘Privatisation of Zamtel - What are the Economic Benefits?’ called for a peaceful demonstration to halt the sale of three quarters of the country’s biggest telecommunication company, stating that the government has failed to heed to dialogue.
Contributing to the debate, Zukas said the hiring of RP Capital to evaluate the net asset value of Zamtel was done without transparency.
Zukas however said it was more prudent to sell Zamtel than to have the company liquidated and workers get very little out of it. “It should be privatised. As to the degree, then we can discuss that but the one point I would like to make…what is the point of asking to see the RP Capital report when we were never consulted transparently about choosing it to assess the assets of Zamtel?” Zukas asked.
“As far as I am concerned, the report is not worth anything…so, we would have to find someone else to be given assessment of what Zamtel is worth. But the important thing is that what Zamtel is worth is not its assets, its assets are old and probably out of date but the assets of Zamtel are the customers that will come in the future. That is where the value lies. Anyone coming in here is not interested in buying the assets. They are going to look at the market…as Zambia develops, they have seen how the cell phones have taken off. The market is there and that is what they will be looking at, but my main concern is that there should transparency. That is the key.
“We started with lack of transparency in choosing the consultant, now all the emotions should be concentrated on making sure that whoever is chosen as managing partner should be chosen in a transparent manner and we should be sure that that partner has the capacity to run Zamtel and not act in the way some of our investors have acted; when the going gets tough, they run away.”
And most members of audience contended that there was need for a peaceful demonstration to halt the process of privatising Zamtel, which they said was laced with corruption.
The audience observed that whereas other national issues like Zesco electricity tariffs had been subjected to thorough debate, the government was evidently bulldozing its way in the manner it was handling the privatisation process.
Former Copperbelt University Students Union (COBUSU) president Emmanuel Mwange said the demonstration was the only way of informing the government that Zambians had rejected its roadmap on Zamtel.
“We can’t come and start massaging ourselves…maybe if we decided that come next week Monday, we are going to hold a demonstration to demand that before Zamtel is given away…how are we going to ensure that those concerns are addressed? I propose that we don’t become jokers,” said Mwange. “If cadres can demonstrate to show their foolishness, why can’t we demonstrate to show some meaningful and purposeful vision for our country Zambia? So, I challenge everybody to make sure we protect our interest.”
His sentiments were echoed by former University of Zambia Students Union (UNZASU) president Antonio Mwanza who said continuing to dialogue with the government over the matter was a waste of time.
He also complained that most educated people had become averse towards matters of governance.
“What worries me is the level of lack of participation by the learned people. We have left the issues of governance in the hands of riff-raffs but we expect proper results from people who don’t even understand their own lives. We are wasting our time,” said Mwanza.
“So, it is time for us to stand up and be a part of that process of governance. Any more dialogue will not change anything…the saying of the wise is that if you want peace, you should be ready for war in order to earn peace. What are we going to do to ensure that equity partner does not take Zamtel?”
Another member of the audience, Heather Hanene said there was need to seek the legal route of blocking the privatisation of Zamtel, and that if it failed, massive demonstration remained the only alternative.
Earlier, National Union of Communications Workers (NUCW) president Clement Kasonde said Zamtel workers accepted the privatisation of the company with a heavy heart after the government, the majority shareholder, rejected the union’s plans to recapitalise it.
Kasonde said the government’s move was a sharp contrast to Western governments that had offered rescue packages to companies that had been hit by the global financial crisis.
“For us as a union, our mandate is not just about representing our workers…we have considered what is happening in Zamtel and its indebtedness and the failure by the shareholder, the government, to recapitalise the company…painfully, we have accepted that we allow the company to be privatised purely on the basis that we want Zamtel to survive,” said Kasonde.
But communications minister Professor Geoffrey Lungwangwa has maintained that the sale of the majority shares of the telecommunications company is the surest way of guaranteeing its survival.
In his draft ministerial statement to Parliament last Friday, Prof Lungwangwa said based on the recommendations given to government by RP Capital, there was need for government to look for an equity partner who could buy 75 per cent shareholding in Zamtel, while the government retained 25 per cent equity in the company.
Prof Lungwangwa said the government would award the 75 per cent shares to a qualified organisation of any nationality, including Zambian, which would demonstrate that it had the financial capacity and management experience to make the telecommunications company competitive.
Labels: ANTONIO MWANZA, CLEMENT KASONDE, EAZ, EMMANUEL MWANGE, GEOFFREY LUNGWANGWA, HEATHER HANENE, PRIVATISATION, UNZASU, ZAMTEL, ZUKAS
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No development without the rule of law – Sanderson
Written by Mutuna Chanda in Kitwe
Sunday, June 21, 2009 3:19:24 PM
KITWE resident Murray Sanderson has said there would be no development without an honest and transparent government. And Copperbelt University (CBU) economics lecturer Mundia Kabinga has said it will be more economical for Zambians to dialogue among themselves than spending US$2 million yearly on the Africa Peer Review Mechanism (APRM).
During an Economics Association of Zambia (EAZ) organised public discussion on the African Peer Review Mechanism in Kitwe on Tuesday evening, Sanderson, who is also Zambia Institute of Public Policy Analysis (ZIPPA) chairman, said Zambians needed to get their priorities right.
"We have only to look across our borders to the DRC and Zimbabwe to realise that without the rule of law and honest and accountable government, any kind of development, any prosperity is impossible," Sanderson said.
"Now let us turn to Lusaka and look at the Ministry of Health and the Wildlife Authority where employees have lately committed massive thefts. Are things so much better here in Zambia? Nor is it just Lusaka. Look at our own Kitwe City Council. What happens to the money they receive? We don't know; the city's accounts are no longer audited."
He said Zambia should concentrate on principles, processes, practices and performance instead of policies and purposes.
"The rule of law; this covers the protection of person and property and the prevention of theft and corruption. Specific requirements under this head are: an efficient and incorruptible police service; a special enforcement body to follow up reports of the Auditor General and ensure honest handling of government monies; a law to protect whistle blowers,” said Sanderson.
"Honest and transparent government which is efficient and accountable to the general public; this could be achieved through introducing closely monitored and effective customer service charters so that civil servants start to live up to their name."
And Kabinga said a country did not need the APRM if it had internal policy dialogue. He cited Botswana and Namibia as examples of countries that did not need the APRM.
Kabinga however said countries that probably needed the APRM were those that lacked internal policy dialogue. He noted that Zambia lacked internal policy dialogue in its political, economic and corporate governance spheres. Kabinga also wondered whether the APRM recommendations would be implemented in Zambia.
But APRM National Governing Council (NGC) spokesperson Amos Chanda said there were examples of peer pressure among African countries working on those that were not in tow with good democratic principles.
And APRM NGC chairperson Tamala Kambikambi said much as African states had problems, that did not stop them from giving suggestions to fellow countries.
Labels: AMOS CHANDA, APRM, EAZ, MUNDIA KABINGA, MURRAY SANDERSON, TAMALA KAMBIKAMBI, ZIPPA
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‘IMF cash injection will boost Kwacha’
By TIMES REPORTER
THE Government has said the International Monetary Fund (IMF)’s approval of financing amounting to more than US$250 million will help Zambia stabilise the Kwacha and enable businesses to plan ahead.
And the Economics Association of Zambia (EAZ) separately said the release of the money would help reduce speculation on the shortage of foreign exchange and build investor confidence in the Zambian economy as the world goes through a financial crisis.
Finance and National Planning Minister, Situmbeko Musokotwane, said the Government was happy that the IMF had already started disbursing the money.
“We are happy that the IMF has approved the $256 million and has since disbursed about $160 million. This is an indication of the partners’ commitment to seeing to it that the country’s economy improves,” he said.
Dr Musokotwane said in Lusaka yesterday that the financial assistance from the IMF would assist the country strengthen and stabilise the local currency, which had lately tumbled against the major currencies.
Dr Musokotwane said the money would also assist in the poverty reduction programmes and address other challenges the country was facing.
He explained that the fluctuation of the Kwacha was a result of the fall of copper prices on the international market and that the Government had no doubt that the situation would be reversed.
He said the Governments was ready to continue maintaining its prudent macro-economic policies and pursing structural reforms to sustain the country’s economic growth.
The minister assured that the Government would ensure that the approved funds were put to good use.
It is for this reason that the Government is moving away from dependence on copper and has identified other sectors to assist sustain the country’s economy.
Dr Musokotwane further called for participation of all Zambians and other stakeholders as the country works towards economic recovery.
He described the recently held IMF executive board meeting as a success.
He said it was during the same meeting with IMF deputy managing director and acting chair, Takatoshi Kato that it was noted that Zambia’s Poverty Reduction and Growth Facility (PRGF) Programme implementation and the recent economic performance had been adversely affected by a number of external shocks, hence the approval of the funds.
The executive board on Friday last week approved an increase by $256.4 million, to $329.7 million in financial support to Zambia under the PRGF.
The board also completed the first and second reviews of Zambia’s economic performance under the PRGF arrangement, allowing the immediate disbursement of $160.1 million and bringing total disbursements to $170.6 million.
Last year the IMF approved a three-year PRGF arrangement for Zambia in an amount equivalent to $79.2 million in support of the country’s economic policies aimed at alleviating poverty and sustaining growth.
The decision enabled Zambia to request the first disbursement of an amount equivalent to $11.3 million.
EAZ president, Mwilola Imakando, said in an interview that the release of the funding was good for business and showed that the IMF had confidence in the Zambian Government.
Zambia Association of Manufacturers president, Dev Babbar welcomed the IMF decision to approve and release the funds at a time when the global financial crisis had hit the country’s manufacturers negatively.
Labels: EAZ, IMF, INFLATION, KWACHA, SITUMBEKO MUSOKOTWANE
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Govt officials in hurry to fraudulently acquire wealth, observes TIZ
Written by Chiwoyu Sinyangwe
Thursday, April 02, 2009 3:51:48 PM
PRESIDENT Rupiah Banda’s regime has seen an increase in high profile government officials moving at "high speed" to acquire wealth fraudulently, Transparency International Zambia (TIZ) has observed.
And Auditor General of Zambia Anna Chifungula has encouraged people to take interest in the Auditor General's annual report because it reveals how taxpayers' money is spent by government.
Addressing the Economics Association of Zambia (EAZ) organised public discussion at Pamodzi Hotel on Tuesday evening under the theme 'Management of Public Resources and Accountability', TIZ executive director Goodwell Lungu said the civil society in the country was currently building its capacity to increase vigilance in view of the growing trend.
Lungu said the new mechanism being devised by the civil society could be seen in the number of "speed traps" that had recently been applied on some government officials.
Lungu said the civil society was also contemplating to engage in private prosecution of some public officials found ailing but that the move was being derailed by huge legal costs and to some extent the structure of the Public Prosecution Office.
He said TIZ predicted that the number of people to be convicted for plunder of national resources would rise going by the increasing cases of people allegedly trying to steal public resources.
"What we have seen in the last few months is that some of our friends in this current government have started moving at a high speed to acquire wealth and you have seen that recently, we have applied some speed traps to slow them down," Lungu said. "As civil society we keep on devising new mechanisms every now [and then] and that is depending on the situation even private prosecution.
"Private prosecution is very costly and that depends on the goodwill of the Director of Public Prosecutions because even a private prosecution, he has to approve of it and if he sits on the private prosecution, you can't go anywhere, and at the rate at which we are going, we see the queue to prison is even going to be even longer as the number of people going there is going to increase."
Lungu urged the public not to wait for politicians to provide political will to fight corruption, saying the people should force politicians to cultivate the political will.
"Zambian people should not wait for political will to come from politicians, but we are going to cultivate political will ourselves. We should be able to demonstrate to politicians that they should be able to lead by example and be able to see a lot of sense and appreciate our efforts as well," he said.
"What we are trying to do is simply to demonstrate that we are concerned with the public welfare and the way public funds are being utilised and so on. So once we have the same understanding with the politicians about public funds, then they will be bound to know that it is not just talking about fighting corruption but to do practical avenues that will demonstrate that they are committed towards the fight against corruption."
He also said politicians needed to demonstrate their commitment to fighting corruption by not shielding their close allies that were implicated in any suspected corrupt activity.
"Demonstration [by politicians] can only come in if they are even able to sacrifice their own bad habits, some of the people they feel are close allies to them but who might be found wanting," said Lungu.
"They should be able to demonstrate to the public that they are capable of doing that particular aspect and they are also capable of being held to account for their own action."
And Chifungula said the OAG always stood ready to assist private citizens to prosecute public officials who are suspected to have embezzeled public resources and were mentioned in the report.
Chifungula cited previous instances where some private individuals attempted to prosecute some erring officers who were suspected to have been involved in the Mbesuma Bridge in Northern Province where over US $3 million was estimated to have been spent without tangible results.
She also expressed frustration at the lack of action on public servants who are mentioned in the OAG reports.
"Previously when some private citizens, I think it came from Parliament decided to move a private citizens prosecution for government officials mentioned in the famous Mbesuma Bridge, my office gave them maximum cooperation," Chifungula said. "When we complete auditing of the public accounts, it is for every citizen and every citizen of this country has to take interest in the report because it shows how your money is being spent. My office will be ready to provide all documents needed to people who want to institute private citizens prosecution."
Labels: ANNA CHIFUNGULA, AUDITOR GENERAL, CORRUPTION, EAZ, GOODWELL LUNGU, MMD, RUPIAH BANDA, TIZ
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No short-term solution to save kwacha – EAZ
Written by Fridah Zinyama
Monday, March 02, 2009 7:40:28 AM
THE Economics Association of Zambia (EAZ) has said there is nothing that can be done in the short-term to prevent the kwacha from depreciating further.
Commenting on the exchange rate situation where the kwacha has seen the worst depreciating levels ever, EAZ stated that until there were clear signs of a turnaround in the global economy and serious efforts being made to diversify the country’s economy, Zambia’s local currency would continue to tumble. EAZ further observed that short-term prospects for the global economy remained bleak.
“All major western economies are now contracting, some at rates that have not been seen since the 1930s. Even China is stagnating. It will be some time before the stimulus packages that are being put in place in almost all the major economies will have an effect,” the association stated.
EAZ however, stated that Zambia could start setting the platform for future improvements in its economy by fasttracking its economic diversification plans.
“Diversification in Zambia’s exports away from mining towards agriculture and tourism will be helped in the long-run by the kwacha depreciation, provided that it is sustained,” EAZ stated. “In the short-term, we can expect some reduction in import demand – and therefore in foreign exchange demand.”
EAZ stated that this would be due to several factors such as capital spending by the mining sector which had reduced due to the completion of some major investments.
“The other factors are international fuel and fertiliser prices which have reduced, and the weak kwacha which will lead to a reduction in import demand,” the association stated. “In addition, the currency depreciation is providing a much-needed cushion to the mining industry, which is better able to meet its local costs.”
EAZ pointed out that the weakening of the kwacha would to some extent help the mining industry avoid any further job losses.
And the EAZ also observed that the reintroduction of exchange controls would only risk the development of a parallel market and discourage whatever foreign investment may be available.
“The use of the foreign exchange reserves to defend the exchange rate will risk both the loss of those reserves and, in the end, an even more depreciated exchange rate,” the association noted.
“We believe that the kwacha depreciation can and should be turned to the country’s advantage. This can be done by government adhering to much greater fiscal austerity than is presently planned in the current budget.”
EAZ also added that improving the business climate through license reform and better financing would also help the country’s economy.
“Fast-tracking infrastructure improvement; targeting groups and regions that need special assistance during a difficult adjustment period, like those facing redundancy are all ways that government can best make use of the weakening currency,” the association pointed stated.
EAZ however, suggested that it would be best for government to set aside some funds in a special account that would help cushion the economy against such future fluctuations.
“This strategy and diversification of the real economy – not a return to the discredited control regime of the 1970s and 1980s – is the best way to avoid high exchange rate volatility,” stated EAZ.
Labels: EAZ, GREAT DEPRESSION II, KWACHA
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COMMENT - Is anyone still in doubt that the MMD is a party of the rich, for the rich? Let's get rid of these neoliberals, and start developing the country for the people, not foreign corporations and the sellout politicians who will take their bribes.
Zambians can afford the US $500,000 MFEZ, says Mutati
Written by Fridah Zinyama
Friday, February 20, 2009 6:57:26 PM
COMMERCE minister Felix Mutati yesterday said most Zambians can afford the US$500,000 requirement to invest in the Multi-facility Economic Zones (MFEZ).
During an MFEZ Stakeholders Consultative Forum hosted by the Economics Association of Zambia (EAZ), Zambia Institute of Chartered Accountants (ZICA) and Association of Certified Chartered Accountants (ACCA) in Lusaka, Mutati said the government had come up with different initiatives to help Zambians in different categories of business to grow.
“There is no need for Zambians to be concerned about whether they will not be able to invest in the MFEZ because those who cannot afford the amount have other options that are meant to help them grow their businesses,” he said. “I will let you know that there are some Zambians who can afford to bring in 10 Marcopolo buses in Zambia which cost about US$ 500,000.”
Mutati further added that the government had signed different credit facilities that could help the Zambian business community to access credit at affordable rates and with longer repayment periods.
“Just last year, we signed a US$ 32 million credit loan facility with the European Investment Bank that is supposed to help the business community with funds to grow their businesses,” he said.
Mutati said Zambians should acquire correct information that could help them make proper investment decisions.
“Look at the Citizens Economic Empowerment Fund, most people have been complaining that it is complicated to fill in when the application form has five parts which have to be filled in,” he said.
“There is a part where you fill in your personal details, your business idea, what you are going to use as collateral. These are simple procedures which, if people inquired, could easily fill in and access the funds.”
Labels: EAZ, FELIX MUTATI, MFEZ, NEOLIBERALISM
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Govt not ready to recapitalise NCZ, says Musokotwane
Written by Ernest Chanda
Tuesday, February 17, 2009 4:52:22 PM
FINANCE minister Dr Situmbeko Musokotwane has said the government is not ready to recapitalise Nitrogen Chemicals of Zambia (NCZ).
And the Economics Association of Zambia (EAZ) has supported government's cancellation of the windfall tax on the mines.
Appearing before an Expanded Parliamentary Committee on Estimates in Lusaka yesterday, Dr Musokotwane said it was a hard process for the government to run the fertiliser-making plant.
This was in response to a committee member who is also Bwacha (PF) member of parliament, Lombe Mulenga, who wanted to know why the government was not recapitalising NCZ to produce cheaper fertiliser and create jobs for Zambians.
The committee, chaired by Lukulu East member of parliament, Batuke Imenda, comprises chairpersons of all parliamentary select committees.
Dr Musokotwane said the government would rather have NCZ run by private entities.
"The technology available at NCZ at the moment is in problems, but as government we are open to Zambians who can run NCZ and produce fertiliser. If they can produce that fertiliser cheaply as suggested, then we will be ready to buy from them. As for now, it is a hard process for government to run NCZ. Anybody can come and we shall discuss with them if they want to invest in the company," Dr Musokotwane said.
And Dr Musokotwane said he might consider increasing the Constituency Development Fund (CDF) in this year's budget as demanded by members of parliament.
"Honourable members should know first of all that we have a squeezed budget. If we increase CDF to K1 billion across the board as they have proposed it would attract an extra K8.2 billion to offset the deficit. And where would government get this money from? We surely will do something to adjust the CDF within this budget, but not as demanded by the honourable members of parliament,î he said.
"It is impossible to increase to K1 billion this year, but we would rather start with something so that in the next few years we shall reach K1 billion as demanded. But we must also realise that as we demand this increase, it means that somebody else in the economy must generate this money."
Dr Musokotwane said if the demanded increment were to be effected this year, other projects would suffer.
"If we do it now, Nansaga Agriculture Development and Kasaba Bay tourism development projects would suffer. And these projects are a seed that we want to plant for the future, so let's start them now. Remember that when you plant a seed, it grows to affect the next generation, and that is what we are trying to do," said Dr Musokotwane.
And EAZ supported the government's cancellation of the windfall tax on mines.
Association president Mwilola Imakando told the committee that such tax would have made it difficult for the mines to operate effectively amidst the global credit crunch.
"...There was a designed fault in the windfall tax arrangement on the mining sector. Government ignored the production side, and we are glad that in fact, the government has just shown that it is a listening government by cancelling the windfall tax. That is just about what any government can do because production costs in the mining sector are just too high," said Imakando.
Labels: EAZ, NCZ, PARASTATALS, SITUMBEKO MUSOKOTWANE, WINDFALL TAX
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Masaka advises Zambia against borrowing
Written by Chiwoyu Sinyangwe
Sunday, February 01, 2009 4:33:52 PM
POLICIES of free and self-regulated markets have failed to work,
visiting Japan International Co-operation Agency (JICA) senior advisor for Africa Masaka Msiyaji
[sic, Masaka Miyaji - MrK] has observed.
And Masaka has advised Zambia against borrowing from international financial institutions to mitigate the impact of the current global economic crisis
Meanwhile, University of Zambia (UNZA) Development Studies lecturer Dr Fred Mutesa also said the government should not borrow for consumption purposes.
During a discussion forum organised by JICA and the Economics Association of Zambia (EAZ) in Lusaka last Friday, Masaka said timely and effective activity and people’s proactive mindsets were a prerequisite for economic development in the current environment of the global economic crisis.
Masaka, who is also former executive vice-president of Mitsubishi Motor Corporation in Japan, said there was need for countries to develop home-grown policies and programmes of overcoming the current economic challenges.
Zambia is among countries that have adopted free market policies, leaving the performance of all economic fundamentals to market forces.
“The current financial crisis, what I want to stress here is that government’s timely and effective activity and people’s proactive mindset are both prerequisite for economic development just like the two faces of the same economy…the government and the people,” Masaka said.
“If we are to analyse the current financial problems, and until the crisis, economists told us globalisation and deregulation of regulations, adopting of money markets or to say markets must be free…that we have to leave everything to the market. That kind of golden rule is no more valid. We must stick to our own way. We mustn’t follow Western ways particularly if you borrow the money from international institutions; many conditionalities come and the economy in the African countries is dropping down. I don’t recommend borrowing money from the international organisations as a country basis.”
Masaka also noted the need to take a protectionist approach towards the domestic economy and industries.
“I would rather recommend that you have to be more protectionist, but I don’t say protectionism. If I say protectionism, economists will be very much upset with me but when I say protectionist, it is a little bit different,” Masaka said.
“But you have to protect yourself as New Partnership for Africa’s Development (NEPAD) is established. NEPAD means self help or self responsibility by yourselves as an African continent and you have to do it by yourselves. You have SADC [Southern African Development Community] and other regional development groupings but Zambia is Zambia. Zambia has to develop by itself competing with other countries and friend of your neighbouring countries. Zambia has to grow. You have the potential.”
And Masaka said countries that borrowed in times of economic difficulties tended to come out worse after a crisis.
The government recently announced that it would increase its borrowing from international financial institutions, a move necessitated by the expected reduced government earnings this year following the current global economic crisis.
The current global economic difficulties are expected to have a negative effect on government revenue as the country's main foreign exchange earner – the copper mining sector – had been thrown in disarray following the continued collapse in international copper prices.
And Dr Mutesa supported Masaka’s calls, saying the conditionalities attached to loans offered by international financial institutions left countries with no policy space to choose options that were suitable for their development needs.
Dr Mutesa, who acknowledged that borrowing could be inevitable owing to the current unfavourable external economic environment, said there was need for the country to set a clear strategy on investing the borrowed funds to enhance productivity.
“…that is the major problem of borrowing from the international markets… what do you put the money to? Is it going to resuscitate the economy or bring dynamism I am afraid if we borrow in order to sustain consumption which include maintaining government administration, then we are headed in the wrong direction,” warned Dr Mutesa.
“If we borrowed to increases production, that would not be a major problem but also we can look at how we can reduce unnecessary expenditure and reallocate the saved resources to more productive sectors and industries.”
Labels: DEBT, EAZ, IMF, JICA, MASAKA MIYAJI, NEOLIBERALISM
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