Wednesday, 21st June, 2017

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Wednesday, 21st June, 2017

 

The House met at 1430 hours

 

[MR SPEAKER in the Chair]

 

NATIONAL ANTHEM

 

PRAYER

 

_______

 

MINISTERIAL STATEMENT

 

ON THE STATE OF THE ECONOMY AND GOVERNMENT’S ENGAGEMENT WITH THE INTERNATIONAL MONETARY FUND

 

The Minister of Finance (Mr Mutati): Mr Speaker, I thank you most sincerely for according me this opportunity to brief the House and nation on the state of the economy and the Government’s engagement with the International Monetary Fund (IMF). The first part of my briefing will provide an update on the state of the economy while the second part will provide a brief on the IMF engagement.

 

Sir, the economic performance has rebound with inflation down to single digit, the exchange rate remaining largely stable while the gross domestic product (GDP) has started recovering. I will now give the highlights.    

 

GDP Growth

 

Mr Speaker, growth in 2017 is projected to rise to 4.3 per cent against an initial forecast of 3.4 per cent. This is as a result of increased agricultural output, recovering generation for electricity and higher mining output supported by better prices and power supply. Other sectors that are supporting the growth are construction, wholesale, trade and tourism.

 

Inflation

 

Mr Speaker, inflation closed at 7.5 per cent in 2016, but has now reduced to 6.5 per cent in May, 2017. This was supported by the continued stability of the exchange rate, lower food prices in view of the good harvest and improved market confidence in the country’s economic policy direction. Inflation is projected to remain single digit in 2017.

 

Exchange Rate and External Factor Development

 

Mr Speaker, the exchange rate of the kwacha against major currencies has remained stable with a bias towards appreciation. The kwacha appreciated against the United States (US) Dollar to an average of K9.34 in May, 2017, compared to K9.92 in December, 2016. The stability of the currency is on account of improved supply of foreign exchange, better outlook of copper prices and positive market sentiments.

 

Mr Speaker, in the external sector, the country’s current account deficit narrowed to US$257 million in the first quarter of 2017 against a deficit of US$574 million in the fourth quarter of 2016. This was largely explained by an improvement in the trade and primary income balances.

 

Foreign Reserves

 

Mr Speaker, as at the end of May, 2017, the foreign reserves stood at US$2.4 billion, which translated to around three months of import cover. The Government’s call is to attain four months of import cover over the medium term.

 

Lending Rates

 

Mr Speaker, let me now provide the Government’s perspective on the lending rates, which are still very high for sustainable economic growth. In the first five months of 2017, the rates averaged 28 per cent, a level that limits lending to the private sector. This rate was slightly below the 29 per cent average for the quarter ending, December, 2016.

 

Sir, in an effort to lower the cost of credit and increase lending to the private sector, the Bank of Zambia eased the Monetary Policy. Both the policy rate and statutory reserve ratio were reduced to 12.5 per cent. These measures will be complimented by the Government’s fiscal restraint. I urge the banking community to reciprocate and pass on the cheaper credit to the market.

 

Fiscal Policy

 

Mr Speaker, may I now brief the House on the fiscal development.

 

Sir, the fiscal performance in the first five months of 2017 was challenging. Revenues under performed by 10 per cent compared to the Budget. The underperformance in revenues has been on account of lower tax compliance by tax payers and delayed implementation of Budget measures such as land titling, installation of electronic physical devices to improve Value Added Tax (VAT) collection, implementation of electronic equipment in the communication sector to improve the performance of Excise Duty and the introduction of a single window at entry points, to reduce the turnaround times at borders and boost revenue.

 

Sir, to contribute to resolving the challenge of lower revenue collection, we are enhancing compliance efforts coupled with getting additional revenues through the tax amnesty. Further, we must all play our part by ensuring that we meet our tax obligations. The failure to do so will attract punitive measures.

 

Mr Speaker following the lower than projected revenues during the first five months of 2017, the Government will reduce underlying expenditure to meet the deficit target and the fiscal consolidation objective. The Government will also hasten to implement the 2017 Budget measures.

 

External and Domestic Debt Performance

 

Mr Speaker, Zambia’s external debt stock as at the end of May, 2017, increased to US$7.2 billion from US$6.9 billion in December, 2016. The increase in the stock was on account of new disbursements. The domestic debt stock was K38.6 billion in May, 2017, compared to K33 billion in December, 2016. The rise is explained by increased demand for Government paper.

 

Sir, in order to ensure continued debt sustainability, the Government has finalised a Medium-Term Debt Strategy that provides a framework for prudent debt management. Further, regular debt sustainability analysis will be the guiding principle for future borrowing activities.

 

Stock of Government Arrears

 

Mr Speaker, as at the end of March, 2017, the stock of domestic arrears stood at K17.4 billion. In 2017 alone, the Government has paid out a total of K4.3 billion towards the clearance of the arrears. Hon. Members, to address the arrear situation in a sustainable manner, the Government has designed a Time Specific Arrears Dismantling Strategy. This strategy also includes measures that will stop the accumulation of new arrears.

 

Structural Reforms

 

Sir, the Government will continue to implement structural reforms aimed at strengthening Public Finance Management to support fiscal prudence and address other structural challenges to stimulate inclusive growth. These include:

 

  1. the full rollout of the Integrated Financial Management Information System (IFMIS) and full implementation of the Treasury Single Account (TSA) by the end of 2017;

 

  1. the full implementation of the Electronic Voucher (e-Voucher) System under the Farmers Input Support Programme (FISP); and

 

  1. the revision of a number of laws, including the Public Finance Act, a new Zambia Procurement Public Procurement Bill, review of the Loans and Guarantees(Authorisation) Act and introduction of the Planning and Budgeting Bill to Parliament.

 

The Medium-Term Outlook

 

Mr Speaker, as outlined in the Seventh National Development Plan (7thNDP), growth over the medium-term is forecast to rise to, at least, 5 per cent. Growth will be mainly driven by agriculture, energy, mining, construction and manufacturing sectors. The exchange rate stability will be sustained while inflation is projected to be within the target range of 6 to 8 per cent. Regarding the fiscal position, the Government will work towards fiscal sustainability and consolidation. This will create room for lending to the private sector and stimulate increased economic growth.

 

Sir, overall, pressure on the external sector is expected to continue in 2017 and reduce over the period 2018 to 2019, mainly because of increased export earnings.

 

The Government’s Engagement with the IMF

 

Mr Speaker, the country has made tremendous social and economic progress. However, risks remain on the external side. Based on the need to support the external side, increase market confidence, enhance investment flows and leverage more resources from co-operating partners, the Government has engaged the International Monetary Fund (IMF) on a possible programme. In this regard, we hosted the IMF in discussions from 29thMay to 10th June, 2017.

 

Sir, during these meetings, the Government and the IMF agreed on the remaining actions needed to reach a staff level agreement on a programme that could be supported under the IMF’s Extended Credit Facility. With the required actions agreed to, we are now on course to have the programme presented to the board in August, 2017.

 

Mr Speaker, let me take this opportunity to emphasise the position on where we are in our discussions. The major issues required to be addressed for us to proceed to the conclusion mainly relate to higher than projected budget deficits, accumulation of arrears and an increase in debt levels. As hon. Members of the House may recall, I highlighted key policy and structural measures aimed at mitigating these challenges, including reforms in energy and agriculture. Further, recognising that the reforms may have adverse effects on vulnerable members of society, I stated that the Government would scale up the social protection programmes. In addition to the increased resources that the Government has committed to the programmes, our co-operating partners have also augmented resources for social protection.

 

Conclusion

 

Sir, in conclusion, allow me to mention that the growth prospects that I have highlighted require the support of all Zambians from all walks of life. I, therefore, wish to urge all of us to put the interest of Zambia first, as we deliberate, including on the need for an IMF Programme. Further, I wish to indicate that the Government will, in a few months, present before this House the 2018 Budget. I encourage all our people to participate actively in the budget formulation process in line with the nation’s values and principles. This will ensure that we lay the necessary foundation to sustain our financial needs largely using domestic resource mobilisation.

 

Mr Speaker, I thank you.

 

Mr Speaker: Hon. Members are now free to ask questions on points of clarification on the statement given by the hon. Minister of Finance.

 

Mr Mbulakulima (Milenge): Mr Speaker, today, our debt service ratio to the gross domestic product (GDP) stands at 12 per cent. Our external debt is about 37 per cent towards the 40 per cent absorption rate of the GDP which we, as a country were accessed to be able to borrow. The Eurobond will mature in 2021 and 2022 and we do not seem to have enough space in between. From the view of the hon. Minister, does the Government intend to borrow between 2017 and 2021? If so, how does it expect to sustain that debt?

 

Mr Mutati: Mr Speaker, indeed, we have on our heads the maturity of the Eurobonds and our strategy is quite clear. We are making efforts to refinance the two Eurobonds to have longer maturities. That is the only way we can sustain the debt in the medium-term to leave room to borrow in order to invest, particularly, in economic infrastructure. So, we have a specific strategy of refinancing the two first maturities of the Eurobond.

 

I thank you, Sir.

 

Mr Kambwili (Roan): Mr Speaker, the hon. Minister stated that economic growth for 2017 is forecast to move from the projected 3.8 per cent to about 4.3 per cent. Bearing in mind that under the Movement for Multi-party Democracy (MMD), a robust gross domestic product (GDP) did not trickle down to translate into better living standards for the people, I would like to find out what this Government is doing to ensure that the projected growth trickles down to translate into better living standards for the ordinary people. 

 

Mr Mutati: Mr Speaker, one of the things that we are looking at is the transmission mechanism that we had particularly targeting the rural poor. For example, we have had the Farmer Input Support Programme (FISP), whose impact on the poor has been marginal for a number of years.

 

What we are now doing is transforming FISP using the e-voucher for better targeting of the recipients. Further, it is important that we eliminate the waste that was associated with FISP. Ultimately, the recipients carried almost 40 to 60 per cent of the cost burden without the corresponding benefits. So, these are some of the mechanisms that we are using in order to target people whose living standards we want to improve.

 

Mr Speaker, I thank you.

 

Mr Ng’onga (Kaputa): Mr Speaker, I would like to commend the hon. Minister for a very timely update. My question is on non-payment of arrears to local suppliers. Some transporters in the agriculture sector that provided services in 2014, 2015 and 2017 have not yet been paid. What is our able Government doing to ensure that these local suppliers are paid so that they continue to benefit?

 

Mr Mutati: Mr Speaker, I indicated that as at the end of March, 2017, stock arrears stood at K17.3 billion. These arrears are partly to agriculture, energy and pensioners. For the last five months of this year, we have been able to dismantle this amount by paying off US$4.3 billion. We will continue with those efforts of dismantling areas.

 

Mr Speaker, only a few weeks ago, we paid K150 million to liquidate part of the pensioners’ arrears. In the last two weeks, we have focused on agriculture and we paid a total of K400 million. This week, we will pay K250 million to support the Ministry of Health in the procurement of drugs. We will continue with these efforts. So, with the limited resources we have, we will prioritise dismantling arrears before moving to asset formation and later tackle recurrent expenditure.

 

Mr Speaker, I thank you.

 

Mr C. M. Zulu (Luangeni): Mr Speaker, a couple of months ago, the hon. Minister assured this House that sooner rather later, the Intermarket Bank would reopen. How far has that gone?

 

Mr Mutati: Mr Speaker, this is one of the issues that has continued to preoccupy the Government and the Central Bank. Even as late as this morning, the Government engaged the Central Bank. The key challenges that have occupied the process leading to the reopening of the Intermarket Banking Corporation are reaching shareholder agreements and the mobilisation of the resources. The Bank of Zambia (BoZ) has done tremendous work and before the end of this month, I will issue a comprehensive statement on the matter.

 

Mr Speaker, I thank you.

 

Ms Katuta (Chienge): Mr Speaker, I wish to thank the hon. Minister for a well-articulated statement. However, I have concerns on how the life of a common man will be improved, looking at the external debt that we have. As it is, we are being rated a high risk. The ratings of other countries such as Rwanda, Tanzania are better than us.

 

The hon. Minister stated that this external debt will be refinanced. I am concerned that this information has not been given to the common man, who is suffering the most. He is the one at pains paying for this external debt. How do you explain to the common man that his life will improve when he has not understood how the money was borrowed, at what interest rate or how it benefits him?

 

Mr Mutati: Mr Speaker, I must admit that, perhaps, in our effort to explain the debt and a number of programmes that the Government is carrying out, we have not been as effective as we should be.

 

For example, we have not fully explained that we have more resources now under the Social Cash Transfer Scheme as a result, reaching many more people. We have not fully explained that even as we increase the tariffs, 200 KW/h will be subsidised for the common man. Indeed, there are a number of infrastructural developments that have taken place in the last five years in the road, education and health sectors which, perhaps, we have not fully explained to the common man. We shall, therefore, up our effort in conveying the information to the common man.

 

I thank you, Sir.

 

Mr Chiyalika (Lufubu): Mr Speaker, I am glad that the hon. Minister has informed this House on the positive developments in the economy of single digit inflation, stable exchange rate and revised projected economic growth.

 

Mr Speaker, what is the hon. Minister doing to ensure that there is equitable distribution of wealth, especially for the rural poor and particularly the people of Ngabwe District?

 

Hon. Government Members: Hear, hear!

 

Mr Mutati: Mr Speaker, I can hear the hon. Minister of National Development and Planning, who has plans to relocate the headquarters to a location that he will elaborate in future, comment.

 

Laughter

 

Mr Ngulube: 500 years from now!

 

Mr Mutati: Mr Speaker, to ensure that development impacts a number of areas, we carried out an analysis two weeks ago to find out which areas have the highest incidence of poverty. The map indicated that most parts of Luapula, the Northern and Central provinces and some parts of the Southern Province have a higher incidence of poverty.

 

Therefore, in dealing with the deployment of resources, particularly with the efforts that we are getting from the World Bank, we have indicated that the K200 million will be directed to infrastructure development of rural roads, where the poverty incidence is higher.

 

Sir, we have also indicated that the other monies that we are getting from the World Bank must continue to be directed to places where the incidence of poverty is highest, including Ngabwe. Therefore, we will be much more focused in areas where poverty is at its highest.

 

Mr Speaker, I thank you.

 

Mr Mwila (Chimwemwe): Mr Speaker, in his statement, the hon. Minister stated that he had discussions with the International Monitory Fund (IMF) on the Extended Credit Facility, which he said may culminate in Zambia accessing funds or loan facilities from the IMF. I would like to find out from him the key issues that were contained in the talks and whether that included the sale of the only the key parastatal companies that we have in Zambia, including the Zambia Electricity Supply Corporation Limited (ZESCO).

 

Mr Mutati: Mr Speaker, our engagement with the IMF has been purely based on the 2017 Budget pronouncements made. For example, under the agriculture reforms, the Government committed to supporting a million farmers, limiting the amount of produce bought by the Food Reserves Agency (FRA) to 500,000 tonnes, removing subsidies in the energy sector, scaling up social protection and also to contain our debt. Therefore, that is the basis of our engagement with the IMF, including the target that we formulated for the deficit. Otherwise, there is nothing external that has been brought into our Budget other than the issues that we presented to this Parliament, which were approved.

 

I thank you, Mr Speaker.

 

Mr Ngulube: Hear, hear!

 

Mr E. Mulenga (Ndola Central): Mr Speaker, I would like to thank the hon. Minister for the good statement and for also informing the nation on the economic status of this country.

 

Sir, in his statement, the hon. Minister indicated that the growth of the economy in 2017 will be driven by agriculture. However, I am worried that farmers are stuck with their produce for the 2016/17 Farming Season because the prices have gone down such that the farmers cannot meet their overheard expenses. What mechanism is the Government putting in place to ensure that there is good market efficiency?

 

Hon. Government Members: Hear, hear!

 

Mr Mutati: Mr Speaker, tomorrow, the hon. Minister of Agriculture and I will issue a comprehensive statement to the press regarding some of the issues that are difficult and challenging in the agriculture space. However, let me just mention one of them.

 

Sir, one of the ways that we will address the challenges concerning the bumper harvest is to put into operation the warehouse receipts, which this Parliament approved. This way, farmers can supply their maize to designated warehouses and get some money now and sell their maize at a better price in future. So, tomorrow, we will elaborate on those issues, including the policy on export and the tax policy, which relates to agriculture.

 

Mr Speaker, I thank you.

 

Mr A. C. Mumba (Kantanshi): Mr Speaker, let me start by saluting His Excellency the President and Her Honour the Vice-President for ensuring that we have in place a Government that is not only stable, but has also been able to inspire a lot of confidence in our economy. Let me also thank the hon. Minister of Finance for really being up to the scratch in terms of his job, which is actually quite difficult at the moment.

 

Sir, I will not talk about the two components that I always belabour, that is, interest on the International Patent Classification. (IPCIS) and stand-alone time, I think the hon. Minister of Finance and I have discussed that at length. Therefore, I will draw his attention to an area which is not being carefully captured by the Government in terms of the common man that the hon. Minister referred to.

 

Mr Speaker, we are now having all these contract finances which have gone deeply into infrastructure development. We also have the challenge of creating the 100,000 jobs, which the hon. Minister talked about in the 2017 Budget Address.

 

Sir, despite the Government providing all this, my concern is the K750 minimum wage the common man is getting on contracts that are worth millions of dollars, which I am sure we have to pay for in future. This means that the people who are working on those contracts need to start contributing to the tax base now. What strategy does the ministry have in place to ensure that these salaries are improved to an extent that, maybe, the Government can even charge Pay As You Earn so that the common man out there who is now benefiting from these initiatives can also immediately start contributing to the tax base?

 

Hon. Government Members: Hear, hear!

 

Mr Mutati: Mr Speaker, indeed, the Government has been deploying a number of contracts such as road constructions and other asset formations. Employment opportunities that are being offered to our people and more so, like the hon. Member has stated, the rate of remuneration quite significantly concern the Government.

 

Sir, the hon. Minister of Labour and Social Security is seized with this particular matter. We, therefore, need to put in a condition, particularly for Government contracts, that a level of pay must, at least, be elevated. This matter is before the hon. Minister of Labour and Social security.

 

I thank you, Sir.

 

Mr Kafwaya (Lunte): Mr Speaker, the hon. Minister has given very important information. I take note that we have a lot of international debt, domestic debt and arrears in payments to suppliers and contractors. When the Government pays the people to whom it owes these arrears, the money will remain in this country and will help in the stimulation of the economy.

 

Sir, at the start of this year, the stock of arrears stood at K17.4 billion. By mid this year, these arrears were dismantled by K4.3 billion, which is just 24 per cent. About 76 per cent of these arrears remain to be dismantled and the hon. Minister has indicated that the Government has a time-specific strategy to deal with this issue. What exactly is that time line that the Government has set for itself to dismantle the 76 per cent balance of the stock of arrears?

 

Mr Mutati: Mr Speaker, sometimes, as you create solutions, you also create new problems. When we started dismantling the arrears, particularly in the road sector, most of the contractors went back on site and to carry out more work and issued us with new invoices. So, the increase in the amount to K17.3 billion by end of March, 2017, is partly because of the new works that have been done. We have programmed between now and the end of the year to pay an additional K8 billion, which will bring the total payments to K12.3 billion. The balance will be attended to next year.

 

I thank you, Mr Speaker.

 

Mr Ngulube: Hear, hear!

 

Mr Chiteme (Nkana): Mr Speaker, my question is with regard to the local debt in the road sector, with particular interest to the contractors. There are a number of unpaid road contractors and this has resulted in a lot of interest and penalty costs, not to mention individual contractors charging the Government up to US$500,000 in standing time per month. What are the interventions that the ministry will put in place to handle this problem?

 

Mr Mutati: Mr Speaker, that remains one of the biggest issues regarding our domestic debt. However, working with the hon. Minister of Housing and Infrastructure Development, one of the measures that we have put in place with regard to standing time, interest and penalties is to request the contractors to write-off the interest and penalties so that the dismantling of their arrears can be accelerated. I can tell you that a number of them have agreed to that proposition.

 

I thank you, Sir.

 

Mr Ngulube (Kabwe Central): Mr Speaker, we have heard what the Government is doing to better the economy. My question, however, is: Does the Government have plans to actually intensify local revenue collection by, for example, increasing the number of tollgates to ensure that the revenue generated from those additional tollgates actually saves us from the wrath of the International Monetary Fund (IMF)?

 

Mr Mutati: Mr Speaker, I thank the hon. Member for that suggestion and I think we shall continue to receive a number of good ideas from the House. The target for additional tollgates for the rest of the year is forty. We are hoping that when all these things are put in place, we shall improve the collection of domestic revenue.

 

Further, we announced an amnesty on penalties and interest on what is owed on account of taxes. As of last week, we had applications from a number of taxpayers. We have 180,000 applications from businesses that want to take advantage of the amnesty. We will continue to receive the applications up to the end of July, 2017, and receive payments up to the end of December, 2018.

 

In a number of situations, particularly from the suppliers, the write-off is quite significant. So, we would want to encourage most of the businesses to take advantage of the amnesty. One of the challenges that we have had is that the level of compliance is still below 55 per cent. So, by introducing mechanisms such as amnesty, we are thinking that the compliance rate will improve.

 

Mr Speaker, the Zambia Revenue Authority (ZRA) has continued to tighten the inspection, surprise checks and using electronic monitoring devices for goods that are coming from outside Zambia to, again, improve on the issue of compliance. So, a number of efforts are being made to, first of all, improve compliance, but much more to collect a lot more revenue so that the deficit of 10 per cent that we have against the Budget could be reduced if not eliminated by December, 2017.

 

I thank you, Sir.

 

Mr Zimba (Chasefu): Mr Speaker, the statement which was made on the removal of subsidies on electricity was that the benefits were not trickling down to the common man and it was the well-to-do man who was actually benefiting from them. Now, in answering a question from one of the hon. Members of Parliament here, the hon. Minister said that for benefits to trickle down to the common man, there was a plan to still subsidise electricity.

 

Therefore, I want to understand how the removal of those subsidies has been done. Which subsidies are we removing on electricity? If the removal of electricity subsidies is done partially, will it not seem that we are backtracking because it was supposed to be done completely? Since the hon. Minister has mentioned giving subsidies to the common man, I want clarification. Why do we have those subsidies, again, on electricity?

 

Mr Mutati: Mr Speaker, let me clarify properly. Last year, we paid almost US$600 million on account of subsidies in the energy sector. That is very significant and by doing that, we displaced some amounts which should have gone to infrastructure such as roads, hospitals, schools and, indeed, other sectors because this amount was merely on consumption.

 

Sir, in removing the subsidies, we have what is called a lifeline tariff. This means that the first units up to 200 MW will support the lifeline for basic lighting in the house, but beyond that, the 75 per cent increase kicks in.

 

I thank you, Sir.

 

Dr Malama (Kanchibiya): Mr Speaker, our economy has been resilient as compared to the economies of some of our neighbours. However, there are certain areas of great concern and Foreign Direct Investment (FDI) is one of them. The way we have negotiated the bilateral investment treaties is of concern. We are haemorrhaging money which can provide backbone infrastructure for our people, particularly those in rural areas. We have 54.4 per cent of our people living under the poverty datum line and 76.6 per cent of people in the rural areas are living under the poverty datum line. Is the Government planning to re-negotiate the bilateral investment treaties?

 

Mr Mutati: Mr Speaker, the most significant trade arrangements we have are with the Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA). If you took the trade balance of Zambia in COMESA, you would find that it actually exports more to COMESA countries than it imports. Therefore, we, as a country, are benefiting a lot more under the trade arrangement in COMESA. In SADC, except for South Africa, we are exporting more than we are importing. So, the biggest challenge we need to tackle in terms of the trade balance is South Africa and that is what we need to focus on. How can it be tackled within the framework of SADC? I am sure my colleague, the hon. Minister of Commerce, Trade and Industry, has seized this issue.

 

I thank you, Sir.

 

Mr Mung’andu (Chama South): Mr Speaker, it is clear from the hon. Minister’s statement that we have a very stable Monetary Policy, but have a problem when it comes to the Fiscal Policy. My question concerns the dismantling of arrears owed to contractors. How much money has been spent to pay arrears owed to companies owned by Zambians? I ask this question because it seems we have a problem with volatility of money in the economy. People are complaining that the kwacha has little liquidity. How much debt is owed to Zambian Companies? When this money is paid to them, it will remain in the country.

 

Mr Mutati: Mr Speaker, obviously, that is a very intense question requiring proper numbers, which I do not have at the moment. However, I shall care to provide the information later.

 

I thank you, Sir.

 

Mr Simbao (Senga Hill): Mr Speaker, it was said that the Government would set up a sinking fund as a safeguard for dismantling foreign debt in future. Has that sinking fund been set up? If so, how much money do we have in it and in which bank is it seated?

 

Mr Mutati: Mr Speaker, we have had challenges in setting up the sinking fund. Up to the end of last year, as I indicated, we were running a significant fiscal deficit and we continue to do so. Under those circumstances, it will not be prudent for us to set up and operationalise the sinking fund because whatever we will gain from it will be less than the cost of carrying the deficit we have. So, the answer clearly is that the sinking fund has not been made operational.

 

I thank you, Sir.

 

Mrs Fundanga (Chilubi): Mr Speaker, first of all, I would like to congratulate you on the decision you made over what happened ...

 

Hon. Government Members: Hear, hear!

 

Mr Speaker: Hon. Member, just engage the hon. Minister of Finance. I make decisions every day.

 

Mrs Fundanga: But this particular one is very special because it involves me as well.

 

Mr Speaker: Ask the hon. Minister of Finance your question. 

 

Mr Ngulube: Old governess! Ema governess!

 

Mrs Fundanga: Mr Speaker, first and foremost, we should not ignore the fact that there is a cry in the nation that there is no liquidity. People are saying that they do not have cash in hand. Secondly, I want to declare interest, but before that, I would like to say that there is no country on earth that has developed using the International Monetary Fund (IMF). If the hon. Minister can show me just one country which the IMF helped to excel, then, I will agree with him. Will we still go the IMF way or can we use alternative ways? We reached the Heavily Indebted Poor Countries (HIPC) debt initiative completion point without the IMF. We had a lot of billions in our reserves. Therefore, for me, going back to the IMF reminds me of the United National Independence Party (UNIP) era. Are there alternative solutions we can go for instead of using the IMF? I was in Turkey presenting a paper ...

 

Mr Speaker: Hon. Member, just put a question.

 

Mrs Fundanga: Mr Speaker, the question is: Is there another alternative to our problem? The IMF is known to be the International Monsters Fund.

 

Laughter

 

Mrs Fundanga: Is there an alternative we can go for apart from the IMF?

 

Mr Mutati: Mr Speaker, I do not want to talk about other countries. However, I will only refer to President Kagame, who left for Rwanda yesterday, and say that his country is on the International Monetary Fund (IMF) programme. As a result, the rate of economic development has been positive. Similarly, Uganda, Kenya and many other countries are on the programme.

 

Sir, the hon. Member may recall that between 2008 and 2011, Zambia was on the same programme. As a result, we had increased international reserves, to which the hon. Member has referred. They rose up. We also had positive gross domestic product (GDP) and lower inflations.

 

Regarding the question on whether there is an alternative, I would say that yes, there is always an alternative. So, the IMF is saying we can be on its programme plus whatever other alternatives, but it is not restricting us from borrowing from anybody else. Moreover, we are members of the fund. Therefore, we are free to access the privilege that we have as members of the club. So, it is IMF-plus.

 

Therefore, some of the hon. Member’s connections that she has referred to, …

 

Laughter

 

Mr Mutati: … can be brought in the basket in order to increase the pool of access.

 

I thank you, Mr Speaker.

 

Mr Chali (Nchanga): Mr Speaker, the IMF conditions have always been harsh mostly towards the poor. The hon. Minister stated that he just concluded the current negotiations for the bailout. I would like to find out whether there are any conditions that he can point at as being in favour of the pro-poor.

 

Hon. Members: Hear, hear!

 

Mr Mutati: Mr Speaker, from the outset, let me take this opportunity to emphasise the point that there is no such thing as IMF conditions. For example, firstly, we will dismantle the arrears that we owe our suppliers. Is that an IMF condition? We should be doing that is it not so?

 

Mr Speaker, secondly, we cannot afford the subsidy in power. Instead, we can use the money for infrastructure formation. Is that a condition? We should be doing that in a normal way.

 

Thirdly, Sir, we have decided that we must move away from the Fertiliser Input Support Programme (FISP) because of its inefficiency and wastage so that we can better target the poor. Would you say that is an IMF condition? These are things we must do as a matter of fact.

 

Fourthly, Sir, we are saying that we cannot borrow beyond our ability to pay. That is an IMF condition. So, the issues that we are engaging with the IMF are the things that we pronounced in the 2017 Budget and nothing else. However, the only role the IMF is playing is to monitor the things that we agreed upon ourselves. So, the engagement with the IMF is on the basis of a home grown programme and nothing external.

 

I thank you, Sir.

 

Mr Kakubo (Kapiri Mposhi): Mr Speaker, in his statement, the hon. Minister of Finance did touch on a number of statistics. In modern economies, one of the key statistics on which we ought to interact is the issue of jobs, yet I did not hear him state any statistics on how many jobs he is creating as an economy, month by month, quarter by quarter or annually.

 

Sir, he also talked about the issue of inflation, which has remained single digit. Previously, it was too high, but it has dropped. However, my concern is that if we hang on to statistics such as inflation without really focusing on the cost of food, it is very difficult for the Zambian people to appreciate it.

 

The hon. Minister also mentioned that the price of food has gone down. I would like to ask him what food has really gone down. The basic food basket has gone up. The price of mealie meal in certain towns in this country is still at K100, …

 

Hon. Government Members: No!

 

Mr Kakubo: … and the price of Kapenta, according to the Jesuit Center for Theological Reflection (JCTR), has also gone up. I would like the Minister of Finance to clarify what food he is really referring to that has gone down in this country. The prices still remain high. Also, when he speaks of the issues of the exchange rate, being an import country, having a stable currency is not enough. We really need it to go down because if it remains at K9.00 …

 

Mr Speaker: Order!

 

Hon. Member, could you ask your question. Do not debate.

 

Mr Ngulube: Ema ministerial statement!

 

Mr Kakubo: Mr Speaker, my question to the Minister of Finance is that: Which food prices have gone down, according to the statistics that he has, please, may he share with us.

 

Laughter

 

Mr Mutati: Mr Speaker, I will just pick up one of the statements that the hon. Member has made that it is, indeed, correct to say that we are an import oriented country. So, sometimes when we have a stable exchange rate, that helps with the cost of things in the country because you are translating into kwacha not so? Secondly, when we have a stable exchange rate, it also motivates investments from outsiders, particularly in government securities because, then, you will have a predictable platform which they can plan on. Thirdly, when there is stability, it also helps you in minimising the component of debt service that is foreign-oriented. So, this is in response to one of the statements that he made.

 

Sir, in terms of decomposing the items that influence inflation, I am sure the hon. Member received a monthly bulletin from the Central Statistical Office (CSO). If he has not received that, I will bring him a copy for the month of May for him to study.

 

I thank you, Sir.

 

Mr M. K. Tembo (Sinda): Mr Speaker, my question has been overtaken by events.

 

Hon. Members: Hear, hear!

 

Mr Ngulube: Chacoka lelo cizungu!

 

Laughter

 

Mr Daka (Msanzala): Mr Speaker, I would like to thank the hon. Minister for a well-articulated statement. Could the hon. Minister confirm to me that the exchange rate is correlated to a bag of mealie meal in Zambia. At one time, our exchange rate was K5 and the minimum price of breakfast mealie meal was K45. Considering what he has said that agriculture is pivotal to our economy, and now that the maize has a glide in the prices, what is the Government doing in ensuring that the small-scale farmer who produces at the lineage of the exchange where a bag of mealie meal is at K100 and the exchange rate is K9.5, that money trickles down to the pocket of a peasant farmer or a small scale-farmer in Petauke or Msanzala or Ukwimi?

 

Mr Mutati: Mr Speaker, I think I need to be tutored by Hon. Daka in relation to the correlation between the exchange the rate and the price of mealie meal so that I can be able to provide a substantive answer. So, I will take my lessons from him in that regard.

 

Laughter

 

Mr Mutati: However, allow me to end on this note. Even as we engage with the IMF, the conditions of the deal are those that we will set for ourselves. If the conditions are difficult, it will be because we set them that way. We own the programme and are responsible for its conditions.

 

I thank you, Sir.

 

Hon. Government Members: Hear, hear!

 

POLLUTION OF WATER SOURCES IN ZAMBIA AS A RESULT OF MINING ACTIVITIES

 

The Minister of Water Development, Sanitation and Environmental Protection (Mr Kaziya): Mr Speaker, thank you for giving me this opportunity to deliver a ministerial statement on pollution of water sources in Zambia as a result of mining activities.

 

Sir, I would like to remind this House that Parliament enacted the Environmental Management Act No. 12 of 2011 in order to repeal and replace the Environmental Protection and Pollution Control Act of 1990. This was also done to continue the existence of the Environmental Council and rename it as Zambia Environmental Management Agency (ZEMA). The Environmental Management Act, inter alia, gives the mandate to ZEMA to undertake the prevention and control of pollution and environmental degradation in Zambia.

 

Mr Speaker, furthermore, in order to ensure that the agency undertakes necessary interventions of ensuring sustainable management of natural resources and environmental protection as well as prevention and control of pollution, the Act confers functions in the agency that include, but are not limited to the following:

 

  1. develop and enforce measures aimed at preventing and controlling pollution;

 

  1. develop standards and guidelines on the protection of air, water, land and other natural resources as well as the prevention and control of pollution, the discharge of waste and the control of toxic substances;

 

  1. collaborate with appropriate authorities and other bodies and institutions to control pollution and protect the environment; and

 

  1. carry out activities relating to environmental management and prevention as well as control of pollution.

 

Sir, a number of environmental problems, including air pollution, water pollution and land degradation, amongst others, were identified as key problems during the National Conservation Strategy and the National Environment Action Plan in 1985 and 1992, respectively. Air and water pollution were attributed mainly, but not limited, to mining activities.

 

Mr Speaker, water pollution continues to be an environmental problem and the mining sector has continued to be a major source of pollution. Section 48(J) of the Environmental Management Act, which requires the agency to do all such things as necessary to ensure monitoring and control of water pollution. Consequently, in exercise of this mandate under ZEMA, in conjunction with the Water Resource Management Authority (WARMA) and other key stakeholders, ZEMA has, over the years, undertaken studies in selected parts of the country on industrial activities to access associated impacts on the environment.

 

Sir, these studies were conducted and concentrated on the Copperbelt, Central and Lusaka provinces and along the Kafue River Basin. Regrettably, the results from the studies have shown that there has been pollution and environmental change in some parts of the country’s water resources which are highly linked to industrialisation.

 

Mr Speaker, for instance, the study carried out in 2005, under a project sponsored by the World Bank, revealed that the Kafue River Basin was constantly under stress from industrial activities, especially mining and mining related activities. Furthermore, the study showed that water quality varied throughout the stretch of the river in that the Upper Kafue on the Copperbelt was particularly affected by mining activities with both metal pollutants such as copper and cobalt, amongst others, being recorded. In addition, the study also showed the problem of acidity along the same stretch of the river. On the other hand, there have been recent reports of pollution of the Kafue River and its tributaries from mining related activities. ZEMA has since instituted investigations and increased the frequency of its monitoring of the industries in the mining catchment area.

 

Sir, other results from the study showed that the middle course of the Kafue River was affected by pollutants from manufacturing industries such as food processing and detergent manufacturing. Others pollutants were from activities such as agricultural activities along the lower basin whose main source is from agrochemicals such as fertilisers, especially coming from Mazabuka District.

 

Mr Speaker, studies carried out in Lusaka in 2010 on the Chongwe/Ngwerere River system showed water pollution from agrochemicals and industrial effluent, amongst others. In addition, new studies have also revealed that water bodies in the North-Western Province are also beginning to show signs of elevated mining-related pollutants due to increased mining activities in the region.

 

Sir, through the Compliance Monitoring Programme and the Review of Environmental Returns, ZEMA has identified seven key facilities whose emissions exceeded national standards. These national standards are prescribed in the Environmental Licensing Regulation Statutory Instrument No. 112 of 2013, which prescribes limits for various parameters such as copper, cobalt, lead, cadmium and similar metals. The said returns covered emissions from both air and water for the period from October to December, 2016.

 

Mr Speaker, investigations by ZEMA on the Copperbelt have revealed that some of the most affected water bodies by the high levels of pollution include Mwambashi, Muntipa, Mushishimba and Chingola streams as well as the Kafue River. The major pollutants to the water bodies were copper, cobalt, iron, manganese and total suspended solids (TSS). I note, with concern, that these pollutants have adversely affected the said water bodies, resulting in siltation of stream beds. This has caused changes in water chemistry and impacted aquatic life, which is adversely affecting other water users. Due to the serious consequences to the health of the people living along or around water bodies, the ministry has since brought this to the attention of the mining companies and stringent measures have since been taken against them.

Mr Speaker, at this juncture, allow me to highlight some of the measures that the ministry, through ZEMA, is undertaking to ensure that there is enhancement of water pollution monitoring programmes with special emphasis on mining activities and other related industries.

 

Sir, in the short-term, ZEMA has continued to institute investigations and has also increased the frequency of monitoring of industries to ensure control and compliance to national standards for emissions. These investigations are not only done on water, but also on air. Arising from this measure, ZEMA, working with other Government agencies, was able to identify seven mining companies on the Copperbelt whose emissions were above prescribed pollution control limits, which were contrary to the provisions of Statutory Instrument (SI) No. 112 of 2013.

 

Mr Speaker, in light of these findings, the seven companies have since been issued with compliance orders to immediately institute measures to comply with national emission standards. In addition, one mining company has been served with an Environmental Restoration Order to remedy the pollution it has caused on Mwambashi, Mushishima and Muntipa streams. Furthermore, the said mining company has been served with key conditions that included the following:

  1. restoring the flow channels of the three streams, namely Chingola, Mushishima and Muntipa by de-silting their beds immediately;

 

  1. development and implementation of programmes for continuous de-silting of the three streams, namely Chingola, Mushishima, Muntipa and the pollution control dam (PCD) to pause water pollution immediately;

 

  1. conducting an Environmental Impact Assessment (EIA) for the restoration of Chingola and Mushishima streams and the Hippo Pool.

Mr Speaker, in this regard, I wish to take this opportunity to assure the people affected by the pollution of the water bodies that ZEMA will utilise relevant provisions of the Environmental Management Act to ensure that all the seven companies comply with the conditions of the compliance and environmental restoration orders which they have been served with. Non-compliance of companies shall attract stringent measures, including complete shutdown of companies and litigation.

Mr Speaker, allow me to stress that the enactment of the Environment Management Act, No. 12 of 2011 has broadened the mandate of the agency and consequently, require enhanced capacity for ZEMA. The Government is, therefore, making strides in the continuous capacity building of staff for ZEMA, especially with regard to emerging environmental issues such as electronic (e)-waste, climate change, strategic environmental assessment and infrastructure development.

 

Sir, on the other hand, the agency is making strides in ensuring that it extends its geographical presence to all the ten provinces of Zambia. To this end, the Government, through ZEMA, plans to open three offices in Solwezi, Nakonde and Chipata, in 2017, to ensure close monitoring of the regulated industries such as mines. In addition, ZEMA plans to expand its workforce from the current ninety-one to 241 in the next five years to ensure that the agency is responsive to the needs of the country and, thus, having a ripple effect in the regulation of industries, resulting in increased environmental compliance.

 

Mr Speaker, I further wish to take this opportunity to inform the people of Zambia that ZEMA is currently developing a strategic plan that will encompass enhancement of the current enforcement mechanism for environmental protection.

 

Sir, I would like to mention that the current legal framework provides for issuance of compliance orders to ensure that industries comply with the provisions of the law. It is in this regard that ZEMA relies upon this mechanism coupled with capacity building programmes to ensure that enforcement is a priority. Further, I wish to take this opportunity to sound a timely warning that in addition to the measures I have highlighted above, ZEMA will undertake to institute criminal proceedings against perpetrators of water pollution and, indeed, other pollution related offences.

 

Mr Speaker, I wish to make an earnest appeal to hon. Members of Parliament and the people of Zambia to support the efforts that ZEMA and, indeed, the Government of the Republic of Zambia are making to ensure that our environment is managed in a sustainable manner.

 

Sir, in conclusion, I would like to assure the people of Zambia that the Government, through the able leadership of His Excellency the President of the Republic of Zambia, Mr Edgar Lungu, …

 

Mr Ngulube: Hear, hear!

 

Mr Kaziya: Mr Speaker, I seem to have mixed up the pages.

 

Interruptions

 

Mr Ngulube: Ema mix up aya!

 

Laughter

 

Mr Kaziya: Mr Speaker, I seem to have misplaced the last page.

 

Laughter

 

Mr Kaziya: Mr Speaker, sorry for that mix up.

 

Sir, in conclusion, I would like to assure the people of Zambia that the Government, through the able leadership of His Excellency the President of the Republic of Zambia, Mr Edgar Chagwa Lungu, remains focused in providing adequate support towards sustainable management of the environment in Zambia for our future generations.

 

I thank you, Sir.

 

Hon. Government Members: Hear, hear!

 

Mr Speaker: Hon. Members are now free to ask questions on points of clarification on the statement given by the hon. Minister.

 

Mr Ngulube (Kabwe Central): Mr Speaker, I am aware that the Zambia Environmental Management Agency (ZEMA) is doing a very good job in terms of protecting our environment and controlling pollution in this country. I am also aware that in my constituency, there are two or three Chinese companies that ZEMA has failed to control. We have raised these arguments, but it appears that these controls by ZEMA are just meant for the local people. It is not shocking to see changing colours in the air during the night due to pollutants. Why is it that ZEMA takes more than a year to visit a place where people have raised complaints with regards to pollution?

 

Mr Kaziya: Mr Speaker, ZEMA has not failed to regulate activities in Kabwe. For the hon. Member’s information, ZEMA has been on the ground trying to review what has been happening in Kabwe. If concerns have been raised that some Chinese owned companies have continued to pollute the environment, the hon. Member of Parliament is free to engage me so that we can look at these problems afresh.

 

Mr Speaker, I thank you

 

Hon. PF Members: Hear, hear!

 

Mr Mecha (Chifunabuli): Mr Speaker, ...

 

Mr Ngulube: Ema neighbour aya!

 

Laughter

 

Mr Mecha: Mr Speaker, I am aware that the Government of the Republic of Zambia is in a hurry to create a lot of jobs, especially for the youth, by industrialising. By implication, we anticipate a lot of pollution. Does the hon. Minister think that the rate at which ZEMA activities are being rolled out is consistent with the anticipated increase in the levels of pollution?

 

Mr Kaziya: Mr Speaker, this country is in a hurry to develop, just as the hon. Member has mentioned, and I am sure that ZEMA is up to the task to ensure that EIAs are done. ZEMA does not issue certificates for projects with the view to only creating jobs. A detailed report is made in order to satisfy the warranting of industries to take root.

 

Mr Ngulube interjected.

 

Mr Kaziya: Mr Speaker, I thank you.

 

Mr C. M. Zulu: Mr Speaker, ...

 

Mr Speaker: Order!

 

Hon. Member for Luangeni, just pause. Hon. Member for Kabwe Central, I do not know whether you cannot see that you are the only one running commentaries in the whole House.

 

Laughter

 

Mr Speaker: Your honour is supposed to be derived from the fact that you are an hon. Member of Parliament as well as counsel.

 

Hon. Members: Hear, hear!

 

Mr Speaker: Counsels are not known to conduct themselves in that manner.

 

Laughter

 

Hon. PF Member: Senior counsel.

 

Mr Mecha: State counsel.

 

Hon. Member: It is true. It is embarrassing.

 

Mr Speaker: Hon. Member for Luangeni, you may continue.

 

Mr C. M. Zulu: It is clear from the hon. Minister’s statement that ZEMA has presence only in three districts and is inadequately staffed. It is good that there are intentions to open up offices in other districts. Are there plans also to engage voluntary inspectors to help reduce the workload?

 

Mr Kaziya: Mr Speaker, we have not considered that option yet, but if we find it viable, we shall do so.

Mr Speaker, I thank you.

 

Mr Mulenga: Mr Speaker, in North-Western Province, there are Chinese who mine gold illegally and their method of extraction involves the use of silver mercury. When they separate silver mercury and gold, they discharge a toxic substance into water bodies. We all know that once a person consumes silver mercury, they face the risk of giving birth to disabled babies. Now, ZEMA has visited these illegal miners, but has not taken any action. So, what is the ministry doing to ensure that these evil acts are brought to an end?

 

Hon. PF Members: Hear, hear! Ema questions aya!

 

Mr Kaziya: Mr Speaker, ZEMA is up to the task to ensure protection of the environment. We have noticed, with concern, that there is some minimal amount of pollution from discharge in most streams. We shall revisit the North-Western Province to ensure that the Chinese or whoever is polluting water bodies comply with regulations. We will give them compliance orders.

 

Mr Speaker, I thank you.

 

Mr Kabamba (Kafulafuta): Mr Speaker, lately, Kafulafuta has received a lot of investment in the mining sector. However, within this short period of time, there have been a lot of complaints that sources of water are being polluted. Did ZEMA carry out an Environmental Impact Assessment (EIA) before it allowed these investors to start their activities?

 

Mr Kaziya: Mr Speaker, ZEMA always carries out an EIA before it issues operating licences. We need to inspect some of these activities and ensure that they comply with the legal requirements. We shall revisit the Kafulafuta region.

 

Mr Speaker, I thank you.

 

Mr Chiyalika: Mr Speaker, I think that this issue of pollution is becoming monotonous. There seems to be complaints year in and year out about pollution caused by mining companies. In Ngabwe, we are at the receiving end. Mind you, Ngabwe is designated to be the next capital city of Zambia.

 

Hon. Members: Hear, hear!

 

Mr Chiyalika: What is the ministry doing to ensure that pollution is brought to an end?

 

Mr Kaziya: Mr Speaker, I am not aware that we are moving our capital city to Ngabwe.

 

Laughter

 

Mr Kaziya: However, we are concerned that the pollution levels from mining houses are raising concern. However, the Government has followed up on this issue. I mentioned, in my statement, that we have identified seven mining houses that are constantly polluting water bodies and have served them with compliance and restoration orders.

 

Mr Speaker, I thank you.

 

Mr Bwalya (Lupososhi): Mr Speaker, the pollution of the Mushishima River in Chingola has caused a lot of havoc amongst the people living around that area. It has become apparent that nothing is being done about the situation. There seems to be passing of the ball amongst ZEMA, the Water Resources Management Agency (WARMA) and the National Water and Sanitation Company (NWASCO). These institutions do not seem to know who should attend to the problem of water pollution. What is being done to enhance the co-ordination amongst these agencies which fall under your ministry?

 

Mr Kaziya: Mr Speaker, ZEMA is charged with the protection of the environment. WARMA reports levels of pollution in the waters. Once it discovers that waters are polluted, it collaborates with ZEMA to handle such cases. If pollutants are found, the process of prosecution is started. These three organs co-ordinate to ensure that they come up with an informed decision.

 

Mr Speaker, I thank you.

 

Mr Mung’andu: Mr Speaker, I would like the hon. Minister to comment on the action that Zambia Environmental Management Agency (ZEMA) took on the upper Lunsenfwa Hydro Dam Project where, you are aware that the food basket of this country is in Mkushi. Mkushi produces about 60 to 80 per cent of what this country boasts as bumper harvest. Taking into account that the farmers in Mkushi came together because of the persistent drought, they thought of coming up with a dam which can be used to irrigate their crops. The country is also moving towards agriculture. Farmers did everything, Environmental Impact Assessments (EIAs) were done and submitted to ZEMA, but I am told that ZEMA rejected the project. I know that the Head of State intervened. How quick do you think ZEMA will be able to review that application so that Mkushi farmers continue contributing to the country’s gross domestic product (GDP)? The hon. Minister of Finance has said that good crop outlook has contributed to the stability of our economy.

 

Mr Kaziya: Mr Speaker, ZEMA is seriously looking into this case. I am aware that this issue was brought before the Head of State, but there are issues that we are still addressing because the said consortium has made an appeal, through my office, so that their application may be considered. There are a few things that we are still looking at which the residents around the said project area have raised. One of the concerns is the graves that will be submerged in the dam. There were suggestions that the residents be moved to the head waters, which is not supposed to be the case. We are carefully reviewing this case and will make our presentations very soon.

 

I thank you, Mr Speaker.

 

Ms E. Phiri (Kanyama): Mr Speaker, as the hon. Minister may be aware, Kanyama is an industrial city which houses a lot of businesses like abattoirs and big markets, but has poor sanitation. What plans does the hon. Minister have for Kanyama?

 

Mr Kaziya: Mr Speaker, I have difficulties in answering that question because my statement is based on water pollution by mining houses. I need to be guided on how sanitation comes in. I will attempt to answer her question. She has talked about environmental pollution by abattoirs in Kanyama. I think we have inspectors that can revisit those areas, make a report and ensure that the area is no longer under threat of pollution.

 

I thank you, Mr Speaker.

 

Mr Jamba (Mwembezhi): Mr Speaker, before, I ask my question, I have noted with concern that when answering, the hon. Minister is always saying that he will revisit, go back and check. For me, those words are very serious. Has the hon. Minister worked together with the Ministry of Mines and Minerals Development to check that these Environmental Impact Assessments (EIAs) with the mines are updated? I have noted that some of the EIA reports are cut and paste. Something which is user-friendly in Chama South, they want to bring it to Nampundwe Mine. Has the hon. Minister checked with the Ministry of Mines and Minerals Development?

 

Mr Kaziya: Mr Speaker, I am not aware of the cut-and-paste issue the hon. Member referred to. I will attempt to answer on issues concerning working hand in hand with the Ministry of Mines and Minerals Development. Yes, we collaborate in a lot of areas with the ministry. We consult each other on many issues and where we feel that we have common grounds to strike, we come up with a decision to move forward and ensure that the environment is protected.

 

I thank you, Sir.

 

Mr Chali: Mr Speaker, on pollution cases that have been taken to court, the penalties have been very unfair against the effect pollution has on humans beings. Are there any plans of reviewing the penalties, if so, when does the hon. Minister intend to do that?

 

Mr Kaziya: Mr Speaker, yes, we have plans to review some of these penalties because they are not benefitting our people. Justice should not only be served, but be seen to be served. I think we will take the hon. Member’s concern into consideration.

 

I thank you, Mr Speaker.

 

Mr G. Zimba (Chasefu): Mr Speaker, since most of these natural water reservoirs are being contaminated, when is the ministry rolling out boreholes that are earmarked for rural constituencies since we do not have even this contaminated water to talk about?

 

Mr Kaziya: Mr Speaker, I think that is a new element being asked outside the pollution statement that I have issued. I think I will address the issue of boreholes at a later stage.

 

I thank you, Mr Speaker.

 

Mr Speaker: Hon. Minister, are you suggesting that boreholes and pollution are divorced?

 

Mr Kaziya: Mr Speaker, thank you for that guidance. Where we feel that water is contaminated, we will endeavour to provide boreholes in those areas.

 

I thank you, Mr Speaker.

 

Mr Kabanda (Serenje): Mr Speaker, I wanted to find out whether the fines that are slapped on these polluters or tort fiscus, as I can put it, are deterrent or not. You will find that a person is fined today, but continue pursuing the same pollution activities the following day. What is the ministry doing about it?

 

Mr Kaziya: Mr Speaker, I think that we have adequate laws to address the frequency of perpetuating these crimes. I think once you are an offender and the courts find you perpetuating these pollutions, there is a stiffer penalty to that.

 

I thank you, Mr Speaker.

 

Mr Kalobo (Wusakile): Mr Speaker, when Mopani Copper Mines wanted to undertake a project called sycronium, it conducted an Environmental Impact Assessment (EIA) and after that, went ahead to submit an Environmental Impact Statement (EIS), which the Zambia Environmental Management Agency (ZEMA) approved. In the statement made by the hon. Minister, he indicated that his ministry monitors the mines from time to time. I want to find out what the Government is doing to address issues of houses that are cracking in Chamboli and Wusakile due to blasting on this project by Mopani Copper Mines.

 

Mr Kaziya: Mr Speaker, we are fully aware about the conditions of houses in Wusakile. I think there should be a solution to this situation. I will request my technocrats to actually see the best way we can help the situation because there is an environmental fund that we need to put in place to mitigate such problems in Wusakile.

 

I thank you, Sir.

 

Mr W. Banda (Milanzi): Mr Speaker, I would like to find out from the hon. Minister the procedure for getting water rights and, of course, the fees?

 

Mr Kaziya: Mr Speaker, I think the hon. Member can engage me on that question because I feel it does not touch on the water pollutions that I have mentioned in my statement.

 

I thank you, Mr Speaker.

 

Hon. Government Members: Hear, hear!

 

___________

 

QUESTIONS FOR ORAL ANSWER

 

RESUMPTION OF CLASSROOM BLOCK CONSTRUCTION AT PRIMARY SCHOOLS IN CHITAMBO

 

270. Mr Mutale (Chitambo) asked the Minister of Housing and Infrastructure Development:

 

  1. when the construction of 1 X 2 classroom blocks at the following primary schools in Chitambo Parliamentary Constituency, which were abandoned in 2009, would resume:

 

  1. Kobola; and

 

  1. Chipundu.

 

  1. what the cause of the delay in completing the projects was; and

 

  1. what the total cost of each project was.

 

The Minister of Housing and Infrastructure Development (Mr Chitotela): Mr Speaker, the construction of 1 X 2 classroom blocks at Kabola and Chipundu Primary schools was supposed to be done jointly with the community. The Government, through the contractor, put up the sub-structure, portal frame and the roof while the community was to complete the classrooms by constructing walls, fixing door frames, plastering and painting which they have not done up to today. The construction will resume when the Government allocates additional resources towards the project.

 

Sir, the cause of the delay in completing the projects is budgetary constraints and due to non participation by the community.

 

Mr Speaker, the total cost of each project is K240,000 and the Government, then, released K220,000 which was adequate then and as planned because the understanding was that the community would participate by doing its part. The Government did its part, but the community failed.

 

Mr Speaker, I thank you.

 

PERMANENT JOBS CREATED FROM 2014 TO 2016

 

271. Mr Lufuma (Kabompo) asked the Minister of Labour and Social Security how many permanent jobs were created from 2014 to 2016, year by year.

 

The Minister of Fisheries and Livestock (Mr Katambo) (on behalf of the Minister of Labour and Social Security (Mrs Simukoko): Mr Speaker, the country recorded the following number of jobs from 2014 to 2016, year by year, as captured by the National Pension Scheme Authority (NPSA):

 

                     Year                             No. of Jobs

 

                     2014                            163,277

 

                     2015                            152,287

 

                     2016                            178,908

 

Sir, you may wish to know that about 80 per cent of the work force is in the informal sector and that the figures given are only part of the formal sector, meaning they are not conclusive. The Labour Market Information System (LMIS) will, in future, give more details for both formal and informal jobs. It should be noted that data on permanent jobs is still a challenge in the absence of a functional LMIS. It is, therefore, hoped that with the support from the European Union (EU), German International Co-operation (GIZ) and the Department for International Development (DFID), the development on the LMIS, which was started, will help in bridging this information gap.

 

Mr Speaker, the figures on permanent jobs are inconclusive, as they contain jobs such as those created in the construction sector, which are project based, or agriculture sector which may be seasonal. In the interim, quarterly labour force survey findings will be used in providing an insight into the trends on the labour market, including job creation.

 

Mr Speaker, I thank you.

 

Mr Lufuma: Mr Speaker, since there is no adequate mechanism to measure the number of permanent jobs that are created every year in general, why then did the Patriotic Front (PF) Government come up with a target of 1 million?

 

Mr Katambo: Mr Speaker, let me indicate that there is a mechanism in place nationwide to create 200,000 jobs per annum. It is the mandate of the PF Government, led by His Excellency the President, Mr Edgar Chagwa Lungu t create jobs. So, in our five-year mandate, we will reach the target of 1 million jobs.

 

Thank you, Mr Speaker.

 

Mr Lufuma: Mr Speaker, I agree that the target was 200,000 jobs, but obviously from the figures that have been given by the hon. Minister, we fall short of that number. How does the Government expect to create 1 million jobs within the five years that it envisaged?

 

Mr Katambo: Mr Speaker, today, His Excellency the President launched the Seventh National Development Plant (7thNDP) which will also encompass the creation of quite a number of jobs in the agriculture, construction, domestic and tourism sectors, as also indicated by the hon. Minister of Finance in his ministerial statement and in many other sectors that will come up and ensure that our citizens have jobs.

 

Thank you, Mr Speaker.

_________

 

MOTIONS

 

REPORT OF THE COMMITTEE ON ESTIMATES

 

Mr Simfukwe (Mbala): Mr Speaker, I beg to move that the House do now adopt the Report of the Committee on Estimates for the First Session of the Twelfth National Assembly, laid on the Table of the House on 16th June, 2017.

 

Mr Speaker: Is the Motion seconded?

 

Mr Kakubo (Kapiri Mposhi): Mr Speaker, I beg to second the Motion.

 

Mr Simfukwe: Mr Speaker, in line with its terms of reference, your Committee considered the budgetary implications of fuel, electricity and maize subsidies. Your Committee also considered fiscal decentralisation and the budget process, in light of the amended Constitution.

 

For purposes of this study, subsidies were broken down into the Farmer Input Support Programme (FISP), Food Reserve Agency (FRA) and fuel and electricity subsidies. I now present the findings of your Committee pertaining to each of these tag points.

 

Farmer Input Support Programme (FISP)

 

Mr Speaker, your Committee appreciates the importance of FISP, as a tool for poverty reduction and for promoting productivity among small-scale farmers. The Committee is, however, disappointed that the programme has not lived up to people’s expectations. Empirical evidence has shown that inputs under FISP are often in the hands of unintended beneficiaries, particularly the well-off in society, at the expense of the poor and vulnerable. In addition, poverty levels, particularly among the rural people, continue to be unacceptably high, currently estimated around 70 per cent.

 

Sir, notwithstanding the shortcomings of the programme, your Committee does not support its discontinuation, as some sections of society have been suggesting. FISP has been acting as a social safety net for some of the deserving beneficiaries and has been contributing to the bumper harvest that the country has enjoyed in the past. A discontinuation of the programme, without replacing it with another form of farmer support intervention will, therefore, be detrimental to the poverty alleviation efforts and the food security of the country.

 

Against this background, your Committee recommends that FISP be restructured in order for it to realise its original objective of reducing poverty in the rural areas of the country. In restructuring FISP, the Government should take into account various challenges that have contributed to its failure in the past.

 

Mr Speaker, FISP has been maize-centred and mistakenly assumes a homogenous group of target beneficiaries, leading to poor targeting. Your Committee is aware that the process of migrating from the traditional FISP to the Electronic (e)-voucher by the Government has not produced desired results, raising complaints such as unloaded vouchers, long distance travelled by farmers to commercial banks and, in some cases, non-availability of inputs.

 

However, your Committee is positive that if properly implemented, the e-voucher system will promote effective targeting, agricultural diversification, timely access to inputs by small-holder farmers and help minimise transaction costs and reduce direct Government involvement in input procurement.

 

Therefore, your Committee recommends that the Government fully rolls-out the implementation of the e-voucher system to all parts of the country. Further, the roll-out should be closely monitored to avoid bottlenecks that were previously associated with the pilot programme, especially in remote areas. Furthermore, your Committee recommends that the Government undertakes a thorough audit of the beneficiaries to determine their wealth status.

 

In line with the findings of the audit, appropriate support should be extended to different categories. For example, those who will need to be supported by social protection programmes such as the Social Cash Transfer Scheme and the Food Security Pak, among others, should be migrated to such programmes while those who will be ready to graduate out of FISP, should be weaned off or moved to suitable programmes meant for emergent farmers.

 

Food Reserve Agency (FRA)

 

Mr Speaker, your Committee notes that the FRA was established to buy specified quantity of grains from remote areas of the country purely for strategic food reserves. It is concerned, therefore, that this mandate has been extended, over time, to include purchasing crops beyond the mandated quantities. The FRA has also been actively engaged in a market through buying and selling of grain, thereby crowding out the participation of the private sector.

 

Your Committee recommends that the role of the FRA be limited to purchasing for strategic reserves and stick to prescribed quantities and areas of purchase. In doing so, the FRA will facilitate market growth and leverage private sector investment.

 

Mr Speaker, your Committee notes that FISP and the FRA accounted for 73.6 per cent in 2016 and is expected to account for 69.9 per cent in 2017 of the budget for the Ministry of Agriculture. This is at the expense of key drivers of agricultural growth such as rural infrastructure, research and development, market information, irrigation, extension and credit. Your Committee recommends that in addition to restructuring FISP and the FRA, the Government promotes key drivers of agricultural growth through a corresponding increase in their budgetary allocations. 

 

Fuel Subsidies

 

Mr Speaker, your Committee supports the decision by the Government to remove fuel subsidies given the lackluster economic conditions. This is particularly true because subsidies mainly benefit the well-off. In addition, subsidies have tended to encourage over consumption of fuel with adverse environmental effects, delaying the adoption of energy efficient technologies and crowding out high priority public spending such as social protection. However, your Committee is conscious of the fact that the removal of fuel subsidies may genuinely have adverse effects on the lives of the poor in one way or the other.

 

Sir, to mitigate adverse socio-economic impact, your Committee recommends that the Government should cautiously implement the removal of subsidies by ensuring maximum benefits without adversely affecting the poor. In order to appropriately deal with challenges of poverty, the Government should scale-up social protection programmes. These social protection programmes should include, but not be limited to social cash transfers, food security packs, women’s development programmes and home-grown feeding programmes in schools.

 

Electricity Subsidies

 

Mr Speaker, with regards to electricity subsidies, your Committee is concerned about the delay in the commencement of the cost of service study. This study, once successfully completed, should provide a benchmark tariff for determining the cost-reflective tariff and address the concern among some stakeholders as to the basis used by the Zambia Electricity Supply Corporation (ZESCO) to request for upward adjustment of tariffs.

 

Your Committee contends that as long as the findings of the study are not known, ZESCO will continue to face resistance from members of the public and commercial consumers such as mining companies. Most of the stakeholders strongly believe that ZESCO, in its current form, is inefficient and that the tariff increase only serves to pay for this deficiency. Your Committee, therefore, recommends that the Government expedites the process of undertaking the cost of service study.

 

Furthermore, your Committee urges the Government to expedite a review of the operations of ZESCO in order to address its operational inefficiencies, as announced by the hon. Minister of Finance in his Budget Address to Parliament.

 

Mr Speaker, your Committee agrees with the Government’s decision to gradually increase electricity tariffs. This will ensure a smooth process of adjusting plans by the business community and members of the public. However, your Committee is aware that the poor and vulnerable still require assistance despite this smooth phasing out. The removal of tariffs may lead to higher cost of production, translating into an increase in the cost of goods and services. In this regard, your Committee recommends that the Government puts in place measures to protect the poor and vulnerable against high electricity bills, such as maintaining a lifeline tariff.

 

Mr Speaker: Order!

 

Business was suspended from 1640 hours until 1700 hours

 

[MR SPEAKER in the Chair]

 

Mr Simfukwe: Mr Speaker, your Committee observes that the country has been facing serious challenges of load shedding caused by law water levels, following drought weather conditions. The load shedding has also been partly exacerbated by poor practices such as leaving lights and appliances on when not in use and the use of energy inefficient appliances and light bulbs.

 

In this regard, your Committee recommends that the Government enhances the countrywide campaign to educate people on energy efficient measures of using electricity such as switching off lights when they are not in use and replacing inefficient lighting bulbs with efficient ones. The Government should also promote the use of alternative sources of energy like solar.

 

Fiscal Decentralisation and Budget Process

 

Mr Speaker, I now wish to highlight some of the findings of your Committee regarding fiscal decentralisation and the budget process. This study was motivated by the provisions of the amended Constitution, which have given more prominence to the devolved functions of local authorities. Enhancing the roles of councils will need close coordination between Central Government and the councils in the budget process.

 

Sir, your Committee is concerned with the slow pace at which the process of fiscal decentralisation is moving. The interactions of your Committee with various stakeholders revealed that preconditions for the full implementation of fiscal decentralisation are in place. Your Committee is also aware of the fact that some works in this regard have already commenced, particularly the transfer of selected functions to local authorities.

 

In this respect, your Committee recommends that the Government expedites the implementation of the decentralisation action plan, including fiscal decentralisation in line with the amended Constitution of the Republic of Zambia.

 

Mr Ngulube: Hear, hear!

 

Mr Simfukwe: Mr Speaker, your Committee is aware that the revised Inter-government Fiscal Architecture (IFA), which should guide fiscal decentralisation in Zambia in terms of assigning various roles to local authorities, has not been approved by the Cabinet. Your Committee is concerned about the failure to approve the IFA, which outlines pillars for fiscal decentralisation.

 

In order to provide for fiscal roles of the councils, your Committee recommends that the Cabinet approves, as a matter of urgency, the revised IFA.

 

Mr Speaker, the House may wish to note that most of the councils in Zambia are heavily indebted. Some of this indebtedness is due to none-remittance of statutory contributions to the Zambia Revenue Authority (ZRA), the National Pensions Scheme Authority (NAPSA) and the Local Authority Superannuation Fund (LASF). The councils’ debt has also arisen from huge arrears owed to various utility companies and suppliers of goods and services. These huge debts may adversely affect the ability of local councils to finance and perform devolved functions.

 

Therefore, your Committee recommends that the Government makes adequate budgetary provisions towards the dismantling of arrears and settling debt of councils. The dismantling of debt will give adequate fiscal space for councils to implement key programmes of infrastructure development and the provision of necessary services.

 

Sir, your Committee has keenly followed the pronouncements by the Executive regarding the introduction of the Budgeting and Planning Bill. Undoubtedly, there is strong political will to get this key piece of legislation enacted in order to improve the budget process. Hitherto, the budget process in Zambia has been centered on Central Government with limited involvement of local authorities. The failure to present this important Bill for enactment has, therefore, led to misalignment of Central Government and local authority budgets.

 

The envisaged legislation, which is a Budget and Planning Bill, is expected to mandate the Executive to produce and represent key documents, such as the medium-term expenditure framework (MTEF), also known as the Green Paper and the Mid-Term Budget Review within the given timelines. It is also expected to entrench consultation at various stages of the budget process and provide for the establishment of the Parliamentary Budget Office.

 

In this regard, your Committee recommends that the hon. Minister of Finance, as a matter of urgency, presents this piece of legislation for enactment in line with his assurance to Parliament. Your Committee contends that Zambia has been lagging behind in budgetary reforms partly because of the absence of a robust and comprehensive piece of legislation governing the budget process.

 

Mr Speaker, I now wish to conclude by expressing your Committee’s gratitude for appointing its members to serve on this important Committee. Your Committee is aware of the progress made so far in budgetary reforms, which are now provided for in the revised Standing Orders. Indeed, these have expanded the role of your Committee, which is now being rightly referred to as the Budget Committee.

 

Your Committee is also grateful to the witnesses who appeared before it for their co-operation and input into the deliberations. Lastly, I also extend your Committee’s appreciation of the Acting Clerk of the National Assembly and her staff for the services rendered to it during the session.

 

I would be failing in my duty if I did not thank the hon. Members of your Committee for the support and co-operation they have rendered to me during this Session. I also wish to thank them most sincerely for giving me the chance to be Chairperson of your Committee.

 

Mr Speaker, I beg to move.

 

Hon. Members: Hear, hear!

 

Mr Speaker: Does the seconder wish to speak now or later?

 

Mr Kakubo: Now, Mr Speaker.

 

Mr Speaker, I wish to thank you for allowing me to second this Motion, this afternoon, that has been well-articulated by the mover. In doing so, I will draw my focus on some of the issues that the mover may not have touched on.

 

Mr Speaker, your Committee considered selected subsidies such as those in the agriculture and energy sectors. Evidence has shown that subsidies mainly benefit the rich, especially on electricity, because electricity expansion has not yet reached most rural areas in this country. Therefore, subsidies actually benefit the people who are affluent. In addition, your Committee also established that agriculture and energy related subsidies have, in many instances, caused pressure on the National Budget. The funds that are channeled into subsidies have been contributing to the fiscal deficit that we have been discussing here today. This has put additional pressure on the Government, which has been forced to move funds from other critical areas that need financing such as water reticulation as well as health. 

 

Mr Speaker, this House is aware that the budget challenges that the country is facing today, including inflationary pressure, unstable foreign exchange rates and persistent balance of payments deficits are, to a large extent, due to unplanned expenditure. The Government borrowing to finance various sectors results in high fiscal deficit as well as pushing interest rates upwards. This has hived off financing into the private sector. As a result, some of the economic variables affecting this country have been pushed upwards due to the same.

 

Mr Speaker, your Committee is aware that decisions to remove subsidies have previously been reversed by the Government, particularly regarding the adjustments to migrate to cost-reflective tariffs in the case of electricity. Your Committee recommends that this time around the Government stays resolved on the removal of subsidies and allow for its full implementation.

 

Mr Speaker, your Committee also observes that Zambia’s debt has increased because the country had to borrow to fill in the fiscal deficit, which has been partly exacerbated by subsidies. In light of this shortcoming, your Committee recommends that the debt strategy for the country be operationalised as soon as possible so that borrowing is not conducted in an ad-hoc manner. Debt contracting should be based on sound debt sustainability analysis which should take into account all areas, including the type of debt, terms of the debt as well as conditions of borrowing and also the cost that will be incurred. Further, borrowing decisions should also be clearly harmonised with spending priorities.

 

Mr Speaker, your Committee notes the poor co-ordination between the Fiscal and Monetary policies. It is the view of your Committee that this problem has, to a large extent, contributed to the increasing fiscal deficit highlighted here today, which is roughly estimated to be between 10 to 12 per cent of the gross domestic product (GDP) on commitment basis. In 2015, the Fiscal Policy was too loose and this meant that the Monetary Policy had to shoulder the burden of the adjustment. You will realise that while inflation appears to be tamed and the exchange rate volatility also reduced, this has caused the country to ride a very tight liquidity rope.

 

In light of what I have highlighted above, your Committee further recommends that there be proper co-ordination between Monetary and Fiscal policies so that the two are complementing each other, as opposed to pulling against each other, in order to maintain aggregate fiscal discipline and foster growth.

 

Mr Speaker, your Committee observed that the country has been facing challenges of mobilising domestic revenue. This has been averaging around 18 per cent of the GDP or 14.4 per cent of the tax to GDP ratio. In order to enhance domestic resource mobilisation, your Committee recommends that the Government puts in place strategies to broaden the tax base and also offer funds and strategies to investment in Information and Communication Technology (ICT) solutions.

 

Mr Speaker, regarding fiscal decentralisation that the mover of the Motion has also mentioned, your Committee observed that one of the major challenges facing our local councils is that of a limited revenue base. Your Committee is urging the Government, through the Ministry of Local Government, to ensure that local councils become more proactive in coming up with progressive strategies such as increasing their revenue base. In addition, your Committee also recommends that funds at the ministry headquarters be channeled towards provinces and districts to ensure onward use by the end-users.

 

Mr Speaker, the chairperson of your Committee proposed various recommendations regarding the importance of the Farmer Input Support Programme (FISP). Your Committee would like to push the Government to engage farmers more actively and offer assurances towards funding of FISP. In this regard, your Committee also urges the Government to treat farming like a business by clearing all arrears attributed to FISP and the FRA. Further, the FRA should also ensure that it pays the farmers on time to allow them to prepare for the coming farming season.

 

Mr Speaker, your Committee appreciates the pronouncement by the hon. Minister of Finance that the Government intends to allow the participation of the private sector in the procurement of petroleum. It is, however, your Committee’s concern that the private sector may not be motivated to build an efficient distribution network to ensure that fuel reaches the hard-to-reach places such as Zambezi. It also worries your Committee that if not properly regulated, the private sector may increase the pump prices of fuel beyond the reach of the ordinary Zambians because of their inherent profit maximisation motive.

 

In this regard, Mr Speaker, your Committee recommends that there is a need to ensure that the Energy Regulation Board (ERB) becomes well-positioned to monitor fuel prices charged by the private sector suppliers and also monitor their expansion plans, as the Government disengages from the procurement of fuel.

 

In conclusion, allow me to thank hon. Members of your Committee for according me this opportunity to second this important Motion. May I also join the Chairperson of your Committee on Estimates in thanking you for affording us a chance to serve on this Committee.

 

Mr Speaker, I thank you.

 

Mr Ng’onga (Kaputa): Mr Speaker, I thank you sincerely for giving me this opportunity, on behalf of the people Kaputa, to add my comments on the good report submitted to this House by your Committee on Estimates on the subject of the implications of the fuel, electricity and agricultural subsidies.

 

Mr Speaker, I think we are all aware that there is no country on this globe where there is no talk about the issue of subsidies in one form or another. However, looking at the report, your Committee affirmed that its study arose from the fact that there was a policy pronouncement by the Government that certain subsidies would be removed so that we could align the National Budget and also restore the fiscal fitness of this year’s Budget.

 

Your Committee also highlighted that the objective of subsidies is to protect the poor and in some instances, stimulate or enhance economic growth. The report has also highlighted some of the implications of subsidies. I will look at some of them. However, my comments will mainly be on the agricultural subsidies.

 

Mr Speaker, one of the implications of providing subsidies was the widening of the fiscal deficit. Owing to the subsidies on fuel, electricity and agriculture, the fiscal deficit widened. Once the deficit arose, the Treasury or the ministry entrusted with mobilising and sharing resources had to remove budgeted resources from areas where they were budgeted for in order to meet unbudgeted expenditures. 

 

Sir, on page 6 of your report, your Committee indicated the impact of the Farmer Input Support Programme (FISP) and the fuel subsidies. The report indicates that the subsidies on fuel and FISP had been consistently growing from 2011 to 2016. When the fiscal deficit grows, the interest rates are also affected. Monies that should go to productive sectors such as the private sector do not end up there. Therefore, people in the private sector fail to borrow money from the banks.

 

Mr Speaker, let me address some issues in agriculture, and FISP in particular. Your report ably highlighted that from its inception, the motive behind FISP was to address the food shortages that followed the years when we did not have enough rains. The introduction of FISP was received very well by most Zambian farmers. However, one of the challenges that has arisen from FISP can be attributed to behavioral issues. A lot of times, some people want to do things that are not in line with the programme. I think FISP was planned in a way that over time, beneficiaries of the programme would be able to graduate from it. However, I have seen that over the years, people who do not even have farms joined the list of FISP beneficiaries to get support from the Government. These people abused the programme and real farmers did not benefit from the programme. In the recent past, the Government introduced the Electronic (e)-Voucher System to try to cure that behaviour, properly target farmers and deliver inputs to them in good time. However, your Committee also highlighted that even the e-Voucher System may not necessarily be the lasting solution to the abuse FISP by people. I know that many people who are not even farmers have found a way to get on the list of beneficiaries of the e-Voucher System. Your report also indicated the way forward on FISP. It indicated that FISP be restructured, and I definitely agree with the report that the current form of FISP cannot benefit farmers, as we intend them to benefit. The programme has to be restructured to address the issue of targeting farmers better and diversifying the number of crops and livestock to provide them. In addition, money should be put where it matters. If this country is to benefit from the e-Voucher System, funds must be provided to it in the earliest possible time. The money for this programme should be there as early as February or March. Beyond that time, we will definitely be fighting a losing battle. If the money is put in place in time, the agro-dealers and suppliers will have a feel of where they are going. Your report also indicated that the Government intends to roll out the e-Voucher System to almost all the districts in this country. We are now in June, but the people in Kaputa, Chama and Kasempa still do not have access to this system. Had the system been rolled out to these places, agro-dealers and other big suppliers would have gone there to set up their businesses.

 

Sir, finally, let me talk about the Food Reserve Agency (FRA). Your report indicated that the FRA be restructured. It also stated that the FRA’s mandate was to buy grain for the strategic food reserve from far flung areas like Kaputa, Chama, Milenge, Lupososhi and Chilubi where the private sector cannot reach because of the poor road infrastructure and the long distances from the market. If the FRA can buy grain from distant areas and leave the areas around urban centres to be attended to by the private sector, then, it will do its job. I sincerely hope that will be done.

 

Mr Speaker, with these few words, I support your report.

 

I thank you, Sir.

 

Hon. Government Members: Hear, hear!

 

Mr Mecha (Chifunabuli): Thank you, Mr Speaker, for the opportunity to contribute to the debate on the report on the Floor and allow me to congratulate the Committee that prepared the report under debate.

 

Hon. Members: Hear, hear!

 

Mr Mecha: Sir, this is a very interesting debate, and I know that the Committee has made a lot of recommendations which are valid. In view of that, I just want to focus probably on two issues. The first one is relating to the subsidies in agriculture and the second one the subsidies on electricity.

 

Mr Speaker, before I even start debating, I have one serious concern over the statement made by the Chairperson of the Committee that the Farmer Input Support Programme (FISP) must continue to exist on the basis that it has provided a social safety net. That is a very serious concern for me. The agriculture sector does not fall under the category of social sectors, going by way the Government has taken it. The sector falls under the category of economic sectors. So, immediately we start talking about the social safety net, it brings in serious issues.

 

For instance, Sir, we have a food security pack under the Ministry of Community Development and Social Welfare. Therefore, this is the portfolio that must deal with that aspect of the social safety net. Indeed, if we are to recommend that FISP continues on the basis of the provision of the social safety net, probably, the best ministry to handle that would be the Ministry of Community Development and Social Welfare.

 

Mr Speaker, what we desire in the agriculture sector is serious farming as a business. Probably, I would go with the idea that if, indeed, we want FISP in the agriculture sector, we must do first things first and they must be the right things. Earlier on, the hon. Minister of Finance mentioned the fact that there is an attempt to streamline the operations of FISP, which is very good. Therefore we need restructuring of FISP immediately so that we can get the economic benefits that are desired.

 

Sir, actually, the way FISP has been operating has contributed to the perpetuation of poverty among the small-holder farmers because it has not helped them. However, if we look at the budget that goes to agriculture, we find that most of the money goes to the Food Reserve Agency (FRA) and FISP. So, it has actually stifled operations of other key subsectors like irrigation and research.

 

Mr Speaker, the importance of research cannot be over emphasised. Therefore, we should talk about developing technologies that can help us develop agriculture. If we do not finance research properly, we will not get these technologies. These are technologies that are taken up by the extension services department. Now, look at the disproportionate way in which the allocation to the agriculture sector is done. The major funding goes to FISP and the FRA, while we are starving extension and research subsectors. The implication is very obvious on the intra ministerial budget.

 

Mr Speaker, we have heard the hon. Minister of Agriculture issuing statements here that Treasury authority to employ extension staff has been sought, yet we do not have a sufficient number of extension staff. How do we expect productivity to go up in the agriculture sector? The current extension staff to farmer’s ratio is about 1:300. How can an extension officer be sufficient? Even if we were to deploy mechanisms like group approach, it is simply impossible to be efficient. So, the budgetary implications, I think, on the other subsectors of agriculture are obvious because so much emphasis has been placed on FISP and the FRA.

 

Mr Speaker, allow me now just to explain what I am talking about in the context of the poverty trap that has been excited as the result of the establishment of FISP. Since the operations of research and extension have been stifled, we have consistently continued to record low productivity. Talk about pays, for instance, we are talking about yields of 2.5 against potential yields of 14 metric tonnes per hector. That is the level of inefficiency I am talking about. This is because extension service delivery is not receiving the necessary attention.

 

We know the implication of consistently having low productivity. It means the pocket power of the farmer will be very low. Our farmers have not been realising much from farming. If anything, they have only been managing to break even. If that is the case, then, we have a serious problem because the implication now is that our farmers cannot manage to save money. If they save money, it will not be any meaningful saving. All of us know the reason we save money. It is because at one point, we would like to engage into meaningful investments.

 

So, at the level our farmers are building their asset base and reinvesting what they are getting from maize production, they cannot achieve anything. If they cannot invest, then, this takes us back now into the poverty trap. The farmers cannot save, therefore, they cannot reinvest into farming as business.

 

Sir, if we look at the statistics from the Central Statistical Office (CSO) very carefully, the number of farmers in Zambia has been growing consistently and this is the reason we have been increasing our production levels. However, their hectrage has been dropping. The reason is simply because they are unable to reinvest into farming. The profit level that they are getting is too small for any meaningful reinvestment. For instance, if I bought four bags of fertiliser this year, be assured that next year, I will not manage to buy those four bags of fertiliser because the cost of inputs is also going up and not in consistency with the profit levels that are being realised. So, it is a serious problem.

 

Mr Speaker, this is why I would like recommend that if we want to insist on using FISP as a social safety net, let it, then, be moved to the Ministry of Community Development and Social Welfare and leave the Ministry of Agriculture to deal seriously with agriculture as a business.

 

So, we are looking forward to the hon. Minister of Agriculture and the hon. Minister of Finance to restructure FISP in such a manner that we will have sufficient confidence in it to contribute towards the economic growth of this country.

 

Hon. Member: hear, hear!

 

Mr Mecha: Mr Speaker, I want to move away from agriculture because I can go on and on. Let me now move to the Zambia Electricity Supply Corporation (ZESCO).

 

The people of Zambia have welcomed the new tariffs. We are buying power and enjoying, but what I want to say to this nation is that we should not take this gesture for granted. The fact that the people have accepted the new tariffs should not be taken for granted. I know that there is high temptation by the ZESCO Board and Management to begin thinking that the revenues that they anticipate to make out of the new tariffs are due to increased operational efficiency of ZESCO.

 

This money is a given. If anything, we can project how much money will be made at the end of the year as a result of removing the subsidies. We should not allow a situation where ZESCO translates this huge amount of money into huge bonuses. We really need to have mechanisms to ensure that this money is monitored closely so that it is not abused by the ZESCO Board and Management.

 

Mr Speaker, the hon. Minister of Energy must ensure that mechanisms are put in place to safeguard this money. If this money goes directly into investments and not into operational costs then the removal of the subsidy will serve its true purpose. If ZESCO wants to give its staff bonuses, it must look at what it has produced as a result of increased efficiency apart from what it will make from people buying power.

 

Sir, with those few remarks, I support the adoption of the report.

 

I thank you, Sir.

 

Mr Speaker: Hon. Members, I have quite a long list of Members who would like to debate this particular Motion. I am aware, of course, that you are entitled to twenty minutes of debate, but I would encourage you to shorten your debate if you are able to do so. We would like the hon. Minister of Energy and the hon. Minister of Finance to respond this evening, if possible. As you know, this evening is a particularly short one, being a Wednesday. Please, take that into account.

 

Mr Jamba (Mwembezhi): Mr Speaker, I thank the Committee for a good report and congratulate them on a job well done.

 

Sir, in order to avoid repetition, I will try to keep my contribution short because the previous hon. Member has said some of the things I wanted to say. However, I will briefly speak about some of the issues which have been raised in the report pertaining to agriculture. I will focus on the Famer Input Support Program (FISP) and the e-Voucher system.

 

Mr Speaker, the hon. Minister of Agriculture informed the House that she is phasing out FISP. However, when the hon. Minister of Finance gave a statement, he said that we should embrace FISP because it helps our farmers improve productivity.

 

Sir, I believe that we should phase out FISP. When the Government was talking about introducing the e-Voucher system to the whole country, I thought FISP would be implemented for a year or two after which the farmers would be left to continue on their own. However, it seems this idea of spending money under FISP persists.

 

Mr Speaker, some of the vulnerable people who we aim to help under social protection programmes are, in reality, not protected. Most times, the people who benefit from FISP are people who stay in urban areas. People from the rural areas are required to pay a deposit before they can access this money. If they do not have the money for the deposit, they are forced to borrow from people in the urban areas. Therefore, the people in urban areas are the masters of the people in the villages who this programme is supposed to benefit. This whole thing is a circus. I encourage the Government to start phasing out FISP in two stages so that money can be saved for other purposes.

 

Sir, vouchers were distributed in the 2015/16 Farming Season, but some of them have not yet been activated to date. There are some vouchers even in my constituency that are yet to be activated.

 

Mr Speaker, the Government wants to introduce this programme throughout the country, but allow me to highlight some of the cardinal issues.

 

Sir, three quarters of the agro-dealers in this country only thrive during the rainy season. They seem to disappear just after March. These agro-dealers are being used as channels to distribute fertiliser. However, for example, if there is no agro-dealer near an area, a farmer will be forced to travel to Lusaka to get the product. The people who transport the fertiliser are to add transport costs to the bill. This, in turn, will mean that fertiliser being delivered to areas which are far from the line of rail will cost more. If a farmer is supposed to receive three packets of fertiliser, they end up receiving one or one and a half. Therefore, the e-Voucher system must be reanalysed to stop the Government from spending money which is going to waste.

 

Mr Speaker, there are a lot of areas, like my constituency, which do not have banking facilities. How does the Government hope to achieve these programmes when there are no banking facilities? The poor farmers who are given these vouchers do not have transport money to travel from far-flung areas to the banks.

 

Sir, I am not sure if there is much collaboration between the Ministry of Agriculture and the Ministry of Finance. It seems there is reluctance on the part of the Ministry of Agriculture to roll out this e-Voucher system. Allow me to speculate. Maybe, these people who are implementing these projects own the trucks which are distributing fertiliser and if ...

 

Mr Speaker: Hon. Member, I think you are aware that it is a settled practice to avoid speculative debates, especially when you start making those kinds of insinuations. Those who are involved may not be involved in the manner in which you are suggesting. You have been candid enough, anyway, to state that you are speculating. However, we would rather you debate from an informed premise as opposed to speculation.

 

Mr Jamba: Mr Speaker, allow me to take this opportunity to debate from an informed position ...

 

Laughter

 

Mr Jamba: ... that some people involved in the e-Voucher system do not support it because they benefit from the trucks which distribute fertiliser. If the e-Voucher system was to be fully implemented, their businesses would be affected. I agree with the Committee that we should roll out this programme, even if it has hiccups here and there, in order to see how much it would save the Government.

 

Mr Speaker, since time is not my good ally, let me briefly touch on the issue of the Budget, which is very serious. Being my first time to witness the approval of the Budget in this Parliament, I noticed that we were rushing. We were here until late hours in order for the Budget to be approved.

 

Mr Ng’onga: Iwe, who was rushing!

 

Mr Jamba: Yes, we were rushing. I, therefore, request the hon. Minister of Finance to bring to this House the idea that the ministries and the Committees go through the issues which have been analysed in the report so that before the Budget is presented, most of the issues would have been dealt with.

 

Mr Speaker, with these few words, I thank you.

 

Mr Mulenga (Ndola Central): Mr Speaker, I thank you for giving me an opportunity to debate the Report of the Committee on Estimates. I also want to thank the mover as well as the seconder of the Motion. Let me also thank the members of the Committee for the good work they have done in bringing out issues which have affected the Government Treasury in implementing these subsidies.

 

Sir, I also want to commend the working Government for removing the subsidies because in the report, your committee has indicated that these subsidies do benefit the rich. A good example which your committee has cited is that on the fuel subsidy, the mining sector has been consuming 70 per cent of the petroleum products which are imported into Zambia. In 2016, the Government spent K1.2 billion of the fuel subsidies. If we calculate 70 per cent of K1.2 billion, it will give us about K840,000. This is a huge chunk of money which the Government was adding to the rich people. I think this money should be put to good use so that the intended purpose is achieved.

 

Mr Speaker, we have been told by your Committee on Estimates, through its report, that the subsidies have actually benefited the rich and I agree with them. Recently, the Ministry of Agriculture introduced the Electronic (e)-Voucher System which has encouraged diversification in agriculture. People are diversifying from growing maize alone to other crops such as soya beans. In 2016, soya beans was fetching an amount of US$350 per tonne. This is because this commodity was scarce on the market. This time, soya beans is costing K1.80 per kg. If we convert that into tonnes, it simply means that it is fetching K1,800. If we convert it into dollars, it simply means that it is fetching US$180 from US$350. The cost of producing soya beans stands at not below US$200. If a farmer is to sell his or her soya beans at US$180, he or she will make a loss and the Government is not achieving its intended purpose. My advice to the Government is that it looks at increasing the market efficiency.

 

Mr Speaker, a person in Kasama, where I come from, and the one in Petauke cannot manage to find buyers for their commodities outside the country. So, the Government should create a marketing platform where it shall advertise and market the products which the farmers in Zambia produce. If the Government does not do that, the intended purpose of alleviating poverty levels in Zambia will not be attained, not even a bit because we are just creating a big margin between the rich and the poor. A poor farmer will remain poor and the rich, who are businessmen, will continue to be rich.

 

Sir, the major product which we get from soya beans is cooking oil. The cost of soya beans is very low. Currently, farmers are forced to sell their soya beans very cheaply because they need finances to meet their daily needs. They have no other alternative, but to just go ahead and sell it. You will find that for the buyer of this soya beans to meet the cost of purchase, he or she will turn it into soya cake so that it is sold as feed for livestock. Out of the soya cake, this rich business man or woman will make and realise their cost out of soya cake. The major product which is cooking oil is actually profit. Meanwhile, a farmer who sweated for months to grow, harvest and transport that crop to the market would have made a loss. The Government needs to review this issue and ensure that the poor farmer makes a profit.

 

Mr Speaker, it is also important that the hon. Minister of Energy looks into the issue of electricity subsidies closely so that that money which is being saved from subsidies is reinvested. For the Zambia Electricity Supply Corporation (ZESCO) to move forward, it needs to reinvest in good technology which will improve the production of electricity in Zambia so that it can move away from load shedding.

 

Mr Speaker, it is good that the Government is saving the money for fuel subsidies because we have been told that it was actually enriching the rich. I, therefore, wish to urge the Ministry of Finance to actually create market efficiency for our people using the money which they save on fuel, agriculture and electricity subsidies. 

 

Mr Speaker, with these few words, I thank you.

 

Hon. Government Members: Hear, hear!

 

Mr Mung’andu (Chama South): I would like to thank the mover for ably moving the Motion. I also wish to thank the Committee on Estimates for the wonderful report it has presented to this House. I will try to adhere to your advice, Mr Speaker, and be brief.

 

Sir, I think everyone is in support of the removal of the fuel, electricity and agriculture subsidies, but I would like to caution that there is no country in this global village that has no subsidies. In my observation, the problem has not been about subsidies. It has mainly been on the way we target and use these subsidies.

 

Mr Speaker, I know that if we do not address the actual process or the issue of integrity in the process of administering subsidies, even the same people that we call the ‘economically marginalised’ may not be helped. We might repeat the same strategies and, as a result, will not remove the poor from their position.

 

Mr Speaker, in my opinion, the removal of subsidies on electricity will have an effect on the very poor people whose plight we are trying to address. We need to target industries or sectors of our economy that need subsidies. In the mining sector, for example, we are aware that our country signed agreements which are actually cast in concrete. They cannot be changed. However, if we look at the value chain of the products in mining, how much of the money remains in our country? How much of the money remains when these mining companies export copper?

 

Mr Speaker, we are an absolutely free market economy and this is why when this country tried to introduce laws to retain profits from the sale of our natural resources like copper, they shot down because it does not control the mines. As a result, a lot of its resources and income moves to developed countries.

 

Mr Speaker, in light of the above, I have some observations to make. When removing subsidies, we should have looked at the core sectors of our economy and agriculture in particular. We cannot talk about industrialisation without energy. For example, a factory like Trade Kings that is producing a tablet of soap is likely to increase the unit cost of its soap because of the increased cost of electricity. This will have an impact in the long-term on the price of soap which also will have an impact on inflation.

 

Mr Speaker, the same logic applies to the agriculture sector. We are talking of subsistence agriculture, but commercial agriculture depends on electricity. The hon. Minister has been talking about value addition to agricultural products and those processes will need energy. Therefore, as we embrace the removal of subsidies, let us not limit ourselves to looking at the consumption side. Let us look at the production side as well.

 

Mr Speaker, will the Government completely remove subsidies in the generation of electricity, for example? We need solutions. Electricity is transmitted to the final consumer in three parts. There is the generation, the transmission and the distribution part. Now, will we remove subsidies on the generation of electricity or will look at which part of this transmission system the Government should consider to subsidise?

 

Mr Speaker, it is justifiable to feel that the Government should remove subsidies because, firstly, ZESCO used to buy electricity, particularly from independent producers. Secondly, this country faced low water levels which forced ZESCO to import electricity at a very high cost, but sell to consumers at very low cost. However, now that our water levels have stabilised, will we not look at areas that will still need to be subsidised?

 

Mr Speaker, I know that a number of my predecessors have debated on the issue of agricultural subsidies. We have to look at the cost in terms of benefits. Indeed, for the many years that our Government has subsidised the Farmer Input Support Programme (FISP), the life of my mother in Chama South, who is peasant farmer, has not changed, yet billions of kwacha have been channelled towards the programme. So, who has been the ultimate beneficiary of these monies? I think that the House can agree with me that the main beneficiaries have been fertiliser supplying companies. Billions and billions of kwacha have been going into these companies at the expense of ordinary citizens. What, then, can we subsidise within agriculture?

 

Mr Speaker, we have the Nitrogen Chemicals of Zambia (NCZ) which our founding fathers had foresight to establish. If well looked into, this institution has the capacity to produce not only for the local market in this country, but also for export as well. How much money have we channelled towards supporting foreign countries that are producing fertiliser, particularly Top Dressing? I am reliably informed that the NCZ was just able to produce D-Compound. It was unable to produce Nitrate or the Urea that our people need. By paying colossal amounts of money to fertiliser import companies, we are indirectly supporting jobs in countries where this fertiliser is produced.

 

Mr Speaker, my other concern is revenue mobilisation. Your report has indicated that there is need for this country to diversify its revenue base. Let us look at our taxation system in this country. You will note a 16 per cent Value Added Tax (VAT) on any receipt that you get from any shop. An employee who gets above K6,000 is taxed 35 per cent in Pay As You Earn (PAYE). So, cumulatively, you find that, maybe, 60 or 70 per cent of one’s income goes to tax.

 

Mr Speaker, this is hurtful tax. Tax is established not only to finance Government or public expenditure, but also to redistribute wealth. However, if you look at our taxation system, it is like our Zambia Revenue Authority (ZRA) focuses on the few people who are in formal employment.

 

Mr Speaker, the ZRA should increase tax inspectors. How many hon. Members or citizens out there have houses that are on rent? Maybe, where I come from I rent a residential property. Rental income per month, especially in prime areas, is in excess of K10,000. The Government pays rentals for residential properties of about K20,000 per month. How many of these properties ...

 

Mr Speaker: Order!

 

Business was suspended from 1810 hours until 1830 hours.

 

[MR SPEAKER in the Chair]

 

Mr Mung’andu: Mr Speaker, in my conclusion…

 

Hon. Members: Hear, hear!

 

Mr Mung’andu: I would like to mention two more important items that is physical decentralisation and the budget process in Zambia in light of the amended Constitution.

 

Mr Speaker, one of the functions of this august House is to approve the Budget. In line with the Government’s policy of decentralisation, it is very important to move away from the process of hon. Members coming to the House with voluminous documents ...

 

Mr Musukwa: Hmmm.

 

Mr Mung’andu: ... and read figures in Committee Stage of passing the Budget.

 

Sir, I would like to urge the hon. Minister of Finance to bring this Budget Bill to the House so that we should be fully involved in the formulation of the Budget through various Committees. I think that is what is obtaining in many other countries. For example, if you are a Committee on Local Government or Health, before the budget is presented to the House, that time we spend going through those figures should be the time we spend in our Committees asking various ministries officials why, for example, they have allocated less money to maternal health or early childhood education considering that 85 per cent of our country’s population is youthful. By doing so, we will provide real checks and balances on the Executive. Not only that, since we scrutinise the Budget preparations, at the end of the year, we will affectively scrutinise if the Executive has implemented what we agreed in the initial budget through your Committee on Estimates. Once the Auditor-General presents a report to this House, there are a lot of anomalies because of the current scenario where we just approve figures.

 

We know that in most cases, these reports come five or six years later and some office holders might have retired or passed on. However, with the proposed fiscal decentralisation and budget making process, we should be able to carry out the duty of budget approval effectively.

 

Mr Speaker, with these words, I support the report.

 

Thank you, Mr Speaker.

 

Mr Ng’ambi (Chifubu): Mr Speaker, I want to start by commending your Committee for having come up with a very well-thought out report. I believe that whatever it has come up with is certainly material that should be used to develop this country.

 

Sir, I do not intend to debate for a long time. Otherwise, I have three things that I want to bring out. Firstly, does Zambia have the fiscal space to continue supporting subsidies? We also need to appreciate the reasons subsidies were put in place to support the poor. I believe that the time subsides were introduced, most of the Zambians were extremely poor and, indeed, the Government focused on improving the lives of many Zambians, including myself. If it was not for subsidies, most of us in here would not have gone to school. I believe that it was from that perspective that the policy to subsidise a number of issues came about. The question is: Do we have the fiscal space to continue subsidising fuel, electricity and agriculture? The answer is, no. This is because the funds that are used to supplement and support the subsidies are mopped out of the economy through the issuance of Treasury Bills, Government Bonds and local borrowing. This simply means that instead of this country creating employment for our young people, the money is used on subsidies as well as capital projects that the Government has undertaken over the last few years.

 

Mr Speaker, I come from a background of the private sector. It pains me to see that the Government is mopping out liquidity that is supposed to be used to stimulate economic activities. It pains those of us in urban constituencies to see the majority of our voters still unemployed.

 

Hon. PF Members: Hear, hear!

 

Mr Ng’ambi: The excess liquidity that the Bank of Zambia, through the Ministry of Finance, has mopped out of the economy is used as the gap to support these subsides that we are discussing. It also pains me to see that a huge amount of money was used to subsidise fuel in 2016. According to the report, K1.2 million was used to subsidise fuel in 2016 alone. This means that if we intended to seriously consider upgrading Indeni Petroleum Refinery Ltd, we could have used the K1.2 million to upgrade it to a level where it would remain competitive in the region as well as globally.

 

I hope that the Government will consider investing the K1.2 million that will be saved in the 2017 Budget into Indeni. Structural challenges at Indeni are due to the fact that the refinery can only take up comingled field stocks. However, if the Government decided to invest K1.2 million, the surplus fuel from Indeni can be exported to regional markets such as the Democratic Republic of Congo and, in a very short period of time, the K1.2 million can be recovered. 

 

Mr Speaker, I know for sure that there was a project where K320 million was needed to upgrade Indeni so that it could start pumping crude fuel from Angola. However, this amount was perceived to be too high. When a contractor evaluated the project, he put the cost estimate at around US$600 million. The savings alone should be able to cover the cost of upgrading Indeni. The suggestion, therefore, that Indeni structures be reviewed is something that the Government needs to consider seriously.

 

Tanzania took the same route and disbanded the only refinery it had. At the moment, Tanzania is in discussions to set up another refinery. If we disband Indeni, we will lose the progressive human resource capabilities that we have gained so far. Further, we will lose the investment that the Government has put in Indeni so far. I feel that it is important that the economic activities of Ndola, which mostly depend on Indeni, be seriously considered.

 

Mr Speaker, I am surprised that your Committee proposed that Indeni’s structures be reviewed. I am of the view that the Government takes the same additional expansion it undertook on Kariba North Bank when it upgraded it from 340 MW generational capacity. I think that this same policy can be applied at Indeni.

 

Indeni has been upholding the economy of Ndola for many years and I am at pains to hear that we do not intend to upgrade it to the levels where it should be. I believe that this country’s economy is growing. We need to start investing in infrastructure that will benefit the region and also meet the needs of this country.

 

Mr Speaker, I want to take this opportunity to thank the Government for making the bold decision to remove subsidies. This has been a challenge for many preceding Governments. I know that it was difficult to make the decision to remove subsidies under the Movement for Multiparty Democracy (MMD). However, the Patriotic Front (PF) has decided to take the bull by its horns. Today, we are having a cost-reflective pump price on fuel.

 

Sir, as we move towards having a cost-reflective tariff on electricity, the Government will have excess revenue that will ensure that some of these budgetary deficits that we have been having are eliminated. For the last five months, the Government was unable to pay contactors because of the budgetary deficit. However, now, contractors are being paid.

 

I want to believe that with this intervention that the Government is putting in place, we will create jobs for our people. I want to believe that once we eliminate all the subsidies, we will have teaching jobs created in Kasempa. The Government will have fiscal space to create jobs for health workers in Sioma. The Government will have capacity to create more districts in order to make service delivery more efficient and effective in this country.

 

I also think that after fifty years of Independence, Zambia should consider bringing the levels of subsidies to somewhere around 10 per cent.

 

Mr Speaker, with those few words, I stand to support the report.

 

I thank you, Sir.

 

Hon. Government Members: Hear, hear!

 

The Minister of Energy (Mr Mabumba): Mr Speaker, I would like to thank you for giving me this opportunity to comment on some of the issues that my colleagues have raised on the Report of the Committee on Estimates.

 

Sir, I will start with the petroleum sub-sector. The key issue that has come from the report and the debate from my colleagues is about the removal of subsidies. I am sure what has been provided in the report is quite true because what is happening is that the Ministry of Finance, which Hon. Mutati is going to talk about at a later stage, has been financing consumption. Obviously, this means that we have been diverting money and putting it into these consumption areas instead of the infrastructure development of this country. This means that we cannot create jobs, grow the economy or industrialise.

 

Mr Speaker, I also take cognisance of the fact that even as we restructure the petroleum sub-sector, in terms of what my colleagues have said, it is important that the customer is protected because for the Patriotic Front (PF) Government and I, the customer out there is paramount. Therefore, I would like to assure my hon. Colleagues that the issue of the cost-effectiveness of the pump price of fuel is just one element in terms of the restructuring of the petroleum sub-sector. However, the detailed restructuring programme and most of the issues that hon. Members have just spoken about will be taken into account.

 

Mr Speaker, for instance, let me just assure my colleagues that even in the context of the Government allowing the private sector to procure and finance the fuel programme in the Republic Zambia which is, of course, a home-grown programme and not induced by anybody, one of the most important arrangements will be that the Energy Regulation Board (ERB) will remain with the powers to regulate the pump price as well as to regulate the quality of the petroleum product.

 

Sir, I also know that there are also fears that when we allow the private sector, there would be some shortages of fuel in the country side. I want to assure my colleagues that the Government has continued with the construction of the storage facilities in the provincial centers of this country. This means that even if the Government allows the private sector, it will not be a wholesome programme, where we will just allow it. We have learnt about a lot of cases, which I do not want to mention.

 

Mr Speaker, for example, the milling and mining companies were privatised. Therefore, on the context of those examples, we will move in the petroleum sub-sector through a gradual process with a view to building capacity in terms of also having a very positive relationship with our oil marketing companies (OMCs) and the dealers in the sector so that we do not allow a situation where fuel shortages are created artificially.

 

Sir, the programme of allowing the private sector is largely going to be driven by Government just like it is done in other countries like Tanzania and Kenya, who have allowed the private sector to procure and finance petroleum products, but the Government plays an important role in regulating the way the private sector comes on board.

 

Mr Speaker, actually, we will seek the Cabinet’s approval over the matter. Therefore, I will come to update the House on the detailed arrangement of what we are proposing, which includes even the issue of mothballing the refinery. We will not mothball the refinery because of the issues Hon. Ng’ambi spoke about.

 

Sir, there are downstream activities, which are supported by Indeni. For instance, at the moment, we have 105 MW power plant within the vicinity of Indeni Refinery. This means that if the refinery is mothballed, we will lose that investment.

 

Mr Speaker, in terms of restructuring our programme, we will ensure that we optimise the operations of Indeni with a view to improving its operations to 1.1 million metric tonnes, where the volume is around 600,000 metric tonnes. As for the details of the whole programme, I will come back to update the House through a ministerial statement at a later date.

 

Sir, with regard to the electricity sub-sector, I want to thank my colleagues who have supported the adjustments or removal of the subsidy in a gradual process. I also want to thank those who criticised us because by doing that, they are only strengthening the Government to ensure that it makes decisions that are in the best interest of the country.  

 

Mr Speaker, the power deficit that this country has experienced since 2015 is simply because our tariff levels have been very low. A comparative study, which was done in 2015, found that Zambia had the lowest electricity tariff within the region, of around 3.3 cents per KWh. This made it very difficult for the country to attract private sector investment into the electricity sector.

 

Sir, it equally made it difficult for the Zambia Electricity Supply Corporation (ZESCO) to generate internal funds to invest in generation, transmission and distribution. Our statistics show that we are at 4 per cent of rural electrification. It is simply because we cannot attract investment into electricity. ZESCO cannot generate sufficient money for distribution lines in our rural areas. This is why hon. Members of Parliament continue complaining about schools and some townships not being electrified in their constituencies. I have gone around the country to eight provinces and it is true that our electrification rate is very poor.

 

However, Mr Speaker, in answering some of the questions that have been asked about the subject, I have said that we are thinking of a new process on how we will move in the electrification of rural areas. I will come with a statement to this House once that process has been approved. 

 

Mr Speaker, regarding the adjustment of tariffs that has been done by the Energy Regulation Board (ERB) effective 15th May, 2017, I want to assure my colleagues who thought that this would probably only enrich ZESCO. One of the assurances I made to the Cabinet was that once the tariff adjustment was done by September, 2017, which would be the last one in the 75 per cent increment, I will go back to the Cabinet to show my colleagues how that money we will have as an additional revenue stream will be spent. I am sure I will make a ministerial statement to share with my honourable colleagues here in terms of how that process is going to be done.

 

Mr Speaker, despite the electricity tariff adjustment, one of the key considerations we made, because the Patriotic Front (PF) Government is pro-poor, was to provide a 200 KW lifeline tariff. If you compare the old tariff with the new one, you will see that under the old tariff, a 200 KW lifeline tariff would cost K76. However, under the new arrangement, because the 200 KW lifeline tariff is at 15n per KW, it is only going to cost about K58. So, there is a saving of about 25 per cent. It means that the PF is trying to demonstrate that it is a pro-poor Government and wants to protect the vulnerable people of this country. I want the Zambian people to hear that the 200 KW lifeline tariff at 15n per KW is real. I want them to buy power from ZESCO so that they are able to see the difference between the old tariff regime that we had whereby it was around K76 for 200 KW, compared to the K58 under the new tariff arrangement.

 

Mr Speaker, my colleagues have lamented the need for a study on the electricity sector and I totally agree with them. Therefore, we have commissioned a cost of service study because we believe that there are emotions that are attached to tariff determination in this country. In future, what we want to do is ensure that the consultancy that I launched on 13th April, 2017, goes to give us a tariff determination framework which will remove the emotions and complaints and also provide predictability in terms of the industry for our customers. For example, we will come up with a more tiered tariff for three years where the tariff will be determined in advance so that the people would be able to know how much a tariff will be and there will be a proviso for cost escalation. So, I want to assure my honourable colleagues that we will come up with that and the consultant is already undertaking the works. We believe that those works will be concluded as soon as possible.

 

Mr Speaker, the other complaint which came from my colleagues and provided in the report is the issue of the efficiency of ZESCO. We totally agree that if ZESCO’s operations are not improved, even with the new tariffs, we might just waste our time. The issue of the cost reflectivity of electricity tariffs is just one option in restructuring the electricity subsector. We are still discussing the major reforms, which would also include looking at the performance and restructuring of ZESCO. I am not ready with the details, but once the approvals are given, we will come to this House just to share with our colleagues on how the restructuring process will be so that we are able to reposition ZESCO and the electricity subsector in general. We want to come up with the improvements that can be done in terms of quality of service that we provide to the Zambian people.

 

Mr Speaker, lastly, we will look at the demand side management of power. I totally agree with my colleagues that there has to be a change of mindset. As we increase the electricity tariffs, one of the key measures we should implement is to ensure that our people start changing their mindset. We have Liquefied Petroleum Gas (LPG) which we export to Kenya, but, in Zambia, people think that gas is too dangerous. The Zambia Electricity Supply Corporation (ZESCO) will continue promoting the use of gas and sensitising our people about it. We need a mindset change, and to encourage our people to consider using alternative sources of energy.

 

As much as the country depends on hydro electricity generation, in the next few years, we want to diversity power generation. We have 300 MW being produced in Maamba. Last week, on Tuesday, the American Government and some energy developers signed a grant to provide 150 micro grids with storage facilities to support 22,500 households in the Republic of Zambia as part of our diversification agenda. On the same Tuesday, last week, we signed a financing agreement with Kalahari GeoEnergy Limited to construct one of the first geo-thermal plants in Monze, in Zambia to produce about 20 MW. In the next few weeks, we will sign a financing with the United States of America (USA) to support a 130 MW power project in Serenje.

 

Mr Speaker, the Government is determined to transform the energy sector. Let us not bury ourselves in the history of where we have come from. I think it is important that we start challenging history. As Minister of Energy, I will challenge history and the status quo so that I can do things differently. In terms of the details on how we will proceed, as a Government, I will come to this House with various ministerial statements to share information with the country and yourselves.

 

I thank you, Sir.

 

Mr Mutati: Mr Speaker, I thank the Chairperson of the Committee on Estimates for the well-reasoned report.

 

Sir, I think the central point that was made in the report was that the Government did not have the fiscal space to support electricity tariffs. Consequently, we had to borrow to support the subsidies on electricity, and the fiscal deficit increased purely because of the subsidies. We had to divert money meant for investment in infrastructure and human development to support subsidies. Let me commend the leadership of His Excellency President Lungu particularly on the removal of subsidies.

 

Hon. Government Members: Hear, hear!

 

Mr Mutati: I think he is the first one who demonstrated the courage to remove the subsidies and recognised that you cannot give what you do not have. In the past Government, we did not have the capacity and the courage to take that decision, but that is history. For now, we have to manage the decision we have taken. 

 

Mr Speaker, regarding the Farmer Input Support Programme (FISP), we cannot continue with a system that has leakages or opportunities for waste in terms of expenditure and limits the farmer to only grow maize. By migrating from FISP to the e-Voucher System, we will give the farmer the choice on what to do and where to buy their fertiliser and other inputs. By migrating to the e-Voucher System, the Government will no longer be the one to chase for and procure the inputs. We are not the most efficient procurement manager, particularly when it comes to pricing. That inefficiency that was associated with FISP will gradually disappear. I also think that diversification begins with giving farmers a choice. 

 

Mr Speaker, on the issue of commodity marketing, as I mentioned earlier on, we will put in place the operations of the Zambia Agriculture Commodity Exchange (ZAMEX). This is simply called warehouse receipts, which will move the Government quite considerably from buying maize. This will be done purely commercially, but providing the opportunity that the receipt that an individual gives to the warehouse can be used to secure money from a bank. So, it will ease the pressure particularly on small suppliers in terms of the liquidity that is required at the point of supplying.

 

Sir, in the report, there was an issue of debt management that was mentioned. I had earlier on indicated that we are putting in place a medium-term debt management strategy so that our future borrowings will be driven by carrying out a debt sustainability analysis. This is in order to ensure our capabilities to be able to repay, particularly, future debts.

 

Sir, another issue was raised on the inter play of Monetary Policy and Fiscal Policy. I wish to state that it is right to say that the fiscal policy was loose. This is partly due to issues we have raised of subsidy. However, this year, it has been tightened. Consequently, you may notice that it is now the Monetary Policy that is loosening. That is the reason the Central Bank has reduced the policy rate and reserve ratio to create, firstly, the liquidity in the market for the private sector and, secondly, to influence the cost of money. So, this has been done.

 

As regards the issue on the Budget Planning Bill, I wish to say that the hon. Minister of Justice is very possessed with this particular matter with active consideration. Similarly, even issues around central decentralisation and effective participation, particularly from the Members of Parliament, through the committees, will only be secured once this Bill is in operation.

 

Mr Speaker, an issue was raised on domestic resource mobilisation. I had earlier on indicated, that to motivate increased compliance is that we declared an amnesty. However, beyond that, we are also modernising and automating processes at the Zambia Revenue Authority (ZRA), including bringing in systems that would first of all, increase the revenue collection from the taxes that have got.

 

Particularly, on the question of shops that was raised, we are hoping to have what is called fiscal devices. This will be able to assist the ZRA to monitor using the cash till on the sales that are being performed and independently compute the VAT component, which has been a problem in the past. This will be made possible by also putting in gadgets through the Zambia Information and Communication Technology Authority (ZICTA), which will determine the sales volume for airtime and compute Value Added Tax (VAT) and Excise Duty independent off the operators.

 

Sir, since January, 2017, we have also appointed VAT agents, such as the National Roads Fund so that the VAT is collected at source. For the first time, in 2017, VAT has been a positive tax. The whole of last year, VAT was a negative tax. It was negative because firstly, we were building up arrears and therefore, the private sectors that were supposed to pay did not pay. Even when they got paid, they did not pass on the VAT component to ZRA. However, now deduct VAT from the source to assist the efficiency of collection and this tax is performing fairly well.

 

Mr Speaker, there are a number of places where we are lagging behind, particularly in the area of land titling. I am working with the hon. Minister of Lands and Natural Resources to ensure that we come up with a way to collect this source of revenue. We are collecting tax from under 250,000 properties in the country, but we all know that there are more properties than that. There are a lot of taxes to be collected out there.

 

Sir, I thank your Committee for the progressive report and suggestions that it has made. I assure the Committee that most of the issues that it has raised are already being worked on. 2017 will be a difficult year. His Excellency the President has decided to make whatever hard decisions we have to make this year. Thereafter, it will just be a matter of managing these decisions.

 

I thank you, Sir.

 

Mr Simfukwe: Mr Speaker, I thank the hon. Minister of Energy and the hon. Minister of Finance for their responses. I also thank all the hon. Members of Parliament who have contributed to the debate on this Motion.

 

Sir, I beg to move.

 

Question put and agreed to.

 

(Debate Resumed)

 

REPORT OF THE COMMITTEE ON LEGAL AFFAIRS, GOVERNANCE, HUMAN RIGHTS, GENDER MATTERS AND CHILD AFFAIRS

 

Mr Mukosa (Chinsali): Mr Speaker, thank you for giving me this opportunity to debate the Motion on the President’s Address on the Progress Made in the Application of National Values and Principles.

Mr Speaker, the speech which was delivered to this House came at a time when it was most needed. I am saying so because it touched on issues of morals, ethics, integrity and those that I will talk about later in my debate.

 

Mr Speaker, currently, we have people who do not value morals due to the love of money. There is too much pretence in this country. Some of the people are magicians who are disguising themselves as men of God. These are people who perform miracles which do not add value to human life. We have people calling themselves prophets who are able to turn water into paraffin.

 

Mr Ngulube: Hear, hear!

 

Mr Mukosa: It leaves me to wonder what value those miracles can add to people’s lives in this country. Such kind of people should not be tolerated in our society. We have seen the same people calling themselves men of God reach the extent of even threatening our hon. Ministers. What kind of a Christian can go to an extent of threatening and insulting elderly people, such as our mothers?

 

Interruptions

 

Mr Mukosa: Mr Speaker, my advice to such people is for them to uphold good morals.

 

Mr Speaker, Zambia is a Christian nation and we are expected to behave in a manner that Christians do. When we have a national day of prayer, we expect everyone to respect that day and attend prayers. Unfortunately, we have some leaders who actually tell their followers to shun such prayers. As a young person, I really wonder what I can actually learn from such kind of people.  I wish, therefore, to appeal to the Zambian citizens not to listen to people who advise them to shun national prayers.

 

Mr Speaker, the Government has an initiative of empowering Zambian citizens through the Citizens Economic Empowerment Commission (CEEC). Its intention is to empower Zambians especially, the youths but when the same youths get money from CEEC, they do not want to pay it back. This is because they think that since the money they are getting is coming from the Government, then they should not pay back. That is just a sign of lack of good morals. I therefore, wish to advise everyone to have good morals. If the Government has good intentions of helping them, they should support it. If they borrow money from the Government through CEEC and other institutions, they should be able to pay it back.

 

Sir, I also heard a lot of hon. Members of Parliament talk about the Farmer Input Support Programme (FISP) which is abused in this country. The Government has intentions of giving subsidised fertiliser to the intended people but the same people who are given this fertiliser end up selling it to the well-to-do at very low prices. That is an issue of lack of morality. Those with good morals cannot do such things.  In fact, the issue of good morals and ethics should start with us leaders. Therefore, as leaders, if we have friends or relatives who abuse FISP, we should advise them that FISP is there to achieve its intended purpose.

 

Mr Speaker, even in workplaces such as Government institutions and the private sector, we have seen people who do not respect good morals and ethics. We have seen people who cannot keep confidential issues. 

 

Mr Speaker: Order!

 

(Debate adjourned)

 

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The House adjourned at 1915 hours until 1430 hours on Thursday, 22nd June, 2017.