United Kingdom High Commissioner to Zambia Fergus Cochrane has confirmed that the UK has frozen funding to Zambia.
Last week, a London based publication reported that corruption and theft of donor funds has pushed Finland, Sweden, Ireland and Unicef to freeze aid to Zambia while the UK is demanding a refund of their US$4 million which has been embezzled.
The dossier published by Africa Confidential titled “Zambia – Graft worsens cash squeeze” also gave details about how Zambia has borrowed millions of dollars to buy sophisticated and expensive defence equipment, such as two modern twin-engined C27-J ‘Spartan’ military transports from Italy’s Leonardo.
Africa Confidential further reveals that the country has struct a deal with Russia for supply of civilian planes to resuscitate Zambia Airways, which is expected to include a presidential jet.
Africa Confidential reported that Western donor governments have placed key assistance programmes under heavy scrutiny as evidence emerges of wide-scale corruption in three important government departments, Africa Confidential has learned. Payments by the health, education and local communities departments may have been diverted.
At the same time, the government is plundering social spending so it can meet debt service payments, government sources in Lusaka say. Current account expenditure, including ministerial trips, is being partly funded by the government pension scheme, we hear, causing delays to pensions contributions and payments to pensioners (AC Vol 59 No 17, Bonds, bills and ever bigger debts).
Civil service salaries were not paid on time in August, in part because a debt repayment had to be made on 3 September, the sources say. Former finance minister Felix Mutati, now Minister for Works and Supply, is among those who have blamed the government publicly for the liquidity crisis. He said the government was not collecting enough revenue and was guilty of an ‘imprudent use of resources’, according to Zambian media.
Africa Confidential further reported that DFID has also suspended its funding of cash transfers to poor families because US$4.7 million is believed to have been diverted at the Zambian post office, which administers the payments. DFID has even demanded restitution. Donors provide a third of the total. The scheme was believed to be a great success and President Edgar Lungu requested the number of recipients be increased from 257,000 households, the figure for 2017, to 700,000 this year. However, the increase was put on hold because enquiries revealed that many of the intended recipients were not paid and that the scheme has been subject to fraud.
‘Finland, Sweden, Ireland and Unicef have frozen funding and DFID has privately asked for £3 mn. (US$4 mn.) to be returned. DFID officials believe ministers were made aware of the fraud, which Zampost officials used to buy expensive vehicles, but refused to terminate Zampost’s contract’
‘The Ministry of Health is another area of strong concern to Unicef and others, donor sources told AC. Enormous quantities of drugs have been stolen from government warehouses with suspicion of high-level involvement, and there is concern that fake drugs have been purchased from corrupt suppliers, leaving many parts of the country short of vital drugs and medical cover. Ambulances were also required at inflated prices (AC Vol 59 No 8, As the debts balloon, Lungu avoids the spotlight).
The defence sector is another source of concern, especially as Lusaka concludes deals to buy sophisticated and expensive equipment, such as two modern twin-engined C27-J ‘Spartan’ military transports from Italy’s Leonardo. The Dubai branch of the Italian bank Intesa San Paolo is lending just over $95 mn.