We have been receiving a lot of queries regarding the happenings on our economy. May we not be lazy in reading what we said and foresaw a long time ago before all these problems but we were called all sorts of names and hate speech was used against us yet we really love this country and have been offering solutions. We advised our colleagues in the PF on what needed to be done on exchange rates, load shedding, mining taxation with a view to creating sustainability, borrowing and many other issues even in the subsequent statements such as economic diversification programmes in order to generate wealth and create jobs locally.
Below is the UPND press statement released on 19th October 2012
The United Party for National Development Preliminary response to the 2013 National Budget
1.0 General Overview
1.1 The UPND recognizes that the Patriotic Front Government is responsible for the 2013 Zambian budget framing and implementation. Irrespective of the party in government, the budget, as an important tool for generating public revenue and directing expenditure priorities, affects in many ways citizens, residents and others who do business in or relate with Zambia.
1.2 Our summary comments on the 2013 budget are presented below.
1.3 Many people were looking forward to the second national budget presented by the PF Government. The PF made a lot of election promises which many people expected would be fulfilled through the 2013 national budget. The overall picture emerging from the budget presented by Finance Minister, Mr. Alexander Chikwanda is that the budget did not address a number of key concerns of the Zambian people and has to a large extent failed to depart from the past in approach, content and value add to the quality of Zambian lives.
2.0 Key Economic Policies
2.1 Many people were looking forward to a significant change in economic policies. An examination of the fiscal and monetary policies outlined in the budget indicate that there is no real departure from the past. Gross Domestic Product (GDP), inflation, exchange rate, debt, taxation and interest rate policies and targets have largely remained similar to those of the past Movement for Multi Party Democracy (MMD) Government with a few exceptions.
2.2 GDP Growth Rate – The PF’s projected GDP growth rate of 7% per annum is too low and inadequate to provide meaningful impact needed to create more employment, reduce poverty and improve people’s overall standard of living. For us in the UPND we believe that in a country with high unemployment and poverty levels, what is needed is a GDP growth target of 10% or more. This project is real and achievable given Zambia’s substantial resource endowment and geoposition. The missing link currently is the PF’s inability to provide clear political leadership to achieve visionary economic and social gains that are possible which the UPND team is better placed to provide.
2.3 Interest Rates– Although some commercial banks have reduced their lending rates actual credit to small/medium scale enterprises and individuals has largely remained high, around 23% depending on the bank’s risk perception of the borrower. To this end nothing much has changed under the PF as this high level of cost of funds is what was obtaining under the MMD. It is the UPND’s considered view that more measures are necessary to lower the cost of loanable funds to interest rates below 12% in kwacha for an average business/individual. This is what will trigger increased economic activity and job creation. The budget lacked additional measures required to make lending accessible and affordable to those who need credit the most.
2.4 Exchange Rates-From September 2011 when the PF took over government, the Kwacha has continued being volatile and has depreciated by over 12% from a rate of exchange of about K4700/US $ to todays rate of around K5270/US $.In our view and according to some commentators, against a background of improved copper prices and other developments the depreciation of the Kwacha reflects the glaring uncertainties in the PF policy direction including the return of nationalization being effected quietly. This is clearly one of the indicators of the loss of confidence in the economy. The developments in the foreign exchange market are also linked to the statutory instrument banning transactions in forex in Zambia. To be specific, despite the PF government’s praise songs about Statutory Instrument No.33 of 2012 (SI 33), the Statutory instrument amounts to a silent reintroduction of exchange controls with immediate, medium and long term damage to stability in the forex market and disruption to the business operating environment in general.
2.5 Eurobond and total debts
Through the 2013 budget, the PF Government has demonstrated its appetite for irresponsible borrowing as opposed to raising revenue through available prudent fiscal measures. Foreign debt and grant financing amounts to K5.6 trillion while local borrowing is K1.8 trillion. This Eurobond is clearly another rushed project which the PF has exaggerated the over subscription to mean confidence in their government when the opposite is the case. The capitalistic investor are looking for higher returns which are not available in the traditional markets which are experiencing low yields due to struggling economies in Europe and America. Currently LIBOR is around 1.5% and the Eurobond was pegged at over 5% which is still high. It is clear that if parliamentary oversight and other controls on borrowing are not effected immediately, the PF government’s approach to balancing the budget through borrowing will undoubtedly lead Zambia into another debt trap which the country can ill afford after the last painful experience the Country went through prior to debt write-off for which, Zambians paid a heavy price. The US $ 750 Million Eurobond was unnecessary if the government had listened to people’s cry to reintroduce the windfall tax which at conservative levels is projected at US$600 million per year. Worse still, the full terms and conditions for the Eurobond such as arrangement, legal, disbursement and other fees have not been disclosed by the Finance Minister.
3.0 Taxation of the Mining Sector
3.1 Many people are demanding that the Zambian people should benefit from the country’s mineral wealth. The 2013 budget indicates that direct mining tax will only contribute about 6% of total revenue for a sector accounting for over 60 % of the economy.People were expecting the PF Government to adequately tax the Mining Sector to generate financial resources in order to provide better roads, schools,hospitals and other infrastructure. As indicated above the people were calling for the re-introduction of windfall tax on mineral revenue. With copper prices remaining above US$7,500 per tonne, the mines are still gaining unexpected income which is above the planned threshold of US$2,500 to US$3,000 per tonne to make profit. The PF campaigned on the platform of re-introducing the windfall tax. What has changed?
Over the PF’s five year term, Zambians will experience a lost revenue opportunity through windfall tax of around US$ 3 billion (K15 trillion) which funds could be applied to job creation, reduction in poverty ,load shedding, better roads and social amenities.
3.2 The people of Zambia deserve to derive benefits from the mineral wealth of Zambia through windfall tax and share with owners of the mines the supper normal profits. If the PF Government have been deceived into believing that they will tax profits of the mining companies to generate more treasury revenue, they are in for a rude shock as the mines would continue to declare minimal profits or losses for a long time to come due to various practices such as international transfer pricing, sophisticated tax planning mechanisms and higher than normal production and operational costs which this PF Government has no capacity to monitor and control.
3.3 While the mineral royalty at 6% is noted, it is insufficient to raise the amount of revenue expected from the mining sector. Mineral royalty itself is treated as an expense rather than a tax. It will still be deducted from total mining revenue for tax purposes. The net revenue gain by the government will be minimal. We would like the income tax act amended to reflect mineral royalty as non deductable for tax purposes.
3.4 To illustrate the missed opportunity, only K1.9 trillion revenue is expected from the mineral royalty in the 2013 budget. In comparison, if the PF Government had introduced windfall tax the additional treasury revenue would have been in the region of K3 trillion. In simple language, the PF Government has lost the people of Zambia K3 trillion by failing to introduce windfall tax in the 2013 budget.
4.0 Electricity Blackouts
The persistent power failures are worrying and unacceptable. Clearly, the government has failed to deal with the problems in generation, transmission and distribution of power in Zambia. Everyday, people who are connected to the national grid are being blacked out by Zesco thereby inconveniencing them, destroying their appliances and disrupting normal family life and businesses. For the rural areas which are not on the national grid they are tired of hoping against hope that some day they will be connected to the electricity grid.
The PF government expenditure allocation to this area (K0.98 trillion), Zesco’s inefficiency and their suggested measures to alleviate the sufferings of the people are insufficient. Zesco will fail to connect users who need power, and electricity load shedding or power cuts will continue.
Ati sosa sosa ichalo chilekufwa
That cool one @Engineer
I really don’t what more advice Chagwa wants from HH. Statement above is clear. HH foresaw the load shedding as far back as 2012. We all know Dangote was able to build a power plant for his cement factory in 3 years. Had the useless PF listened to HH in 2012, they would have build enough power plants to sustain at least domestic consumption. But Kambwili will tel you it is global
ukulanda kwalyanguka ukucila ukubomba this sadist called hh can say anything but cant achieve what he says no human being can make things perfect only the Almighty Jehovah can. by the grace of God these politicians can only do their part and leave everything for GOD himself.
Far much better than you clueless drunk from Chawama
when pipo give advice ati ukulanda kwalyanguka,did u expect hh to use his money to allievate this poverty as thou he was a president of zambia?the gvt asked the opposition leader to say what his stance was if he was to avoid such challenges and thats exactly wat he elaborated.the pf took it as politicking what more did u expect him to do.zambia shall remain behind as long u refuse to take advise frm pipo who hav knoweledge bcos of tribalism.
Retarded Imbecile:What has Lungu & his PF done in the last 4 years apart from taking us back economically.HH foresaw the mess you morons would put us in and you still cant get it in your thick heads that you are grounding this nation to a halt.
@ haluza hageni do you have an inkling on what working as a team entails? Note how you have invited bees to sting you by comments following your posting. I feel sorry for you, don’t look at the individual in HH your acronym namesake whom you obviously love to hate but the message he tries to put across.
HH is always coming clear on these issues advising Govt but lungu pays a deaf ear considering its coming from Kachema. He is always pumping sense in chagwa who seemingly choose to be stubborn doing what he thinks is right while killing our economy. No wonder doves failed to fly away during inauguration and freedom day commemoration.
Tribalistic voting is what has killed the true Zambian Dream created by Harry Mwaanga Nkumbula, Simon Kapwepwe and KK…..A voter for PF in the last election should be the last individual to complain about this economic mess. Clearly, HH was the better devil in the last election, and he still is the man. But wait and see again how the tribalistic voter will continue voting PF in the next election in-spite of the poverty that has short up exponentially.. Even common sense is defied with tribal ideas in Zambia. It surprises me!!!LMAO……..
This is mere academic rhetoric!
You call this “mere academic rhetoric!”??? That is solid advice that PF and Lungu should have heeded. Mwanawasa’s strength lay in listening to Sata’s criticism and implementing what made sense! ECL is sooo afraid of criticism that anything said by HH is ‘out of hate and jealousy’ and not worth listening to. That is why PF is in the ditch they are in. We Zambians who care about this country will kick them out, come 2016. Let us try HH.
Tribalistic voting is what has killed the true Zambian Dream created by Harry Mwaanga Nkumbula, Simon Kapwepwe and KK…..A voter for PF in the last election should be the last individual to complain about this economic mess. Clearly, HH was the better devil in the last election, and he still is the man. But wait and see again how the tribalistic voter will continue voting PF in the next election in-spite of the poverty that has short up exponentially.. Even common sense is defied with tribal ideas in Zambia. It surprises me!!!LMAO…
@haluza hageni: “You have said that “ukulanda kwalyanguka ukucila ukubomba” Please, can you open your mind? Mr. Hichilema is not in the driving seat as at now. If he was, whatever he says, would have been implemented. And remember again that our Loving God works through people. Where people are doing right things, He gladly stretches his hands on their deeds and all moves according to the good plans. God works through people. So, I am a PF sympathizer, but come 2016, I don’t want to disappoint my God by voting for the party I support as at now. Instead, I will vote for the United Party for Development. That is my opinion and no one has the right to question. Good day to you all!!
remain in poverty foolish zambians.you think an angel from heaven will come bodily to give u advise over your economic challenges?u will call hh alot of names yet he s greatly offering his knowlege to advise thegvt inpower that doesnt take advice.he who refuses knowledge rejects wisdom.
Even a mental retarded human being is able to give such advises. Being on the driving seat is not equal with those who are on the terraces or passengers like Akainde. Managing a country that is 750,000m plus sq km is not and will not be equal to manage some 5 kettle ranches that one can have. He should test those plans by being a councilor and learn how govt operates. The fact that he will be trying for the fifth time for the race to plot one does not make his plans achievable.
How come you gave it to a guy who was managing a beerhall?
Isaac, just to remind you that Kangwa is not a mentally retarded person. He comments on things as they are on the ground right now. Are you happy yourself what is obtaining in the country? We shouldn’t side with things, but deep down in our hearts, we see that things are not right. Well, Kangwa respects your opinion. Have a blessed day.
Some chaps are useless. I don’t know if you are using your asses to think or what? Are your brains not functioning well that you can’t get some senses from what HH is saying? If you don’t understand anything about what the man is talking about better you shut your stinking asses on this topic than masturbate your ignorance in public like that. Shame you good for nothing *****s. Everyday its HH this HH that. You are the same ***** who are saying zambia is a christian nation and your doings are contrary to the teachings of the bibble.
Just imagine, K4,700 (ZMW4.70) and today??? Why is it that some People are just politically blind and deaf? Give credit where credit is due. If only the advice in this article was noted, we would not be in the predicament we find ourselves today. Yet there are still some that don’t believe! What will open your eyes and ears? Maybe ZMW50/$, or m/meal @ ZMW250/25Kg? My advice is that we must all start paying attention to the real issues affecting all of us and stop all this hear-say, tribal nonsence and insults. ONE ZAMBIA, ONE NATION. Chabe!!!
Managing a Country is not like milking animals in Monze,Choma,Namwala and Kalomo.In 2016,we don’t want leaders who want to do job on training…..it will take us backwards again for under fives to begin learning how govt ministries operate.The yapping by UPND bloggers here is sheer propaganda to hoodwink Zambian
If the “yapping” is sheer propaganda, then at least we know that the works of PF are real and are killing this country. We will not be ruled by drunkards or cadres and thieves! 2016 Kuya bebele!! We will vote HH and teach you a lesson that “power always reposes in the people”!!!
PF, you have destroyed this country and you do not listen to advice! By the way, your campaign to cause people to vote on tribal lines has failed. Your second strategy to picture ECL as a “christian” president is also bound to fail. “God cannot be mocked”.
Julio!
You are right!
But I would rather have a person who milks cows in the driver’s seat than a drunk. Give me a sober person anytime!
Now ask yourself:
HH is to milking cows (and demonstrably profitable).
EL is to……..?
Your thinking is illogical.
I will vote for a fresh and technically high Guy than a visionless drunkard ECL who cant even learn on the job. This country has gone to the drain due to pettiness and tribal hate by people like Julio,Isaac,Munyelo Pwete and useless haluza hageni (HH. Anyway 2016 PF is gone whether you believe it or not. We cant this anymore
Lucy mmm. Ur perfume is rather cow doughish. Take a.bath in dip tank
Beerface Lungu go back to Chawama and run a chibuku tavern.
@ mm you coward …..ECL is the president of Zambia.
If is makes you sick sorry……keep on dreaming.
I dont know why this hh is scared of cameras and he looks not in peoples eyes surely he is a satanist.
never vote for a freemason……
PF cadres talk from their “anus” their statements are full of garbage.PF will be thrown in the dustbin.2016 is comin
This statement is a response to the 2013 budget!
If feel citizens r educated out of majority thn theth majority will always vote on tribe not policy coz thy dnt understand economic indicators .lack of knowledge.UPND is a economically, visionary party that can rebalete ths country. Its policy r clear ,Upnd is not HH,his unda UPND.citizens that see light r those in urban area. Disptee hardships rise in basic commodity,Roadshiding etc mining retrechiments etc. Vote wise. It’s for our grand children future.economy runs the grobal. Attract investment we won’t look fo thm thy will look fo us.
UPND (ULYA PALYA NI DEVIL ) USE GOOD POINTS TO CONVICE PIPO. LET ME TELL U SOMETHING DID U KNOW THAT 60% OF PIPO LEAVE IN VILLAGES & MONEY,ELECTRICITY,FUEL,ROADS,MANY MORE HAVE NO VALUE TO THEM,& U CONTINUE SINGING ABOUT THE ABOVE WITHOUT GIVING PROPOSALS ITS EMPTY TALK SOMEONE TRYING AND MAKING MISTAKES IS EVEN MUCH BETTER THAN A HYENA MAKING NOISE IN THE PARK.
HH and UPND…tundilani mu Kariba so loadshedding can stop.