Saturday 9th October, 2010
Analysis of the 2011 Budget by Church Leaders from the Council of Churches in Zambia
We, the Church leaders from the member churches of the Council of Churches in Zambia, gathered together on Saturday 9th October, 2010, in Lusaka, having listened to the budget speech and having analysed the said speech, make the following observations:
- 1. Need for an agreed benchmarks for assessing the performance of the economy
As church leaders, it has been difficult for us to assess the performance of the entire Zambian economy and quantify the said 6.4 percentage growth as there are no agreed benchmarks to assess its growth, performance and achievements.
The absence of agreed government benchmarks and instruments in assessing the performance of the Zambian economy has for over the years created a problem for the church and other stakeholders in assessing the performance of the economy. For example the UN has their Human Development Index which contains benchmarks for measuring human growth and development in a nation.
Our observations as Church leaders, therefore, is that even though the government has recorded a 6.4 percentage growth, this figure is difficult to quantify as we do not know how many Zambian families are now better off this time than they were last year. We also do not know how many quality jobs for Zambians were created by the economic activities that produced the reported growth in the economy.
Furthermore, the absence of government benchmarks to measure the performance of key economic sectors make it difficult for the country to measure whether the economy is achieving real social and economic development that can benefit the Zambian poor.
- 2. Anchor of the Economy
Government firmly states in the budget speech that agriculture would remain the centre of the development and diversification of the economy yet a paltry 5.9 percent has been proposed in this year budget which figure does not indicate that agriculture is the priority and does not vindicate the rhetoric. This is less than the 11.7 % total allocation for defence and public order!
We sadly note that Zambia has continued allocating more money to defence and public order when we have been singing that Zambia is peaceful and not at war with anyone. We have however at the same been singing that the poverty levels are very high. We would therefore be happy if the defence and public order allocations were reduced by half and the savings taken to poverty reduction and job creation activities.
We have noted that the Zambia defence force has in the past been engaged in economic activities such as building bridges and mending roads in times of disaster. They have also been engaged in food production, manufacturing and industrial engineering. We propose a deliberate policy of awarding these contract works to the defence forces in order to save tax payers’ money and retain these resources in Zambia instead of giving them to foreign companies.
- 3. Manufacturing, Industry and Commerce
The world over, economies are driven by the wheels of industry and commerce, yet in Zambia the contribution of manufacturing and industry to the country’s GDP have declined, with Minister Musokotwane confirming that the manufacturing sector “had fallen below trend levels in recent years.”
The major reason for the failure of manufacturing sector to contribute positively to the economy is the high cost of production, high cost of fuel and the high cost of road transportation in the Zambia.
The government and the MPs will need to pay particular attention to this sector as they debate the allocations in the 2011 budget. The government will need to provide incentives for our manufacturing sector for it to compete favourable with products and services from within the region in order for it to expand, add value to our raw goods and materials and create quality jobs for the Zambians. This will broaden the tax base and increase revenue collection for the government.
- 4. Social Protection and safety nets
Despite government recording a one digit figure on inflation, the reality on the ground is that prices for basic goods and services have been going up. The food basket for basic goods and services for a family of six is currently at K2.8 million per month according to the JCTR food basket statistics for September.
The increase of the tax free pay as you earn (PAYE) from K800,000 to K1 million is therefore a drop in the ocean and will not reduce the suffering of the Zambian worker. If the issue is to maximise revenue collection in the PAYE for the government, there are ways of increasing revenue collection in the mining sector through the windfall tax or broadening the tax base by creating more jobs for the Zambians through the awarding of government contracts to Zambian owned companies and firms.
We have also noted the penchant of the government through the Minister of Finance to borrow money without explaining what that money is to be used for. We are saddened that the government intends to borrow heavily to the tune of USD 400 million and this might take us back to the pre-Jubilee debt Cancellation campaign era where our foreign debt had reached over USD 7 billion.
We therefore urge the MPs to compel the government to justify in clear measurable terms plans for such borrowings so that the country is not tied to a loan that we may not need and which may commit our children for generations to come.
We also strongly urge the national assembly to reconsider the proposals that we as church and civil society had originally presented to the Mung’omba Constitution Review Commission on the need for parliament to scrutinize and approve all borrowings on behalf of the nation.
We sadly note that even though in the budget speech the Minister of Finance assures the nation “that government places paramount priority in ensuring that public financial resources are used for the intended purposes”, the government has proposed removing section 37 from the current Anti-corruption Commission (ACC) Act that protects public finance from abuse by thieving public officers. We hope the MPs will seriously consider this as they debate the proposed amendments to the ACC Act.
We commend the proposal for infrastructural development in the country but we want to see this match with human development activities as well.
- 5. Conclusion
Our conclusion therefore is that even though the speech by the Minister of Finance alluded to some key achievements in the last 12 months and was positive on the future government plans, the allocation of figures in the 2011 budget tells a different story.
Agriculture which should be the driver of diversification in the economy has only been given less than 6 percent, while manufacturing and higher tertiary or university education has received little or no mention in the government’s plans.
We are persuaded to believe that this budget as presented will not alleviate the high poverty levels in the country or diversify the economy away from mining.
Our hope therefore is that the MPs will scrutinize the figures as contained in the yellow book and make sure that these figures match the positive budget speech.
Signed on behalf of church leaders;
Rev. Suzanne Membe Matale
The Council of Churches in Zambia (CCZ)
Tuesday 12th October, 2010