9 October 2015
So now we have the 2016 budget before us. Here we present our initial reaction while we prepare a more detailed analysis and alternative proposal for the Zambian people that we will issue next week.
The first thing many will observe is that the budget is bigger than last year now standing at K53.1 billion (US$4.6bn) against last year’s K46.7 billion (US$7.4 billion). However the kwacha is much weaker, having fallen 46% against the USD in the past year, which is very problematic for an import dependent economy such as ours. It is also worrying when you consider that the cost of everything has gone up double or sometimes even triple. For those living in poverty there was nothing in this budget to improve their situation or to help them cope with rising prices. For example on agriculture, this budget is silent on pro poor growth.
To us this budget highlights the missed opportunities we’ve had and demonstrates the danger of a government without a strong vision for the economy, coupled with the will and determination to realise that vision. If the vast sums of Eurobond money the PF has raised during their time at State House had been deployed strategically then we could have much greater resources at our disposal to address these challenges, but this cannot happen without a vision. And so we now face an external debt of $6.3 billion compared to $4.8 billion just 9 months ago. We face this debt mountain without any hope of how we will get over it.
It is hard to credit the Minister with fiscal discipline in this budget. The theme of the budget may be ‘fiscal consolidation to safeguard our past achievement and secure a prosperous future for all’ but yet at a time of economic difficulty the size of the Cabinet has been increased in size by 25% at great expense. This appears to be an unwise investment on behalf of the Zambian people as the Government is not delivering value for money. At the same time the past achievements have been torn to pieces. So what are we safeguarding?
This clear mismatch between stated intentions and spending undermines the credibility of the Minister’s address. This is also the case when they talk yet again about diversification. This is something that has been regularly stated but no serious attempt to deliver has followed. There were other claims on inflation and reduction of budget deficit, the deficit that they have grown exponentially during their 4 years in office, where it was not made clear how they will be achieved and there is still much explaining for the PF to do. Zambians are tired of such claims without explanation, just as our economy is tired.
There was also a lack of strategic focus, something that only becomes more important when your resources are limited. For example, once again the talk of a national airline was packaged as an attractive proposition, but we are already running late on critical aviation infrastructure developments and taxes continue to choke the tourism sector. We must be serious and strategic about such matters. The Minister did not do justice to the tourism sector.
We also wonder where the targeted interventions in areas that will deliver returns, such as youth, entrepreneurs and start-ups, who can go on and create jobs for others are. We may not have vast sums of money to invest as a country but mentorship schemes and programmes to increase knowledge and skills transfer are low-cost but high-impact interventions. Given our limited resources these are some of the areas we must concentrate on, at the same time giving businesses the best chance to succeed, grow and create more jobs through clear, stable and common sense policies.
Finally, it is evident that in the face of current economic challenges Zambians need a Government that is strongly focused on delivering results. Perhaps after increasing Cabinet by another 5 ministers at a time of financial austerity the President could rectify this error by sacking 5 of his worst performing ministers if they do not deliver quickly?
At budget time the question we used to focus on was how can we make things better for Zambians and how can we improve our country together. How have we gone backwards from this to a place where the question is more about how can we stop things getting worse? The PF has taken us here during their four years in office. This should be the last PF budget.