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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 All export permits issued before or after the release of this S.I have since been revoked.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.