REMOVAL OF SUBSIDIES – THE NAREP POSITION
The removal of subsidies on fertilizer, fuel and maize has created serious problems for many ordinary Zambians. This reality seems to be lost on the PF administration. No one is seriously disputing the fact that these subsidies are a huge drain on national resources. No one is doubting that the funds could be more effectively used to develop social and economic infrastructure that could bring about development that would better benefit everyone, including the most vulnerable in our society. The problem is really not so much WHETHER subsidies should be removed but HOW the PF administration should go about doing it and how they will address the needs of ordinary Zambians with the resulting savings.
First of all, the exercise should have been conducted in a way that cushioned the negative impact on those that are struggling to put a meal on their table each and every day. This includes farmers, minibus and taxi drivers, informal sector business owners, rural community dwellers and ordinary workers, all of whom will have to pay more for basic foods and transport.
Secondly, there should have been far better and more continuous explanations about why subsidies need to be removed and what the government is doing to alleviate the pain this will cause in the short and medium term. Many will remember how the late former president Frederick Chiluba went on a tireless campaign to explain the Structural Adjustment Programme to the nation. He was able to get national support for the programme, even though it was painful for many. This would have avoided unnecessary confrontation with innocent university students who are simply voicing the concerns of communities across the country about the hardships they are experiencing.
Thirdly the PF administration must start to show leadership by example. If government is still spending recklessly on consumption then it will mean the majority will have suffered for nothing and we will have saved money only to squander it on a bloated political machinery and civil service (40 per cent of the budget goes towards civil service emoluments), unnecessary by-elections (costing between 10 and 15 billion old kwacha per election), overpricing of single-sourced and badly negotiated contracts (especially on roads).
Currently, the removal of subsidies on fuel has resulted in a salary increases for ministers and deputy ministers because they are paid the cash equivalent of a minimum of 800 litres of fuel per month. Whenever the price of fuel goes up, therefore, they are entitled to receive more money in their pockets. So while the rest of us suffer, PF ministers and deputy ministers are able to cushion the impact of the changes with higher take-home pay. This cannot be right.
Fourthly the government has not demonstrated that it has the discipline required to operate efficiently. For example, the national oil procurement system is conducted in such a way that Zambia ends up paying more for its fuel than other countries in the region. In addition, huge additional and unbudgeted expenditure is being incurred every time the president creates a new district. Creating new districts is not in itself wrong. What is wrong is when this is done in a manner that is unplanned and therefore unbudgeted. This has contributed to the imbalance in the budget and may be part of the reason why there is pressure to remove subsidies in such haste and without proper planning and consultation.
Finally, the PF administration should indicate clearly how the savings will be applied and how the ordinary Zambian will be able to hold them accountable for the spending they are claiming they will now be able to make as a result of the removal of the subsidies. Given the rate at which the campaign promises have been broken, it is important that this time the voters do not sit back and wait for future disappointment while the PF embarks on a spending spree at the expense of properly coordinated development.
NAREP has proposed that in order to alleviate the hardships that will be caused by the subsidy removals and to gain national support on this issue, government needs to lead by example and cut the cabinet to perhaps 15 ministers and reduce the number of deputy ministers from 41 to 15. Right now, there are 41 deputy ministers that each cost approximately 50,000 rebased kwacha (or 50 million old kwacha) per month in pay, allowances and gratuities. This means that every month, we are spending a minimum of 2.5 billion old kwacha on party functionaries that do not really add much value to government operations.
NAREP believes that subsidies have to be removed gradually with full stakeholder consultation and in a manner that promotes disciplined spending behaviour from leaders. The removal of three different subsidies (food, fuel and fertilizer) should not have been done in one go as this has only served to increased the hardships being experienced by many. Cost-saving measures such as the ones we have laid out above should be clearly set out and an accountability process for how the subsidy savings will be spent should be outlined and enforced. A minimum six-month phasing out period should have been considered along with cost-saving measures on fuel procurement that would have resulted in the removal being so gradual that people would not really have noticed the changes and would have had time to adjust to them and support them.
Doing all these things successfully requires wise leadership and a government that truly has a heart for the people. As a Party that is focussed on constructive criticism, NAREP has set out these ideas in the hope that the PF administration will come to its senses and see the harm that is being done to communities across the country that have suffered for far too long.
