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Sunday, 28 September 2014

The Mining VAT U-turn

Government appears to have completely U-turned on the $600m VAT refund to exporters, with the larger bulk owed to mines and other exporters. ZRA says the U-turn is due to "widespread concern on the matter".

Minister Minister Chris Yaluma says "ZRA will do what they think is right and like they said, they have got the autonomy to run as best as they can to ensure all needed revenues are collected...They are trying to do what they can do best in the interest of the country.” (Source: The Post). No word from Alexander Chikwanda but it appears the U-turn may have President Sata's backing.

Monday, 22 September 2014

Growth and government size in Zambia

By Henry Kyambalesa

In this article, the term "economic growth" refers to an increase in a country's total output of goods and services over a given period. The term "economic development" refers to improvements in the standards of living of a country's citizens. These include sustained and pronounced improvements in per capita income, life expectancy, literacy levels, human capital, healthcare services, food security, public housing, transportation infrastructure, and leisure and recreation.

Saturday, 20 September 2014

Zambia Fitch Rating (September 2014)

Editor's note: Fitch today affirmed Zambia's credit rating at 'B', and revised the outlook to positive owing largely to the rebased GDP figures, government revoking BoP regulations and promises to consolidate fiscal spending as part of the ongoing discussion with the IMF on a new austerity programme.  The Fitch assessment does not appear to reflect current information on some issues so some the risks it flags requires deeper consideration. 
Fitch Ratings has revised the Outlook on Zambia's Long-term foreign and local currency Issuer Default Ratings (IDR) to Positive from Stable and affirmed the IDRs at 'B'. The issue ratings on Zambia's senior unsecured foreign and local currency bonds have also been affirmed at 'B'. The Country Ceiling has been affirmed at 'B+' and the Short-term foreign currency IDR at 'B'.

Friday, 19 September 2014

President Sata : Parliament Speech 2014

Editor's note : President Michael Sata earlier today delivered the highly anticipated speech to parliament set out the government's agenda in the next parliamentary year. Full speech below, with minor editorial edits for ease of reading.
I am privileged and honoured today to be with you and the members of parliament on this important day of our national calendar to officially open the fourth session of the eleventh national assembly. It is now three years since the patriotic front government took office, and there are only two years before the next elections.

Wednesday, 17 September 2014

Cash transfers

Community Development Minister Emerine Kabanshi recently announced that the Government plans to extend the cash transfer scheme to cater for up one million households. Government has sensed that it is onto an election winner.

GRZ is currently running two cash protection schemes that gives support to the vulnerable in the community : social cash transfer and social protection fund. The cash transfer is a bi-monthly cash allowance of $25 and $50 dollars for vulnerable households and households where there are people with disabilities respectively.

Monday, 15 September 2014

Zambia's chaotic land administration

By Bruce Chooma

Zambia is in a bizarre position when it comes to land administration and management. No one knows how much land is available for various purposes. For over 20 years the Zambian government has insisted that only 6% of land in Zambia is state land the remaining 94% is customary. The truth is that a lot of land has since been converted from customary to state land across the country but without any reliable system of records at the Ministry of Lands.

Zambia has a dual system of land tenure of customary and leasehold tenure. The land is vested in the President on behalf of all Zambians. However, the issue of vestment is one that lacks widespread consensus particularly among the traditional leadership.

Friday, 12 September 2014

Sell them!

“It is our hope also that the government will help companies like Times of Zambia where workers have gone for three or four months without getting paid. Workers have been patient, we have met the labour and information ministries but the request we made to the Ministry of Finance is still pending and they are the ones who hold the key...If this money is paid, then the Times of Zambia can also manage to pay the workers"

(Source: The Post)
We keep going in circles on this one. How long will government continue to bail out these newspapers? We should sell all state newspapers and ensure no more money is wasted on producing propaganda that no one is interested in. At the very least one of them must be sold urgently. You don't need both.

Wednesday, 10 September 2014

Infrastructure and development

A recent World Bank blog piece  about infrastructure and development makes the following interesting comment :
"Will public investment in infrastructure be sufficient for unleashing faster economic growth in Sub-Saharan Africa? The evidence, both academic and empirical seems to say not necessarily. We see from the works of Rodrik, Hausmann and Velasco (2005)  that developing economies face multiple constraints to growth, and that public policy should focus on removing the binding constraints that really matter. However, that requires an accurate diagnosis of the binding constraints to growth" 
It is not sufficient just building infrastructure we need to be clear whether it is a binding constraint. And the good news is that in Zambia's case it is one of the binding constraints. The last constraints study actually suggested that the key binding constraints to inclusive growth are low investment in human capital, low infrastructure services and coordination failures.  In fact Zambia is addressing the first two except the last one - governance remains very poor and we can only hope that the recent political changes will now move the country forward in a better direction.

Monday, 8 September 2014

Judicial system and growth

A recent IMF working paper has an interesting summary of the latest empirical evidence on the channels linking the judicial system and growth :
Development of credit markets and cost of credit. Weak contract enforcement raises the cost of borrowing, and shortens loan maturities (Bae and Goyal, 2009; Laeven and Majnoni, 2003), with a detrimental impact on investment, the depth of mortgage markets, and GDP (Bianco et al., 2002; Laeven et al., 2003; Djankov et al., 2008).

Thursday, 4 September 2014

Ebola and growth prospects

A fascinating comment in Business Week on the potential of the ebola virus on the West African region :

"Sierra Leone’s prospects were bright before the worst-ever outbreak of the virus. The economy was expected to grow 14 percent this year, almost three times faster than the average for sub-Saharan Africa. In neighboring Liberia and Guinea, rich iron-ore deposits were luring billions of dollars in foreign investment and fueling growth. Then, in December, the first case of Ebola appeared in Guinea. Its emergence at first was seen as a short-term outbreak with limited economic impact. The disease now threatens to cripple three economies with a combined gross domestic product of about $13 billion. Commodity companies are slowing production, and airlines are shutting routes. In Liberia, the government says the epidemic threatens to derail progress made since the end of the civil war in 2003. Sierra Leone has canceled its first sale of bonds open to foreigners"
Things have a way of falling apart in Africa. If it is not wars then its nature. Given the regional turbulence in West Africa Ebola is the last thing the region needed. One can only hope that the region's government have sufficient fiscal space to boost demand post Ebola.

Paradox of Populism

Populist leaders...start out attacking their opponents’ corruption and accuse them of hijacking the state for a self-serving political establishment that excludes the interests of ordinary people. Yet, when in power, they end up behaving exactly the same, treating the state as their or their party’s property and engaging in, or at least condoning, corruption. Usually, this apparent hypocrisy does not hurt populists’ electoral prospects"
From Jan-Werner Mueller's fascinating piece on the paradox of populism. It has a lot of resonance with much of the African experience.  The authors suggest that the reason why this paradox exist is because populism erodes the distinction between government and the people.

Tuesday, 2 September 2014

Lessons from Mangango

By Bruce Choma 

The victory recorded by the Patriotic Front in the recently held by-election in Mangango is no mean achievement for them as a party seeking to establish national character.

Opposition political parties in Zambia still have a lot to learn about the voting attitude of people in rural areas. They need to take a few steps back and ask themselves critical questions around their strategy and messaging.

The Mangango polls were marred with electoral violence with clashes mainly between cadres and agents of the ruling Patriotic Front and the UPND. This did not do well to level the playing field and to an extent contributed to voter apathy.