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The Budget 2011 Expectation & Economic development

Columns The Budget 2011 Expectation & Economic development

Dr Musokotwane arriving for the budget presentation at parliament today

By Lubinda Mwipihi

What should this Budget 2011 offer?

When the minister will be tabling the 2011 budget, we expect him to aim and to display transparently on how Zambians will benefit from government’s programmes and policies and how their tax contributions will be spent.

For the poor, the Budget should continue to expand by bringing bread and butter on the table, rural development, better community services and social assistance grants for the elderly, the disabled and children in need.
For workers, the Budget should emphasis on job creation and expenditure on the “social wage,” including access to health services, education, social security, transport and municipal infrastructure.

For the business sector, the Budget should expand investments in modernizing our infrastructure and transport logistics, accelerating further education and skills development and supporting research, technology and industrial investment.
For the small business sector, the target of financial and enterprise development programmes, and tax relief measures should be in place.

For the youth, government should expand access and financial assistance for further education, and a range of initiatives aimed at expanding job opportunities.
All of this, and more, must be done within a sound fiscal framework. The minister must also recognize that we are taking steps, this year and next, on a long-term growth path, a decades-long transformation and expansion of our social and economic possibilities.

As comrade Chris Hani so rightly said, “We want to build a nation free from hunger, disease and poverty, free from ignorance, homelessness and humiliation, a country in which there is peace, security and jobs.”

Macroeconomic stability in an uncertain world

The growth and transformation of financial markets in recent decades has seen increased volatility of exchange rates and capital flows. Global commodity markets now account for significant fluctuations in prices for our energy imports, mineral exports, and food supplies.

The macroeconomic environment facing Zambians – through interest rates, exchange rates, inflation, and credit conditions – can be destabilized by those international shocks. The macroeconomic policy task is to provide a stable and predictable economic environment by offsetting such shocks as far as possible.
Our monetary policy designed and conducted by Central Bank are to target and achieve the low rate of inflation and interest rates. Fiscal and monetary policy should continue to work in partnership. Monetary policy, operation by the Bank of Zambia, should continue to be focused on controlling inflation, and to ensure that fiscal policy is countercyclical within a sustainable long-term framework. Movements in the exchange rate affect different sectors of the economy in different ways, and present difficulties in macroeconomic policy for many countries.

Recognizing the impact of Zambian Kwacha strength on the manufacturing industry, in particular, the minister should announce measures to moderate the potential effect of capital inflows.

Foreign exchange regulations should be amended to permit greater foreign investment by Zambian institutions.
Step up foreign exchange purchases by the Central Bank will have partially offset upward pressures on the Kwacha.

Economic Development

We seriously expect job creation, zero fraud and a corrupt free government, low taxes, free education, Social sector development, infrastructure & governance.
While we appreciate all sectors in support, we expect the government to disburse amount of funds to boost agriculture. The poverty level in Zambia has riched the highest level such that only the rich can have bread and butter and afford the three meals per day.

Unemployment level is very high and alarming. We are like a nation on autopilot.
Fraud and corruption are elevated by scraping the Anti-Corruption Commission by our government. That will lead to a lot of things that has transpired during the past years. We saw and noticed that almost every report by the Auditors General has money misused. We also saw the:

Selling of Zamtel and purchasing by RP Capital
The removal of the Anti Corruption Commission (ACC)

The Constitution is a key to every developing country like ours. The draft does not have our mandate as a people-driven constitution but the few selfish individuals. To have a sustainable and validity policy, we need to have a people’s constitution.

Social economic – This has fallen below par, from bad to worse. We have noted that we probably have some of the worst medical facilities/scheme hospitals in the world without taking into account the funds being misappropriated by the Ministry of Health. The National Mobile Health Services program hospital – Is that a tangible solution to Zambia’s health crisis? I leave it to you people to answer yourselves.

People need to have a low tax bracket. One may argue that: “where does government get the funds if low tax is to be implemented effectively”? A windfall tax abolished is a simple example. Where is the government getting the money from? We can exchange the two to ensure that we put money into the people’s pockets.

In conclusion, I repeat, with jobs comes dignity. With dignity comes participation. And from participation emerges prosperity for all.

“In judging our progress as individuals we tend to concentrate on external factors, such as one’s social position, influence and popularity, wealth and standard of education… It is perfectly understandable if many people exert themselves mainly to achieve all these. But internal factors may be even more crucial…Honesty, sincerity, simplicity, humility, pure generosity, absence of vanity, readiness to serve others – qualities which are within easy reach of every soul”,

46 COMMENTS

  1. This is very powerful article and well said. We need this kind of article than spend time on PACT when real issues of economical development need to be discussed. Thank you Lubinda and LT. Lubinda – You need to work with uncle Situmbeko to drive the nation into prosperity.

  2. Great article Mr Lubinda.
    The issues you have articulated are what we need as a young nation to develop.
    You have noted important issues among them,corruption,windfall tax,mobile hospital and transparency to mention but afew,which are hindering development in the current regime but MMD does’t think so.That’s why we are advocating change of govt because we feel MMD is taking us in the wrong direction.

  3. Is it true that this Lubinda guy is loaded financially? Word has it that he was in the UK, he studied economics and Finance, that he is one of the advisors to BoZ through Dr. Fundanga. Its also said that ADD wants him to return to Z so that he contests in W/P. Any data bloggers?

  4. You’ve got toLove the article if you are true patriot. It has dwelled on all aspects of Human development as required both as a nation and as individuals. Lets draw some inspiration from it and move forward as one. Especially ma politicians; Mwazifunsako everyday mumazulo, Have I done anything to better someone’s life today?????

  5. Musokotwane is a CROOK !!!

    FQM (kansanshi) owes zccm-ih $400 million and gave only crumbs ($24 million) while the benefit of kansanshi overtook $ 664.2 m in 2008 and $610.4 m in 2009

    Zccm-ih owes the govt $300 million

    the govt owes IMF $ 330 million and was only able to pay back $ 1,9 million…

    and those crooks need to borrow money to make ends meet !!

    Simuusa, who is Patriotic Front chairman for mines, said recent audit report on pilot audit on Mopani Copper MInes which revealed glaring irregularities on the books the mining firm presented to ZRA for taxation was symptomatic of the level of revenue leakages in the mining sector. He wondered why finance minister Situmbeko Musokotwane had kept secret a document which he described as ” the biggest political scandal of the…

  6. continued

    year”. Simuusa said the current fiscal mining regime was aiding mining firms to avoid paying taxes to the country. ” Hon Musokotwane and Maxwell Mwale have (been) sold out to the mines and that is why today they are acting as spokespersons for the mines”, said Simuusa. : He ( Dr Musokotwane ) has been saying mining firms were being taxed at 47 per cent but reality on the ground is that mining firms are not even paying the three per cent mineral royalty in full”

    (from The Post)

    The Zambian people must sack those THIEVES…!!

  7. the article is good in that it raises lots of important issues. we must all admit that there are not easy answers to our problem. two issues that caught my attention are
    1. free education. free education? where on earth do we get money for such a thing important as it is. we as a nation can’t afford offering indiscriminately free education to all. we need instead to identify people that totally need assistance .secondly gov should instead make available moneys for study loans which should be paid back. this is more responsible than borrowing again form the future to feed the appetite of today.
    2. Lubindad discribes us right that we have the one of the most primitive health care system in africa. agains it calling upon zambians to responsibly contribute to the national health account

  8. This article has outlined very important issues which our leaders should take into account than the dribbling tactics which one ”Dr” Chiluba has recommended to our ruling Party! We waste so much time discussing the Pact without realising that if we donot demand transparency and accountability Zambia will never come out of its difficulties!

  9. #11 conti
    while we are health in form of insurance, medical schemes, or medical fund. our system requires us to look for money when we are sick in the name of user fees. as a nation we need to look at the possiblity of creating a national health insurance scheme where all zambians contribute equitably. again here if we ask for free health services then let us not complain when we end up with UTH and the like

  10. Mike Te first of all i do understand what you are trying to say. i say this with due respect. secondly YOU ARE LYING that the mining are paying nothing on the ground. by the way who are you quoting did you read for yourself or you are accustomed to repeating what politicians tell you. but one thing i would agree with you is that we need to strengthen the tax collection tools politicians should tell us how they will do this.

  11. # 5. Free at last. Yes. Mr. Lubinda is an economist with hands on finance. He is full of accountability and integrity. As to work with ADD will be the best thing to do. ADD is a future of Zambia. If you have noticed his article, you will realize that he has much information on macro-economic and passion for the people. I like his quote on Chris Hana that “We want to build a nation free from hunger, disease and poverty, free from ignorance, homelessness and humiliation, a country in which there is peace, security and jobs.”

  12. #5 & 16. We cannot discuss Lubinda’s credentials. I know he wrote the best article and this is what our government is doing. Even all to ma PACT members know the truth that MMD is a working government. To bring your Kaponya mentality and your school of thinking into government, you will make everyone go into economical oblivion.

  13. This article is very inarticulate,incoherent and not grounded on sound fiscal and monetary foundations.It falls short on sound proposals with the current budgetary constraints in mind and delineating the macro and microeconomics situation in the formulation of zambia’s fiscal and monetary policies.Hard to believe the “economist”

  14. I m not a parrot and I did not say that the mining are paying nothing but are only giving crumbs because of bribes…

    – Read the Consolidated Financial Statements of First Quantum Minerals
    Third Quarter – September 30, 2010 page 4
    zccm-ih’s minority interests (non controlling interest) is $385 million
    The minority Interest is the benefit after amortization for the others shareholders in kansanshi mining… There is only one shareholder with first quantum minerals : ZCCM-IH

    Kansanshi ZCCM-IH Minority interests (20 percent shares of Kansanshi)
    First Quantum Minerals (80 percent of shares of Kansanshi)

    – glencore and fqm do not rule Mopani mining
    it is their subsidiary Carlisa Investments Corp based in tax havens (in the British Virgin Islands)

  15. continued

    Carlisa Investments Corp is jointly owned by Glencore Finance (Bermuda) Limited (81.2%), a wholly owned subsidiary of Glencore International AG; and Skyblue Enterprise Incorporated (18.8%), a wholly owned subsidiary of First Quantum Minerals Limited (also in the British Virgin Islands)
    Mopani uses transfer pricing to pay no taxes and no dividends to zccm-ih

    – 100 million dollars swindled from ZCCM and invested in the banking system in Mauritius

    the gvt, finance minister Musokotwane ALSO FORMER DIRECTOR OF ZCCM knows that and where the money is… but nothing was done to recover it
    if mauritian banks refuse to return money why Musokotwane does not publicly make pression on mauritians ??
    The Zambian people need these $ 100 m

    where is the money???

  16. continued

    – Congolese state expelled FQM from DRC because of malversations several months ago

    Why Congolese politicians can do it and the MMD crooks are not be able to expel FQM and Glencore from Zed ???

    honey is so sweet ???

    I like this citation

    “The government is like an estate agent and if you have an estate agent who cannot collect rent, what do you do with them? You fire them,” Dr Mpande said.

    The PF has already told you how they will collect tax and get money (and not crumbs) from the mining companies
    PF members made a very interesting speech to parliament on Sept. 29 2010…

  17. #18 Section_24: I did not say the article is bad. I was only telling Free & Dad to stop discussing Mr. Lubinda’s credentials. It has nothing to do with this article. Also your hatred for MMD is very bad. And I wish to inform you that there will not be any change to government this year. As an MMD member with card 01, we will continue to listen to important criticism raised in this article. VIVA MMD, VIVA RB

  18. #23 Mike Te, i admit my ignorance about the speech by PF MP on collection of tax. i will definitely look it up. i thing finding better methods of collecting tax is a good thing. and right now gov needs to improve their tax collection tools

  19. 5&16 we cannot discuss Lubinda Credentials i know he wrote the best article and this is what our goverment is doing.Even all to Ma PACT members know the truth that MMD is a working goverment.To bring your Kaponya mentality and your school of thinking into goverment.You will make everyone into economica oblivion. We should to give his advise to Boz and ministry of Finance.

  20. 26 @ Global citizen

    Debates- Wednesday, 29th September, 2010
    Wednesday, 13 October 2010

    Mr Simuusa: Just because you go to the UK, use microwaves and eat pizzas, you think you are in Heaven and start to boast? That is as annoying as it is embarrassing. Those people who belong to that country have developed their countries and the development belongs to them. People who boast about things in other countries should come back home and manufacture a microwave, and then properly say that they are living well because they have worked hard to achieve their status.

    Therefore, Madam Speaker, if we want to boast about the increased production, as I have said before, the reckless policies of this Government must be reversed.

  21. continued

    Madam Speaker, I was one of the people who were against the complete privatisation of the mines. I advocated that we retain one unit, the Nchanga Mine. That way, it would have competed with the Kansanshi Mine, First Quantum Minerals and Fox Dodge. By working on a par with these mines, we would have assessed whether we can truly boast about increased production because, at least, that would have been our production.

    Madam Speaker, one of the countries we use as a benchmark is Chile. It has declared about US$30 billion as revenue from mining. Of that US$30 billion, US$15 billion, which is 50 per cent, came from the National Copper Corporation of Chile (CODELCO). For those who can remember, CODELCO was one of the mines that wanted to buy Nchanga Mine during

  22. continued

    the privatisation period, but it is State-owned. It is a parastatal owned by the Government, but it contributed US$15 billion to its country’s tax revenue. Therefore, Chile can boast about increased production and that is what we are talking about.

    Mr D. Mwila: Hear, hear!

    Mr Simuusa: These are the policies that this Government should implement if it wants to boast about increased production. I challenge it, although it is too late because it is on its way out, …

    Laughter

    Mr Simuusa: Anyway, let me challenge it. Maybe, in the few remaining months …

    Laughter

    Mr Simuusa: … it can start an operation whose production it will compare with mines such as the Konkola Copper Mine (KCM) because only then can it boast about increased production.

  23. continued
    Madam Speaker, as it is, I join my colleagues in bemoaning the gross failure by this nation to acquire benefits from these mines because of its bad policies.

    Madam Speaker, I will give you another example. If the Government wants to get benefits from the dividends, the vehicle that should be used is the Zambia Consolidated Copper Mine-Investment Holdings (ZCCM-IH). This is the vehicle that we have created to get dividends from all these mines in terms of share holdings. However, I have noticed that the ZCCM-IH has not produced annual reports for 2005 and 2006.

    Madam, are we serious as a nation? This is gross incompetence. How can we let a company that is supposed to be our watchdog and one that is supposed to be deriving benefit on our behalf not produce an annual report?

  24. continued
    This way, we do not even know our losses or profits. I would like the hon. Minister of Mines and Minerals Development to explain why that has been allowed. Why should we allow such a situation to prevail after it was said on the Floor of this House that if we are to benefit, the shareholding in the ZCCM-IH has to be increased?

    Madam Speaker, Zambians only own 1.2 per cent shares in Lumwana Mine. Thus, there is no need to boast about that. The Lumwana Mine, in the North-Western Province, will be the biggest mine in Africa, but we do not own it. Are we serious as a nation? I would like the hon. Minister of Mines and Minerals Development to state why we have not increased shareholding in the ZCCM-IH so that we get what

    Madam Speaker, the Government is good at

  25. continued
    boasting and claiming glory. As a result, there was so much talk about the US$18 million that Kansanshi Mine paid to the ZCCM-IH as dividends.

    Madam Speaker, the accrued profits made by Kansanshi Mine, after taking care of all its accounts and expenses, was in excess of US$1.7 billion. Since, as a country, we only own 20 per cent shares in Kansanshi Mine, this works out in excess of US$350 million. The only amount of that US$350 million that came to the Government was US$18 million.

    Mr Lubinda: Where is the rest?

    Mr Simuusa: What happened to the rest?

    Mr Lubinda: Bamalukula!

    Mr Simuusa: That is what the hon. Minister of Mines and Minerals Development should be explaining to the nation. The Government should not boast about meaningless production.

    Laughter

  26. continued
    Mr Simuusa: Let the hon. Minister of Mines and Minerals Development tell the nation what happened to the rest of the money. The International Monetary Fund (IMF) also said that we are not collecting even the little tax that we are supposed to because we do not have the capacity. Those are the things that should be talked about.

    When I was reading this Speech, I noticed that the President had talked about mining being the mainstay of the economy, but he did not talk about all these issues.

    Madam Speaker, as regards tax collection, we have under collected. The 3 per cent of Government revenue from the mines is only from PAYE and mineral royalties. Wait and see what will happen when this is increased to 6 per cent. At the moment, we are losing about K8.3 billion

  27. continued
    from under taxation of mineral royalties. Are we, therefore, going to collect this K8.3 billion by the end of the year? The answer is no and the reason is that we do not have the capacity. Our people are not competent enough to handle the sophisticated mine owners. Where are we heading as a country?

    Madam Speaker, not only have we declared taxes that are too low, but also failed to collect them from the mines. Yet, we stand here boasting about production which is not even ours. This is why I am embarrassed to be a Zambian because, as a nation, we are not serious.

    Madam Speaker, there has been talk about windfall tax versus variable profit. Having talked about the ZCCM-IH, how many companies declared profit? They must have been about eight with Kansanshi Mine being

  28. continued
    the only significant one as the rest either declared losses or very minimal profits from the time they took over.

    Madam Speaker, since we insist on variable profit tax, but cannot handle simple mineral royalty, the challenge remains for the hon. Minister of Mines and Minerals Development or the hon. Minister of Finance and National Planning to tell us who has the capacity to collect this tax. Do they have the power to go through the books of these companies and question why there are losses? No, they do not. They do not have the capacity to deal with these sophisticated people who will continue reporting losses. Why then is there an insistence on variable profit tax when there is no profit being declared?

    Madam Speaker, as a nation, how serious are we?

  29. continued
    I would like to challenge the hon. Minister of Mines and Minerals Development and the hon. Minister of Finance and National Planning to help me understand this. When I looked at the President’s Speech, I did not find where the President noted all these very important issues. When someone says that this speech is hollow, my colleagues on your right defend it. They say, “No, it was brilliant.” I am saying this speech is hollow because there are so many questions that beg answers. I am a genuine Zambian who is embarrassed by what is happening in this country.

    Madam Speaker, even the people who are coming to take over these mines are laughing at us. They even say, “You people have a raw deal. You are sleepy.” As a Zambian, I am so embarrassed and would like the Government

  30. continued
    to really come out forcefully and give direction on this matter.

    Madam Speaker, in the President’s Speech, what was said about mining only covered less than a page, and yet it is the mainstay of the economy of this country which is supposed to build the entire infrastructure. I call for more seriousness when handling such topics.

    Madam Speaker, in concluding my debate, I would like to say that there are so many challenges that the people on the Copperbelt are facing. Having looked through the speech, the President did not mention anything about ex-miners’ benefits. There are miners who have not been paid for thirteen years, but he did not mention anything concerning that issue. At the moment, we have the former President, Dr Chiluba, whom I think is the ambassador now.

  31. continued
    He is the one dealing with ex-miners’ benefits now.

    Interruptions

    Mr Simuusa: Madam Speaker, assigning the former President to take up this task means that it is very important, but why did he not talk about it? What is his policy on this issue?

    Laughter

    Mr Simuusa: Madam Speaker, as regards housing, to date, people in my constituency are still hacking themselves over a problem that this Government caused. The issue of housing has been in existence for thirteen years and people are still fighting over it, and yet all it would take to be resolved is the will of the President.

    Madam Speaker, this problem of housing was politically brought about by the former President, Dr Chiluba, through an announcement.Now that there is a problem, the Government is not willing…

  32. continued
    to solve it. Instead, it is advising people to take the matter to court. Is it the courts that started the problem? No, it was a political announcement by a President. Therefore, we need the President to come in and make a statement on this issue.

    Madam Speaker, President Mwanawasa, may his soul rest in peace, tried. He started a tribunal to probe the issue of houses on the Copperbelt and, I believe, it made quite a lot of progress. However, where are the results of that tribunal because they can help to resolve this problem? Considering how this problem was created, I would like to urge the President to come and make a statement and solve this problem once and for all. We are sick and tired of our people fighting over an issue that was created by the Government which

  33. continued
    is not willing to lift a finger to try and solve it.

    Madam Speaker, it is now thirteen years since those houses were sold and the people still do not have titles. What kind of incompetence is this? People are willing to use their title to get loans from the Citizen’s Economic Empowerment Fund (CEEF), but they cannot because they do not have them yet. This is totally unacceptable.

    Madam Speaker, this Government claims that there are a lot of jobs on the Copperbelt. One does not have to be a statistician to know that there is a big problem of unemployment on the Copperbelt. Every time I sit in my office, I get not less than ten people looking for employment. They actually think that as an hon. Member of Parliament, I can find jobs for them. I tell them that the Government

  34. continued
    says that there are plenty of jobs out there and they all refute this claim asking me where those jobs are. There is a serious employment crisis on the Copperbelt and the statistics that are supposed to show this are not even available. This is why I said proper statistics which can be followed should be put up.

    When the President talked about economic indicators to show whether we were doing well after the global economic crunch, I expected to see unemployment ratios. Employment ratios are the most important indicator in any economy. However, they were not even referred to. In countries like the United States of America, Barrack Obama is being judged on employment creation. Almost every month, employment statistics are made available. His presidency hangs on the line

  35. continued

    because of the employment figures. Here, in Zambia, the story is different. We are so casual over our employment statistics.

    Madam Speaker, a Labour Survey has not been published in five years. How do we know how we are doing? We hear someone in the Government parroting, “We are doing fine,” when there is a crisis. Where are the figures? I am on the ground and I am telling you that there are no jobs on the Copperbelt.

    Madam Speaker, we are not serious. I would like to urge this Government to consider these issues that are being brought up. I would like to see a situation where we are able to see where we are going and where we are coming from so that when it comes to voting, people know what we should be doing as a nation. We should not just drift along.

  36. Waitaya Lubinda or is it LT who has made a mistake of writing 2011 budget instead of 2012? or is it that Lubinda does not live in Zambia and so he still thinks budgets are presented in the year they are supposed to be implemented and not in the year before?

  37. Mike Te i applaud you for making it easy for me to get this imformation. important concerns raised too by the MP. however Mike Te the MP is not proposing anything really new . he tells us he want nationalisation of the mining industry in short. but Mike you know this is a failed policy for our country. ZCCM eat from our pockets. it survived by taxes we paid and look what it left behind. I want the policy of privatisation to continue. what i am not happy about is the gov’s failure to collect the agreed tax. more should have been done to stop the leakages of tax. however if zambia takes steps back on the private sector driven economy our children will be worse off than we were. zimbabwe was good because it had a private driven economy the same as SA, Bostwana, Namibia. Nigeria has started.

  38. good policies if only we can impliment them but we wait until after five yrs to impliment bwafya pa zed if only we can change this it will help us alot but hey everything is political.

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