The other side shows a blooming economy, with an expanding GAP, increased foreign direct investment, thousands of new Jobs and much-needed sector diversification. Both are true. Unsurprisingly, it was the platinum version which President Michael Sat underlined on September 20 during a speech to inaugurate the 1 lath National Assembly third session, rattling off a by now familiar set of economic indicators. Zambia registered GAP growth of 7. 3% in 2012, though it is down to 6% for 2013 thanks to lowered agricultural production. Inflation shrunk to 7% over the summer of 2013. Lending rates have fallen to 16%, own from 20% last year.
Furthermore, by the end of June, the government had surpassed its $3 billion foreign direct investment target for the year by over half a billion dollars. The centerpiece of Seta's economic record remains the $750 million Rebound issued last September, a move straight out of Zambia author Dampish Mops 2009 book Dead Aid. With that first foray into international capital markets, Zambia Joined a growing cohort of sub-Sahara African countries drifting away from the confessional loans and aid-based development doctrine promoted by the World Bank and International Monetary Fund.
The Rebound money is earmarked for energy generation and transmission, road and rail infrastructure, small and medium enterprise development, and health care. Of course, this comes with voices of caution that remember Samba's recent history as a Heavily Indebted Poor Country (HIP). The Treasury says that, in 2013, debt will reach 37% of GAP - not perfect, but much better compared to 200% at the peak of its debt crisis twenty years ago - and that fugue is expected to come down when the government rebates GAP next month. Meanwhile, Zambia has received a frenzy of international attention for co-hosting the
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United Nations World Tourism Organization's General Assembly with Zanzibar. It is generally agreed that the conference will contribute to a long-term branding success, although the private sector had mixed feelings about the event, with operators in the host city of Livingston lamenting the absence of immediate economic benefits. Tourism is central in If's economic diversificationagenda, along with agricultural development, infrastructure construction and manufacturing, all of which factored in the party's 2011 campaign. Paving the way to school To that end, Sat boasted of a 316,000 multi-sector expansion in Jobs in his speech.
While light on specifics, the government has been open about setting targets, promising 510,000 Jobs in agriculture and 500,000 in tourism alone. A series of road work programmer also features in the government's Job-creation scheme, with Pave Zambia 2000 pledging 20,000 Jobs, Link Zambia 8000 gearing up for its second phase the nation's capital. The party's 2011 manifesto also vowed huge changes in the health and education sectors, which, thanks in large part to Samba's painful history of debt servicing obligations, have been long neglected.
The document criticized the roomer Movement for Multiparty Democracy (MD) government for funding only of the education sector, forcing it to rely on non-governmental support. Seta's anniversary speech highlighted an on-going review of education policy with the intention of aligning curricula to national development goals. He said the government would speed up the construction of secondary schools, with 32 of 84 completed to date. University construction is also on-going and the 2013 budget pledged 17. 5% of total expenditure to education.
The administration has also increased health expenditure. Its manifesto disparaged MD allocations of 6% (although the former overspent actually pegged its contributions at 8. 6% in 2011). In 2013, budget allocations were Just over 11%. Health achievements this year have been partly smothered by on-going news of anti-retrovirus shortages - or "rationing", in official parlance - but Sat boasted a battery of progress indicators, including 137 facility upgrades, two new district hospitals and hundreds of sector-related construction projects.
A sinister side In general, the numbers paint a reliable picture of a developing county. The fact of the Rubdown's relatively low coupon rate and 15 times oversubscribed alone attest to market confidence in Zambia. But there is a sinister side to the Sat administration, which seems to be intensifying. To start with, rumors of the president's poor health sparked a leadership rivalry between Defense Minister Geoffrey Mamba and the party's Secretary General and Justice Minister Winter Kabob.
While each minister has since publicly distanced himself from presidential ambitions, the dispute was intense enough to split the IF into factions, with six members arrested by police after allegedly storming a party function, destroying property and beating attendants. IF-perpetrated violence has been directed outwards as well. The most recent case was against Hacienda Hickman, leader of the country's third-place opposition United Party for National Development, who says his entourage was attacked last week during a visit to the town of Assam.
While the incident was reported in numerous media outlets, the police issued a statement on Friday refuting Hacienda's version of events. Violence has also been a feature of Samba's numerous by-elections, the result of a IF strategy to increase their majority in Parliament. Government baits the opposition parliamentarians with ministerial appointments and other incentives, triggering by-elections whenever members cross he legislature. The tactic has been largely successful, with IF winning eight of 13 ballots so far, with three more soon.
But after the recent vote in Monika, which the MD won by a landslide, newspaper reports alleged IF-orchestrated violence, complete with gruesome photographs depicting bloodied members of the opposition. Victims of political violence come from all parties, however, as shown by the 2012 Refunds local government by-election that ended in the murder of a IF cadre. The trend in the ruling party has been severe enough to merit censure from The Post, the country's leading independent and pro-government newspaper.
In an editorial earlier this month, the paper called on government to weed out and bloodshed, but his personal record on the issue is dubious. Nicknamed King Cobra, he was linked to machete attacks in a 2001 by-election while serving as minister without portfolio in the late Frederick Chiliad's MD government. Cultivating a culture of silence Sat has also taken up Africans presidential tradition of wielding the same laws that frustrated him in opposition. He has been accused of silencing critics with criminal and civil defamationproceedings, with members of the opposition-aligned media a favorite target.
IF cadres have also been accused of beating Journalists and a series of institutional media reforms have run aground, due to the government's powers to make key appointments to relevant committees. Critics also say the government's use of the colonial Public Order Act has impinged on constitutionally guaranteed rights of assembly. While the law calls only for organizers to inform police of demonstrations, in practice it has been used to shut them down entirely.
This tendency to suppress alternative dialogue also plays out in disputes with Samba's Nags, many of which re threatening to boycott what they say is an onerous registration process if government does not amend an MD-era law setting out the terms of their operation. The government says groups that do not register will be delimiters. Broken promises Despite the appearance that Sat has delivered on many of the country's economic indicators, he trails a long string of broken promises.
One of the most significant of these is his government's on-going failure to introduce a new constitution, which it promised to do within 90 days of taking power. Another of the government's 90-day ledges vowed to peacefully settle long-standing separatist sentiments in Western Province, but clashes have continued, culminating in over 60 arrests and numerous treason charges last month. Likewise, the Freedom of Information Bill, paralyses since before his administration took office, has yet to come before the National Assembly, despite assurances to the contrary. Not all stakeholders are internal.
Dominated by foreign ownership, the extraction industry anxiously awaits the completion of government's review of the Mining Act, and, according to a piece in this month's The Bulletin and Record, it is unsure of what to expect. That makes for an uncertain investment environment in a country that relies on mining for 80% of its export receipts and, despite weaker Chinese demand, expects copper tonnage to reach 1. 5 million tones by 2015. No matter what the review reveals, it is not likely to assuage the industry legion of critics, who say generations of mining development have failed to improve the economic prospects of ordinary Zambia.
The story of the IF in power is convoluted and often ambiguous. The Sat administrationreinstated the Anti-Corruption Act abuse of office clause, but the president appointed his uncle as minister of finance. The government stabilized the cache, but it tore fuel and maize subsidies away from the poor. Zambia has the respect of international markets, but it maintains close ties with North Korea. The first big vote of the new session will be the 2014 budget, a document that will inevitably steer the narrative toward the 2016 election.
The 2011 poll was close. If the government doesn't live up to its promises, the next one may be too. Think Africa Press welcomes inquiries regarding the republication of its articles. If you would like purposes, please contact:[email protected] Com. For further reading around he subject see: Back in the Red: Can Zambia Manage More Borrowing? Just six years after debt relief, Zambia is approaching international capital markets, with government promising more such borrowing in the future.
ARTICLE | 16 SEPTEMBER 2013 - 3:PM I BY PAUL CRUCIAL Fifty Cache notes, the Zambia currency. Photograph by Lugging Chaise. Lusaka, Zambia: When Geoffrey Seconds father died in 2001, he was Just about to enter high school and Zambia was still struggling through its debt crisis. His school fees and personal development suddenly at risk, Chino's eyes were opened to a country that had pent a decade crashing through inalienable reforms that required its leaders to privative the economy, halt subsidies and drastically restructure the social sector.
The debt to GAP ratio was 170% that year, with a huge social fallout: rampant unemployment, over 15% of the population suffering from HIVE/AIDS and life expectancy at Just 42 years old. Congo is now Economic, Equity and Development Programmer manager at the Jesuit Centre for Theological Reflection ACTOR), a Lusaka- based think tank. Speaking to Think Africa Press, he says, "The macroeconomic statistics you've heard are real. We knew that when the rain season came, we would have cholera. It's because of poor sanitation and poor health services.
Every year we would have cholera and it would kill hundreds and hundreds of people. " His uncles and brothers were able to secure employment, however, and ultimately his school fees were paid. Five years later, after a barrage of reforms prescribed by the International Monetary Fund (MIFF) and World Bank, much of Samba's $7 billion debt was cancelled. Just six years on, Zambia started borrowing again, with the Patriotic Front (IF) government currently preparing to complete its first interest payment on cast Septembers 10-year $750 multimillionaire.
Finance Minister Alexander Chinwag says that these types of instruments are the future, yet debt-watchers like Congo are concerned. They note a rising trend of taking on commercial loans, which stipulate fewer conditions than their confessional alternatives, but have higher interest rates. At the same time, many critics accuse the government of an antiquated debt policy with insufficient parliamentary oversight. Others lament wasted potential in the tax system that could see development dollars raised without onerous terms or interest.
While no one is warning of a new debt crisis yet, borrowing remains a loaded concept in a country so recently removed from Heavily Indebted Poor Country (HIP) status. An era of arrears Since independence in 1964, Zambia has struggled to control its debt levels. Following the 1973 oil crisis and the 1975 plunge in copper prices the Kenneth Uganda government fell into an ongoing balance-of-payments crisis. In response, international creditors pressured Uganda into making unpopular structural reforms, until he lashed out in 1987, breaking off relations with the MIFF and refusing to pay external debt and withholding aid.
By the time Uganda rebuilt his bridges with the MIFF in 1989, debt to GAP ratio was 200% and the country was convulsed by hyperinflation and currency collapse. In 1991, after 27 years under Uganda, the country held multi-party elections and Movement for Multiparty Democracy (MD) leader Frederick Chula surged to victory. Chula was a good student for the MIFF, propagating much of the economy and enacting other market reforms. By the mid-asses, prospects had improved: GAP grew by 6. %, inflation stabilized and manufacturing and non-traditional exports recovered, although education and healthcare indicators continued to decline. But the end of the decade brought still more instability. The government-owned Zambia Consolidated Copper Mines hemorrhaged millions before it was partly privatized in 2000, whilst GAP growth shrank to 3. 5%. Debt was tallied at $7. 3 billion. In 2001, the year Zambia entered the HIP program, it owed $606 million to debt servicing alone. However, foreign governments began canceling or restructuring some of the country's debt.
At the Glassless Summit in 2005, the 68 cancelled $40 billion of debt from the world's poorest countries and, combined with completion of the HIP program and a 00% write off of its MIFF and World Bank loans accrued before 2005, Samba's debt to GAP ratio fell to 9%. Off to the bonds market In September 2012, the IF government issued the country's first sovereign bond, joining a trend in sub-Sahara Africa initiated by Ghana in 2007. Mainly international investors have bought the government's bonds, receiving an interest rate of 5. 625%.
The bond was so popular it was oversubscribed by a factor of fifteen, revealing a trend of investor interest in emerging market debt. Echoing his boss, Deputy Finance Minister Miles Sampan has reportedly said that government will continue to approach he international capital market, with a 45% debt to GAP ratio the intended ceiling. Meanwhile, after the government's successful foray, a number of public agencies, from city councils to Samba's Road Development Agency, announced their own intentions to enter the bonds market, bringing the issue of debt sustainability once again to the fore.
Ministry of Finance Permanent Secretary Felix Annulus's, speaking to Think Africa Press, says, "Our policy has always been that we should have sustainable debt and our preferred loan contraction is confessional loans. In situations where the confessional loans are not enough and we can go for immemorial loans, they should be commercial loans on projects that have economic results attached. " In addition to confessional loans, Zambia for years benefited from budget support, which was transferred straight into the country's ledger books.
But Samba's fiscal ranking has changed dramatically in less than a decade. It is now considered a middle income country with a sovereign credit rating of B+. Its success makes it less and less eligible for budget support and confessional debt, with the former registering Just 5% in the 2013 budget, down from roughly 40% in the HIP years, according to Annulus's. The absence of these inputs forces the government into the international markets if it wants to finance development. The 2013 Budget Speech pledges Rebound money to railways, roads, and healthcare infrastructure.
Congo approves of the allocations in theory, but worries about political interference when cash leaves the government coffers. Better roadways to Samba's remote undergoing one of the country's frequent by-elections might not. Legal instruments to manage debt "Our concern is the framework that governs borrowing," Congo says. "We feel it's still weak. It doesn't guarantee oversight of Parliament. The executive minister of finance still dominates the process of contracting debt. " Samba's Loans and Guarantees Authorization Act empowers the minister of finance to contract loans and negotiate terms and conditions.
CTR would like to see a debt management policy that brings loans before a parliamentary committee on a case-by-case basis. They highlight a series of past loans that they say would have benefited from an oversight system, including a 2011 credit of $53 million from China for mobile hospital units that has been castigated for being ineffective and wasteful. According to Annulus's, there is efficient parliamentary oversight when Parliament approves a budget stipulating borrowing ceilings. Case-by-case oversight, he continues, is impossible in part because of the parliamentary sitting schedule.
He cites the example of the Rebound, when he says finance staff woke the minister up at 04:AMA to report market rates. "We don't have time to go to Parliament," he says, "because we have to make a decision in half an hour". Although the department is updating its debt management strategy, it will not, Numskull's says, include recommendations in line with Actor's thinking. Tax then spend The MONGO Action occupies a separate corner of this debate, arguing that government should not be approaching international capital markets, whether it can sustain loans or not, until it maximizes tax potential.
Circuitous Patrick Moonshine, Economic Justice Program officer with the organization, argues that "If we are going to look at financing for the economy, financing for a project, it has to be a more sustainable mode of financing, and the only sustainable mode we have is taxation. Why is that we are avoiding something that we already have in our hands which we could utilize in preference of going to borrow? Annulus's says Zambia isn't eager to tax thirteenth surge in mining investment until investors see returns.
And reaping taxes from the informal sector, he adds, costs more money than it nets. But Action believes that alternative forms of taxation must be explored, considering debt servicing payments are money diverted from spending on health, education, and social security. Moonshine isn't convinced by blooming economic indicators, noting that much of the productivity in the mining sector, which remains central to Samba's economy, stems from foreign-owned capital. He says that "We do not have full control over that. So in that sense it is not prudent to base that on our GAP growth. The future Samba's current debt to GAP ratio is 27% of the country's $20 billion GAP, according to Annulus's, 10% of which comes from external lenders. He says 2014 projections of the debt burden are in development, and quashed fears of other public bodies issuing bonds, saying none of them have been rated and they do not have the technocratic capacity to engage the market. Current debt levels are widely considered sustainable, at least in the short term, all the more so if government successfully rebates its GAP this October, a move observers say could increase GAP y 20%. Still, there are those who are reticent.
Speaking as a private economist and transparent borrowing regime with plenty of oversight. He argues that "If we are able to put in place mechanisms that will ensure first of all there's accountability, there's transparency, there's the issue of monitoring the kind of money we are borrowing, and it's utilized for intended purposes, and this has to be capital projects, it is a welcome move. " Think Africa Press welcomes inquiries regarding the republication of its articles. If you would like to republish this or any other article for re-print, humiliation or educational purposes, please contact:[email protected] Mom. British Government Hails IF Economic Strides British High Commissioner to Zambia, James Thornton has described as 'impressive' Samba's economic growth in the first two years of the Patriotic Front (IF) government. Mr.. Thornton has observed that Samba's economy has continued to grow faster under the IF regime because of the good polices that the IF is implementing. He says President Sat deserves a pat on the back because of the numerous developmental projects his administration has embarked on especially infrastructure development to only in Lusaka but the country as a whole. Mr..
Thornton is hopeful that President Sat will steer Samba's development forward because he is a man of action. He has urged Zambia to rally behind President Sat and the IF government because the people stand to benefit more under the government of the day. Inspired to Inform ... Email: [email protected] Com Monday, 23 September 2013 IF GOBO HAS NO INTENTION TO TURN ZAMBIA INTO A ONE PARTY STATE - SAT President Michael Sat has opened the Third Session of the Eleventh National Assembly with an assurance to the Zambia that the IF Government has no intentions of turning the country into a one party State.
Below is the full speech Introduction In accordance with the decorum of this August house, I Join you and the rest of the Honorable members of parliament to officially open the third session of the eleventh national assembly. It is one year since I last addressed this august house on the occasion of the official opening of the second session of the eleventh national assembly and a number of developments have since taken place in our country.
Obituary Before I go any further, I note with sadness that during the second session of the eleventh national assembly, the house lost the Honorable member for Mans central parliamentary constituency, the late Mr. Kennedy Shaken, MM and former minister of information and broadcasting services, who passed away on 5th September, 2013. May his soul rest in peace. May I now ask the house to stand and observe a minute of silence in honor of our dear departed colleague. Mr.. Speaker, This session is special in many respects. Firstly, it marks almost two years of hard work by the Patriotic Front in government.
The Patriotic Front government came into power to address the many social and economic challenges facing the Zambia which is enshrined in our manifesto which states and I quote, "the citizens of this land, not only deserve better lives but are entitled to better lives", end of quote. Secondly, the session also comes against the background of Zambia having successfully co-hosted with Zanzibar, the highest ever attended United Nations world tourism organization general assembly last month. The event has helped to raise Samba's image as a tourist destination of choice.
Thirdly, this session sets the stage for the commemoration of Samba's 50th independence anniversary, the golden Jubilee, in October next year. The theme of the celebrations is and I quote, "commemorating God's favor of Samba's 50 years of independence for continued peace, unity, democracy, patriotism and prosperity' end of quote. Mr.. Speaker, This is an opportunity for us as a country to reflect on our achievements and challenges. It is equally, an occasion to motivate and energies ourselves as a united people to face the future with resolve.
During the commemoration, government will bestow deserving individuals who have made outstanding contributions to the development of this country with "a special single class independence day medal". Parliamentary affairs Mr.. Speaker, I am happy to note that, during the second session of the eleventh national assembly, the honorable members of parliament worked together across party-lines to deal with matters of great national importance in the interests of our people. This was demonstrated by the number of bills passed, parliamentary questions debated and ministerial statements presented. , therefore, wish to thank you, Mr. Speaker, the honorable deputy speaker, the deputy chairperson of committees of the whole house, and the chairpersons of all the parliamentary session and select committees or effectively discharging your functions. Your leadership enabled the house to carry out its constitutional mandate and ensure that our government was kept on track in its provision of services to the Zambia people. Furthermore, I would like to thank and congratulate his honor the vice president and leader of government business in the house, on the excellent manner in which he directed government business.
In thanking his honor the vice president, I also acknowledge the role that party whips played in ensuring that the business of the house was conducted smoothly. Similarly, I would like to commend the clerk of the national assembly and her staff for the excellent services and their dedication to duty. Let me take this opportunity to congratulate all the new members of parliament, who have since Joined the house. I also thank the electorate who participated in the by-elections. L, however, regret to note that some by-elections were characterized by violence.
I wish to emphasis the need for self-restraint and tolerance before, during and after elections so as to enable our democracy to flourish. Socio-economic affairs Under the Patriotic Front government, the performance of the economy has intended to be positive, recording growth in the gross domestic product off. 8 per cent and 7. 3 per cent in 2011 and 2012 respectively. This growth was driven by the transport, communications, construction, agriculture, trade and manufacturing sectors. Inflation has remained at single digit, recorded at 7. 1 per cent as at end of per cent as at June 2013. Mr..
Speaker, The government's initiative of borrowing through the Euro bond, resulted in increasing the fiscal space for national development. This has enabled the country to undertake projects such as the re-capitalization of the nitrogen chemicals of Zambia. The production of fertilizer locally is going to boost our farmers' production and subsequently increase food security and generate employment. Mr.. Speaker, Efforts to diversify the economy will be guided by the national vision 2030, the revised sixth national development plan covering the period 2013 to 2016 and the decentralization policy.
The focus will be on the key areas of agriculture, infrastructure, manufacturing, tourism, science and technology. Our goal is to achieve higher and sustained economic growth in order to alleviate poverty through rural development and Job creation. The planning framework re-affirms our overpayment's commitment to coordinated planning in line with the Patriotic Front manifesto which must be our reference document at all time. To this end, government will soon present to this house, the 2014 national budget to support implementation of priority programmer.
I urge this august house to support the budget. Education and skills development I wish to restate that education and vocational skills development is critical to our national development. It is, however, a fact that a good number of our young people have not had access to quality education due to limited school spaces particularly, at secondary and tertiary education levels. In our effort to address this challenge, I wish to inform this house that our government is reviewing the education policy and stakeholder consultations are about to be concluded.
The policy will realign the educational system to ensure that the academic and vocational training are harmonious from early childhood to tertiary education levels. The aim is to make the curricula at all levels relevant to national development. In my address to this house last year, I directed the minister responsible for education to establish a regulatory body to monitor education standards in the country. I am pleased that the higher education act was enacted. This act provides for the establishment of the higher education authority.
Government has commenced the process of establishing the authority. Mr.. Speaker, while steady progress has been made to expand primary school infrastructure, government recognizes the need to accelerate construction of new secondary schools to meet the growing demand for post primary education. In this regard, government has completed construction of 32 new secondary schools out of the planned 84 in the country. In 2014, government will accelerate the completion of the remaining 52 schools currently under construction.
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