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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.

According to the World Bank, without the investments, changing rainfall patterns amid global warming could cost Zambia $4.3 billion over 10 years and keep 300,000 citizens below the poverty line. The World Bank says, “mitigating the impact of droughts and floods through development of a sound infrastructure platform to secure the productive use of water resources is central to continued economic development...Less that 5 percent of Zambia’s arable land is irrigated".

This latest loan agreements of US$155m  come in a month that Zambia has looked to borrow more than US$250m in a syndicated loan as GRZ struggles to find new sources of finance following irresponsible spending on wages and an ever expanding bureaucracy. The Government has also been negotiating with the mining companies to reduce their taxes following threats of closures - as global commodity prices tightens.

The World Bank is very irresponsible. It should be lending money to countries which have a publicly accepted Debt Management Legal Framework in place. I thought they were interested in good governance. Lending money, even for good causes, without a proper legal framework for the people to hold Government to account is quite foolish to say the least. The hypocrisy of these multilateral institutions never cease to amaze.

Related Posts

Debt Watch (World Bank), 3rd Edition
Debt Watch (World Bank), 2nd Edition
Debt Watch (World Bank)


AUTHOR
Chola Mukanga | Economist
Copyright © Zambian Economist 2013

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