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Friday, 6 December 2013

Annual Sabbatical

Dear Friends,

As is customary since I started this blog in 2007, I am taking one month off to recharge the batteries and switch off from social media and active blogging.  Over the years I have come to value this period. 

This means that I wont be reached through this website, Facebook or Twitter. I also will not be able to respond to non-urgent emails or queries or requests for interviews until after 15 January 2014.

Many thanks for your continued readership. Particularly thankful to those who actively take time to feedback on which articles have been helpful / not helpful - and those who always sending across important information. Special thanks to those who have supported the website through donations! The contributions go a long way in keeping this blog going! 

It's never too late to help!  If you share the vision of this website to provide independent analysis and information on pressing economic issues facing Zambia and want to make it sure it continue, please feel free to contribute towards via the "donate" button on the right.

Wishing you a very special Christmas! 

Chola Mukanga | Economist
Copyright © Zambian Economist 2013

Zambia on Strike, 3rd Edition

The Zambia Congress of Trade Unions (ZCTU) has warned that President Sata's decision to fire nurses that took part in a recent strike may soon plunge us in an industrial crisis that could paralyse the entire country :
"Let it be made clear that the labour movement is not weak. We have chosen the option of negotiation rather than industrial action but government should not take us for granted...Whoever advised President Sata to fire the nurses made a huge technical error which they will regret....It is highly immoral for Dr Kasonde to start attacking us in Parliament knowing fully that we cannot defend ourselves. If he thinks we are irrelevant, let him not push us. We will not be intimidated. The labour movement does not answer to anyone expect the worker"
It was always obvious that if you fire one worker, others will rightly feel they will be next next time they go on strike. More importantly as long as the fired workers are unionised the union must defend them. Otherwise the unions are not worth the membership.

Thursday, 5 December 2013

A Note on Mining Taxation Policy

Editor's note: This is a guest post by Kaela B Mulenga (PhD), a resident contributor to Zambian Economist. He is an economist and development consultant based in Canada. You can find him on Facebook and via email
Mineral taxing issues for Zambia have been exhaustively discussed in several of my previous articles. I normally make comments to complement the excellent tax debate found on Zambian Economist (ZE). But somehow the message I propound hasn't sank in with our taxing authorities. Let me elaborate.

I do realize that copper prices do sometimes rise and other times they fall. And that consumer preference does change. Indeed things do happen. With no investors and when customers turn away from buying copper, we lose revenue. I know that. Therefore I am quite concerned about the dependence on copper, which after all one day may no longer be in demand.

Zambia on Strike, 2nd Edition

Government has fired more than 250 nurses and midwives for going on strike. Health Minister Joseph Kasonde has informed Parliament in a ministerial statement that the dismissal of nurses and midwives is a lesson to other workers. He says normal operations has been restored at all affected hospitals in spite of the dismissal of some workers as new nurses were being recruited. (Source: The Post)

Those affected are from UTH, Kasama General Hospital, Livingstone General Hospital and Levy Mwanawasa. The nurses, who staged a 10-day strike are demanding 100 per cent salary increment, as opposed to the 4 per cent that was awarded by government. They also want equal work and equal pay, and extra patient allowance, K2,000 monthly housing allowance and K2,000 night duty allowance as well as harmonisation of salaries in comparison with other classes of health workers.

Policy Direction on Transport and Communication

This speech is a useful resource on the current policy direction of the government on transport and communication. There are a number of projects I was not aware of until I read this. 

Thank you for giving me this opportunity to outline the policy direction of the Ministry of Transport, Works, Supply and Communication for the year 2014.

As the House may be aware, this ministry is charged with the responsibility of facilitating the construction and maintenance of public infrastructure. It is also responsible for promoting the development of the transport and communication sector in order to contribute to the socio-economic development of our country. It is further responsible for the control of Government transport, office equipment and Government printing. It also provides meteorological services.

Wednesday, 4 December 2013

Politics of Windfall Tax

MMD MPs led by Catherine Namugala are now crying for the windfall tax that they worked very hard to scrap against the wishes of all Zambians :
"We have time and again asked the government to introduce windfall tax, if you need to raise revenue, tax those that are creating massive wealth in this country...Tax the mines because we all know that when they create wealth, this wealth goes out of this country, we all know that when a poor person creates wealth in Zambia, they will use it to increase productive capacity of our economy." 
A bit of history might help us to put things in perspective. In January 2008 President Levy Patrick Mwanawasa (LPM) announced that Zambia was breaking the huge milestones hung around her neck by the Chiluba administration. Mining Development Agreements (DAs) were going to be abolished and replaced by a new fiscal regime. Under the LPM changes the corporate tax rate for mines was set at 30%, mining royalties on base metals at 3% of gross value (up from 0.6% in most DAs), and withholding tax on interest, royalties, management fees and payments to affiliates or subcontractors in the mining sector were set at a rate of 15%.

Monday, 2 December 2013

Windfall Tax Debate Returns

Mbita Chitala has joined an increasing band of people that have resumed the call for the reintroduction of the windfall tax on minerals to capture large profits being made by mining companies. He is urging Zambians to continue demanding the reintroduction of windfall tax if we want the country to develop :
"For us to have money to do everything we want to do, windfall tax should be reintroduced, and that's the only way we can get money from our copper. We cannot tax them Pay As You Earn tax; they will always declare losses, so there is no tax on that. So the only way these resources are taxed is by windfall tax. Anywhere in the world, whether it is in Botswana or America or Norway, it is that turnover tax which is done, even in the oil industry...Minister of Finance Alexander Chikwanda called those calling for the reintroduction of windfall tax as lunatics, but he is wrong. All over the country, all the economists have said it should be done...Even the PF in their campaign they advocated the same thing." (The Post, November 2013)

List of Prominent Zambians For A "Windfall Tax" On Mining

This post is regularly updated with quotes from leading analysts and public figures urging the government to reintroduce the windfall tax. Please scroll to the bottom to see the latest contributor  :
"It is an injustice for the government to only collect US$ 77.6 million from copper exports valued at US$2.9 billion. And I do not see that the mines themselves in their heart of hearts would consider it an injustice to pay extra more" 

Sunday, 1 December 2013

Zambia on Strike

The Government is facing increasing industrial strikes by public sector employees. Nurses and midwives in many parts of the country, including major cities of Lusaka, Livingstone and Ndola have been on strike again just over a month after calling off a 7-day strike. The workers resumed work last month believing that government had promised to address their grievances, only for Health PS Peter Mwaba to refute any promises. (Source: ZNBC, MuviTV)

The nurses alongside other public sectors workers who were promised by GRZ wage increases of up to 200 percent. But somewhere along the line the political promises and the final written bargaining package did not match. What politicians hailed the "unprecedented rise" in public sector wages, for some people it turned out to be a mere 4% rise. That is what sparked off the protest. According to Leonard Hikaumba (ZCTU) the workers are willing to go back to work "as long the government comes out clearly on the position of what they had promised".

Friday, 29 November 2013

Policy Chaos at BOZ

Policy confusion continues to rock the Bank of Zambia (BOZ) as the Kwacha slides further. BOZ is struggling to halt the depreciation of the currency which is now at its weakest level in five years. And they do not know what to do.

Media interviews with leading figures at the BOZ suggests that the Bank is lost for options. BOZ's Financial Director Emmanuel Pamu says the Kwacha is merely on a “random walk" and that BOZ is not "concerned too much" because it expects "some correction.” He believes that the kwacha will be in “equilibrium” at a rate of 5.30 to 5.40 per dollar. A surprising hint that PF is now resigned to a Kwacha at that level at best. Is this the new policy?

Thursday, 28 November 2013

The PF and Intra-Party Violence

Editor’s note: This is a guest post by Henry Kyambalesa, an Adjunct Professor in the School for Professional Studies at Regis University, Denver, USA, as well as an Independent Business and Management Researcher and Consultant. He is has written a number of books and regularly reflects on issues facing Zambia. 
There is an urgent need for the Patriotic Front (PF) to show leadership in addressing the increasing levels of political violence among its members, otherwise we risk having political hooliganism entrenched in our country’s democratic institutions that will eventually be difficult to address.

It is hard to understand why political cadres threaten to harm or kill other citizens who have different political views and/or those who support different individuals or political candidates!

Wednesday, 27 November 2013

Reviving Kapiri Glass Factory

Kapiri Glass Factory is allegedly set to reopen its operations in July 2014 under a new local investor Chimsoro Milling Company Limited. This follows the recapitalization and re-investment into latest machinery and technology at the once defunct company and will operate under a new name called Kapiri Glass Manufacturing (KGM) Limited.

KGM General Manager Sunil Malik says the equipment is currently being installed at the factory to replace the obsolete one will enable the company produce over 75 tons of glass per day. This will translate into 21,000 tons of glass per annum or 20 million bottles per year. The glass factory will cerate employment to over 200 local people once fully operational.

Tuesday, 26 November 2013

Rogue Investors or Whistle blowers?

Government recently revoked the work permit of Konkola Copper Mines (KCM)'s CEO Kishore Kumar over KCM’s plans job cuts. The move has been celebrated by some who see this as a strong stance by PF against foreign investors. What has been worrying is that no one has yet pointed out that GRZ's recent actions appear to be part of its addiction to cancelling "work permit" in dubious circumstances.

Of course PF is not the first to be obsessed with bundling foreigners out of the country. An historical glance suggests that the recent actions are merely a continuation of the selective shameful practices of the past, when any foreigner who did not toe the party line was unceremoniously bundled out of the country on flimsy grounds. Why shouldn’t a foreign CEO take decisions that safeguards the financial viability of his company? Why should they be victimised for merely doing their job?

Monday, 25 November 2013

Explaining Zambia's Poverty

I have previously noted that there's a poverty of papers and books on Zambia's economic history. This new paper by Alan Whitworth is a welcome addition to the little information that currently exists! Those who don't learn from history are bound to repeat the mistakes. And according to this paper the current PF government appears not to have learnt the lessons of the past. Well worth the read! 

Facebook Discussion 

Thursday, 21 November 2013

Free Falling Kwacha

This chart is quite revealing because it shows the clear trend of the Kwacha over the last 3 years. Whilst some of the Kwacha’s current slide is seasonal, as retailers tend to buy most of their importants in advance of Christiams to avoid a slowdow in shipping activity, it is clear that the factors driving its decline are much more substantial.

Over the last month we have seen the Kwacha experience it's sharpest fall since PF came power and the lowest value in five years, if not more. The currency has substantially eroded in value since PF came to power in 2011. It is also clear that the ban in use of dollars, Kwacha rebasing and exchange control restrictions have not stemmed this substantial decline.

Wednesday, 20 November 2013

Who will weep for our street children?

Whenever I watch a documentary about child slavery, I can't help but wonder how many of Zambia's street children probably end up in one form of slavery or another. Child slavery and our growing number of street children are invariably linked. As long as children are on the street they remain vulnerable to all sorts of abuse.

For girls on the streets especially it is like a death sentence. It's too dangerous. When you add in the problem of AIDs it makes one despair. A theme touched on in Princess Kasune Zulu’s remarkable book ‘Warrior Princess’.

It is no surprise we continue to witness a growth in human trafficking. Sadly the problem has not commanded as much public attention as it should. The closest information I am aware of is the very rough 2006 Central Statistical Office survey which revealed that 22% of girls and 20% boys reported knowledge of human trafficking. 15% reported knowing someone who had been trafficked. But those statistics did not specifically sample street children.

Monday, 18 November 2013

A Development Blueprint for Zambia

Editor’s note: This is a guest post by Michael Chishala, a Zambian writer and regular contributor to the discussions on the ZE Facebook page.  Follow him on Facebook
Many armchair critics rightly observe that many other armchair critics complain about problems in Zambia without offering solutions (ironically, they equally offer no solutions either). So today, let's debate some ideas about what specific steps a government of a poor nation needs to do to produce prosperity. I shall do things in reverse. Steps first with explanations, and then the main reasoning behind.


Year One

a) Drastically cut the size of government to ten Ministries and get rid of all Deputy Ministers (we do not need 70 ministers). Reduce some ministries to small departments. A Kwacha in private hands produces more than a Kwacha in government's hands (they are driven by politics of the belly and the desire to remain in power forever).

Friday, 15 November 2013

How competent are Zambian graduates?

Editor’s note: This is a guest post by Sue Clayton, a lawyer and regular contributor to ZE Facebook discussions.
I think it is highly presumptuous to accept, on the basis that many believe it to be true, that Zambian graduates are losing out to foreigner graduates [as implied in a previous blog]. I think the key here is competence which we must not confuse with ability.

The world over intelligent “educated” people are incompetent, either down to poor education and training or their own attitudes or the environment in which they operate. We need an open discussion about competence because having a degree does not confer competence and does not entitle one to anything – but it should demand “professionalism” of the holder.

I believe professionalism encompasses competent performance of one’s job, being honest, and working for the best interests on the employer within the law. It means working until the job is complete whatever it takes, remembering one’s duty to one’s client or customer or patient. It requires maintaining and always striving to improve standards, proving oneself, humility and co-operation.

Thursday, 14 November 2013

Are expatriates taking Zambian graduate jobs?

One of the most common complaints I get is that many Zambian graduates do not have access to jobs because the jobs are normally given to foreign expatriates. Many see the challenge of unemployment as being largely compounded by the presence of foreign experts doing jobs that can be competently executed by Zambian graduates.

There are three fundamental questions help us unpack this issue :

(1). Are Zambian graduates really not getting the jobs that they are equally competent to do, and may even be able to do at lower wages?

(2). If the answer to (1) is yes, is this a failure of the market, or is this effectively a failure of government?

(3). What is the appropriate way of addressing these market or government failures, assuming they exist?

Wednesday, 13 November 2013

The Problem of Unemployment

Hakainde Hichilema (UPND) has responded poorly on the KCM crisis with this suggestion :
“The PF government has the responsibilities of lowering the cost of doing business, not just for KCM, but for other mining companies and businesses as well, so as to enhance employment creation. For example, the PF should re-instate the fuel subsidy which was removed and is now a burden to our people and business sector. There are many other ways a responsible government can institute to lower the cost of doing business to save existing jobs and enhance employment creation…” (Source: UPND)
This is a rather poor suggestion for three reasons. First, the government is broke and cannot afford to reinstate the fuel subsidies. Can we please move the debate beyond subsidies? They are not coming back and rightly so!

Secondly, giving a fuel subsidy as a bribe to KCM is simply subsiding jobs. If we want to subsidise workers it may be better to give them money directly. But clearly that would be foolish because presumably the retrenched workers will get a severance packages. If they don’t get a severance package, then the real issue lies with our labour laws. Why don't we actually focus on getting our labour laws right?

Finally, lowering the cost of doing business should not be entertained if it comes with lower mining taxation. Everyone knows that taxation is the biggest constraint to doing business. Equally no right thinking Zambia would ever advocate for low mining taxations. In short, Zambians have to realise that not every job is worth saving. If the economics don't stuck up for KCM let them close and jobs be created everywhere. Have we not read Schumpeter?

The job of government is not to save jobs but to create conditions that allows the private sector to create  new ones! Unemployment is part of the creative destruction process. Let the market decide what jobs we need and don’t need. Government's job is merely to create efficient and fair conditions. It is also wrong to ask poor people to subsidise jobs at KCM by reinstating other subsidies. It is merely cost shifting!

The problem in all this debate is a lack of appreciation of two issues. First, as VP Guy Scott has said before, it is not Vedanta’s job, or any company for that matter, to worry about employment levels in the country. It is a job for government.

Tuesday, 12 November 2013

GRZ Vs Mining Companies (6th Edition)

Vedanta Resources owned Konkola Copper Mines Plc is suing Zambia Revenue Authority over a K3.2 billion ($586 million) tax charge relating to exports of copper cathode. KCM wants the Lusaka High Court to quash ZRA’s decision to charge a 16 percent VAT on the exports from January 2011 to March 2013, according to court papers. KCM also wants the court to reverse the authority’s decision to levy the tax from July.

Monday, 11 November 2013

The Mining Employment Problem

KCM plans to cut at least 1,529 jobs by March 2014. The policy is with immediate effect. Some have already being laid off, though KCM disputes that. It cites the coming to end of the lifespan of some of the mines at Nchanga (Nchanga Open Pit and the Nchanga Underground Lower Ore Body) in the next three years as contributing factors.

Over the years, copper grades at Nchanga underground have significantly decreased, from an average of five per cent up to the 1980s, to three per cent in 2000 and currently 1.6 per cent, while open cast mine grades had dropped from three per cent to one point zero today.

To make matters worse KCM's annual output is around 8 tonnes per employee compared to the global average of 100 tonnes. The reason is that the Nchanga operations are still using the costly conventional method of mining compared to mechanised /automated mining used by its global competitors. So KCM is shifting towards mechanisation and automation for all of its operations in order to increase productivity. Which means job losses!

Friday, 8 November 2013

Free Riding Justice

William Harrington (Former Transport Minister) is asking for financial assistance to ensure justice is done. Mr Harrington intends to move a motion in the High Court to probe Tourism Minister Sylvia Masebo over allegations of abuse of authority regarding the operations at ZAWA. This follows a recent High Court ruling that Mr Harrington has the right to a judicial review against Masebo. Contrary to the position taken by Acting Chief Justice Lombe Chibesakunda who continues to refuse to appoint a Tribunal to probe Masebo.

Unfortunately the High Court did not award him costs for his action against Justice Chibesakunda because “the matter had been moved in public interest". This means Harrignton has to continue carrying the financial cost alone even though his actions benefits the public in general. He is now considering giving up the fight due to lack of financial resources. Unless other stakeholders who wish to see justice in the matter come on board, the judgment granted in his favour would remain on paper.

Thursday, 7 November 2013

Where Next for ZESCO?

Government has approved the proposal by ZESCO to increase electricity tariffs. Energy Minister Christopher Yaluma says that the Energy Regulation Board (ERB) approved ZESCO’s application, without indicating by how much the tariffs will rise.

Earlier this year ZESCO applied for electricity tariffs to increase 26% on average in order to meet its operational costs, high inflation and meet rising demand for electricity in the country. Yaluma says that the new electricity tariffs will increase less than 26%, but he has refused to state the exact amount. We have to wait for ERB to announce how much has been approved.

Wednesday, 6 November 2013

A Zambian Conundrum

Editor’s note: This is a guest post by Ntheye Lungu, an analyst and regular contributor to the ZE Facebook page discussions.
Here is a conundrum :

You are a shrewd and very successful businessman. You started off in the mining supply business, before venturing into micro-lending where you made an absolute fortune charging your desperate clients outrageously high interest rates. Over the years, business has been incredible and you now find yourself with excess cash that you would like to invest in other ventures.

It has always fascinated you that although your country is endowed with substantial mineral resources, there are not that many local entrepreneurs who actually own and manage a substantial share of the mining enterprises. The major players involved in mining in your country are all foreign, all largely managed by expatriates (although you are fully aware that the labourers are predominantly local).


Finance Minister Alexander Chikwanda on low mining revenues :
[Members of Parliament] have rightly expressed their disquiet about the paltry contribution of the mining sector to tax revenue. The mining sector in Zambia contributes merely 5 percent to domestic tax revenue while the contribution of the mining sector in the other major SADC mining countries is at 11 percent. The mineral royalty in these countries is 3 percent while it is 6 per cent in Zambia.

The low contribution of the mining sector in Zambia can only be attributed to pervasive fraudulence, a state of affairs we are dealing with by placing a team of experts in Zambia Revenue Authority to design systems which will enable government to determine both the quantities and content of the minerals produced in Zambia.

Only then shall we be able to restructure the taxation of the mining sector in a way that optimises revenue from the sector without impairing the operations of the sector. Minerals are a non-renewable resource and it is only fair that the country gets a fair and reasonable return from its non-replenishable resources, in the process safeguarding the interests of posterity.

(Source : Ministry of Finance)

Tuesday, 5 November 2013

Debt Watch (Saudi Arabia)

The government recently signed two loan agreements with Saudi Arabia worth $40m to buy urea fertiliser ($20m) and renovate the University Teaching Hospital ($20m). This is the third loan agreement with the Saudi Fund for Development under the Patriotic Front government.

Zambia has witnessed unprecedented speed of borrowing over the last two years. Since PF came to power Zambia's external debt is nearly three times what it was 2 years ago. In 2012 alone, Alexander Chikwanda borrowed a staggering 14 times abroad!

Monday, 4 November 2013

Mine Watch (Kabwe)

Berkeley Mineral Resources (BMR), through its Zambian subsidiary Enviro Processing Limited (EPL), is planning to reopen Kabwe Mine and is expected to initially invest US$300 million (about K1.5 billion) in its operations. BMR is listed on the London Stock Exchange Alternative Investment Market. It hopes to commence operations in 2014 / 15.

EPL has been acquiring surface rights in Kabwe and licences over zinc and lead tailing dumps since 2008. It completed the the acquistion of all the relevant assets, surface rights, mining plot and licences in 2012. It says, it “has done a quality intensive verification process of samples in South Africa and we found that there [is] still a large percentage of base minerals in those (tailing) dumps..”. There also other minerals such as indium, silver and gallium inside the tailing dumps.

Friday, 1 November 2013

Bye, Bye ZCCM-IH!

An important recent report which has not had much discussion. The Government recently announced that it plans to cede control of ZCCM-IH. Mines Minister Chris Yaluma says that Cabinet will decide on the size of the divestment and that go is to give up control : “We are not looking back, but looking forward and getting the mining houses TOTALLY into private hands...We have gone past nationalisation and we are not going back.” (Source: Bloomberg)

Government currently owns about 87.6% of ZCCM-IH which in turn owns miniority shares in a number of mining houses. Yaluma’s statement suggests not merely a reduction to shares in ZCCM-IH below 50% as some have suggested, but potentially completely selling its shares and allow individuals (most of them likely to be foreigners) to purchase shares in ZCCM-IH. This is very consistent with a similar statement he gave Metal Bulletin. 

Thursday, 31 October 2013

Restricting Maize Exports

The government earlier this month suspended maize and bran exports, the Ministry of Agriculture said in a latest move to ensure availability locally. According to Statutory Instrument No. 85 of 2013, only government-to-government exports and exports by the World Food Programme (WFP) are exempted from the ban. All export permits issued before or after the release of this S.I have since been revoked.

Zambia's maize production fell 11 per cent this year after poor weather and a worm infestation impacted on yields. The 2012/13 maize output was recorded at 2.5 million tonnes from 2.85 million tonnes in the previous season.

Although industry officials have placed the total national requirement of maize at an average of 1.2 million tonnes for food, the brewery and stock feed industries, there are fears the country may experience shortages of maize and bran if exports are not banned.

Wednesday, 30 October 2013

Another day, another party (13th Edition)

Daniel Pule has formed a political party called the United People's Jubilee Party (UPJP). He says the party will “fight discrimination and tribalism of all kinds” and will be a party “for all Zambians”. Mr Pule says, “this is our 49th and I will invite you on the 24th of October for a major press conference, where we shall give the details of our Jubilee Party...this is a party for all Zambians, and it's grounded in the word of God. We are here to encourage Christians, Christian business people to participate in national affairs."

When asked who the other leaders in the party are, Pule said it will be revealed at the “Independence Day press conference”. Pule last served as deputy information minister in the Frederick Chiluba regime. In 2002, he formed the Party for Unity, Democracy and Development (PUDD), which is presumably no longer in existence.

Mr Pule has has been asked to change the name by Government for a somewhat foolish reason (apparently the word jubilee can only be used by government due to the independence celebrations next year). If he does succeed to keep the name, UPJP is the latest in the birth of new parties in 2013, which has already seen George Mpombo’s PDP, Frank Bwalya’s ABZ, Peter Sinkamba’s Green Party and Mike Mulongoti’s party (the name escapes me!).

Tuesday, 29 October 2013

A broken tourism policy, 2nd Edition

Government has started opening offices for tourism promotion abroad. Tourism PS George Zulu says the countries were offices are being set up include South Africa, France, Spain, Britain and USA. In his words : “There’s great potential in the tourism industry to boost the Zambian economy more than in other sectors because the hospitality of the nation draws tourists into the country".

I was under the impression that our many costly embassies around the world are already geared towards this sort of promotion. What are they doing in the embassies if they are not already promoting Zambia?

My free advice to Zulu and others is to ask the diaspora to help market Zambia instead of such expensive ventures. Its quite obvious that if they want to sell Zambia abroad, their best ambassadors are the diaspora. They understand what Zambia has to offer and what the foreigner wants. Incidentally, I have always found that there's something to say for "person-to-person" recommendation. More importantly, it will save taxpayers a lot of money.

Monday, 28 October 2013


Transport Minister Yamfwa Mukanga MP says government has engaged a Chinese firm TSDI to carry out feasibility study on TAZARA in order to recommend to the Tanzanian and Zambian governments on what to do about TAZARA. The study started in 2011 and was supposed to end in 2012, but GRZ is still waiting for the consultant to hand over the documents. 

Hon Mukanga, who is also the Government’s Chief Whip, says TAZARA has been under-performing and is highly indebted. Although the arrears for the workers have been cleared after the two governments released US$8 million, TAZARA is on life support. Among the options which may be presented may include privatising TAZARA.

TAZARA has virtually collapsed. One suspects the team of experts have not issued the report because they have found the task was too difficult. How long does a feasibility study take? The problems facing Tazara are not new but come off the back of historic mismanagement and insufficient demand. No new government money or experts can turn it round. The problems are so huge that even the injection of US$40 million by the Chinese government in 2011 to revive operations following the signing of the 14th protocol yielded nothing.

Friday, 25 October 2013

Corruption Watch (Courts, REA, Digital Migration)

The Anti-Corruption Commission (ACC) recently arrested and charged Wilfred Serenje, the former Chief Executive Officer of the Rural Electrification Authority (REA) for Abuse of Authority of Office contrary to section 99(1) of the Penal Code Cap 87 of the Laws of Zambia. It is alleged that that between 1st January 2008 and 31st November 2011, Mr. Serenje abused the authority of his office by allowing his personal motor vehicle to draw fuel and lubricants from the REA account. Mr. Serenje’s contract with the REA was terminated on 9th November 2012 after the ACC instituted investigations into his conduct.

The ACC has also arrested a Local Court Clerk in Kitwe for Corrupt Practices involving K200.00 Ms. Barbra Chansa 34, of house number 7 Wusakile Township, in Kitwe was arrested and charged with one count of corrupt practices contrary to Section 19(1) of the Anti-Corruption Act Number 38 of 2010. Details are that between 1st September, 2013 and 23rd September, 2013, Ms.Barbra Chansa as a Court Clerk with the Judiciary Department corruptly solicited for and actually received K200.00 cash gratification from Peter Ngalandi as an inducement or reward for herself to facilitate for a favorable Judgment in a local Court case between Peter Ngalandi and Mr. Silavwe at Wusakile Local Court.

Another day, another prison amnesty!

President Sata yesterday pardoned 500 prisoners serving sentences for various offences to mark the commemoration of Zambia’s 49 years of independence. The pardoned prisoners are from various prisons in all the 10 provinces of the country.

This now brings to nearly 4,500 the number of prisoners PF has released on the streets! The releases have been usually on Africa Freedom day or independence day. In 2013 alone President Michael Sata has set free 1115 prisoners countrywide, with 615 pardoned earlier this year. 

On its first independence day in power 2011, the Sata government freed people who were allegedly imprisoned "over minor wildlife-related offences". In Mr Sata's words, "as we celebrate 47 years of our independence, I have extended a gesture of goodwill to these people by pardoning a total of 673 prisoners, majority of whom were jailed over these minor wildlife-related cases".

In June 2012,  we had another amnesty of 2,318 prisoners as part of the Africa Freedom Day celebrations. According to government this significant gesture was a response to appalling conditions in prisons and is in line with the PF's manifesto of turning the prisons into correctional service facilities. It was also part of Government's commitment to "finding lasting solutions to the persistent problems of congestion in our prisons. We need to have conditions that foster humane treatment in tandem with international standards”.

The 2012 independence day saw President Sata release another prisoner amnesty to 260 people as part of the celebrations. Apparently the move was "meant to decongest prison facilities in the country".

Thursday, 24 October 2013

Debt Watch (World Bank), 4th Edition

GRZ recently signed US$155million loan agreements with the World Bank to help ZESCO Limited facilitate the Lusaka Transmission and Distribution Rehabilitation project ($105m) and for the water Resource Development Project ($50m).

The ZESCO project aims at increasing the capacity and improving reliability of electricity transmission and distribution in Lusaka. Finance Minister Alexander Chikwanda and the World Bank signed the agreement recently. The project involves rehabilitation of the 132 KV and the 88KV transmission network in Lusaka area and the rehabilitation of the 33 KV and 11KV distribution network in Lusaka area.

The US$50m loan would support the implementation of an integrated framework for development and management of water resources in the country by the ministry of Mines, Energy and Water Development. This would include construction of small dams to help moderate damage from drought. It is hoped that the loan proceeds will go toward building and repairing about 100 small dams that will benefit more than 1 million people in rural areas over the next 10 years.

Wednesday, 23 October 2013

Fiscal Incentives for Sports

Government has decided to work out a policy that will give additional fiscal incentives (tax exemptions) to companies that support sports in the country. Sports Minister Chishimba Kambwili recently said that companies are sacrificing a lot to contribute money and even material support into sports and there was need to encourage them to continue doing so. 

What Mr Kambwili is proposing can be argued for any sector of the economy. So one has to be clear about two questions : a) Is this the right approach to support sports development in the country (and other sectors), and, b) should sports take financial priority over other areas of development (e.g. tourism, agriculture)?

The use of fiscal incentives may not be without costs! What is important is to consider the counterfactual (the 'do nothing' world). What would happen if the tax breaks and concessions are not made? Would Zambia get the investment in sports anyway? That is certainly possible if one believes there are credible alternatives to encouraging investment in many sectors divorced from the large tax breaks.  I have previously suggested that what we should focus on is to develop a bureaucratic hands-off approach across all sectors, the freedom to invest across sectors, and promote contestable markets (with import competition, and privately financed infrastructure being two of the key factors).

Tuesday, 22 October 2013

Aid Watch (China), 3rd Edition

China recently donated military and medical equipment to the Zambian defence forces to help improve operations of the country’s military hospitals. The donation was US$8 million. China's ambassador to Zambia Zhou Yuxiao says the equipment would be delivered in three phases over three years. 11 Chinese doctors are already working at defence hospitals "providing expertise".

This seems to be just a repeat of the deal we read about in May 2012, which is now being reported by the Times of Zambia as a "new deal". Last year Defence Minister Geoffrey Mwamba went to Beijing where he signed a "US$8m military aid agreement for the rehabilitation of the Ndola and Maina Soko Military hospitals".

Chinese aid to military hospitals sounds good in theory, until you begin to see a pattern of deeper China - Zambia military cooperation or colonisation, depending on your view of China.

Monday, 21 October 2013

A Poverty of Power

Home Affairs Minister Edgar Lungu has said that President Michael Sata is ready to forfeit his salary increment provided MPs follow suit : “The President is saying that’s fine, but we have talked to the opposition UPND and MMD and they are saying we are with you and are actually saying it’s not enough. So why are the opposition MPs condemning the increment when they gave him that money through the standing orders committee?".

Edgar Lungu is wrong and right. He is wrong because the MPs did not "give" the president the salary increase. Parliament does not vote on the salary thanks to a law passed in 2009 which allows the Finance Minister to merely issue a Statutory Instrument at the stroke of a pen. He is right that MPs on the standing orders committee do look at the wage increase. He is also right that the majority of MPs are quiet and are not fighting to change the status quo because part of the unspoken deal is that they also get their salaries increased. Parliament is a sort of "rich boys club" with the public watching with eggs on their faces!

A Poverty of Journalism (The Post)

If you had any doubt that the Post newspaper has zero credibility this recent paragraph from one of their many editorials should erase any doubts :
"...Wynter was introduced to us by Michael himself. We were asked to assist Wynter in his work in any way we could. And we know how to respond positively and generously to men and women of goodwill, to those who are trying to do something good for our country and our people. When we take up a commitment, we honour it and give it everything that we have to ensure a successful outcome. We don't act out of convenience or out of opportunism. We believe in an honest policy and in loyalty to others...Our relationship with Wynter was and still is a product of Michael's request to us...And surely, should the Patriotic Front be decimated on account of our said friendship with Wynter? We leave this for the deep reflection and meditation of Mwamba, the leaders, cadres and members of the Patriotic Front..." 
The Post is a politically captured newspaper that now finds itself on life support and begging for mercy from other political players. And in it's desperation it now reveals the extent of its deep rooted relationship with the Patriotic Front. In an era where the media has become so politicised Zambians are now left wondering where they can turn to for objectivity.

Friday, 18 October 2013

Random Thoughts, 9th Edition

Spending by miners in Chile is spreading through Chile’s economy, fueling a consumer boom and driving unemployment down to 6.2 percent in the second quarter, the lowest rate since 1973. The nation has become the wealthiest in Latin America, according to the International Monetary Fund, with per capita gross domestic product rising to about $16,300 this year from $4,780 10 years ago. The growth of copper mining and shortage of skilled workers mean many miners earn bonuses in excess of $30,000 for signing new contracts every two or three years. Mining giant BHP Billiton (BBL) says truck drivers at its Escondida mine get paid the equivalent of $80,000 a year, excluding bonuses, more than their counterparts in the U.S. Zambia on the other hand can just dream of such figures. The resource wealth is poorly managed.

Thursday, 17 October 2013

Health Watch (Ambulances), 2nd Edition

The ambulances recently bought by Government have started arriving in the country. Child Health D Minister Jean Kapata  recently informed parliament that the 208 ambulances would be distributed to districts to help address health care delivery hurdles especially in rural areas. She says this figure "is far beyond the number of districts we have and they will be sufficient".

It is encouraging to know that someone knows how many districts we have! On a more serious note, this indeed is a very welcome development. It is shocking that there is no adequate medical response system in the country. The issue is most acute for road accidents where victims bleed because no medical personnel arrive on the accident scene. The question of course is whether one or two ambulances for a town like Kitwe is enough.

Wednesday, 16 October 2013

More Government Propaganda Papers

Government has launched newspapers in six local languages. The 36,000 copies of local language newspapers (6000 per language) are Ntanda (in Tonga), Ngoma (in Lunda, Luvale and Kaonde), Tsopano (in Nyanga), Lukanga (in Lenje) while in Lozi it is known as Liseli. The Chibemba version is Imbila.

Information and Broadcasting Minister Mwansa Kapeya says that the first and second issues of the newspapers would be distributed for free, after which they would be sold at “minimal cost” to sustain production and distribution. Government will employ translators and relevant staff to produce the newspapers. He did not explain what news the newspapers would contain.

It is unclear whether these are meant to be weekly or monthly papers. But the idea of newspapers in local languages is a good one. But the obvious question must be asked - why don’t these papers exist already if there’s a market for them? Why has the market failed to provide for these papers? There are no barriers of entry or exit. There are many journalists and business who have attempted to started papers. But none of them are clamouring to launch something like this.

How much should President Sata earn?

The Daily Nation reports that President Michael Sata’s annual salary has been increased to K414,406 with a special allowance of K108,934 barely a year after his salary was increased to K327,000 in 2012. The President's annual salary now stands at K0.5m. This is set out in SI 91 of the Presidential Emoluments Act signed by Finance Minister Alexander Chikwanda. Government has also increased salaries of cabinet ministers and statutory offices.

This is the third time in two years that the presidential salary has been increased. The first two increments having been effected at 100 per cent of the annual basic pay. The salary increases come against a backdrop of health workers including nurses, council workers and other public service workers having gone on strike after receiving a four per cent increase.

There are two observations worth making on this. First, we are all to blame for not paying careful attention to the laws of the land. A piece of legislation was passed in 2009 that everyone interested in Ministerial pay should have read and be aware of. The Ministerial and Parliamentary Offices (Emoluments) (Amendment) Act, 2009.

Tuesday, 15 October 2013

Random Thoughts, 8th Edition

I recently came across an article that illustrates that the madness of "in a speech read for him" has reached epic proportions. In a recent Times of Zambia article we are told : "Vice-President Guy Scott in a speech read for him by Community Development Mother and Child Health Minister Joseph Katema....". And the later we are told, "...And Dr Katema in a speech read on his behalf by his deputy Jean Kapata..." What is the point of such nonsense? Why can't people just read speeches for themselves?  Does it really matter whether the speech is by a Deputy or a full Minister? Doesn't government speak as one voice?

Having gone through Mr Sata's recent speech to parliament, it clear that the speech was largely a summary of what Government has done over the last year and is doing. There was very little on setting out the strategic direction of the country or any new policies. In fact there only two new interesting facts related to recapitalising the Zambia National Building Society and establishing Youth Training Centres! Everything else regular readers of Zambian Economist would have been aware of already. I was rather shocked how many people praised its "new policies". Did I miss something?

Gender D Minister Freedom Sikazwe recently stated government policy with respect to distribution of condoms in schools : "If we allow the distribution of condoms in schools, what will that show to us as a community? There are a lot of challenges in this; because I feel we will be asking children to be experimenting. We have a moral obligation as a country, as families, to ensure that we look after our children. There is a certain age where anything can start. Why taking condoms to schools, where there are four, five-year-old children? Even if we are in a democratic society, it's not everything that comes that will be taken on board. It's not everything that is western that will be taken on board. As a country, we have to assess things but we will also look at our tradition". Needless to say the debate on this issue was heated on our Facebook page.

Government allegedly stands to lose over US$80m for cancelling the the supply of the Public Security Safety Network. Apparently procurement rules suggest that the cancellation could cost government about 40 percent. Home Affairs Minister Edgar Lungu recently cancelled the US$210m dully awarded contract to ZTE Corporation for the supply of the public security safety network. This is despite process having undergone all procedures and endorsement from the Zambia Public Procurement Authority and Attorney General’s office. Absolutely shocking incompetence! 

Chola Mukanga | Economist
Copyright © Zambian Economist 2013

Monday, 14 October 2013

Budget 2014: Summary of Readers' Comments

The 2014 Budget contains seven targets for government economic policy in 2014. I asked for your comments on which of those targets raised questions on your mind and why. We had over 100 comments on the Zambian Economist Facebook page thread. Here is the broad summary of what you said. Where relevant, I have added additional points for clarity and ease of reading.


It was noted that this target was merely a repeat of last year’s Budget target of 7% for 2013. It therefore speaks volume that Chikwanda is again aiming for the same target of 7%. Many thought the target was unachievable just as the last Budget’s target proved unachievable. It was noted that the latest IMF statement shared on the Zambian Economist projects Zambia's growth in 2013 is at 6.0% based on discussions with the Ministry of Finance. This is a big drop from 7.1% growth in 2012.

Many believed the Government is unable to meet its growth target because of general poor economic management which has resulted in weakening macroeconomic fundamentals i.e. growing fiscal deficit, unstable exchange rate and increased foreign borrowing. It is also noted that Zambia is extremely vulnerable to the China's slowdown and the decline in copper prices - and the latest Budget does not appear to address this vulnerability. Based purely on Chikwanda's record it therefore seems that achieving 6% is not guaranteed let alone 7%.

Wigs and Robes

James Thornton (British High Commissioner) helpfully touches on a subject that I have repeatedly mentioned to my Africans friends. It is the matter of those foolish looking robes and wigs worn by Judges and parliamentary officials :
"A non-British colleague expressed surprise that the Supreme Court justices, the Speaker and the Parliamentary clerks still wore wigs and robes. It is true that these date from eighteenth-century British practice….There is no point in continuing with traditions that no longer seem comfortable or which are no longer useful. But these costumes are effectively a badge of office. If they reinforce the sense of the individuals that they are doing important work in accordance with the traditions of the offices concerned, they are well worth keeping."
(Source : The Post)
I would add that this issue is not just a matter of style or comfort. These strange and funny looking robes and wigs (they look so foolish on a Zambian!) probably does more harm than good culturally. Although the attire exists for historical reasons, continuously wearing them actually reinforces a colonial mentality among Africans. More worryingly, such attire also projects to many rural dwellers in our villages that Government is alien to them. A sort of foreign concoction forced on them. If we want courts and parliaments to connect with people we should ensure that the images that emanate from their also connect with people. Looking like an 18th century Tory or Whig politician is not the way to connect with a 21st century Zambian villager.

Friday, 11 October 2013

Minimum Wage U-Turn

Government has allegedly u-turned on the minimum wage because some sectors such as agriculture and tourism are struggling to pay the minimum wage. According to labour Deputy Minister Rayford Mbulu, Labour Minister Fackson Shamenda will “soon” issue a new statutory instrument outlining new sector-based minimum wages. In July 2012, GRZ increased minimum wages by 67%, with back-dated effect, without prior consultations. Back then Shamenda rejected sector-based minimum wages as being complicated.

The minimum wage legislation appears not to have been implemented by many organisations. The Union of Commercial and Industrial Workers of Zambia (NUCIW) recently revealed that Shoprite Checkers management have ignored Government's directive to implement the minimum wage. Those that have “implemented” have moved to reduce other perks to ensure the impact remains neutral.

Instead of increasing enforcement the government is backtracking and now considering differentiated minimum wages based on sectors. This is rather surprising because such an approach is discriminatory against some sectors. More important it appears government is trying to plan the economy by artificially imposing differences in the cost of labour across the economy. It is interesting to note that the very few countries in the world have this sector based minimum wage policy. And for obvious reasons!

Chola Mukanga | Economist 
Copyright © Zambian Economist 2013

Zambia Budget 2014

Finance Minister Alexander Chikwanda delivered the Budget Statement 2014 today. But as always, I thought it was more important getting it across to you speedily. Great work by the way from the Zambia Revenue Authority who have also got it on their website in record time!

Chola Mukanga | Economist
Copyright © Zambian Economist 2013

Thursday, 10 October 2013

Legislative Folly in Zambia (Part 3) - Breaking the Cycle

In the last two posts, I have noted that there are many laws that are decidedly anti-poor in Zambia. I focused on two : the criminalisation of those aged between 8 years and 12 years old; and, criminalisation of bouncing cheques. To that we can add a long list including imprisoning people for merely using a rude word about the president! There also many measures in the current draft constitution that will lead to a bloated parliament, public funding of political parties and other costly things funded by cash strapped taxpayers!

But many of you have asked, ‘We hear you, but how do we rescue people from the ignorant menace of the lawmakers?’ It is a fair question and thank you for challenging me on this. I think there are four things we can immediately push for to bring about change in the way legislation is done.

Wednesday, 9 October 2013

Legislative Folly in Zambia (Part 2) - Criminal Children

I noted yesterday that many laws in Zambia are foolish. Another good example of this exercise in folly is the the criminalisation of children in law. Zambia currently has over 2% of children in prison (over 340 persons). The distribution of these children is “normal” with at least 20% below the age of 14 years. These numbers are facilitated by a law that allows young children to be sent to prison.

Under Section 14.1 of the Penal Code, Part I, Chapter 87 of the Laws of Zambia a child above 8 years old is criminally responsible for his/her actions. This is partially qualified by the fact that a person under the age of 12 years is not criminally responsible for an act, unless it is proved that at the time of committing the act or making the omission s/he had capacity to know that he ought not to do the act or make the omission.

There is an urgent need to increase the minimal age of criminal responsibility. There are five reasons why I believe must be done urgently. First, it makes international sense. Our minimum age of criminal responsibility is far too low compared to many countries. A quick glance at the international evidence shows that Zambia must look to catch up with Spain, Japan, Belgium, Luxembourg and other countries that have set their age of criminal responsibility at 16 and above. My view is that we need to move it to 18 years.

Tuesday, 8 October 2013

Legislative Folly in Zambia (Part 1) - Bounced Cheques

Bouncing cheques is a criminal offence in #Zambia under the National Payments System Act 2007. It is not a civil offence. In other words it is a crime against the State not a contractual breach against the individual. Any person who wilfully, dishonestly or with intent to defraud issues a cheque on an insufficiently funded account is liable to imprisonment for two years.

It is interesting to note that annually we have around 16,000 bounced cheques! There are few criminal prosecutions. In fact the prosecutions have usually been only where politics is involved e.g. when George Mpombo was prosecuted in 2010 for bouncing a cheque after he had resigned from the Banda administration. With little or no deterrence effect it begs the question why this is a criminal offence and not a civil breach between individuals. Why send people to jail for merely bouncing a cheque?

Monday, 7 October 2013

Mine Watch (Maamba), 3rd Edition

Maamba Collieries Limited (MCL) is on schedule with the construction of a US$800 million coal-powered thermal electricity generation plant in the Sinazongwe (Southern Province). The project is the only large source of fossil fuel in Zambia and is served by a branch of the Mulobezi railway.

The construction of the first-ever coal plant in Zambia is being fast-tracked through the 15 contracted companies that are carrying out shared and specialised works ahead of the October 2014 deadline, when the plant will offload its first power Mega Watt to the population, through ZESCO.

Electric power construction company Shandong Electric Power Construction Corporation is carrying out the engineering, procurement and construction of the main power plant. MCL was given a notice-to-proceed on March 26, 2012 and has done massive work since then. Currently, there are two shaft units under construction at Maamba. The first is expected to be completed in October next year, while the second one will be commissioned in early 2015.

Sunday, 6 October 2013

ZCCM-IH Market Announcement

The latest ZCCM - Investment Holdings (ZCCM-IH) as released to the market on 4th October 2012. It proposes a rights offer as part of an effort to liquidate debt owed to the Government of the Republic of Zambia following the ZCCM sell off during the privatisation era. 

Chola Mukanga | Economist
Copyright © Zambian Economist 2013

Friday, 4 October 2013

Why The Law Matters For Zambia's Development

Michael Hobbes in his recent piece "Why Is #Zambia So Poor? And Will Things Ever Get Better?" powerfully observes :
"There are so few judges in the courts that people have reportedly waited in pre-trial detention for up to 10 years...Take lawyers. Zambia only has 1,000 of them, and they’re concentrated where the money is: Lusaka (government), Copperbelt (mining) and Livingstone (safari tourists). Some provinces don’t have any lawyers at all. The government operates a kind of legal bookmobile, a team of lawyers that travels around the country offering basic services, but it only comes to each province once every two months. If you miss it this time, you’re out of luck until it returns. Last year, only six lawyers were admitted to the bar out of 164 who took the exam. The year before that, it was 16 out of 145" (Source : Pacific Standard Magazine)
Yet despite such observations the poverty of our legal landscape remains one of the most overlooked aspect of the development story. The reason is that people don't really understand why lawyers and judges are important to economic development. They see it largely as a political issue rather than an economic one. As a result underinvestment and mismanagement continues to exist in this area.

Thursday, 3 October 2013

Will Mining Companies Get Lower Taxes?

Mining companies are currently in negotiations with Government to reduce the mining tax burden. According to a "government official" at the mining ministry quoted by a recent Wall Street Journal report, the talks over incentives and tax waivers are progressing well but warned that "miners shouldn’t expect a lot of concessions".

What is clear is that there are concessions being made by Government. And the focus seems to be getting either deferring mineral royalties or getting rid of the 10% export levy introduced last year on unprocessed mineral exports. KCM recently upped the pressure by claiming that copper production at Zambia’s largest copper producing mine is facing a looming threat as stockpiles of unprocessed concentrates rise due to inadequate treatment facilities in the country. It values the stockpiles at around US$130m.

Wednesday, 2 October 2013

Why Is Zambia So Poor? And Will Things Ever Get Better?

A recent reflective piece from a foreigner on his recent visit to Zambia. It is a long read - but well worth it. Here is one stinging excerpt:

"Zambia is poor—that much is clear as soon as you arrive. To get to Kitwe, a city of 500,000 people in the Copper Belt Province, you land at Ndola airport an hour away. “Airport” is putting it grandiosely. It’s a strip of runway next to a low building the size of an exurban Starbucks. You get off the plane, walk 100 feet across the tarmac, and wait under an awning until a tractor pulls up, towing a cart with your luggage. Everyone crowds in, grabbing their bags, and you do, too—it’s all over in about 45 seconds. At no point are you indoors. As you leave, you hear a European in a suit remark, “I wish they did it like this everywhere".

Tuesday, 1 October 2013

Zambia's agricultural subsidies

A recent piece from IAPRI on Zambia's agricultural subsidies surprisingly does not engage with recent government policy changes in the area. However, it does helpfully note that given the continuation of input subsidies in general, the challenge is to increase their benefit by addressing the design and implementation problems. These problems include inequitable targeting of fertiliser distribution, low crop­response rates, and crowding out of commercial fertiliser distributor.

Zambia's decision to spend 90% of its agricultural budget on subsidies has left little money for activities that generate a greater impact on agricultural growth and poverty reduction.

Florence Chipwende, a farmer, was elated to discover in October last year that the ministry of agriculture had designated four bags of subsidised fertiliser for her under the farmer input support programme (Fisp). However, they arrived a month after the rains started and, as a result, her maize was planted four weeks late.

Monday, 30 September 2013

Corruption Watch (Southern Province)

The ACC recently arrested former Southern Province Permanent Secretary Edwin Zumbunu for corrupt practices. According to the ACC between 1st May, 2012 and the 31st August, 2012 Edwin Zumbunu in role as Permanent Secretary for Southern Province wilfully failed to comply with applicable procedure relating to procurement when he approved works for the construction of a wall fence at the Southern Province Minister’s official residence. The works were allegedly valued at more than K195,000 (in rebased prices).

Edwin Zumbunu was fired exactly a year ago by President Sata following allegations of corruption. The Zambian Watchdog had revealed the extent of Zumbunu's corrupt activities. Zumbunu had dismissed all the allegations levelled against him.

Friday, 27 September 2013

Shang'ombo on the rise!

The Government has started construction of the US$40 million United States dollars Shangombo-Rivungu canal in Shangombo district has kicked off. The contractor from Clay Disposal, a South African Company engaged to construct the canal is already on site.

The 3 year project will link Zambia to the port of Robito in Angola, and is expected to accelerate cross border trade between the two countries. The project is due to flagged off by Transport Minister Yamfwa Mukanga and his Angolan counterpart in due course.

Press Release : Office of the Acting President


LUSAKA, 27th SEPTEMBER, 2013. Government is deeply concerned with recent media reports attributed in some cases, to senior government officials alleging that there is the practice of tribalism in the Patriotic Front (PF) and in government.

It is indisputable that Zambia's biggest asset is its peace and unity and that all its people live in harmony. In fact, Zambia's natural unity is its fortress and anyone attempting to bring disunity based on tribe or ethnic grouping is strongly frowned upon.

Therefore the careless talk about tribalism is dangerous, regrettable and only serves to sow seeds of disunity. The talk is counter-productive to the well-being of the country and must be curbed immediately.

We must emphasize that the recent happenings in the Patriotic Front are purely internal debate and the normalpractice of internal democracy. The political differences in the PF party will be resolved using established channels and its internal grievance handling process.

We should state that Government is functioning normally and there is no paralysis, fear or dysfunction as alleged by certain media reports. It is, therefore, naïve and illusory for the Opposition to assume that the internal differences in the PF will result in their reaping political fortunes. Over the years, the PF has demonstrated that it is a resilient and strong party that eventually overcomes its internal challenges and has emerged stronger and united.

Diversity of views can never be at variance with the dictates or imperatives of unity. The PF Party will also not yield to selfish interests or private cleavages perpetrated by persons or individualsattempting to hijack the party or pursue agendas which are adrift with the national development agenda.

The Opposition will also not succeed in derailing government's ambitious development agenda. It is, therefore,desirable that all leaders in the PF work together for the good of the party and country.

Government is committed to its national development program and will not be dissuaded by activities that undermine this noble agenda. Government is also focused in ensuring that poverty levels are significantly reduced, and that jobs and wealth are created.

Hon. Alexander B. Chikwanda M.P
Acting President and Minister of Finance
Republic of Zambia

Thursday, 26 September 2013

Rotten Judges

President Michael Sata recently suspended two High Court Judges Emilia Sunkutu and Timothy Katenekwa and has appointed separate tribunals to investigate them on various charges.

Although the charges have not been specified, the suspensions are alleged to be connected to alleged incompetence and misconduct. The suspensions follow complaints processed through the Judicial Complaints Authority, unlike the Chikopa Tribunal which was called following complaints by debtors who owe the Development Bank of Zambia more than K18 billion.

Wednesday, 25 September 2013

North West Railways Project, 2nd Edition

It appears the North West Railway is struggling to materialise. Government revealed recently that it is in the process of advertising the North-West Railway (NWR) project to local and foreign investors who may be interested to develop the infrastructure. Transport Deputy Minister Panji Kaunda says the project is still at the "planning stage".

The negotiations with the project initiators, principally Kavindele, are yet to be finalised. Government had opened discussions with Mr Kavindele but that, they did not come to a conclusion, hence the need for the resumption of talks so that the matter could be finalised.

Why I oppose the proposed Freedom of Information Act

New Information PS Emmanuel Mwamba recently announced that the Freedom of Information (FOI) bill cannot be taken forward as it currently stands because there’s need to go back to the drawing board to reconcile the various pieces of legislation. The process is getting more complicated by the day and there appears a lack of clear timeline given the issues are also being addressed in the Draft Constitution. The delay is good news because before we do anything the government should produce a comprehensive Impact Assessment that explains the costs and benefits of this legislation. Not just guess work.

As I understand it the proposal under consideration is to have an Act of parliament that gives ordinary Zambians the right to ask any public sector organisation for all the recorded information they have on any subject. Anyone would be able to make a request for information. Such requests for data would need to be handled under the relevant legislation to accommodate data protection and national security concerns.

Tuesday, 24 September 2013

MF - Zambia Watch (September 2013)

I am finally vindicated by the IMF. Please read their latest statement on Zambia released this evening below. Take a closer look at the deficit estimate. 
Press Release No. 13/357
September 24, 2013

An International Monetary Fund (IMF) team led by John Wakeman-Linn visited Lusaka during September 17-24 to conclude the 2013 Article IV Consultation discussions with Zambia. The discussions focused on recent economic developments and the policies needed to ensure macroeconomic stability and continued growth. The mission met with Finance Minister Alexander Chikwanda, Bank of Zambia Governor Michael Gondwe, and other senior government officials, as well as representatives from the private sector and civil society. The mission would like to express its sincere gratitude to the Zambian authorities for their excellent cooperation and warm hospitality

Mr. Wakeman-Linn issued the following statement in Lusaka today, outlining the mission's preliminary conclusions:

“The Zambian economy has continued to expand at a rapid pace, although experiencing pressures in some areas. Overall output growth is projected at 6 percent in 2013, with the decline from 7.2 percent growth in 2012 largely due to lower agricultural production. Copper production has continued to increase strongly despite lower prices on the international market, and the economy has also benefitted from high levels of foreign direct investment and rapid growth in non-traditional exports. Moreover, at 7.1 percent year-on-year in the latest data, inflation has remained broadly at last year’s level.

“The main economic challenges are in the fiscal area. Government expenditures in 2013 will be significantly above budget, including from fuel subsidies incurred before retail prices were raised on May 1, the civil service wage increase that came into effect this month, and costs of covering the Food Reserve Agency’s operations and outstanding debt. In addition, revenue is short of target. Altogether, the budget deficit for the year is now expected to reach about 8½ percent of GDP.

“The mission very much welcomes the authorities’ plans to comprehensively address the fiscal challenges in the budget for 2014. With a combination of stepped-up revenue collection and tight expenditure control, the draft budget aims to bring the deficit to about 5 percent of GDP, similar to what was originally planned for 2013. Ensuring that this budget is adhered to will be important for macroeconomic stability and hence the foundation that will support continued strong growth of the Zambian economy.

Mine Watch (LCM)

Luanshya Copper Mines (LCM) will next year embark on the construction of a US$50m cobalt processing plant. The plant would be constructed using feed from Baluba Mine, would be situated at Muliashi Mine. The feasibility study has already been done and the company has started making preparations including procuring of equipment. The construction will take a year to complete and the plant will employ around 200 people. The project should help improve LCM's financial profile as the mine grapples with increasing costs in other areas and declining copper prices And of course, any new investments in mining at this time is good news indeed. More detail via Times of Zambia

Monday, 23 September 2013

Random Thoughts, 7th Edition

In case you have been wondering what happened to the ZANACO probe instituted in January 2012 by President Sata led by former Justice Minister Sebastian Zulu. Apparently the Government has closed the probe. And Rabobank will continue to manage it. Earlier this month Finance Minister Alexander Chikwanda said the probe report into the privatisation of Zanaco has been overtaken by time. In a response to a question, he hurriedly responded, "We don't want negatives; Zanaco is growing…I will not deal with that question. It has been overtaken by time". I like to record things here as a matter of public record. So there you have it - case closed allegedly. I wonder how much that cost? And how many other inquiries have not publicly reported!

Friday, 20 September 2013

Abandoning Zambia!

British Airways recently suspended its flights into Lusaka due to low revenues the route has been contributing to the airline's business. The airline, which has flights directly into Lusaka on Mondays, Thursdays and Saturdays, will cease operations next month and affected workers will receive a severance package.

"We have suspended our three flights into Lusaka from London with effect from October 27, 2013. The route has not been making a profitable contribution in recent past and affected staff shall be given a severance package," George Mawadri, the airline's commercial manager for east and central Africa, was quoted as saying by the Post.

The Agriculture Challenge

The contribution of Zambia agricultural sector to GDP has been falling over the last decade. Agricultural growth has not kept pace with growth in other sectors of the economy. The falling share of fishing is particularly noticeable. A long neglected sector.

IThe general declining trend is worrying given the percent of Zambians who depend on agricultural for their livelihoods. Overall GDP growth combined with a declining contribution from agriculture in a primarily agrarian country like Zambia indicates a widening income gap between urban wage earners and the rural poor. It largely explains why inequality has been on the rise.

President Sata : Parliament Speech 2013 (Transcript)

The full transcript of President Michael's speech to Parliament on Friday, 20 September 2013:





Wednesday, 18 September 2013

Debt Watch (OFID)

Zambia recently borrowed US$10 million from the the OPEC Fund for International Development (OFID) to help fund the education sector. The US$10 million loan will co-finance the construction of three technical colleges in Petauke, Sesheke and Solwezi districts. As a co-finance arrangement Government will need to meet the rest. The loan agreement was signed by OFID Director General, Mr. Suleiman J. Al-Herbish and Ms. Mwitwa Mulonda, Charge D’Affairs at the Zambian Embassy in Germany, who signed on behalf of the Zambian Government.