Zambia's mining policy chaos

A confused picture is emerging on Zambia’s mining taxation policy. Mines Minister Christopher Yaluma recently said ., “It is our responsibility and obligation to ensure that we provide an enabling environment for the mines to sustain their operations in the country. We are looking at revisiting the tax regime. Anytime from now we are going to make known [the changes] after cabinet approval.”

That statement was made on 28 June 2014. It was interpreted by many, including mining companies, as suggesting that mining taxes were going to be reduced. This was because Yaluma’s statement came shortly after FQM announced that it would hold back from investing $1 billion in Zambia. 

Who will defend press freedom in Zambia ?

Editor's note : An important article on the ongoing attack on press freedom in Zambia by Bruce Chooma. Media freedom is important because as Nobel Laureate Amartya Sen reminds us "development is freedom". 

The work of journalists is becoming increasingly difficult in Zambia due to growing intolerance by the state to independent media and a rise in cases of harassment of journalists. A recent report by Freedom House, a US based human rights organisation showed that in 2013, Zambia fell 21 places from 72 to 93 out of 180 and landed in the category of states that are classified as “not free”. 

Reforming CDF (ZIPAR Response)

Editor's note:  A very helpful response from ZIPAR on some of the questions that the were raised by Zambian Economist readers on Facebook and Twitter pages. You can also follow the discussion to the article below via Facebook.

CDF reform should begin with guaranteeing a fairer distribution of resources across Zambia– before embarking on more comprehensive reform.

On Monday we published an article calling for reform of the Constituency Development Fund (CDF). It argued that the CDF should be allocated on the basis of a measure of need with resources targeted on the most deprived constituencies. The original article is available here.This has provoked a series of interesting responses and comments which are welcome contributions to this important debate.

20 ideas to cut wasteful government spending in Zambia

A while back we asked for ideas on how Zambia can cut wasteful spending. The need to cut down on bye-elections and reduce on infrastructure spending are known. We wanted to identify simple ideas that are often missed. Here are some of the ideas that you came up with.

1# - Reduce the size of cabinet to no more than 12 with each ministry having only one supporting junior minister and one permanent secretary who runs the ministry. All provincial deputy ministries should be scrapped.

2# - Abolish the post of District Commissioner as it merely duplicates other functions. Make the Town Clerk the Chief Executive Officer and introduce an enhanced role for directly elected mayors to improve accountability.

Does Zambia need to change how CDF is allocated?

Editor’s note: An helpful article from Tamara Billima-Mulenga (ZIPAR) on the Constituency Development Fund (CDF). It does not address the fundamental problems, nsmely CDF corrupts the proper functions of MPs; encourages corruption and mismanagement; and, is a poor attempt at “fiscal decentralisation”. But the paper is helpful in contributing to the debate in this area. We need more such discussions to ensure public money is being properly utilised. 

As the Ministry of Finance commences the preparation of the 2015 National budget, it is worth asking how the government allocates spending across the different programmes it funds. These decisions are often based on existing historic allocations and developmental plans. It is, however, rare for the government to base spending decisions on some measure of ‘need’: that is targeting funding at those areas that experience higher levels of poverty, or where the cost of delivering services is higher.

13 ideas to improve road safety

Earlier this year we asked for ideas on reducing road traffic accidents on our very active Facebook page. Its taken a while to sort through the many detailed comments. Here are the best 13 ideas you came up with.  The ideas are over and above basic existing initiatives being undertaken by GRZ such as building more roads, more dual carriageways, increased road maintenance and mode switch. And of course all the ideas would require a proper cost benefit analysis before taking them forward.

1# - Introduce restrictions on where drivers can drive depending on existing experience e.g. those with less than one year driving experience could be banned from driving on intercity roads.

Are some lives worth more than others?

On 3rd January 2011, PF President Michael Sata wrote to President Banda following his wife's treatment in South Africa arranged by the Zambian government. He expressed "profound gratitude" to President Banda for "the consideration, compassion and care extended to [Christine Kaseba] during the period of her illness and stay at Milpark Hospital". Mr Sata was particularly "pleased to see that [Christine Kaseba's] life was saved due to the government’s prompt action to evacuate her".

State of Railway Infrastructure in Zambia

Editor's note: the article below is from the recent Parliamentary Committee on Communications, and Transport  report (July 2014) which covers wide range of areas. We have extracted the article on fiscal decentralisation for ease of access. Some minor edits have been made for ease of reading. 

The Committee resolved to undertake a study on the state of railway infrastructure in Zambia. The objective of the study was to: (i) find out if there was any policy on the maintenance and management of the railway infrastructure in Zambia; (ii) establish the state of railway stations, railway lines, locomotives and wagons in Zambia; (iii) assess the challenges, if any, faced in the maintenance and management of railway infrastructure in Zambia; (iv) find out if there were any measures that had been put in place to revamp the railway system; and (v) make recommendations to the Executive on the way forward.

Fiscal Decentralisation in Zambia

Editor's note: the article below is from  the recent Parliamentary Committee on Estimates report (July 2014) which covers wide range of areas. We have extracted the article on fiscal decentralisation for ease of access. Some minor edits have been made for ease of reading. 

The revised Decentralisation Policy was launched by His Excellency the President, Mr Michael Chilufya Sata on 16th June, 2013. Fiscal Decentralisation is part of the broader framework of the revised Decentralisation Policy. It entails the devolution of some budgetary powers to the local authorities.

Swiss made poverty?

A telling quote from a recent article on how mispricing and the opacity of commodities trading in Switzerland is contributing to Africa's underdevelopment :

Switzerland is a global hub for trade in commodities, and so exerts a significant influence on Africa's development. But critics say the way commodities are traded through the country is shrouded in opacity and this ultimately deprives developing regions such as Africa of revenue….

For example, a 2010 study by Christian Aid showed that as Zambia's copper production soared in the 2000s, Switzerland came to account for more than half of the southern African country's exports of the commodity. But the price of Swiss re-exports of the copper was far higher than that received in Zambia.

In 2008, the study estimated, Zambia's GDP would have been 80 percent higher if the copper leaving its borders in that year alone had received the same price as Switzerland. It's a pattern of trade mispricing that has persisted, critics say.

A study in January by the Centre for Global Development, a trade and aid think tank, estimated that developing countries may be losing between $8 billion and $120 billion a year because of mispricing of commodities in Switzerland….

In other cases, commodities such as copper will be recorded as destined for Switzerland but instead go to a Swiss-based trading house and onwards to, say, China.

Tribe, tribalism and culture

Editor’s note:  This article by His Royal Highness Chitimukulu of the Bemba people (“Henry Kanyanta Sosala”) provides important reflections on tribe, tribalism and culture. The article is reproduced from Lusaka Times.

Preamble

A tribe is a political, social and economic unit; it’s like a social class in Europe in which people find their polyglot neighbours in times of distress and helpers in times of need. A tribe offered sanctuary in the old days of tribal wars. A tribe is exclusive and the only way to win acceptance is to be born into a particular tribe. This means that the people of one tribe are united by common citizenship; common language; common racial harmony and common tribal codes, most of which stretch back into pre-history but also by common bloodlines i.e., the blood of the tribe.

Morality Matters

The Great Wall of China is thousands of miles long, 30 feet high, and 18 feet thick and was built as security against the northern invaders. It is a massive construction, visible from outer space, and was intended to be impenetrable. In fact, impressive as it was, the wall was breached not by physically breaking the wall down but by a simple ruse: the gatekeepers were bribed. A wall is only as strong as the people protecting it; an economy is only as strong as the people working in it; a business is only as strong as its staff; an army is only as strong as its soldiers. We can build walls to protect us, but walls are as strong (or as weak) as the humans that guard them. One bribe and the gates will open.

JOSH MOODY

(Source: Journey to Joy)

Always good to be reminded that the condition of the human heart is important in every sphere of life, including politics and economics. To have a strong and vibrant Zambia, a strong society and economy, we need strong and morally upright people. Institutions are important but institutions can be uprooted overnight by evil hearts.

AUTHOR

Chola Mukanga

Economist | Consultant | Researcher

Copyright © Zambian Economist 2014

Politics of Energy Subsidies

A recent article  from Economist Magazine provides some interesting commentary on current trends around the world to get rid of energy subsidies. It notes that energy subsidies have wrrecked budgets and the environment alike :

Of the $500 billion a year the IMF reckons they cost—the equivalent of four times all official foreign aid—half is spent by governments in the Middle East and north Africa, where, on average, it is worth about 20% of government revenues. The proceeds flow overwhelmingly to the car-driving urban elite. In the typical emerging economy the richest fifth of households hoover up 40% of the benefits of fuel subsidies; the poorest fifth get only 7%. But the poorest suffer disproportionately from the distortions that such intervention creates. Egypt spends seven times more on fuel subsidies than on health. Cheap fuel encourages the development of heavy industry rather than the job-rich light manufacturing that offers far more people a route out of poverty.

Presidential Uncertainty

"I am not qualified to stand as president because I am excluded by the same amended 1996 Constitution, which excluded Kaunda and excludes, as far as I understand, Given Lubinda and Mulenga Sata. Both your parents have to be Zambian. So [President Sata] is reluctant in my understanding to appoint someone who could be a target of a petition in the courts... If this man is not qualified to stand as president, how can we make him the Acting President? [President Sata] does not want to have a constitutional crisis, when he is somewhere else. So there is no big deal."

GUY SCOTT

(Source: The Post)

This is the clearest statement from Vice President Scott on the issue yet. The conclusion is actually wrong as many legal minds have made clear. For the simple reason that the person who fulfills the presidential functions is not an "acting president" in a legal sense. Such an office does not exist in the constitution. He or she merely mere fulfils the functions of the president with significant limitations (e.g. he cannot sack anyone). So the person need not be directly eligible to be president to fulfill those functions. They just need to be a government minister. The issue of standing as a president in an election is an entirely different matter. 

Parlimanent needs to be smaller not bigger

Editor's note:  Resident contributor Henry Kyambalesa argues in the article below that the latest calls to increase the size of parliament are totally misguided.

In 2010, the National Constitutional Conference (NCC) recommended an increase in the number of Parliamentary seats from 158 to 280 seats. Recently, Electoral Commission of Zambia Chairperson, Comrade Ireen Mambilima, urged the government to amend the Republican constitution in order to increase the number of Parliamentary seats from the current 150 to 235 elective seats.

This is worrisome, for how can some segments of Zambian society have a desire to increase the size of Parliament at a time when our beloved country’s educational system is not adequately catered for, the healthcare system can hardly meet the basic needs of the majority of citizens, public infrastructure and services are still deficient, and, among a host of other socioeconomic woes, civil servants are still not adequately compensated for their services?