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Saturday, December 3, 2022

Felix Mutati’s budget is wrong and contradictory-Charles Kakoma

Columns Felix Mutati’s budget is wrong and contradictory-Charles Kakoma

Charles Kakoma
Charles Kakoma

UPND Spokesman Charles Kakoma has described the 2017 national budget presented last Friday by Finance Minister Felix Mutati as wrong and contradictory.

Mr Kakoma said the priorities that Mr Mutati has set for the budget are that the entire budget offers no hope for the suffering masses unless a proper surgery is done.

He states that Mr Mutati’s pronouncement that Government has no business to be in business represents a policy contradiction between what President Lungu wants and what the Finance Minister is preaching.

Mr Kakoma said President Lungu in his speech to Parliament this year clearly stated that he wanted to see the newly created state owned Industrial Development Corporation (IDC) to take a leading role in Zambia’s industrial development agenda.

He said President Lungu wants one million jobs in the next five years and the Finance Minister is targeting 100,000 jobs next year adding that whoever advised President Lungu to make the 1 million jobs pronouncement was a joker.

“Even at a time when the economy was growing at 7% per annum, Zambia failed to create the 500,000 jobs that the President promised the youth. Now that economic growth will drop to 3.4% next year, how possible will it be to create 100,000 jobs. There is no magic to job creation but to grow the economy. Prospects for increasing employment are dim in an economy under stress,” he said.
Mr Kakoma observed that even the government itself has frozen employment in all ministries, except education and health.

“With the anticipated increase in costs of production as a result of increases in fuel and electricity tariffs, many businesses will shed off labour to remain afloat,” he said.
Below is Mr Kakoma’s full statement

2017 National Budget: My Reflections

I heard my dear friend, Finance Minister, Felix Mutati playing with catchy economic phrases in the National Budget. He said “you cannot spend cash which you do not have “. He also said “Government will have no business to be in business.
Fair enough. Economists, businessmen and politicians have used these sexy statements from time immemorial. Will these pronouncements be translated into reality in the 2017 budget? Is the 2017 national budget reflecting the economic recovery plan needed in Zambia?

I doubt and here is why:

1. Government business

Government has no business to be in business? It won’t work in the 2017 budget. It actually represents a policy contradiction between what President Lungu wants and what the Finance Minister is preaching. The President in his speech to Parliament this year clearly stated that he wanted to see the newly created state owned Industrial Development Corporation (IDC) to take a leading role in Zambia’s industrial development agenda.

So my friend Felix, you can go ahead and withhold funding to the IDC because the President is wrong to involve government in business. But I see that even when you strongly believe that government has no business to be in business, you are proposing to spend about K3 billion on farmers input support programme next year.

2. Cash Budget

The minister says that you can’t spend what you don’t have. That is partly true. But will it work in 2017 in a country which believes in deficit financing? I doubt.
Zambia has run a cash budget before. Under President Chiluba , Zambia had a cash budget monitored by the IMF. It was a disaster for the poor people. The cash that was available was used to meet the luxury needs of the apamwambas such as foreign travel, seminars, allowances and luxury vehicles.

There was no money for medicines, roads, food security packs, pensions, water, sanitation and education for poor people’s children. I can see history repeating itself.
The problem in Zambia is financial indiscipline which is motivated by greed and corruption. There is scramble for the little money in the treasury. Those with political power and influence get the cake. Rules for sound fiscal policy are ignored.

We have high inflation and interest rates now because of poor adherence to financial management and political will to live within the approved budget. There is always unauthorised and excess expenditure appearing in the Auditor General’s report every year.

If you want to test your fiscal policy, my friend Felix Mutati, next time the President wants to fly out for an activity that was not budgeted for, put your foot down because there is no money to hire a jet. Infact, in order to live within our means, the Finance Minister should shoot down proposals that tend to bust the budget such as reintroduction of positions of deputy minister. He should actually advise the President to immediately do away with positions of District Commissioner because we have now got elected representatives at district level (mayors and chairmen) to coordinate government activities at district level.

3 Employment Creation

The President wants one million jobs in the next five years and the Finance Minister is targeting 100,000 jobs next year. Whoever advised the President to make the 1 million jobs pronouncement was a jocker. Even at a time when the economy was growing at 7% per annum, Zambia failed to create the 500,000 jobs that the President promised the youth. Now that economic growth will drop to 3.4% next year, how possible will it be to create 100,000 jobs. There is no magic to job creation but to grow the economy. Prospects for increasing employment are dim in an economy under stress. Even the government itself has frozen employment in all ministries, except education and health. With the anticipated increase in costs of production as a result of increases in fuel and electricity tariffs, many businesses will shed off labour to remain afloat.

4. Lack of an Export Led Growth

With the declining fortunes in the mining sector, attention should have been made to other sectors such as tourism, agriculture and manufacturing to earn foreign exchange. It is possible to increase non-traditional exports within one year with a serious diversification programme. But as usual, “diversification ” is just a boring song which appears in both the President’s and Finance Minister’ speech. It is possible to increase the output of maize, rice, beans and wheat in Zambia for export to other countries. I have been to Isoka, Mongu, Zambezi, Chavuma and other districts where small scale farmers are successfully growing rice. Give them the inputs and extention support services and you will see the miracle. Support outgrower schemes for wheat farmers and within two years, Zambia will be the bread basket of Africa. Create a revolution in the agricultural sector. I can’t see the revolution in the budget in terms of funding and policies.

There will be employment freeze in the agricultural sector but you want to make agriculture the pillar of a smart Zambia. Even if you provide money for fish farming but fail to employ aquaculture officers to teach small scale farmers how to do it, how will it help. I can’t see how the high cost of fertiliser has been reduced in the budget. You expect villagers to use e-vouchers to sale their maize to Food Reserve Agency whose marketing function has been taken away in the budget?
Just wait for the maize marketing disaster next year.

5. Cost-Push Inflation

The whole domestic resource mobilisation strategy appears to be centered on heavy taxation of imports. Perhaps we are back to the Kaunda days of import substitution strategy of development which failed lamentably. What is needed is an Export Led development strategy. Zambia is heavily dependent on imports. In an import-dependent economy, heavy taxation of imports has the same effect as depreciation of the kwacha in terms of cost-push inflation. The inflationary pressures of the tax measures in the 2017 budget will be felt within the first quarter of next year. Prices of goods will escalate. It is a wander that with the anticipated increase in the price of imports, the minister is projecting inflation to drop from 23% a few months ago to 9% next year.

6. EDUCATION

The story of education in Zambia is a sad one. A lot of children are out of school now because parents can’t afford school fees. The 2017 budget is very clear; let the dead bury themselves. Ignorance is going to be the cornerstone of development in Zambia. Perhaps, I’m missing something in the education equation in Zambia. How much does it cost to educate a pupil, say in grade 8? The government already pays the salaries for teachers, buys the desks, books, chalk and other educational materials.

The government already foots the recurrent operating expenses such as stationery, fuel, electricity, water and other expenses. These costs form the largest component of expenditure in education. Why should the government let children fail to go to school because of school fees and examination fees? What kind of Economics is this? Perhaps one can argue about the cost of food and accommodation for those in boarding schools. What about those in day schools?

The money is there. Why would you spend billions of kwacha on law and order as if the country is at war? Why buy more teargas to stifle people’s democratic right to assemble, associate and speak instead of educating our children? Why would you think that buying sanitary towels is more important than paying school fees for that same child? Is it because someone with connections to government will get a contract to supply the pads? Why do you think that spending money on social cash transfer is more sustainable than investing in education when infact the same people you fail to educate will soon que to get social cash handouts? Why increase in women and youth empowerment funds when you know that these funds are highly politicised and end up being shared by cadres? The priorities are wrong. The 2017 budget is wrong and offers no hope for the suffering masses unless a proper surgery is done.

26 COMMENTS

  1. The only way to create jobs is to grow the economy. Kokomo is so right on this one. But them how do you grow the economy when everything is in Dununa Reverse? Load shedding, hight fuel cost and soon ZESCO bills will go up too

    • “the minister is projecting inflation to drop from 23% a few months ago to 9% next year” !!

      Is this Zambias real Minister of Finance or an escapee from Chinama? Was he paying attention in school when maths were being explained?

      Mealie meal has gone from K35 a bag to K110 a bag under PF. Which part of 9% does he not understand?

  2. Kakoma, Kakoma, will you ever see anything good in others other than in your small god wamuyayaya Hakaivotela Heka?
    100,000 jobs indicated in the budget is just a base and with big dreams come great things so there is no contradiction between the President and Finance Minister.

  3. I am with Kakoma on point No.4, these guys have failed to understand the business of agriculture and are just using borrowed words from AfDB President Adesina that “agriculture is not a way of life but business” . But where are the linkages that show that we are making agriculture a business? Where specific funding programs to encourage mechanisation, irrigation and investment in latest post harvest technology,enhanced extension,research services and governments support to create market linkages – the key ingredients to diversification in agriculture and of course a good route to economic diversification!! Everything is empty shouts and now we start seeing Chinese getting excited with the Minister of Agric before the Zambian people even know what is there for them in agric budget and…

  4. Great insights and timely advise into management of our poor country. We have great brain but ignored be selfish individuals, contradicted by the wannabes who offer nothing in return.

  5. YEs, District Commissioners must go! They are excess to our requirements. Let the elected representatives come to party and do the work.

    As for the rate of Inflation, no one should boast that they will bringing it down, because it is coming down on its own anyway, on account of the formular used, rather than by increase in supply! It is the high numerator of the basket of commodities used last year that is to become the numerator of the Inflation formular this year. The computation will show a decline in the increase of the Inflation Index per se. The decline in the value of Index as derived by the Inflation formular is not indication of lowering in prices, not even a decline in the increase in prices!

    Please, let us not celebrate ignorance!

  6. Thank you for your proper analysis of the budget. Others were busy praising it without understanding what it meant when applied in reality. I wish government would listen to people like this. Mr Kakoma has offered free advice and it shouldn’t matter that he is UPND. He is a Zambian worried about his country and offering critic and ideas on the way forward.

    • In my opinion, an analysis aims to achieve two things: provide a critique of what is in place and then offer alternatives or solutions. It does not necessarily intend to cancel what is available. Now Kakoma says the budget is wrong. Kakoma has just analysis a few components of the budget that, to him, needs further clarification and re-alignment. The budget announcement took 3.5hours and contains a lot of both questionable and good stuff. What Kakoma should have done in my view was to offer alternatives on areas that are contradictory and support those that are in good standing. Honestly, the budget has provisions that are extremely good for the country and can not fall in the “wrong” category.

  7. YEs, District Commissioners must go! They are excess to our requirements. Let the elected representatives come to party and do the work.

    As for the rate of Inflation, no one should boast that they will bringing it down, because it is coming down on its own anyway, on account of the formular used, rather than by increase in supply! It is the high numerator of the basket of commodities used last year that is to become the denominator of the Inflation formular this year. The computation will show a decline in the increase of the Inflation Index per se. The decline in the value of Index as derived by the Inflation formular is not indication of lowering in prices, not even a decline in the increase in prices!

    Please, let us not celebrate ignorance! Comment:

  8. Good analysis without any malice at all, if anyone in not in agreement, let them defend provide convincing reasons against Kakoma’s urguement otherwise, we have got crap in our Govt which will lead us no where.

  9. Which Lungu is Kakoma referring to as president here..is HH also called Lungu considering the fact that the UPND do not recognise ECL as president..i am Lost here somebody, anybody..:)

  10. You fellow Zambins, we should learn to separate politics and valuable critical analysis. Quite often I have heard people blog to say, give advice, yet when it given, the same bloggers turn to say this is crap.
    I honestly praise the analysis from a different perspective, I hope Mutati will sit down and instill some measures.
    Again, this has nothing to do with HH, this has to do with a patriotic Zambian. His position in the Party has not been signed for. Meaning he speaks from his point of view.
    Well done Kakoma.

    • I totally agree with General Sun-tzu @17.Kakoma has given a useful analysis of the 2017 budget and offered solutions but as usual some people take it as politicking. Someone has not only critized but has also offered some solutions.Give credit where it is due. The Finance Minister may have made it clear that the position of Deputy Minister has not been budgeted for in next year’s budget but when Parliament goes ahead to amend the constitution and re-introduces that position, money will be found come what may.

  11. The IDC is a limited company created to streamline efficiencies for government parastatles. The PAYE has gone up, because the government has to raise revenue. If you listened to the meetings with stakeholders, the Minister was told that Zambia still has to do a lot to raise revenue. Most importantly fiscal discipline is required moving forward. Especially plugging the leakages in government itself as per the AG report.

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