DAILY PARLIAMENTARY DEBATES FOR THE FOURTH SESSION OF THE TENTH ASSEMBLY

Wednesday, 21st July, 2010

The House met at 1430 hours

[MR SPEAKER in the Chair]

NATIONAL ANTHEM

PRAYER

_______

MINISTERIAL STATEMENT

PRIVATISATION OF ZAMTEL

The Minister of Commerce, Trade and Industry (Mr Mutati): Mr Speaker, I thank you for the opportunity to issue a statement on the process of the privatisation of the Zambia Telecommunications Company Limited (ZAMTEL). This statement will cover the background to the privatisation, rationale for the Government’s decision to privatise, the outcomes of the valuation study and the execution of the privatisation process.

History of ZAMTEL Privatisation

Sir, as the hon. Members of Parliament are, no doubt aware, ZAMTEL has been struggling financially and commercially for many years. For over a decade, the Government has been seeking ways to revive the fortunes of ZAMTEL.

In 1999, Cabinet directed that up to 20 per cent of the shares in ZAMTEL be offered to a minority shareholder and that the Government retain management rights in the company. This decision, however, failed for a number of reasons. These include:

(i)    the 20 per cent shareholding without management control was unattractive to the private sector, particularly considering that an investor was expected to recapitalise the company; and

(ii)    the 20 per cent shareholding only attracted investors that did not have the requisite technical and financial strength;

In the meantime, the performance of ZAMTEL continued to deteriorate.

Mr Speaker, having failed to sell 20 per cent stake in ZAMTEL, in 2002, Cabinet suspended the privatisation and directed that ZAMTEL, instead, be commercialised. The commercialisation programme also did not succeed.

Since 2007, ZAMTEL’s customer base has been declining and competition has been intense. During the period from 2007 to date, ZAIN and MTN have attracted over 3 million subscribers between them. Over the same period, ZAMTEL has lost 30,000 subscribers.

ZAMTEL’s revenue and customer base declined while costs rose to disproportionate levels. Staff costs made it impossible for ZAMTEL to operate in a viable way. As at 31st March, 2010, the company, with a customer base of around 40,000, employed 2,340 people while ZAIN, the largest telecommunication operator in Zambia, with a customer base of over 3 million, had fewer than 740 employees. Simply put, Mr Speaker, for every employee of ZAMTEL, there were 170 lines compared to ZAIN which had more than 4,000 lines per employee.

The financial year ended 31st March, 2010, ZAMTEL’s audited accounts, prepared by Ernst and Young, show that the company made an operating loss of K104.8 billion, which was higher compared to the loss of K69.9 billion made the previous year. As at 31st March, 2010, the company revenues were K385 billion, a reduction from K466 billion the previous year. Staff costs were K253 billion, equivalent to 65 per cent of revenues, compared to the industrial average of 25 per cent. 

As a result of its poor performance, ZAMTEL had become insolvent. The liabilities exceeded its assets by more than K360 billion as of 31st March, 2010.

In terms of tax revenues to the Government, the private operators, ZAIN and MTN have, over the past five years, contributed a total of more than K1.4 trillion to the Treasury. On the other hand, ZAMTEL owed the Government K500 billion in unremitted taxes.

Clearly, Mr Speaker, ZAMTEL had become an unsustainable business. Commercialisation efforts had failed and it was evident, for some time, that a radical and permanent solution was needed.

Decision to Privatise

In order to inform the Government decision-making process on the feature of ZAMTEL, RP Capital Advisors were contracted by the Government to conduct a study on the options for ZAMTEL and to prepare a valuation for the company as required by Section 32 of the Zambia Development Agency Act.

The RP Capital Report examined all the options for ZAMTEL, including, but not limited to:

(i)    immediate change of management and recapitalisation by the Government. This option was not viable as the Treasury had no resources to recapitalise ZAMTEL;

(ii)    maintain the status quo. This option was not viable and was not in the interest of the nation as it would have led to liquidation;

(iii)    public flotation on the stock exchange was not a viable option due to ZAMTEL’s poor financial condition and its inability to meet the stringent listing requirements of the Lusaka Stock Exchange;

(iv)    management contract was not viable as it would not raise the requisite capital or technology and would not address the problems of ZAMTEL on a permanent basis;

(v)    breaking up ZAMTEL and selling its divisions was not viable because it would have led to the abandonment of several divisions of ZAMTEL. This would have resulted in mass disruption to the core services such as land line, voice services, fixed internet and so on. The mobile business, Cell Z, may have been saleable, but the fixed line business, which includes the national fibre optic backbone, would never have been sold or if it would have been sold, it would only have attracted marginal value.

It is clear that a break up and sale of the various divisions would have reduced the value attributable to ZAMTEL as a whole; and

(vi)    introduce a strategic equity partner in ZAMTEL to bring in new technology, inject fresh capital, restructure the company and improve the provision of telecommunication services. This was found to be the only viable option. This was in the best interest of the nation, employees, customers, suppliers, lenders and the Government.

Mr Speaker, the report from RP Capital revealed the state of ZAMTEL, including its operations, financials, human resource, technology, legal and other issues. The assessment also covered the information communication technology sector in Zambia. This was done in order to accurately define the status of ZAMTEL. Therefore, this will be the basis for determining the framework for taking the fortunes of the company forward. The report also gave an indicative valuation of ZAMTEL going forward on the assumption that some reform and restructuring was done to improve the company’s prospects. This is as required under Section 32 of the Zambia Development Agency Act.

Mr Speaker, Cabinet used the results of the assessment as a primary basis for deciding the future of ZAMTEL. The conclusion was that the most effective means by which the future of ZAMTEL could be secured was to effect the sell and offer majority stake up to 75 per cent of the equity in ZAMTEL to a strategic partner. Cabinet then directed the Zambia Development Agency (ZDA) to implement the privatisation of ZAMTEL in accordance with the Zambia Development Agency Act.

The Privatisation Process

Mr Speaker, the privatisation process began with the publication of an announcement in the local and international media on 16th September, 2009. This announcement invited parties that were interested in participating in the privatisation to submit an application for pre-qualification to the ZDA. The announcement was run in publications like the Economist, the Financial Times, the Business Day South Africa, Business Day Nigeria and the China Daily among others. Locally it ran in The Post newspaper, the Times of Zambia, the Zambia Daily Mail and on the internet.

Mr Speaker, in response to that announcement, at least thirty inquiries were made to the ZDA. Locally, only TATA Zambia made inquiries, but it never submitted an application to pre-qualify to the ZDA. An administrative fee of US$20,000 was set by the ZDA in order to cover, in part, the administrative costs and to ensure that all parties were serious and committed to the process.

The deadline for submissions of the pre-qualifications application was 16th October, 2009. At the time of closing, eight submissions had been received from the following:

(i)    Altimo Holdings of Russia

(ii)    Bharat Sanchar Nigam Limited (BSNL) of India

(iii)    Lap Green of Libya

(iv)    Mahanagar Telephone Nigam Limited (MTNL) of India

(v)    Portugal Telecom

(vi)    Telecel Globe (Part of Orascom Telecom)

(vii)    Telkom South Africa

(viii)    Unitel/Angola Cables of Angola

The board of the ZDA met on 21st October, 2009 to consider all the pre-qualification applications. The criteria by which the applicants were assessed included the following:

(i)    the financial strength and stability measured by minimum net assets of US$250 million or minimum market capitalisation of US$500 million of the bidding entity;

(ii)    experience in the telecommunication sector, minimum five years.

(iii)    the number of subscribers that the bidding entity had, minimum 3 million subscribers.

Mr Speaker, the ZDA Board concluded that all the eight pre-qualification candidates be invited to participate in the due diligence investigations. A public announcement was then made to the local and international media by the ZDA in October, 2009, stating that the eight entities had pre-qualified and were admitted to the next bidding process.

On 23rd October, 2009, tender instructions were sent by the ZDA to all the eight pre-qualified bidders, inviting them to take part in the due diligence. All the bidders were asked to submit a non-binding bid for up to 75 per cent of the equity in ZAMTEL. 23rd December, 2009 was a deadline for bid submission.

Mr Speaker, in order to ensure that the due diligence process was as efficient, fair, and transparent as possible, a virtual data room was established. The virtual data room contained all relevant and pertinent documentation pertaining to ZAMTEL’s finances, legal matters, regulatory matters and other aspects of its operation. It also acted as a platform through which questions could be submitted by participants and answered by the ZDA.

Mr Speaker, all participants had equal access to the data room. Over three hundred documents were posted in the virtual data room. Over six hundred questions were posted by the pre-qualified bidders and answered by the ZDA. Six of the eight pre-qualified companies came to Zambia to undertake such visits to assess the activities of ZAMTEL, the competitive environment and meet with ZAMTEL management, the telecom regulator and other stakeholders.

The other two companies namely MTNL of India and Portugal Telecom, chose not to undertake site visits. All the information disclosed to the participants who visited Zambia was posted on the data site to ensure equal access. At the close of the first round bidding on 23rd December, 2009, four bids were received from the following:

(i)    Altimo Holdings of Russia

(ii)    BSNL of India

(iii)    Lap Green Networks of Libya

(iv)    Unitel/Angola Cables of Angola

Mr Speaker, as regards the first round bid evaluation, the following criteria were employed to assess:  

(i)    Enterprise Value

the primary criterion within the assessment was the enterprise value ascribed by each bidder for 100 per cent of ZAMTEL, on a debt-free, cash-free basis. The ZDA calculated an unadjusted threshold enterprise value, based on the forecast value of ZAMTEL’s external liabilities at transaction closure.

This was the enterprise value required such that, in the event of the sale of 75 per cent of the equity in ZAMTEL, the proceeds received by the Government would be sufficient to cover 100 per cent of ZAMTEL’s external liabilities at transaction closure. 

The forecast of total external liabilities at the point of transaction was estimated at US$176 million. Therefore, the unadjusted threshold enterprise value was US$235 million. This was the minimum enterprise value for 100 per cent of ZAMTEL; and 

(ii)    Capital Expenditure Projection (CAPEX) 

the bidders’ forecasts for capital expenditure for the two years immediately following the transaction closure were employed as a supplementary assessment criterion.

The ZDA calculated a minimum threshold value for CAPEX based on a discounted cash flow model of ZAMTEL.

The CAPEX threshold was estimated at US$125 million over two years. This was considered to be the minimum investment in infrastructure required to affect a viable turnaround, from the perspective of network coverage, quality and capacity.

Mr Speaker, the first four round bids proposed the following values for 100 per cent of ZAMTEL on a debt-free, cash-free basis and CAPEX for the first two years of operation.

Company            Enterprise Value             CAPEX
                                 (US$’million)            (US$’million)

Altimo Holdings            299                          58

BSNL                           302                         195

Lap Green Networks    184                       148

UNITEL/Angola Cables  160                        350

The bidders’ enterprise value and capital expenditure projections were considered together as a function of one another. This meant that the higher the enterprise value, the lower the CAPEX and vice versa.

Mr Speaker, in order to quantify this relationship, ZAMTEL’s cash flow projections were adjusted to include the minimum CAPEX threshold of US$125 million and the discounted rate adjusted to arrive at the minimum enterprise value threshold of US$235 million.

Mr Speaker, in other words, the evaluation method considered both value at transaction time and in the future. 

On 11th January, 2010, all the four bids were accepted by the board of the ZDA as they met the minimum threshold values and assessment criteria employed.

On 13th January, 2010, the ZDA issued a public announcement stating that all the four bids had been invited to move to the next round of the process. The next round comprised further due diligence and submission of final bids and business plans.

Mr Speaker, regarding the second and final bidding round, a second set of instructions were sent to the four short-listed bidders on 2nd February, 2010, inviting them to make site visits to Zambia for the second time and to undertake more detailed due diligence, including meeting management and other stakeholders.

Three of the four participants undertook visits to Zambia. The BSNL of India was unable to visit Zambia, but continued its due diligence studies via the virtual data room.

Mr Speaker, by the deadline of 12th March, 2010, three binding bids had been received from the following:

(i)    Altimo Holdings;

(ii)    Lap Green Networks; and
 
(iii)    UNITEL/Angola Cables.

Mr Speaker, the BSNL asked for a two-month extension to the bid deadline, which was declined. Any extension may have threatened the continued interest of the other bidders. Further, an extension would have required a material deviation from the published process. The BSNL, therefore, failed to meet the bid deadline.

Second Round Bid Evaluation Criteria

 In line with the second round tender instructions, each bidder was required to provide bids that included the following elements:

(i)    Price

 the price, in US dollars, which the bidder was prepared to pay for 75 per cent of the share capital of ZAMTEL had to cover the following:

(a)    the cost associated with planned redundancies;

(b)    the cost of resolving the funding issues of the ZAMTEL Pension Scheme;

(c)    liabilities taken by ZAMTEL to the Chinese banks in connection with network infrastructure projects;

(d)    an initial equity capital injection proposed by the bidder in order to cover the cash cost of capital expenditure and operating losses in the first three years of operations; and

(e)    an amount to be made available to the Government as transaction proceeds;

(ii)    Leverage Ratio

the bidders had to set out a proposed leverage ratio, that is, debt to equity, to be applied by ZAMTEL in the first three years immediately following the acquisition of the 75 per cent shareholding interest.

The inclusion of a leverage ratio in the bid structure was designed to ensure that the Government shareholding in ZAMTEL could not be diluted during the first three years of operation;

(iii)    Business Plan

 a business plan outlining the bidders’ plans for the operations of ZAMTEL and roll out plans in the first five years immediately following the acquisition. The business plan needed to contain details of the operations and financial performance of ZAMTEL;{mospagebreak}

(iv)    Mark up of the Transaction Documents

     transaction documents included in the draft share sale and purchase agreement and the shareholders agreement, both of which were initially drafted by the ZDA’s legal advisors and submitted to the bidders together with the tender instructions. The bidders were required to provide mark-ups of these documents together with the final bids;

(v)    Financing and Proof of Financial Stability

 This had to include: 

(a)    a description of the financing for the acquisition of the proposed shareholding interest, along with an indication of the steps and timing required to secure the necessary funds; and

(b)    document demonstrating the financial stability of the bidder, including a comfort letter issued by a reputable bank or banks, confirming that, to their best professional knowledge, the bidder had sufficient funds;

(vi)    Bid Bond

 the bidders were required to provide a bid bond of US$2 million. This would be returnable to the bidder who complied with bidding rules; and

(vi)    RP Capital Valuation 

the price range as determined by the RP Capital valuation was between US$142 million and US$204 million. This was based on a very detailed discounted cash flow valuation and a number of assumptions on the future potential of the company.

The price range acted as the Government’s internal guide for the privatisation process. The bidders were not privy to this information.

Mr Speaker, the methodology for evaluating the second round bids was based on all of the evaluation criteria mentioned above. The mark-ups of the transaction documents were to be used for negotiations. Any material commercial and financial mark-ups to the transaction documents were also taken into consideration during the evaluation of the bids. The evaluation method had four distinct steps, which were as follows:

(i)    checking the availability of the US$2 million bid bond;
 
(ii)    establishing the completeness of the bids, including proof of financial stability;
 
(iii)    ensuring that the price was sufficient to cover all the external liabilities and net proceeds to the Government; and

(iv)    assessing business plans and capital programmes and their implications for the turnaround of ZAMTEL.

Mr Speaker, regarding the results of the second round bid evaluation, Lap Green’s bid comprised a cash consideration of US$257 million. This was the highest total cash consideration for ZAMTEL in comparison with the other two bidders. The Lap Green bid comprised the following elements:

(i)    full funding of the pension liability of US$20 million;

(ii)    settlement of loans from the Chinese banks amounting toUS$32.7 million;

(iii)    paying redundancy costs of US$97.7 million for all staff of ZAMTEL. Lap Green proposed making 100 per cent of the existing workforce redundant and, after which, it indicated that it would hire employees as needed;

(iv)    an initial equity investment of US$64 million for the first three years of operations; and

(v)    payment of US$42.6 million as proceeds to the Government.

In summary, Lap Green fulfilled all the requirements set out in the second round bidding instructions.

Mr Speaker, Unitel/Angola Cables’ bid comprised a cash consideration of US$186.6 million, broken down as follows:

(i)    funding for the pension liabilities of US$20 million;

(ii)    paying redundancy costs of US$65 million for 70 per cent redundancies;

(iii)    an initial equity investment of US$63.9 million. Unitel’s submissions implied addition equity injection, which raised the risk of diluting the Government’s shareholding in the ZAMTEL post-transaction;

(iv)    settlement of loans from Chinese banks amounting to US$32.2 million;

(v)    payment of US$5.5 million as proceeds to the Government.

Mr Speaker, Unitel’s bid also included a number of conditions to the transaction documents. These included the issuance of a pay-TV licence, a demand for exclusivity in the sale of Information and Communication Technology (ICT) services to the Government and the establishment of asymmetric interconnected agreements in favour of ZAMTEL. These and other conditions were considered unacceptable. 

Altimo’s total cash consideration was US$120 million. It was the lowest amongst the three bidders comprising the following elements:

(i)    US$3 million as Government consideration;

(ii)    US$62 million for 70 per cent of the redundancy programme;

(iii)    US$40 million initial equity injection in the company; and

(iv)    US$15 million for the pension deficit. 

Altimo’s bid was incomplete as it did not include a business plan or mark-up of the transaction documents. It was also the lowest and deviated, substantially, from the methodology set out in the tender instructions. Altimo proposed retaining the Chinese loans on the balance sheet of ZAMTEL. 

The ZDA Board on 31st March, 2010 met to consider the three bids. Both the Lap Green and Unitel bids fulfilled the criteria. The bid from Altimo did not. The board, therefore, decided that both Unitel and Lap Green be invited to enter into the final negotiations. The Altimo bid was placed in reserve in case either Lap Green or Unitel withdrew from the process. Negotiations with Lap Green and Unitel commenced on 12th May, 2010.

Mr Speaker, pursuant to the Zambia Development Agency Act, the ZDA Board appointed an independent negotiating team which undertook the negotiations with the bidders. The ZDA independent negotiating team was assisted by transaction advisers, RP Capital and the ZDA’s legal advisers, Simmons and Simmons of the United Kingdom. It should be noted that as part of the preparatory work for the transaction and negotiations, the ZDA also engaged local advisers such as Mulenga Mundashi and Company and Grant Thornton Associates.

Mr Speaker, the negotiations were structured such that Unitel and Lap Green were afforded the same amount of negotiating time. The outcome of the negotiations was very clear. Unitel did not increase its offer for ZAMTEL. This meant that Lap Green’s offer remained the highest. It is important to point out that, during the negotiations, Lap Green also enhanced its bid by offering a bonus payment if ZAMTEL was able to achieve the targets in the business plan. That bonus, payable at the end of the third year of ZAMTEL’s operations post-privatisation, would be paid to the Government by Lap Green and not ZAMTEL. Its value could be up to around US$30 million in present value terms. Lap Green’s mark-up of the transaction documents was considered acceptable by the negotiating team.

Mr Speaker, it is also important to note that the business plan proposed by Lap Green forms part of the shareholders agreement. The business plan targets include:

(i)    subscriber numbers for all of ZAMTEL’s business lines and networks;

(ii)    technical targets pertaining to network coverage and capacity for the fixed and mobile networks; and

(iii)    financial targets in terms of profitability.

The plan envisages ZAMTEL significantly increasing the size of its customer base and revenues over the next five years. The ZDA Board approved the recommendation of the negotiating team, that Lap Green be invited to finalise and sign the transaction documents which comprised, among others, the sale and purchase agreement and shareholders agreement. These documents were submitted to Cabinet for approval.

Following Cabinet approval, the hon. Minister of Finance and National Planning and Lap Green Networks signed the transaction on 5th June, 2010 and US$64.25 million was paid. This represents 25 per cent of the transaction value.

Mr Speaker, Lap Green Networks is a telecommunications operator wholly owned by the Libya Africa Investments Portfolio (LAP), which is a sovereign wealth fund wholly owned by the Libyan Investment Authority.

Lap Green has telecommunications operation networks in Rwanda, Ivory Coast, Uganda, Sierra Leone, Niger and Togo. It has also, recently, completed the acquisition offer and operator in South Sudan. More significantly, Lap Green has undertaken similar acquisitions in other African countries such as Rwanda and Uganda where it has purchased former State-owned incumbent operators and delivered a rapid and effective turn-around.

Lap Green Networks has built a customer base of over 4.5 million subscribers. It had an equity base of US$500 million and a capital base of US$8 billion as at the end of 2009. This Government is confident that Lap Green is the right partner for ZAMTEL.

Mr Speaker, the completion of the transaction took place on 10th July, 2010 and the balance of the US$257 million consideration was paid. From there, the funds will be dispersed in accordance with the transaction documents as follows:

(i)    approximately, US$97.7 million will be used for settlement of terminal benefits for ZAMTEL employees;

(ii)    US$32.7 million will be transferred to the Chinese Banks to extinguish the loans;

(iii)    US$64 million has gone straight to ZAMTEL’s Bank account, for recapitalisation;

(iv)    US$20 million will be paid in an Escrow account and used to resolve ZAMTELl’s pension issues; and

(v)    US$42.6 million will go to the Government.

Furthermore, once all the payments have been made and settled, the residue in the Escrow account will also go to the Government.

Mr Speaker, the Government made a very clear decision to use the proceeds of the transaction to ensure that ZAMTEL, which is a key institution in this country, is transformed into a viable business. ZAMTEL is now capable of fulfilling its potential to serve the needs of the Zambian consumers and businesses

Mr Speaker, it will further be able to make a fresh start with an appropriately-sized workforce, a rationalised balanced sheet, with a sizeable capital injection and a dynamic management team. 

The Government is confident that, within a few months, it shall see a positive difference. The business plan put forward by Lap Green is focused, credible and achievable. It will see ZAMTEL rapidly transformed into a strong, capable and innovative company.

Mr Speaker, had the privatisation not been successfully concluded, ZAMTEL would have fallen bankrupt by October, this year.

Interruptions

Mr Mutati: The consequences of bankruptcy would have been too dire to comprehend.

Hon. Government Members: Hear, hear!

Mr Mutati: Mr Speaker, it should be noted that the price achieved of US$257, measured on the basis of the enterprise value per subscriber, is the highest ever achieved on the African Continent.

Interruptions

Mr Mutati: All major analysts in the telecommunications industry have given credit to this price.

Hon. Government Members: Hear, hear!

Mr Mutati: Mr Speaker, the Government remains a significant minority shareholder in ZAMTEL. It has retained the right to list some or all of its shareholding in ZAMTEL on the Lusaka Stock Exchange so that the Zambian citizens can participate in the turn-around of this company.

Hon. Government Members: Hear, hear!

Mr Mutati: Mr Speaker, as I conclude, I would like to urge, through the hon. Members of Parliament, the public, the Zambians, …

Mr Kakoma: Are worried!

Laughter

Mr Mutati: … now that we have done the work in the gymnasium, with what we have accomplished, to go and run the race by mobilising our financial resources as Zambians and position ourselves to come and participate in the initial public offering of up to 25 per cent of the Government’s shareholding. By participating in the initial public offering of the Government’s shares, the public will be taking a stake in one of the most promising sectors of its economy.

Mr Speaker, allow me to point out that we are confident that the template laid out by ZAMTEL’s privatisation will be employed for future transactions. It enhances Zambia’s image as an investor-friendly nation which is open for business on terms that are fair for both the buyer and the seller.

Mr Speaker, allow me to restate the Government’s position that the privatisation of ZAMTEL was not only to bring in a new lease of life to the company, but also to create a positive impact on the ICT sector as a whole. 

The effects of the broader telecommunications sector reforms are already paying dividends. The liberalisation of the international gateway has resulted in Zain reducing its international calls by up to 70 per cent. It is likely that, soon, the three mobile operators will reduce the interconnection fees such that it will be cheaper to call across networks. The licensing processes have been streamlined and the number of licenCes reduced. 

The impact of all these measures is that it will make mobile and other telecommunication services more affordable. This will reduce the cost of doing business in Zambia. It will also benefit our people, businesses and improve Zambia’s competitiveness.

Mr Speaker, I thank you.

Hon. Government Members: Hear, hear!

Mr Speaker: Hon. Members may now, ask questions …

Some hon. Members stood up.

Mr Speaker: Order! 

I was waiting for you to finish your sitting comments.

Laughter

Mr Speaker: Hon. Members are now free to ask questions on points of clarification …

Some hon. Members stood up.

Mr Speaker: I am still speaking.

Laughter

Mr Speaker: … on the statement which has just been given by the hon. Minister of Commerce, Trade and Industry.

Mr Nkombo (Mazabuka Central): I am very thankful for giving me this opportunity. Sir, I need your help. Can you allow me to pre-empt my question?

Mr Speaker: No! 

You ask your question.

Mr Nkombo: Mr Speaker, why has the hon. Minister not answered my question as delivered on the Order Paper of 16th July, 2010, which was specific to issues that the people who sent me to this Parliament requested me to ask because they deserve an answer …

Mr Speaker: Order! 

Ask that question now.

Mr Nkombo: How much money did the Government ministries owe ZAMTEL immediately prior to the Lap Green Networks acquisition of 75 per cent shares, ministry by ministry?

Hon. Opposition Members: Hear, hear!

Mr Mutati: Mr Speaker, this, indeed, is a very important question which requires to be fully answered. At the point of privatisation, the total indebtedness of various Government ministries and departments was K36 billion. In terms of liquidating this amount, it is a common commercial practice that the various Government ministries and departments should liquidate this amount from the recurrent departmental charges (RDCs) that are given by the Ministry of Finance and National Planning.

Secondly, a question was asked, last week, in terms of what the net assets were. The net asset position of ZAMTEL, at the point of transaction, was in the negative by K360 billion, effectively meaning that the liabilities of the company, when compared to its assets, were much more. This means the company was already insolvent.

Mr Speaker, I thank you.

Hon. Government Members: Hear, hear!

Mr C. K. B. Banda, SC. (Chasefu): Mr Speaker, the hon. Minister informed the House that the liability exceeded the assets. I would like to know the total gross assets of the company prior to privatisation whether that include the Mwembeshi Satellite and other assets such as the Lamya House.

Mr Mutati: Mr Speaker, the assets, before taking account of the liabilities for ZAMTEL, at the point of transaction, were worth K541 billion. This also included relatively obsolete technology such as the Mwembeshi Satellite.

I thank you, Sir.

Interruptions

Mr Speaker: Order!

Mrs Masebo (Chongwe): Mr Speaker, I had a similar question on the actual value of ZAMTEL. The issues that are not clear are the asset value, liabilities and the two R P valuation reports and not the actual sale. We support the sale because ZAMTEL was on its knees. Is the hon. Minister able to give us clear answers so that we convince people in our constituencies, who are currently asking us too many questions which we are unable to answer?

Mr Mutati: Mr Speaker, we shall make available a copy of the statement to each hon. Member. In the statement, it is absolutely clear that the net asset value is K360 billion. It is also equivocally clear, in the statement, that the range of the value, as determined by RP Valuation, is between US$148 million and US$204 million. This is contained in the statement in black and white.

I thank you, Sir.

Hon. Government Members: Hear, hear!

Ms Kapata (Mandevu): Mr Speaker, how many ZAMTEL workers are going to be retrenched and retained?

Mr Mutati: Mr Speaker, at the point of transaction, 100 per cent of the employees in ZAMTEL will be paid their terminal benefits because they will be declared redundant. The amount attributable to this redundancy package is close to US$100 million. 

Mr Speaker, the next step will be for the new ZAMTEL to re-engage the previous ZAMTEL employees as supported by the business plan that they submitted as part of the shareholders’ agreement.

I thank you, Sir.

Mrs Phiri (Munali): Mr Speaker, how confident was the hon. Minister when he was reading this ministerial statement, bearing in mind that this issue is even in the Supreme Court because the Zambian people are not satisfied with what is being said? Or is it the usual statements which are read because it is thought that Cabinet has the monopoly of intelligence compared to any other Zambian?

Hon. Opposition Members: Hear, hear!

Mr Speaker: Order!

Mr Mutati: Mr Speaker, we present statements to the hon. Members of Parliament with the belief that they need to understand the transaction for the purpose of explaining what is presented to them to the people. I have attempted to explain all the facts and figures to assist them with a better understanding of this transaction.

I thank you, Sir.

Mr D. Mwila (Chipili): Mr Speaker, the hon. Minister mentioned, in his ministerial statement, that US$64 million would be used for recapitalisation of the company. Is that amount enough to recapitalise the company which had a lot of debt?

Mr Mutati: Mr Speaker, I did elaborate that one of the problems of ZAMTEL was indebtedness. The loan liabilities, issues surrounding the pensions and terminal benefits will all be paid separately. After clearing all the external liabilities, the US$64 million will be used to meet the capital expenditure injection for the first two years to reposition ZAMTEL so that it achieves its goal of providing meaningful services to the people of Zambia.

I thank you, Sir.

Hon. Government Members: Hear, hear!

Mr Kakoma (Zambezi West): Mr Speaker, the hon. Minister, in his ministerial statement, said that the Government selected RP Capital as the financial adviser without elaborating how this was arrived at. Did the Government select RP Capital as its financial advisers without following tender procedures?

Mr Mutati: Mr Speaker, thank you for that important question. The Zambia Development Agency Act provides for a mechanism of engaging advisers through single sourcing, limited tender and public tender.

Hon. Opposition Members: Aah!

Mr Mutati: This process is supported by the Zambia Public Procurement Authority Act. In the case of RP Capital, they were engaged on the basis of the provisions of the Zambia Development Agency Act as supported by the Zambia Public Procurement Authority Act.

I thank you, Sir.

Hon. Government Members: Hear, hear!

Mr Sichamba (Isoka West): Mr Speaker, how many of the companies, at the start of the valuation and the second valuation, had bids partnering with the Zambian citizens? Were they given priority through the Citizens’ Economic Empowerment Commission (CEEC)?

Mr Mutati: Mr Speaker, we have already elaborated that ZAMTEL was in a difficult financial condition. In order to achieve a turn-around, we set a minimum criteria for acquiring a strategic partner. The criteria was premised on three pillars:

(i)    the participants needed to demonstrate capacity to have a capital base of US$250 million;

(ii)    have market capitalisation of approximately US$8 billion; and

(iii)    have at least 3 million subscribers in the telecom industry.

Those were the minimum conditions open to everyone with the capacity to meet them whether Zambian or foreign.

I thank you, Sir.

Mr Beene (Itezhi-tezhi): Mr Speaker, in the twenty years of the MMD rule, the company has deteriorated to its current status.

Mr Speaker: Order! 

What is your question, please?

Hon. Members: Hear, hear!

Mr Beene: Could the hon. Minister confirm that the Government owes an apology to the Zambian people for allowing ZAMTEL to reach its current status?

Hon. Opposition Members: Hear, hear!

Mr Mutati: Mr Speaker, the policy that the Government undertook was to address not only ZAMTEL, but also the parastatal companies that were not contributing to the fortune of the State. Therefore, in the last twenty years, the Government has been undertaking the privatisation of various parastatal companies so that they can begin to contribute to the National Treasury and also be relevant in the sectors in which they operate. We have done that in mining, …

Dr Scott: Apologise.

Mr Mutati: … retail trade and many other sectors.

I thank you, Sir.

Hon. Members of Government: Hear, hear!

Mr Hachipuka (Mbabala): Mr Speaker, could the hon. Minister confirm the general belief that the Fibre Optic Cable Project which was undertaken by both ZAMTEL and ZESCO has been passed on to the buyers of ZAMTEL?

Mr Mutati: Mr Speaker, I must correct that impression. The fibre optic cable of ZESCO has not been passed on to ZAMTEL. What will happen is that ZAMTEL will lease space on the fiber optic of ZESCO.

I thank you, Sir.{mospagebreak}

Mr Mwiimbu (Monze Central): Mr Speaker, I would like the hon. Minister of Commerce, Trade and Industry to categorically answer the question which was raised by Hon. Kakoma pertaining to the engagement of RP Capital. What criterion was used to single-source this company to be the financial consultant for ZAMTEL?

Mr Mutati:  Mr Speaker, my answer to the question from a distinguished legal brain is that the Government complied with the provisions of the Zambia Development Agency Act and Zambia Public Procurement Act.

Thank you, Sir.

Interruptions

Mr Lubinda: Mr Speaker, the hon. Minister was very clear regarding all the Cabinet decisions that were made to do with the processes involved in the sale of ZAMTEL. However, he did not state at what stage Cabinet met to decide on the privatisation of ZAMTEL in the manner that it happened. He also did not state whether or not the Attorney-General was in attendance at that meeting. Could he also state whether the Attorney-General gave advice on how to shortlist and contract RP Capital to value the property of ZAMTEL?

Hon. Opposition Members: Hear, hear!

Mr Mutati perused through his papers.

Mr Kambwili: One page is missing?

Laughter

Mr Speaker: Order!

Mr Mutati: Mr Speaker, on paragraph sixteen of the ministerial statement, which I will distribute to all hon. Members …

Mr Speaker: Order!

 There is no need to reproduce for all hon. Members to study.

Hon. Government Members: Hear, hear!

Mr Speaker: Your statement, as delivered, is sufficient. You may go ahead.

Mr Mutati: Mr Speaker, let me then say that the Attorney-General is part of Cabinet and, therefore, a part of the decisions it makes.

I thank you, Sir.

Hon. Opposition Members: Aah!

Mr Mwamba (Kasama Central): Mr Speaker, I would like to find out from the hon. Minister whether any Zambian qualified to tender for the purchase of ZAMTEL because I can see that …

Mr Speaker: Order! 

The House has to make progress. That question has been asked and already been answered.

Laughter

Mr Speaker: Order!

Mr Syakalima (Siavonga): Mr Speaker, could the hon. Minister be kind enough to show us the RP Capital Valuation Report and lay it on the Table of the House rather than us grappling with his statement.

Mr Mutati: Mr Speaker, the substance of the RB Report …

Hon. Member: RB Report!

Laughter

Mr Speaker: Order!

Hon. Opposition Member: Taona manje.

Mr Speaker: Hon. Members, one more of this sort of thing and I shall conclude that the House does not want to listen to the debate any more. The hon. Minister may continue.

Mr Mutati: Mr Speaker, the substance of that report is the valuation of ZAMTEL. After a 300 paged analysis, ZAMTEL was valued between US$148 million and US$204 million.

I thank you, Sir.

Ms Mwape (Mufulira): Mr Speaker, I would like to find out from the hon. Minister what contingency plan the Government has put in place in case the subscriber liability related to the Government ministries and departments is discounted. I am trying to find out what would happen if the liability is bought off at a discount and the new debt owner pursues the Government for a full value of the liability. 

Mr Speaker, my question comes in the light of the huge amount or the extent of …

Mr Speaker: Order! 

Mr Mutati: Mr Speaker, at the time of the transaction, the auditors of ZAMTEL, Ernst and Young determined the extent of the liabilities of ZAMTEL. It was on that basis that the offers were structured in such a way that all the external liabilities of ZAMTEL would be extinguished at the point of the transaction.

I thank you, Sir.

Hon. Government Members: Hear, hear!

Mr Shakafuswa (Katuba): Mr Speaker, I would like to find out from the hon. Minister whether he is aware that RP Capital was rejected by the ZDA Board at the time it was introduced to them. 

Mr Mutati: Mr Speaker, …

Mr Kambwili: Ali kwata amano yakwe, mulekeni ale yasuka.

Mr Mutati: … the simple answer is that, I am not aware.

I thank you, Sir.

Mr Chota (Lubansenshi): Mr Speaker, how was Lap Green coerced by the Government to buy an insolvent company?

Laughter

Mr Mutati: Mr Speaker, we can assure the hon. Members that there was no coercion. The Government made an announcement which spelt out the criterion for the transaction and Lap Green responded. It could be that Lap Green has a strategic interest in telecoms, particularly, in the southern part of Africa. It also could be that for that reason it made the decision to acquire ZAMTEL.

I thank you, Sir.

Mr L. J. Mulenga (Kwacha): Mr Speaker, through you, I would like to find out from the hon. Minister what assets were taken into account at the time of the valuation. Were the Optic Fibre Project and Mwembeshi Satellite taken into consideration? Can he also explain why the Government allowed ZAMTEL to undertake a huge project like the optic fibre cable when the company was insolvent?

Hon. Opposition Members: Hear, hear!

Mr Mutati: Mr Speaker, one of the reasons the financial condition of ZAMTEL was so bad was because of the decisions made by management, in particular, in relation to the Optic Fibre  Cable Project. When we were assessing ZAMTEL in relation to the optic fibre cable, there was an intention by management to expand and invest in it at a cost of US$70 million. As a Government, we advised them not to incur additional expenditure because another parastatal already had an optic fibre which they could access. Therefore, we limited the extra capital expenditure on the optic fibre by about US$40 million.

Mr Speaker, I thank you.

Dr Katema (Chingola): Mr Speaker, I would like to find out from the hon. Minister how ZAMTEL could afford to spend US$70 million on the optic fibre, but could not afford to invest US$64 million which this new company is injecting into ZAMTEL.

Mr Speaker: I want to call on the hon. Members to listen to other hon. Members’ questions and how they are being answered. That question has just been asked and the hon. Minister has explained how, as I heard him, ZAMTEL was restrained from spending any further money on that project.

In case the hon. Minister has something more to add to what he has already said, he may do so.

Mr Mutati: Mr Speaker, you have assisted me. I have nothing more to add.

I thank you, Sir.

Hon. Government Member: Hear, hear!

Mr Kambwili (Roan): Mr Speaker, can the hon. Minister confirm that the President’s son, James, introduced RP Capital to the Government and how much it was going to be paid as commission.

Hon. Opposition Members: Hear, hear!

Interruptions

Mr Speaker: Order!

Mr Mutati: Mr Speaker, I have already indicated that the appointment of RP Capital was in accordance with the Zambia Development Act and Zambia Public Procurement Act.

I thank you, Sir.

Mr Kambwili: No. Answer the question. You are not telling the truth.

Mr Chongo (Mwense): Mr Speaker, the nation suffered from the dishonest conduct by …

Mr Speaker: Order! 

Do you have a question or you want to debate?

Laughter

Mr Chongo: Sir, what measures have been taken to ensure that there is no asset stripping as was the case with the companies that were sold in earlier times?

Hon. Opposition Members: Hear, hear!

Mr Kambwili: Fya chabe chabe fye!

Mr Mutati: Mr Speaker, as I already indicated, at transaction time, the schedule of assets to be taken over by the new strategic investor were listed and verified.

I thank you, Sir.

Mr C. Mulenga (Chinsali): Mr Speaker, could the hon. Minister confirm that the conditions set regarding the privatisation of ZAMTEL discriminated against Zambians, hence no Zambian participated in the bid process.

Mr Mutati: Mr Speaker, for the sake of mere repetition, I would like to state that when you are administering a dosage to a patient, you are supposed to administer one that cures the patient and that is the dosage that we designed. 

I thank you, Sir.

Hon. Opposition Members: Aah!

Mr Chimbaka (Bahati): Mr Speaker, may the hon. Minister state, categorically, how negatively ZAMTEL was going to affect the economic development of this country if it was not privatised.

Interruptions

Mr Mutati: Mr Speaker, a simple measure of that impact is that the other two mobile operators on the market have contributed, in the past five years, K1.4 trillion to the Treasury. In the case of ZAMTEL, it has got K500 billion from the Treasury. That is where the answer lies.

I thank you, Sir.

Laughter

Mrs Musokotwane (Katombola): Mr Speaker, I would like to find out from the hon. Minister what the value of Mwembeshi Satellite Station and Lamya House is.

Mr Mutati: Mr Speaker, I do not have specific information on the value of ZAMTEL assets, but it can be provided.

I thank you, Sir.

Mr Mukanga (Kantanshi): Mr Speaker, can the hon. Minister reconcile his statement that Mwembeshi Satellite Station is obsolete when, in fact, it was recently modernised prior to privatisation and, I think, a group of hon. Members of Parliament even visited the station.

Mr Mutati: Mr Speaker, when the decision to liberalise the international gateway was made, it was clearly evident that there had been a shift of technology in terms of access and communication outside Zambia. The technology being used at Mwembeshi belongs to yesteryears.

I thank you, Sir.

Interruptions

Mr Speaker: Order! 

According to my reckoning, there have been twenty-seven follow-up questions on the hon. Minister’s statement to the House and I make no excuse. You are now repeating yourselves. To my ears, it is clear that the subject has been exhausted. There is nothing new that you will add to what has already been said. 

Mr Ntundu indicated.

Mr Speaker: I hear there is something new here. 

Mr Ntundu (Gwembe): Mr Speaker, the sale of ZAMTEL remains a controversy, whatever the hon. Minister says.

Mr Speaker: Order! 

This is question time and not debate time. 

Mr Ntundu: Mr Speaker, can the hon. Minister confirm if it is true that the initial stage of the sale of ZAMTEL was done at some restaurant called Rhapsody’s. Secondly, why is the hon. Minister not confirming that the Report of RP Capital will be brought to this House to be laid on the Table?

Mr Speaker: The hon. Minister of Commerce, Trade and Industry will observe the one question rule. Pick one of the two questions.

Mr Mutati: Mr Speaker, I am not aware that the board of the ZDA made the decision to privatise ZAMTEL in a restaurant located at Arcades.

I thank you, Sir.

Hon. Government Members: Hear, hear!

__________

QUESTIONS FOR ORAL ANSWER

DROUGHT PRONE AREAS’ ASSISTANCE

573. Mr Chazangwe (Choma Central) asked the Minister of Agriculture and Co-operatives what measures had been taken to assist drought prone areas in the Eastern and Southern provinces in the 2009/2010 rainy season.

The Deputy Minister of Agriculture and Co-operatives (Mr Mbewe): Mr Speaker, several measures have been initiated in the country to assist drought prone areas, including the Eastern and Southern provinces. These measures are aimed at creating resilience in agriculture and they include the following:

Conservation Agriculture Activities

There are three supported projects being implemented in the selected districts of Chipata, Katete, Petauke, in the Eastern Province and …

Mr Speaker: Order! 

The hon. Member for Choma and I would like to pay attention to that reply. May the rest of the House pay attention as well.

Mr Mbewe: Mr Speaker, thank you for your protection. 

…and Mazabuka, Monze, Choma and Kalomo districts in the Southern Province. 

Sir, in addition to the Government supported conservation agriculture, the Norwegian Government is supporting the Conservation Agriculture Project, implemented by the Conservation Farming Unit at the Zambia National Farmers’ Union (ZNFU). The Norwegian Government is also supporting the Conservation Agriculture for Sustainable Agricultural Programme Concept as a scaling up of the Conservation Agriculture for Increased Production and Productivity (CASPP) under the Ministry of Agriculture and Co-operatives. Alongside, the European Union Commission is supporting the project called Farmer Input Support Response Initiative (FISRI). All these projects are implemented following the conservation agriculture principles that work to harvest water in-situ. 

Mr Speaker, furthermore, farmers who use conservation agriculture techniques prepare their fields early to take advantage of the full season. More than 41,000 farmers in the Eastern Province and 43,000 farmers in the Southern Province have been trained and have participated in the implementation of conservation agriculture.

Irrigation related projects implemented in 2009/ 2010 Rainy Season

Sir, under the rolling National Irrigation Plan (NIP), the Government planned and developed small holder irrigation schemes and these are:

(i)    during the year 2009, Nkyanya Dam in Petauke District,  in the Eastern Province, and Nkwenga Dam in Sinazongwe were constructed. In addition, Kabulamwanda Irrigation Scheme in Namwala District, in the Southern Province, was equally rehabilitated; and

(ii)    under the Small-scale Irrigation Project (SIP), one small-holder irrigation scheme was constructed at Buleya Malima in Sinazongwe District, in the Southern Province. 

I than you, Mr Speaker.

Mr Chazangwe: Mr Speaker, due to climate change, when will this Government begin to construct big dams in the Eastern and Southern provinces which can be used when there are droughts?

Mr Mbewe: Mr Speaker, my ministry is responding favourably to issues concerning climate change. Above all, my ministry is producing varieties that will conform to areas prone to floods and those that have low rainfall. At the same time, my ministry has taken up the issue of dam construction as it was in this House that K15 billion was approved to go towards irrigation equipment and construction of dams.
 
I thank you, Mr Speaker.

Mrs Phiri (Munali): Mr Speaker, some of these people who are affected by hunger sell the food they are given as relief. What measures have been put in place to protect these people from selling their food? 

Mr Mbewe: Mr Speaker, my ministry does not run any price control system. If a farmer has produced enough maize, he has the right to sell it the way he wants. It is very unfortunate that when some people are given food aid, they end up selling it. I think we need to sensitise our farmers and this is a responsibility of each and every hon. Member of Parliament who is in this House to ensure that people take care of their food.

I thank you, Sir.

Hon. Government Members: Hear, hear!

Mr Lubinda (Kabwata): Mr Speaker, conservation farming is very important during drought and even during times of floods. Can the hon. Minister indicate to this House how many of the small-scale farmers in the Southern and Eastern provinces are engaged in conservation farming practices and what productivity levels they have reached.

Mr Mbewe: Mr Speaker, I indicated in my reply that we have captured about 41,000 farmers in the Southern Province and 43,000 in the Eastern Province. I would like to report to this august House that the yield for all the farmers who have practised conservation agriculture has been very good. It is for this reason that we are talking about a bumper harvest. 

Thank you, Sir. 

Dr Scott (Lusaka Central): Mr Speaker, I wonder why the hon. Minister has not mentioned some of the crops that are drought resistant and whose quality improves with drought such as cotton and tobacco. Could he explain to us what he has done to get small-scale farmers to diversify into such crops other than depending on livestock?

Mr Mbewe: Mr Speaker, our extension officers are in the field sensitising our farmers on diversification. For instance, we are encouraging farmers in the valley to look at crops which are early maturing. We are also sensitising farmers along the valley to grow millet and sorghum. Our officers are also sensitising farmers on higher ground in the management of growing tobacco and cotton. 

Mr Speaker, we are very pleased that some non-governmental organisations (NGOs) such as Dunavant and the Tobacco Board of Zambia (TBZ) have assisted our extension officers with transport and have imparted knowledge to them, which they pass on to farmers so that they can grow enough and ensure that they sustain themselves. 

Thank you, Sir. 

HEADS’ MINIMUM QUALIFICATIONS

574. Mr Chisala (Chilubi) asked the Minister of Education what the minimum qualifications for a head teacher and head of department at a high school were. 

The Deputy Minister of Education (Mr Sinyinda): Mr Speaker, the minimum qualification for a head teacher and a head of department at a high school is that of a degree with two or more years of teaching experience. However, there are cases where these positions are held by officers with diploma qualifications with a number of years of experience. This is due to the inadequate number of degree holders in high schools. 

Hon. Government Members: Hear, hear!

Mr Chisala: Mr Speaker, could the hon. Minister indicate why it took too long for degree holders from universities to be upgraded resulting in diploma and certificate holders administering high and upper basic schools?

Mr Sinyinda: Mr Speaker, I wish to thank the hon. Member for his concern. However, being a teacher himself, I am sure he is aware that things are done gradually. It is not possible for the Government to immediately do away with diploma holders, who have a lot of experience, just because, now, we have degree holders. The Government will work on this, but gradually. 

Thank you, Sir. 

Mr Chazangwe: Mr Speaker, I would like to find out from the hon. Minister why it takes time to confirm a head teacher when appointed to that position. 

The Minister of Education (Ms Siliya): Mr Speaker, firstly, it is very important to state that, on this side of the House, we believe that there is no substitute for education, especially a good education. This is why we are trying very hard to ensure that, at high school level, we have degree holders. Obviously, we have a challenge because, in our high schools, only about 14 per cent of the teachers have degrees. This is why we have embarked on a programme to upgrade 6,000 teachers to degree holders, through distance learning, particularly in mathematics and sciences. 

Mr Speaker, on the issue of confirming head teachers, firstly, there are not enough degree holders to be appointed as head teachers. Therefore, you will find a situation where we have diploma holders managing schools. However, we have also realised that we have some management challenges in terms of the processes that it takes for us to confirm teachers through the Teaching Service Commission. 

In the last one year, we have tried to address this matter. Many teachers nationwide will attest to the fact that we have tried really hard to quicken the process for teachers’ confirmations. The biggest challenge was acquiring the information about where the teachers were and it had to do a lot with transfers and details of the teachers. We are trying to clean up so that we can have the right information and process teachers’ confirmations as quickly as possible. 

Mr Speaker, I thank you. 

DONGWE RESETTLEMENT SCHEME

575. Mr Imenda (Lukulu East) asked the Vice-President and Minister of Justice when infrastructure at Dongwe Resettlement Scheme would be developed to ensure maximum operations.

The Deputy Minister in the Vice-President’s Office (Mr Sichilima): Mr Speaker, Dongwe Resettlement Scheme situated in Lukulu District in the Western Province is one of the resettlement schemes being developed by the Department of Resettlement in the Office of the Vice-President. The development of infrastructure to ensure social and economic viability of the scheme will commence in 2011. The focus, in 2011, will be on opening up of internal roads, citing, drilling and equipping of boreholes prior to the resettlement of people. 

Thank you, Sir. 

Mr Imenda: Mr Speaker, is the Vice-President and Minister of Justice in a position to recall that when a similar question was asked in 2008, he assured this House that the road to the site would be worked on and an amount of K500 million would be disbursed for the scheme to be operational in the same year. 

Mr Sichilima: Mr Speaker, sometimes, hon. Members of Parliament should appreciate, especially those in the area where this scheme is, that certain conditions determine the works that are likely to be undertaken. At the time, we admit that we had difficulties in opening up the resettlement. This was because we did not want to open up a road that would be washed away or become impassable in the shortest possible time. We had to look at other technicalities. 

Mr Speaker, I thank you. 

Mr Lubinda: Mr Speaker, could the hon. Minister indicate to us what measures will be put in place to ensure that if the road is constructed now, it will not be washed away, which would have been the case had it been worked on after the promise made on the Floor of the House in 2008.

Mr Sichilima: Mr Speaker, I indicated that, in 2011, a number of issues will be taken into account. When we talk about roads, the opening up of drainages and where the water will flow is included. Added to this, … the Kabwata hon. Member of Parliament is not listening. 

Laughter 

Mr Sichilima: Mr Speaker, at the same time, we have also taken into account that even people from the hon. Member’s constituency would want to resettle in this area. Therefore, we will also re-demarcate the place so that wetlands that are not likely to dry up are left out. I would like to confirm through you, Sir, that the works have been taken into account. 

Thank you, Sir.

Mr Lubinda interrupted.

Mr Speaker: Order!

MENTALLY DISTURBED PERSONS

576. Mr Chisala asked the Minister of Health what plans the Government had put in place to protect the communities from the mentally disturbed persons who were increasing in number countrywide.

The Minister of Health (Mr Simbao): Mr Speaker, I wish to inform the House that Zambia is a signatory to the United Nations Principles for the Protection of Persons with Mental Illness and the Improvement of Mental Health Care adopted by the General Assembly Resolution 46/119 of 17th December, 1991. It is also a signatory to the United Nations Convention on the Rights of People with Disabilities which was also adopted by the United Nations General Assembly on 13th December, 2006.

Enshrined in all these instruments is the fact that people with disabilities, including the mentally ill, should be accorded full and equal enjoyment of all human rights and fundamental freedoms, including respect for their inherent dignity. These instruments further urge change of attitude towards people with disabilities all over the world.

In this context, the situation should actually be to the contrary. It is the communities that are expected to protect the mentally ill, especially the homeless mentally ill who are least considered among the vulnerable people in society.

However, the Government has put in place a number of measures to effectively address the problem of mental illness in the country. Some of these measures are:

(i)    a mental health policy was developed and approved by Cabinet in 2005; 

(ii)    the Ministry of Health, through Chainama College of Health Science, has resumed the training of clinical officers, psychiatry and registered mental health nurses who are suitable to manage mental health illnesses. So far, over 120 of these officers have been posted to district provincial mental health facilities and rehabilitation centres;

(iii)    the Government has also embarked on the revision of the Mental Disorders Act Cap. 305 with a view to repeal and replace it with a new Mental Health Act;

(iv)    mental health has been mainstreamed in national planning documents such as the Fifth National Development Plan (2006-2010) and the National Health Strategic Plan;

(v)    the Ministry of Health has also developed a National Mental Health Strategic Plan (Road Map) 2007-2011;

(vi)    mental health has also been integrated in all the clinical and technical guidelines as follows:

(a)    standard treatment guidelines;

(b)    integrated technical guidelines for frontline health workers; and

(c)    Zambia National Formulary.

Mr Speaker, the ministry is also collaborating with various civil society organisations in the areas of mental health such as:

(i)    the Mental Health Users Network of Zambia (MHUNZA);

(ii)    the Mental Health Association of Zambia (MHAZ);

(iii)    care Ministries of the Mentally Ill; and

(iv)    MUTUTA Memorial Day Care Centre and many others.

Finally, I would like to urge hon. Members of Parliament and, through you, Sir, the general public not to abandon their mentally ill patients as these illnesses are treatable or, at least, manageable. If we all take responsibility, we shall not have these people roaming the streets anyhow. Secondly, facilities exist were mentally ill patients can be accommodated such as the Matero After Care in Lusaka, Nsadzu Rehabilitation  Centre in Chadiza and Kawimbe Rehabilitation Centre in Mbala.

 Mr Speaker, I thank you.

 Hon. Government Members: Hear, hear!

Mr Chisala: Mr Speaker, I would like to thank the hon. Minister for that detailed answer.

Mr Speaker, may I know whether the Government has any serious plans of constructing psychiatric clinics at the district level countrywide.

Mr Simbao: Mr Speaker, presently, the Government is expanding its psychiatric facility services which include Mbala and Kasama. In addition, many hospitals now have a department for the mentally ill.

 I thank you, Mr Speaker.

Mrs Musokotwane (Katombola): Mr Speaker, is it possible for the Ministry of Health to work with the Ministry of Home Affairs so that the police can pick the mentally disturbed people who are roaming the streets and take them to the facilities the hon. Minister is talking about?

Mr Simbao: Mr Speaker, yes, it is possible.

I thank you, Sir.

Mrs Phiri (Munali): Mr Speaker, I would like to find out from the hon. Minister the total number of mental rehabilitation centres there are countrywide. 

Mr Simbao: Mr Speaker, I do not have that answer. All I know is that we have two big centres, which are in Lusaka and Ndola.

I thank you, Mr Speaker.

Mr Kapeya (Mpika Central): Mr Speaker, may I learn from the hon. Minister what drives a person to …

Laughter

Mr Kapeya: Mr Speaker, may I learn what causes a normal person to become mentally disturbed.

Laughter

Mr Simbao: Mr Speaker, there are many causes and if we are not careful, any one of us can become mentally ill.

 I thank you, Mr Speaker.

Laughter

Mr Chazangwe: Mr Speaker, I would like to find out from the hon. Minister of Health why the police refuse to assist when someone becomes mentally disturbed, giving the reason that there is no compensation in the case of injury.

Mr Simbao: Mr Speaker, I am not aware of that.

 I thank you, Sir.

Mr Speaker: Order!

Business was suspended from 1615 hours until 1630 hours.

[THE DEPUTY CHAIRPERSON OF COMMITTEES in the Chair]

ELECTRICITY EXPORTS

577. Mr D. Mwila (Chipili) asked the Minister of Energy and Water Development:

(a)    how much money was raised from the export of electricity to the neighbouring countries by the Zambia Electricity Supply Corporation (ZESCO) from 2007 to 2009;

(b)    to which countries the electricity was exported;

(c)    whether ZESCO intended to increase the amount of electricity exports; and

(d)    what measures ZESCO had taken to reduce load-shedding country-wide.

The Deputy Minister of Energy and Water Development (Mr Imasiku): Mr Speaker, I wish to inform the House that ZESCO raised a total K112 billion from electricity export to neighbouring countries with Zambia from 2007 to 2009 broken down as follows:

Year        Amount
        (K’billion)

2007    22 

2008    19 

2009    71 

Total        112

Mr Speaker, electricity was exported to neighbouring countries such as Botswana, Namibia, the Democratic Republic of Congo, Tanzania, Mozambique and Zimbabwe.

Sir, the geographical location of Zambia puts ZESCO at a strategic position to export electricity to neighbouring countries because of the generation expansion projects at Kariba North Extension (360 MW) and at Itezhi-tezhi (120 MW), which are currently under execution. With further expansion in generation capacity and the development of the transmission inter-connectors with the neighbouring countries, ZESCO is likely to increase exports of electricity in future.

Mr Speaker, on the generation transmission side, the company has rehabilitated and upgraded the existing power stations as follows:

Power Station    Initial Rating     After Rehabilitation
        (MW)            (MW)

Kafue Gorge    900     990

Kariba North Bank    600    720

Victoria Falls    108    108 

Sir, the rehabilitation of the Kafue Gorge Power Station has been completed while rehabilitation works on the last four generators at Kariba North Bank will be completed in 2011.

The company is currently executing the Kariba North Bank Extension Project which will avail an addition of 360MW peaking power. The company, through a partnership with TATA, is also in the process of developing a 120MW power station at Itezhi-tezhi Dam. The two new generation stations are expected to be productive by 2012 and 2013 respectively.

Mr Speaker, the rehabilitation and up-rated generators in the existing power stations together with the additional generation from the Kariba North Bank Extension and Itezhi-tezhi will increase generation output, thereby reducing load shedding in the medium term. 

Sir, in addition to that, on the consumption side, ZESCO Limited continues with its Demand Side Management (DSM) initiatives aimed at energy conservation and efficiency. Actually, we launched this programme on the Copperbelt, this week, and in Lusaka, a few weeks ago.

I thank you, Mr Speaker.

Mr D. Mwila: Mr Speaker, why did ZESCO management make a decision to start exporting electricity, and yet its electricity supply is not enough in the country?

The Minister of Energy and Water Development (Mr Konga): Mr Speaker, ZESCO being a member of the Southern Africa Power Pool, which is an organisation of utilities of the Southern African Development Community (SADC) member countries, has signed agreements with other countries to support these countries. Although it is true the country faces deficits, the obligations that ZESCO has to these countries have to be met.

Sir, actually, I would like to indicate that for the countries that have been mentioned here and if you observe the areas which power is supplied to, you will find that most of them are bordering with Zambia, for instance, Kasane in Botswana, Tete and Zumbwe in Mozambique and the border towns with Democratic Republic of Congo (DRC) in the Luapula Province. These connections are actually done at medium voltage levels. We could, of course, lift the inter-connectors, but that will not substantially change the energy profile for the country because the energy that is being exported is not very significant if you look at the figures.

I thank you, Sir.

Mr Lumba (Solwezi Central): Mr Speaker, may I find out how many megawatts, not in money form, were exported and if at all Zambia also imported power within this period from these other countries, how many megawatts were imported?

Mr Konga: Mr Speaker, at present, I do not have the figures for the megawatts that were exported to these countries, country by country, but I can make that available even tomorrow.

I thank you, Mr Speaker.

Mr Kapeya: Mr Speaker, may I find out from the hon. Minister what plans he has to connect areas in Zambia serviced by imported electricity to the national grid.

Mr Konga: Mr Speaker, Zambia is a wide country. At present, the national grid runs more or less from the north to south along the line of rail. There are a few offshoots to connect certain parts like the Eastern and Western provinces through Sesheke. However, attempts are underway through the electricity master plan to construct more transmission lines to the other parts of the country. This is being done in line with the efforts that the Government has put in place to increase generation. Firstly, we need to increase production of energy. If you heard the hon. Deputy Minister speak, he mentioned that there were efforts to increase generation at Kariba North Extension, at Itezhi-tezhi and, now, we are talking about the Kafue Gorge Lower. Very soon, we will embark on Mombo Tuta and Mambilima in the Luapula Province so that once we have generated this extra power, we embark on increasing the transmission network so that we can distribute the power to the various parts of the country. 

I thank you, Sir.

Mr Simuusa (Nchanga): Mr Speaker, may I find out whether the 35 per cent increment in tariffs requested by ZESCO is justified.

Mr Konga: Mr Speaker, indeed, the 35 per cent tariff adjustment requested by ZESCO is justified. I say so because as we have indicated in respect of part (d) of the question, currently, there is inadequate energy in the country to drive our various economic activities. This also affects our lifestyles because, every so often, there is load shedding, and, maybe, people do not carry on with their normal lives. So, this requires us to have new investments in power generation.

On one hand, we will be celebrating that the price of copper has gone up, but, on the other hand, from the electricity side, copper being a major input in transformers, the cost of transformers will go up.

Mr Speaker, this tariff increase application by ZESCO is, indeed, justified because if we do not do this, we are not going to have any investments in the generation side. If we do not invest in new energy production now, definitely, it will have a negative impact on the economic and social aspects of our lifestyle. I would like to urge the hon. Members to support the tariff application by ZESCO.

I thank you, Sir. 

Dr Scott (Lusaka Central): Mr Speaker, I wonder whether the hon. Minister would enlighten us on how this thinking and caring of the hardworking Government, which has been in power for nearly twenty years, can …

The Deputy Chairperson: Order! 

Could you ask a question, please?

Dr Scott: Mr Speaker, I would like to know why hydro electricity, having been identified as a major export industry at the end of the Rhodesian war in 1980, has not, until now, been actually expanded by more than a few megawatts and, therefore, left with no industry.

Mr Konga: Mr Speaker, indeed, there has been stagnation in the investments in the generation side of the energy sector for almost forty years now, even before the end of the Rhodesian war.

Mr Speaker, at the birth of this country, in 1964, the outlook for economic growth was positive, but, again, due to commitments which this country made towards the liberation of many countries in the Southern African region and the policies that obtained in the commandist economy that existed at that time, the economic performance declined and, as such, the demand for energy also declined. There was, therefore, no need at all to invest in new energy infrastructure because there was surplus energy. 

As the hon. Member has rightly indicated, because of the very progressive policies of this Government, which has turned round the economy, there is now renewed interest in investing and growing the Zambian economy. As such, the current energy levels have been outstripped by the demand by industry. That is why this very able Government is investing in new energy infrastructure.

I thank you, Sir.

Mr Sikota, SC. (Livingstone): Mr Speaker, I join those who have congratulated you on your election to your seat.

Mr Speaker, I would like to find out from the hon. Minister what tariffs are charged for the electricity that we export. Is it at the same rate as what is charged locally? If it is at the same rate, why is ZESCO saying that those are sub economic tariffs?

Mr Konga: Mr Speaker, the tariffs that are charged to the various export markets vary depending on how they have been negotiated between the importing country and ZESCO. There is no flat figure that we would mention but ZESCO does negotiate the tariffs that it charges and these vary from country to country.

I thank you, Sir.

Dr Machungwa (Luapula): Mr Speaker, has the Government shelved plans to sell power to East Africa through the inter-connector from Pensulo, which has been planned, considering that we do not have enough power in the country?

Mr Konga: Mr Speaker, the Government has not shelved plans to export power to East Africa. What the Government is doing is agreeing with the other two countries in East Africa, which are Tanzania and Kenya, on the mode of constructing the high voltage transmission line which will link East Africa to Zambia so that the power from Zambia and, indeed, the Southern African Power Pool will be available for the East African market. Currently, there are negotiations going on to construct the transmission line after which the power will be exported. That is why there is all this effort to implement the Kafue Gorge Lower, Mambilima and Mombo Tuta and other projects in Zambia so that power can be exported to East Africa.

I thank you, Sir.

Mr Matongo (Pemba): Mr Speaker, I wish to congratulate you on everything that has happened to you.

Mr Speaker, can the hon. Minister indicate very clearly whether the investment in the energy sector in the region for the past twenty-five to the forty years he has mentioned will have an effect on investment in Zambia developing mini-hydro power stations when Inga Power Station in the Democratic Republic of Congo comes in effect. Can the hon. Minister confirm that South Africa is going nuclear come 2025?

Mr Konga: Mr Speaker, that is a very important question and I am glad that the hon. Member has asked it. It is important that the Zambian Government quickly invests in its hydro-power potential because what we are looking at are various little segments of the hydro-power potential. However, of course, there is a very big potential that lies in the Democratic Republic of Congo and many other countries are looking at that potential with the intention of developing it. Once that is done, the need for people to look at Zambia’s energy will be relegated to third and if not the last rung of the ladder. So, it is important that the Zambian Government, as it is doing now, makes efforts to quickly develop its hydro-power potential so that it can be available to the market, both in Southern and Eastern Africa. If we do not do that now and other sources are found by other countries, they will bypass Zambia and there will be no need for the country to look at that development potential at all.

Mr Speaker, the Government, on that basis, is undertaking all measures to ensure that investments in the energy sector are undertaken as a matter of priority.

I thank you, Sir.

___________{mospagebreak}

MOTIONS

SECOND REPORT OF THE COMMIITTEE ON LOCAL GOVERNANCE, HOUSING AND CHIEFS’ AFFAIRS 

Mrs Musokotwane (Katombola): Mr Speaker, I beg to move that the House do adopt the Second Report of the Committee on Local Governance, Housing and Chiefs’ Affairs for the Fourth Session of the Tenth National Assembly laid on the Table of the House on 19th July, 2010.

The Deputy Chairperson: Is the Motion seconded?

Mr Mwango (Kanchibiya): I beg to second the Motion, Mr Speaker.

Mrs Musokotwane: Mr Speaker, your Committee, in performing its duties, was guided by its terms of reference as set out in the Standing Orders.

Mr Speaker, your Committee, undertook a study of the housing situation in Zambia and the Government’s position on the administration of property rates during the year. It also considered the 2010 report of the Minister of Local Government and Housing on the summarised audited accounts of local authorities and the action-taken report on your Committee’s report for 2009. Your Committee also undertook local tours to selected local authorities in the Central and Copperbelt provinces, in order to acquaint itself with its operations.

Mr Speaker, in performing its role, your Committee is always mindful of its important role in safeguarding public interest by continuing to prod stakeholders for delivery of services in an efficient and effective manner. Local governance provides an opportunity to make a difference because councils impact on people in their everyday lives.

Mr Speaker, let me now turn to the housing situation in Zambia. Having deliberated on the housing situation in Zambia, your Committee is seriously concerned that most of the information availed on housing is either outdated or cannot be relied upon. It is practically impossible to accurately state the scale of the actual housing problem in the nation. This is an unfortunate and unacceptable situation because proper planning and strategising cannot be done under such circumstances.

Mr Speaker, your Committee, therefore, urges the Government to prioritise information management and research as it relates to housing in Zambia. The Government should expeditiously undertake a survey to collect accurate data on the housing stock.

Mr Speaker, as regards the adequacy of the policy framework, your Committee is happy to learn from stakeholders that the National Housing Policy of 1996 is comprehensive and has even won an international award in recognition of the participatory manner in which it was formulated. However, your Committee is concerned that little has come out of the policy in terms of implementation. 

Stakeholders bemoaned the lack of the specific operational components that could have made the policy work. Most of its provisions are general in nature and are not easy to implement or evaluate. For instance, your Committee notes that the objective to allocate a minimum of 15 per cent of the National Annual Budget to housing though well intended, has never been attained.

Mr Speaker, your Committee, therefore, urges the Government to urgently devise a comprehensive implementation strategy indicating set targets and the key implementing institutions.

Mr Speaker, your Committee also examined the institutional framework for the provision of housing and wishes to report that your Committee is gravely concerned with the lack of co-ordination among key players in the sector. This has led to massive duplication of work among concerned institutions and various ministries which are engaged in developing housing without recourse to what other institutions are doing. Your Committee is also concerned that the National Housing Authority (NHA) is unable to fulfil its mandate to provide housing to all parts of the country due to financial constraints. Further, the authority is unable to provide social housing for the less affluent members of society.

Mr Speaker, your Committee, therefore, urges the Government, through the Ministry of Local Government and Housing, to devise an effective co-ordination mechanism for stakeholders in the housing sector. Your Committee, further, urges the Government to provide adequate funding to the NHA so that it can effectively spearhead the construction of housing units throughout the country.

Mr Speaker, another matter that your Committee extensively deliberated upon was the issue of availability of land for housing projects. Your Committee is concerned that most of the land in Zambia is held under a tenure system that does not encourage home ownership or housing development. Most of the land is under customary tenure which does not provide adequate security while, at the same time, the process of conversion of the land into State land is fraught with bureaucratic barriers. 

Mr Speaker, your Committee further observed, with concern, that most of the land in urban areas, especially Lusaka, is concentrated in the hands of a very few individuals. This land, too, is often idle and is being held for speculation purposes. Your Committee fears that, if this situation is not addressed, most ordinary Zambians will be denied an opportunity to acquire prime land for housing purposes.

Mr Speaker, your Committee, therefore, strongly urges the Government to come up with a less bureaucratic process of converting land from customary to State land. Further, your Committee implores the Government to carry out an audit of land ownership in Lusaka and consider repossessing idle tracks of land in national interest.

Mr Speaker, as regards the issue of property rates, your Committee is of the view that financial sustainability of councils is dependent on their ability to raise revenue through the services they provide to residents. Councils must receive money from residents in order to provide a service. If they do not, they cannot provide and if they cannot provide, they cannot receive.

Hon. Opposition Members: Yes.

Mrs Musokotwane: Therefore, the culture of paying for services is at the heart of whether a council will survive or collapse. It is for this reason that your Committee is concerned that, following a Government pronouncement on the issue of rates, councils have been experiencing difficulties in collecting rates. Your Committee was informed that some of the rate payers, both corporate and residential, had stopped paying rates while some, who had already paid, were requesting to be refunded. Your Committee is saddened that despite recent efforts by the hon. Minister of Local Government and Housing to try and clarify the matter through a press briefing, the situation has not changed. Your Committee’s worry is that, if the situation is not urgently attended to, council operations on the Copperbelt and other urban local authorities will grind to a halt.

Mr Lubinda: Mwamvera ma bosses.

Mrs Musokotwane: Mr Speaker, your Committee, therefore, urges the Ministry of Local Government and Housing to come up with a vigorous awareness creation programme to clarify the Government’s position on the matter and appeal to property owners to honour the law on property rates.

Mr Speaker, turning to the report of the hon. Minister of Local Government and Housing on audited accounts of local authorities of 2010, your Committee is concerned at the large number of councils that have been cited in the report with accounting queries.

Some of the common queries are:

(i)    irregular or wrong payments;

(ii)    use of cash at source;

(iii)    misapplication of Government grants;

(iv)    failure to retire imprest;

(v)    failure to render CDF monitoring reports;

(vi)    disregarding internal audit advice;

(vii)    failure to prepare financial statements; and

(viii)    over-expenditure on votes without preparing supplementary budgets.

Mr Speaker, I have served on this Committee for several years now and as your Committee considers these audit queries, at times, I think I am listening to the same old stories. I worry that reports and warnings issued by your Committee are often ignored. Some controlling officers continue to appear before your Committee to answer queries of a similar nature. Your Committee is gravely concerned and finds this unacceptable and, therefore, urges the Government, through the Ministry of Local Government and Housing, to take stern action against erring officers.

Mr Speaker, in conclusion, allow me to thank all town clerks, council secretaries, the Ministry of Local Government and Housing and other stakeholders for their co-operation during your Committee’s deliberations. Appreciation also goes to the hon. Minister of Local Government and Housing for appearing before your Committee to clarify the Government’s position on the administration of property rates.

We are grateful to the offices of the Auditor-General and the Clerk of the National Assembly for the unfailing support and their hard work. Finally, your Committee wishes to record its indebtedness to you, Mr Speaker, for the guidance rendered to it.

Mr Speaker, I thank you.

Hon. Opposition Members: Hear, hear!

The Deputy Chairperson: Does the seconder wish to speak now or later?

Mr Mwango: Now, Mr Speaker.

Mr Speaker, I wish to pay tribute to the hon. Members of your Committee for according me this opportunity to second this important Motion. I also wish to commend the Chairperson of your Committee for providing appropriate leadership during your Committee’s deliberations.

The mover of the Motion has just highlighted most of the critical issues raised in your Committee’s report. Let me, however, address a few issues arising from your Committee’s tours to selected local authorities in the Central and Copperbelt provinces.

Mr Speaker, I will start by commenting on the difficulties that councils are facing in the maintenance and rehabilitation of township and feeder roads. All councils visited by your Committee complained of the lack of capacity to work on the roads. Your Committee particularly notes that the appointment of councils as road authorities has not worked as expected. There has been no effective collaboration between local authorities and the Road Development Agency (RDA). If the situation is not urgently addressed, the management of roads within the jurisdiction of local authorities will remain a major challenge.

Your Committee is of the view that the only effective way to maintain and rehabilitate public roads is to empower all councils in the country to acquire a required set of road maintenance equipment.

Mr Speaker, let me also touch on the issue of housing. Housing is one of the basic social needs which is a pre-requisite for socio-economic development. However, your Committee is seriously concerned with the lack of housing, especially in rural and smaller councils such as Chibombo, Masaiti, Mpongwe and Lufwanyama. In Lufwanyama, the situation is so critical that some officers are still staying in Kalulushi, a situation which is not acceptable at our level of development. 

Your Committee found that a few houses were being built in these districts. About seven houses are being constructed in Chibombo, four in Mpongwe and five in Lufwanyama. The view of your Committee is that these efforts are too small to yield the desired result of having sufficient accommodation and infrastructure for the districts. Your Committee urges the Government to consider funding an ambitious construction programme for rural councils.

Sir, let me now turn to the issue of fire services in Zambia, which I feel is one of the most neglected areas in the country. We were gravely disappointed by the poor state of the fire stations in the places visited. Most councils do not have functional fire tenders nor do they have qualified fire fighters. Fire buildings are also in a poor state due to negligence. Let me make special mention of the only fire training school based in Kabwe, which your Committee had an opportunity to visit. Your Committee could not believe this was a national training school and, indeed, the only one in the country. The training school is evidently poorly equipped while the rest of the facilities are in a poor state.

Your Committee urges the Government to assist local authorities to source fire equipment as it is too expensive for them to acquire from their local resources. Your Committee also urges the Ministry of Local Government and Housing to help recapitalise the training school in order to upgrade the standards of training.

Sir, the mover of the Motion has already touched on the numerous financial irregularities contained in the hon. Minister’s report on audited accounts for local authorities for 2010. Allow me, however, to comment on a worrying tendency by some controlling officers to ignore internal audit controls. Some councils still do not have internal audit sections while others deliberately ignore the advice of internal auditors. This is resulting in numerous financial irregularities and the loss of public funds. The Ministry of Local Government and Housing should ensure that effective internal audit controls are put in place in all the local authorities in the country.

Mr Speaker, I urge the House to support the Committee’s report and thank you.

Dr Scott (Lusaka Central): Mr Speaker, I just want to take up one matter which I think has been misunderstood and explain what the problem is. I will also suggest to the hon. Minister what the solution might be. I will look at the administration of property rates, as it has been called in the report on page 6. The basic problem is that of moving from outdated valuation rolls to more up-to-date valuation rolls of 2007 and 2008. In the updated rolls, low value properties have been revaluated. For example, in the valuation roll for Lusaka of 1995, council houses were all simply valued at book value, for historical reasons of course. In other words, the council was merely paying rates to itself and, therefore, it did not matter what the actual value of the houses was. 

When these houses were sold to sitting tenants and others, the rates continued to be the same, based on the book value of the houses. However, in the current set of valuation rolls, updated recently, in the last two or three years, the valuators have quite correctly put into the valuation rolls the current commercial, replacement or market values of all property. This has created a problem in that, with former council houses, the value has increased by 1,000, 2,000 or even 3,000 per cent over a decade or so simply due to this change from book value to actual commercial value. Even if the councils have struggled to reduce the burden by down rating the tariffs to try and take some of this pressure off some individuals or many holders of former council houses, they are still actually finding that from paying rates of about K20,000 per quarter or half a year, they suddenly have to pay K300,000 or K400,000 for the same period.

    They are, therefore, finding it difficult to understand what is happening because they were getting services virtually for free and now, suddenly, the tariffs have been hiked. The Zambian Government has the bad habit of waiting for some time and, then suddenly hiking the price of something by thousands of percents. We have seen it with electricity tariffs and with all sorts of tax quantities. There is a bit of a crisis in reasoning and it is unfortunate that we did not foresee this problem regarding our rates and sidestepped it. We have seen it in Lusaka, but we have not yet approved a new rating formula. On the Copperbelt, this problem has certainly hit all the urban councils. 

The interpretation of certain public statements by the Executive regarding this issue has had very damaging consequences. Some of the statements are interpreted to mean that people who live in houses that were not built by the council should not be charged high rates. All this is perfectly stated in the report. This is not a Patriotic Front (PF) versus Movement of Multi-party Democracy (MMD) problem. The two MMD controlled urban councils on the Copperbelt, which are Kalulushi and Luanshya, are suffering severely from this valuation problem just as our own PF councils or any UPND councils anywhere in Zambia.

I would like to plead with the hon. Minister to let us come up with an acceptable transitional arrangement so that we do not have these sudden increases at the lower end and also keep down, which we should not be doing, the rates paid by all these rich people with ten bed roomed houses. We should find a way to try and lower the strain on the poor. In other words, we need a graduated tariff where people pay something like 0.6 or 0.7 per cent of the market value at the top end and considerably lower at the bottom end for a limited period of time so that the transition can actually take place. 

Otherwise, these ramifications are going to continue and they are going to affect the operations of all councils because the situation, as clearly explained here, is that many rate payers think that they should be excused from paying rates. It is like what happened when one of our former Presidents forgave agricultural debts in a given year. It so happened that, that year, the country was not only hit by drought, but it was also a year for elections. As such, even people who had borrowed money from various sources and for purposes unrelated to agriculture felt that they had been forgiven of their debts through the Head of State’s pronouncement. 

I think if we have to get out of this problem, we need some creative dialogue with the Committee, the hon. Minister, the councils and other leaders so that people can start paying rates like what is happening in Lusaka. I raised a question during the Vice-President’s Question Time, the other day, as to why Lusaka’s quarterly total rates collected for the last quarter, from April to June, were the lowest it had recorded in the last fifteen years. All this is happening in Lusaka which is connected only by telephone to the Copperbelt. It is not even in a shouting distance, but a travelling one. I hate to think about what the ramifications of this problem will be because we all want to avoid having insolvent councils. We also want to avoid the social injustices and surprises that some of the people who have bought council houses are experiencing.

Therefore, I urge the hon. Minister, when he comes to debate this report, to show us some creative thinking. He should also show that the work which will be done to work around this problem will not be partisan. We should not start accusing Kalulushi and Luanshya of having the highest tariffs on the Copperbelt. The hon. Minister can try and avoid this problem being used as a political tool because it has caused a lot of damage to the quality of life in many towns and districts.

With those few words, I thank you, Sir.

Mr Mooya (Moomba): Mr Speaker, firstly, I must declare interest by stating that I am a member of this Committee. Having done so, I want to briefly reinforce two issues.

The first issue is on household data. Remember, yesterday, we had a workshop on the census and I asked a question on the accuracy of the data that was collected ten years ago by the Central Statistical Office (CSO). The answer which I was given was not clear. In the next census, we need to have very accurate data so that we can make acceptable projections.

The witnesses that came before your Committee gave varying data regarding the backlog of housing. The variations ranged between 1 to 2 million. This is not acceptable. I was going to accept the situation if the variations were within the range of 1 to 1.2 million. The next census should have very accurate data so that whenever we call witnesses to appear before the Commitee, they do not give varying information.

Mr Speaker, let me now talk about the road works that are funded by the Japanese International Co-operation Agency (JICA) in Ndola and Kitwe. According to the report, in Ndola, JICA gave US$12 million for works for a total of about 12 km. Roughly, it is US$1 million per kilometre and when you compare that to what we are used to here, which is US$300,000 per kilometre, you will notice the difference.

Therefore, I am appealing to those involved in the negotiations with JICA to sit down and try to lower that US$ 1 million per kilometre to, probably, US$300,000 to enable us work on the many roads in need of attention. If we do things properly, now, we can put ourselves in a position to handle, maybe, two to three times more than we are currently doing. 

Mr Speaker, since I was very inquisitive, I asked why US$1 was used per kilometre and the answer given to me when we toured Ndola was that this was because JICA comes with its own equipment, engineers and technicians. Therefore, I would like to request the hon. Minister to plead with JICA to only bring along equipment that is not available here and not engineers and technicians because we have them here. The whole idea is to lower the cost of construction to enable us work on more kilometres on our roads.

I thank you, Sir.

Mr Kamondo (Mufumbwe): Mr Speaker, thank you for according me this opportunity to deliver my maiden speech.

Mr Speaker, it is, indeed, my privilege and honour to stand and make my maiden speech to this august House. Before I go ahead with my speech, allow me to remember the three young innocent souls that were lost in Mufumbwe soon after the elections. May their souls rest in eternal peace.

Hon. Opposition Members: Hear, hear!

Mr Kamondo: Mr Speaker, may I take this opportunity to thank the people of Mufumbwe Constituency for the confidence they have entrusted in me to represent them. I thank all supporters from various groupings who contributed in the elections, such as the Church, hon. United Party for National Development (UPND) members, Patriotic Front (PF) members, my campaign manager, Hon. Lumba, and most importantly, the co-presidents of the act, Mr H. Hichilema and Mr M. C. Sata.

Hon. Opposition Members: Hear, hear!

Mr Kamondo: May our good Lord continue blessing them.

Sir, may I also take this opportunity to thank the Cabinet Ministers from the Movement for Multi-party Democracy (MMD) Government who also supported my candidature. 

Hon. Opposition Members: Hear, hear!

Mr Kamondo: Mr Speaker, I wish to extend my gratitude to the losing candidates for their participation in the by-election mainly Mr Mulondwe Muzungu, MMD, and Mr Stephen Kamwengo, United National Independence Party (UNIP). The two gave me a tough run during the campaign, but, like any other competition, there must be one winner. I thank God that, this time around, I was declared the winner. May God bless them in their future endeavours. To their supporters, I simply say, they are welcome. Let us work together as brothers and sisters to develop Mufumbwe.

Hon. Opposition Members: Hear, hear!

Mr Kamondo: Mr Speaker, allow me to pay tribute to the former hon. Members of Parliament for Mufumbwe Constituency, Mr Mulondwe Muzungu, Mr Matiya Ngalande and Mr Bert Mushala. I pay a special tribute to the late hon. Member, Mr Misheck Bonshe, who mentioned to me that I was the next hon. Member of Parliament for Mufumbwe immediately after his elections in 2006. May his soul rest in eternal peace. 

Hon. Opposition Members: Hear, hear!

Mr Kamondo: To my lovely wife and family, I thank them for encouraging me to do this noble task. I give glory and honour to the almighty God who chooses leaders. Let Jesus our Lord and Saviour reign and continue leading our country.

Hon. Opposition Members: Amen.

Mr Kamondo: Mr Speaker, this country can only boast of meaningful democracy when the rule of law prevails and is applied fairly on all citizens. I would like to urge the Government, through the Ministry of Home Affairs, to ensure that no selective law is applied. Every Zambian should be treated the same. Zambia, being a Christian nation, politics of character assassination and hatred should be condemned by all political parties. I appeal to the listening Government to accept mistakes, if any, and to the Opposition to give credit where it is due.

Hon. Opposition Members: Hear, hear!

Mr Kamondo: Mr Speaker, in the coming elections, we want to see free and fair elections. The police should operate freely to maintain law and order and punish whoever is found wanting. This should be done without discrimination on the basis of political affiliation. We want people to have confidence in the police, Anti-Corruption Commission (ACC), Drug Enforcement Commission (DEC) and the Director of Public Prosecutions by not discriminating any one.

Mr Speaker, I appreciate the progress Zambia has made economically and politically. The people of Zambia want progress to exceed to higher levels. The Electoral Commission of Zambia (ECZ) has tried to do the best, but what is being experienced in the elections will compromise its work. There must be free and fair elections and, to achieve this, we must make sure that Government vehicles are not used.  Public institutions or resources should not be used to promote the interests of a party or persons. The cadres should also not be allowed to camp at polling stations as exhibited in the Mufumbwe Constituency by-election.

Hon. Opposition Members: Yes.

Mr Kamondo: Mr Speaker, our national public media has a lot do for the nation. The State is supposed to allow everyone to have equal access to the public media, but the Zambia National Broadcasting Corporation (ZNBC) television section has not been covering the Opposition candidates. Zambia wants to have equal access to public media, whether from the Opposition or Ruling Party. The candidates should access the media and inform the nation what they intend to do for mother Zambia.

Hon. Opposition Members: Hear, hear!

Mr Kamondo: Mr Speaker, as Zambians, we are proud that we are a multi-lingual and multi-cultural nation with seventy-three tribes that live in harmony. At the recent Mufumbwe by-elections, we saw people campaigning on tribal grounds. Tribalism is a scourge that must not be entertained by any well-meaning Zambian. We need Zambians to continue living in unity by embracing the “One Zambia, One Nation” motto. In the UPND, we say, “One Zambia, One People”. In Mufumbwe, we saw village headmen of one ethnic group threatening their subjects to have their village registers confiscated if they did not support the MMD candidate. Others were threatened with eviction. One headman had a village register confiscated ...

Interruptions

The Deputy Chairperson: Order! 

Firstly, there is no point of order on a maiden speech. Secondly, hon. Members on my left should listen to the hon. Member debating and stop making running commentaries.

The hon. Member for Mufumbwe continue.

Mr Kamondo: Thank you, Mr Speaker. 

Many UPND sympathisers have been told to leave their villages where they have lived for all their lives.

Mr Speaker, I stand here to strongly condemn these activities of tribalism. Everyone should be allowed to support any candidate of their choice other than on tribal lines or chiefdom. I appeal to the Ministry of Local Government and Housing to look into this matter urgently before these people bring disunity in the district. I am afraid that if such trends continue, we may not have a free and fair election in 2011. Unity of our people decides the present and future in a positive manner.

Mr Speaker, our traditional leaders also play an important role in the development of rural Zambia, but they should not be used to win an election. Chiefs should not play any part in any given election. In fact, the law states clearly that chiefs and civil servants should be non-partisan, but they are involved in politics and that is why people are now being chased by their village headmen because of supporting an Opposition party. Since Zambia is a democratic nation, let us allow citizens to belong to any party of their choice without intimidation. The Government should encourage measures which promote peace and unity. All Zambians should be treated fairly by our traditional leaders without discrimination on political and tribal lines.

Hon. Opposition Members: Hear, hear!

Mr Kamondo: Mr Speaker, the people of Zambia are desperate for development. We appreciate the works being done on the Mutanda/Chavuma (M8) Road construction project, but we expect the Government to speed up the construction by engaging two or more contractors as pronounced. People are now tired of this road being used as a campaign tool.

Hon. Opposition Members: Hear, hear!

Mr Kamondo: Mr Speaker, with its abundant natural resources, the North-Western Province has been a Cinderella province in Zambia.

Hon. Opposition Members: Hear, hear!

Mr Kamondo: It is time to change the scenario of the province and use its resources to develop it.

Hon. Opposition Members: Hear, hear!

Mr D. Mwila: Landa mudala, ifwe twalinaka ukulanda.

Mr Kamondo: Mr Speaker, despite having abundant minerals like copper and other natural resources such as timber, honey and fertile soils, Mufumbwe is still one of the poorest districts in Zambia. It is time that this imbalance was taken care of. We ask the Government to facilitate and hasten the investment process to both local and international investors.

Hon. Opposition Members: Hear, hear!

Mr Kamondo: Mr Speaker, the education and health sectors are in dire need of development.

Hon. Opposition Members: Hear, hear!

 Mr Kamondo: Since its declaration as a district in 1978, Mufumbwe has had no boarding school. Pupils travel long distances to examination centres to write examinations.

Hon. Opposition Member: That is why you won elections.

Mr Kamondo: There is a need for a boarding school to help pupils write examinations without covering long distances.

Hon. Opposition Members: Hear, hear!

Mr Kamondo: There is a need to construct more classroom blocks because many schools only have three classroom blocks against two to three streams from Grade 1 to 9. At some schools, there are only two staff houses and very few teachers. 

Sir, in the health sector, there is an urgent need to complete the construction of the Mufumbwe Hospital. The people of Mufumbwe have, since independence, been referred to Mukinge Mission Hospital, which is a distance of 160 kilometres, for specialist treatment.

Hon. Member: How can you win an election like that?

Mr Kamondo: Many remote areas do not have health centres. For example, in Lalafuta Ward, which His Honour the Vice-President visited, …

Hon. Opposition Members: Hear, hear!

Mr Kamondo: … people travel 30 km to Miluji Health Post to seek medical help.

Hon. Opposition Member: Imagine!

Mr Kamondo:  In Kalumange, which is in the Western Province, ...

Hon. Member: He even went by air.

Mr Kamondo: … most of the health posts have no trained staff and accommodation.

Mr Mwiimbu: Hear, hear!

Mr Kamondo: Mr Speaker, my constituency has a lot of challenges. The former hon. Members of Parliament sang on the same and only got promises that were never honoured.

Mr Speaker, communication is vital to development. The road infrastructure in the North-Western Province is poor. One has to use a longer route to travel from point A to point B.

Mr Nkombo gave him a bottle of mineral water.

Mr Kamondo: Thank you very much.

Hon. Opposition Members: Hear, hear!

Mr D. Mwila: Landa ifwe twalinaka ukulanda.

Mr Kamondo: If one has to move from Mushima to the boma, which is a distance of 120 km, one has to pass through Kasempa, which is a distance of 220 km. This is due to the fact that there is no bridge across Musonweji River, which is just 80 kilometres from the Boma. People need a bridge across this river to connect the boma to Mushima area.

Hon. Opposition Members: Hear, hear!

Mr Kamondo: Mr Speaker, forty-five years after independence, with no war or natural disasters, we should not be talking about small issues like roads and bridges. No! Those do not take much of the resources from the national coffers. We should be talking about bridges on rivers like Kabompo and Zambezi.

Mr Speaker, the Ministry of Home Affairs urgently needs to do something about accommodation of the police officers in Mufumbwe. They live in tin houses or war tents. Not only do they have housing problems, but have no decent police offices. 

Hon. Opposition Member: Tabomfwa.

Mr Kamondo: Officers have to walk 3 kilometres to the police post. 

Mr Speaker, the same applies to the prison in Mufumbwe which was formerly a bus station. 

Hon. Opposition Members: Aah!

Mr Kamondo: Prison warders do not have institutional accommodation. Promises were made and a foundation stone laid, but to date, no police station has been built.

Hon. Opposition Member: You see why you lost?

Mr Kamondo: Mr Speaker, agriculture plays an important role in our nation. I appreciate the Government for encouraging the farmers, through the introduction of the Farmer Input Support Programme. However, under this programme, allocation to small- scale farmers has been reduced to four. We suggest that it should be increased to eight to make the farmer have enough to sell and for household food security.

Hon. Opposition Members: Hear, hear!

Mr Kamondo:  Mr Speaker, our farmers should also be encouraged to grow other cash crops while maintaining the maize.

Hon. Opposition Member: Hear, hear!

Mr Kamondo: Mr Speaker, there is a need to employ more extension officers and deploy them to productive constituencies. We appeal to the Government to introduce a satellite depot at Lalafuta and Muji, either through Kaoma or Mufumbwe.

Farmers in Miluji are involved in cattle farming. There is also a need to have an extension officer in veterinary services.

Mr Speaker, we appreciate the connection of Mufumbwe to the national electricity grid. We encourage the Government to continue and not abandon it after the by-election like it has been in the past.

Hon. Opposition Members: Hear, hear!

Mr Speaker, as I conclude, allow me to state that the Government needs to sort out a lot of issues.  The people of Mufumbwe have been neglected for some time. There is an urgent need to have clean and safe water. We would like to have more boreholes and old ones repaired.

Hon. Opposition Member: You have three minutes to conclude.

Mr Kamondo: Mr Speaker, this constituency has neither a filling station nor a bank. The civil servants have to travel to either Solwezi or Kabompo for their salaries. Farmers also find it very difficult to get their money after selling their produce. 

There is also a need to help women by funding them through clubs like what we have seen happening in other constituencies through the Ministry of Community Development and Social Services.

Hon. Member: You cannot win elections like that. 

Mr D. Mwila: Landapo napali pact.

Mr Kamondo: Mr Speaker, I thank you.

Hon. Members: Hear, hear!{mospagebreak}

Mrs Sinyangwe (Matero): Mr Speaker, I have a few points to debate on. To start with, I would like to commend the mover and the seconder of the Motion for a job well done.

Mr Speaker, the first question I ask myself is whether councils have anybody to supervise them. One fails to understand what goes on and, therefore, cannot tell whether we are going forward, backward or standing still. What I have seen is that politics have destroyed councils.

Hon. Member: Cheap politics!

Mrs Sinyangwe: Sometimes, the chief officers do not know what to do because the councillors, who are supposed to supervise them, get wrong instructions elsewhere.

Hon. Government Members: Hear, hear!

Mrs Sinyangwe: As a result, we seem to be running in circles. There is no accountability. For example, when K120 million, which was meant for fuel was exhausted within a week in my council, nobody could explain how that money was spent. I ran left, right and centre and no one has given me any explanation to date.

Hon. Government Members: Aah!

Mrs Sinyangwe: When you want to trace something, somebody wants to punish you and get at you in a wrong way. They tell people not to move when you want to move.

Mr Speaker, the Constituency Development Fund (CDF) for my constituency stands unutilised in a bank. Despite having K805 million and projects that have been approved, nobody is releasing the money.

Hon. Government Members: Aah!

Mrs Sinyangwe: One wonders whether this money is in the bank or somebody is making money out of it.  I do not know whether they want me to leave the council and Parliament without using that money so that they can comfortably say that I have failed.

Interruptions

Mrs Sinyangwe: I am asking the local government to build capacity at the councils. I dread to think of what will happen when the decentralisation policy is fully implemented, if we continue with the capacity that we have in the councils. Councils are supposed to run businesses so that they make money. However, all they do is hike rates and water bills. While councils want to make money, they have a responsibility to the people not to hike rates that they will fail to pay.

Hon. Opposition Members: Hear, hear!

Mrs Sinyangwe: They pay more than what they were paying in rentals. Where are we going?

Mr Speaker, I now come to the issue of land. This issue is a big problem in this country. There is a lot illegal allocation of plots. As a result, land has been taken away from schools. People are even building houses on cemeteries. I do not know whether we are turning into animals or not. 

Hon. Members: Hear, hear!

Mrs Sinyangwe: When you go to tell them about houses that have been built on a piece of land that is meant for a school or on a gazetted road, no one will move. It is because we, the councillors, who are supposed to supervise these people, do not realise that we should be councillors first before we become anything else. We should make sure that we do the right thing. Sadly, among ourselves, there are camps. Even when you have a genuine complaint, others want to work against you.

Hon.  Members: Hear, hear!

Mrs Sinyangwe: Mr Speaker, if we want to move, as a country, there is supposed to be a time when we should be patriotic and do what is best for our country. The land issue has become more problematic under the Ministry of Lands than when it was under the supervision of the councils. The Ministry of Lands allegedly allocates pieces of land that are supposed to be under the supervision of the council. The Ministry of Education gave Matero Constituency money to build a school, but there is no land available for the project. Is it not shameful that we can fail to find land where we can build a school for our children? 

Hon. Opposition Members: Shame!

Mrs Sinyangwe: We have plots which are called Government farms. I believe when they are referred to as such, it means that the land belongs to the Government. Even when one asks somebody to find out what is happening at the Government farms so that the land can be used for the construction of a school, nobody seems to move.

Sir, let us look at the management of our councils before we sink as a nation. The local government is key to development. If the councils were performing the way they are supposed to, there would be less pressure on the Central Government, but they are not. 

Mr Speaker, finally, I would like to talk about the issue of housing. We have seen a lot of shanty compounds mushrooming, but we are not doing anything about it. We are not upgrading them and, as a result, when cholera breaks out, people die in huge numbers. Why can we not come up with a good housing policy? 

Sir, our teachers live in shanty compounds. Why not come up with a housing policy which will encourage home ownership? When councils build houses, let the teachers get those houses and acquire loans to buy them off. Apart from the few houses that the Second Republican President, Dr Chiluba, sold to people, we are going back to destitution. When teachers retire, they will be destitute. Even when our pastors and reverends, who preach the word of God, retire, today, they will be on the streets. They do not even have anywhere to live. These are some of the issues that we should look at and ensure that we tighten the screws where things have been left loose. 

I urge Zambians and this august House, to long for a time when they shall forget all their differences and work together, as Zambians, to promote our country and do what is best for us.

I thank you, Sir.

The Deputy Chairperson: Before, I call on the next person to take the Floor, I just want to direct that we should avoid phrases like ‘Councillors turning into animals’. It is unparliamentary and it will lead to people becoming emotional. I plead that we consider using parliamentary terminologies.

Mr Lumba (Solwezi Central): Mr Speaker, I thank you for giving me an opportunity to briefly debate the Motion on the Floor of the House.

Sir, I perused through the report and was saddened, particularly, by the financial mismanagement in the councils. I was sad to note that all councils cited in the report, had problems with the issue of financial management. According to the audit report, there were reports of unretired imprests, unauthorised payments and missing payment vouchers. 

Mr Speaker, this shows lack of capacity to manage finances in the councils. There is a problem within the councils of capacity to manage the resources. In my view, I do not think we can entrust huge amounts of money with the current financial personnel in the councils because they do not have the capacity to manage it. 

Sir, I also concluded that there is lack of supervision of these councils either by the parent ministry or the councillors themselves. This is because these problems have been going on for a long time. The few days that I have been in the House, I have heard from the Chairperson of the Committee that some of these issues have been brought out in a number of reports before. Clearly, this shows lack of seriousness by those entrusted with these responsibilities. I think that there is a lack of supervision by the parent ministry.

Mr Speaker, the other issue I picked from the report is the revenue base of the councils. To me, it seems that the councils have a very narrow revenue base. One of the major sources of income for the council was the housing units that were sold, but nothing has been done to replace them. There has been no investment in infrastructure from which the councils can raise revenue.

Sir, another issue is that of the markets. The markets are supposed to be managed by the councils, but the Zambia National Marketeers Association (ZANAMA) has taken over this responsibility. It is encroaching on what is supposed to be an area for the councils. The little resources that are supposed to be raised from the councils or bus stops are shared between the council and ZANAMA. ZANAMA is supposed to be getting its resources from its members, but you find that where the council is supposed to be getting levies, ZANAMA is also present. It has the political support and, therefore, has become like a big, untouchable corporation operating within the markets.

Mr Speaker, this issue of ZANAMA and the councils in the markets should be resolved. The markets should be left to the councils because they are the ones who look after the infrastructure there. 

ZANAMA gets the money raised from the markets and we do not know where it is taken. The toilets and other market stalls are in a deplorable state because the councils do not get the money to invest in this infrastructure. This issue should be looked at by the parent ministry. 

Mr Speaker, still on the revenue of councils, in 2001, I went to Chipata to audit one of the companies there. I happened to visit the Chipata Municipal Council. At that time, the Chipata Municipal Council had a good revenue base. The Town Clerk then boasted of having salaries for six months in advance in the bank. He told me about many other accounts the council had. However, now, the council cannot boast about that. It had bicycle, crop and dog levies, but these levies have been done away with because of political expedience and none of them have been replaced.

Hon. Opposition Members: Hear, hear!

Mr Lumba: Mr Speaker, as I sit here, I feel grieved when the hon. Minister in charge of roads says that the councils should be innovative and work on the roads from their resources. I then ask how councils can be innovative. How do council get funds and from which sources? If the councils, today, came up with innovative ideas of introducing levies, the Government would come in quickly and revoke them at a rally. We need to leave the councils to operate in an environment where they can do what they are expected to do. 

Mr Speaker, at one point, the councils in this country were raising some revenue from water and sewerage services, but, now, their departments of water and sewerage services have been commercialised and limited liability companies have taken over. The councils are not getting any dividends from this because these companies are, themselves, not even viable. This creates another problem. The councils had one or two people to man these departments, but now you have big corporations in these areas with managing directors who want to get salaries like finance directors who work in the banks. The resources which they can get from water and sewerage services are minimal. 

Mr Speaker, the Government has to look at the commercialisation of water, particularly the water tariffs. Solwezi or the North-Western Water and Sewerage Company charges the highest tariffs, and yet the people in that area are very poor. How do you expect the company to survive? The issue of commercialisation of this water department should be re-looked at. Water companies should also be supported by the Government. 

Sir, when we ask the mining companies in our councils, for those of us privileged to have them, to pay rates, they reduce on their corporate social responsibility. Their argument is that because they pay rates it follows that they reduce on their corporate social responsibility. In the recent past, we have seen some of these mines in other towns rushing to the Government to be protected from paying rates.  

Mr Speaker, we need to leave the council to operate freely and raise the required resources for them to provide a service. The problem is that there is no service provision in our councils. Even here in Lusaka, a dead dog by the road side will rot there and that will be its grave. A council official may even use the road on which the dog lies, but will not be bothered. 

While we do not want to quickly blame the councils, we are supposed to see what the problem is. In my view, there is a lack of capacity. When you look at the asset base of the councils, things like council guest houses and toilets are in a deplorable state such that one cannot even visit them. Some of them were last painted in 1964. The councils in this country are not operating as expected. 

Mr Speaker, I would like to suggest to the Government to give the council leeway to raise its financial resources. The Government should not run in quickly to do away with levies at political rallies. The councils should be left to be innovative. They should be able to raise money through levies such as the dog and bicycle levies like the case was in Chipata in 2001. People did not complain about paying these levies and, as a result, the Chipata Municipal Council was very rich.

Mr Speaker, allow me to speak on the issue of land management. It is very sad that, sometimes, land is given by councillors in their areas without even going through an agency. Again, this shows that we are failing to manage the councils. Some councillors think they have so much power that they can sell land. For example, the hon. Member for Matero has been saying that some of this land is encroaching in the school play grounds. I, therefore, appeal to the parent ministry to look into these issues seriously and offer guidance and supervision to these councils before the country grinds to a halt.

With those few words, I beg to support the Report.

Mr Speaker, I thank you.

Hon. Opposition Members: Hear, hear! 

Mrs Masebo: Mr Speaker, I rise to add my voice to the debate on this very important Motion. From the outset, I want to state that the Committee did a very commendable job. I also want to say that the Chairperson of that Committee has been working very hard in this sector to really help the Government improve on the administration of councils in the country.

Mr Speaker, I just want to make a few comments on the housing situation in Zambia. I note that the Committee made mention of the fact that there is an old Housing Policy in place. I know that the Government has been trying to review it and I hope that the current hon. Minister, when he winds up debate, can help us understand how far the Government has gone in reviewing this policy. He should also look at the Housing Act, which is outdated, and also ensure that the various pieces of legislation that we use in the delivery of houses are harmonised. I am aware that the process started sometime back. So, I hope that the hon. Minister can update us so that we know exactly what is happening in the housing sector vis-à-vis legislation and other issues relating to housing.

Mr Lubinda: Kamba, mwana!

Mrs Masebo: Mr Speaker, I think that one of the issues that the Committee did not seem to put much emphasis on when it looked at the issues of housing in Zambia was that of finance. That is one of the issues that has let us down in this country in relation to housing development. Successive Governments have not really put enough resources in the Budget for housing. 

When I talk about housing, I am referring mainly to the general housing that can be used by civil servants and the medium and low income groups, especially after the houses were sold. We all applauded the policy on home ownership because, of course, it is good for one own a house. However, I think that the problem with that policy was that the implementation was haphazard. 

Sir, when one looks at the 1996 Housing Policy, one of the issues that was articulated was that there was a need to sell some houses and come up with the housing revolving fund so that the money could be revolved for construction purposes. However, we just handsomely sold everything and the pricing, obviously, was also political, in some instances. We did not realise enough resources to have a revolving fund as was envisaged in the Housing Policy then.  Therefore, it is important for the Government to look at the issue of housing in the country. 

In 1966, the Government of the day, actually, made housing a right. We have learned that, at the time, even the National Budget of K15.5 million had a good allocation towards housing because it was felt that it was a right. From the report, it can be seen that, over the years, the Government has attempted to allocate money for housing construction.

 However, from 1991 onwards, the MMD Government missed the boat regarding resources. To date, the amount of money going towards housing is almost 0.1 per cent. As a result, squatter compounds have mushroomed. However, in the absence of housing for rent, what choice do people have? People will, obviously, start squatting anywhere. This is what we have allowed in this country and it is unfortunate. 

Mr Speaker, I think that the legal framework for the Land Policy, though in motion, needs to be sped up so that we can rationalise the issue of housing in this country. The use of the private sector in housing construction is also important. The utilisation of resources being mopped up by some of our pension funds, for instance, is also important. These are the funds used even during the United National Independence Party (UNIP) days. The money used to construct houses in Helen Kaunda and Kabwata came from pension funds. Of course, there was a legal framework that supported this, which, unfortunately, we do not have at the moment. 

Mr Speaker, I notice that people have a problem when there are many players doing one thing. I have no problem with the fact that we have many players in the construction industry. I think that what we are missing is the co-ordination by the Ministry of Local Government and Housing, which is the parent ministry mandated to develop housing. One of the weaknesses could be that we have combined housing and local government administration. 

That is probably why, in the National Budget, there is nothing for housing. Other countries actually have a ministry for housing. Therefore, you will find that they have an elaborate housing policy, legislation and a budget specifically for it. In this country, however, because of the combination, we have, over the years, underplayed housing in terms of financing and legislation. I hope that the current hon. Minister, whom I respect and have a lot of confidence in, will carry on some of the ideas that we started together. 

Mr Speaker, it is a pity that we have been talking about the Land Policy for the last ten years, and yet we have failed to come up with one. This has resulted in the problems we are facing in the housing sector. We all know that most of this land is vested in the traditional authorities. Even at the National Constitutional Conference (NCC), the issue of land is a challenge. I hope that when the Constitution comes to this House, people will be more sober because I have noticed Zambians have a tendency to fear for political reasons. 

We fail to say that traditional leaders must do something about land alienation in the country when there is an election because we think that we will lose votes. Therefore, instead of expressing ourselves before our traditional leaders, we shy away as politicians and, in the end, make no progress. Over the years, we have spent so much money visiting our traditional leaders over the Land Policy, but no decisions have been made. We keep going back and forth. Unless we become firm and sincere in the process of consultation, we will continue having difficulties with the Land Policy. 

Mr Speaker, I was happy when the President took a stance on the issue of land in this country as it relates to people who deliberately encroach on other people’s land. I hope that the Committee that has been constituted will come up with something and we will be able to see a difference. 

Mr Speaker, it is good that your Committee has ventured into administration of rates. This is a very straightforward matter. The law is very clear about everybody paying rates. I would like to advise my colleague in the Ministry of Local Government and Housing not to encourage the division of councils on political lines as their running will be failed. This is a fact. My understanding of the Local Government Act is that the hon. Minister of Local Government and Housing is responsible for all the seventy-two councils. 

Hon. Opposition Members: Hear, hear!

Mrs Masebo: The Government of the day is responsible for all the seventy-two councils. The minute you begin associating councils to political parties, you are derailing yourselves. This is my understanding. In the process of administering councils, the hon. Minister has a lot of power. Therefore, when the councils succeed, he also succeeds. When they fail, he also fails. You cannot divorce the two. It is as simple as that.  

Hon. Opposition Members: Hear, hear!

Mrs Masebo: He can complain about the facts, but this does not change them. It is important that we understand the structure of these facilities so that we help ourselves. Let us not seem to be shooting ourselves in the foot because the result will be disastrous. 

The House will recall that in 2002, after the 2001 elections, the Patriotic Front made statements to the effect that it got more votes along the line of rail and, therefore, was going to control the councils there. We, as a Government, said nothing of that sort would happen because we were in charge.

Hon. Government Members: Hear, hear!

Mrs Masebo:  I recall this because I was Minister of Local Government and Housing then. You may recall the difficulties that this created then. If these statements we are making now were made in 2002, I am sure that, by now, we would have gone for early elections because most of the council membership along the line of rail were Opposition. 

However, they could not have been councils run by the Opposition because the Government of the day is the owner of the seventy-two councils. Even the policies that are followed by those councils are made by the Government of the day. This is why the President of the day can make a decision about the method of collection of rates. The method of collecting rates should not be through confiscation of television sets because this disadvantages people, considering that most of them, particularly on the Copperbelt, are unemployed. It is not that someone does not really want to pay rates, but they cannot afford to. Therefore, as a local authority that has been elected by the people, you must be able to negotiate and find more humane ways of ensuring that people pay. 

Hon. Opposition Members: Hear, hear!

Mrs Masebo: It is not a question of the President saying people should not or should pay rates pay because the law stipulates that they should. If the President does not want people to pay rates, he can tell the hon. Minister to bring a law to Parliament and we shall change it so that people can live in these areas free of charge. 

Mr Speaker, the notion that mining companies are big and have money and can support us in one way or another and, therefore, should not pay rates is wrong. In fact, I am surprised because even the former hon. Minister of Mines and Minerals Development, Dr Mwansa, was very categorical and supportive by telling these mining companies to pay rates to the councils. How do mining companies expect the councils to operate?

Hon. Opposition Members: Hear, hear!

Mrs Masebo: I expect the hon. Ministers of Mines and Minerals Development and Finance and National Planning to assist the hon. Minister of Local Government and Housing in ensuring that the mining companies pay rates. 

Hon. Opposition Members: Hear, hear!

Mrs Masebo: By protecting people who are making money, we are killing ourselves as a country.

Hon. Opposition Members: Hear, hear!

Mrs Masebo: As the hon. Member for Matero said, the development of the Government can be seen through councils. Hon. Members of Parliament make laws. That is our job. 

I laughed, yesterday, when I heard an hon. Member of Parliament say that the CDF should be taken to constituency offices because only then would development take place. I was happy when the hon. Minister of Finance and National Planning said such was misinformation. I think that it is important to know what our role is. As hon. Members of Parliament, our role is to legislate. Those guys in the Executive, the men and women …

The Deputy Chairperson: Order! 

Withdraw the word ‘guys’.

Mrs Masebo: Mr Speaker, I retract the word.  

The men and women in the Front Bench are elected to implement the moneys that we agree upon in this House. Hon. Members of Parliament are supposed to check and see how they are implementing those moneys. As a Back Bencher, I am supposed to have oversight and not agree to everything. Back Benchers must not want to take the jobs of those in the Executive. We cannot make laws, implement them and perform the role of oversight as hon. Members of Parliament. We will get derailed. 

Mr Speaker, we should be crying for an increment of the CDF from K600 million to K2 billion, for instance, so that it can help us. 

Mr Kambwili: Hear, hear!

Mrs Masebo: We cannot be imitating things that other countries are doing.  In any case, Kenya is not a country to imitate. When you go to Kenya, listen to what the community is saying about their Parliament. We should not follow things anyhow. Let us do things which will be good for Zambia. The Kenyans came here to learn and they went and did what they wanted to do. What we must do with our CDF is increase it so that it becomes meaningful. We should not send it to constituency offices for hon. Members of Parliament to manage. That way, we cease to be legislators and become the Executive. This is my view and I do not want to be part of that confusion. 

Mr Speaker, financial audit reports continue to make sad …

The Deputy Chairperson: Order!

Business was suspended from 1815 hours until 1830 hours.

[THE DEPUTY CHAIRPERSON OF COMMITTEES in the Chair]

Mrs Masebo: Mr Speaker, when business was suspended, I was talking about audited accounts and I was saying that it is clear, from the report, that we still have challenges. It is also clear that there are problems in terms of financial regulations in the local authorities. Therefore, I want to state that these facts have been known for a long time. The way forward, by the Government, is to have good and qualified staff. As such, there is a need to come up with the Local Government Service Commission which this House has already passed. What will be of importance and interest is for the hon. Minister to tell us how far this issue has gone and where we are in terms of implementing the law on the establishment of this commission. 

Sir, the other issue is on the implementation of the Decentralisation Policy. How far have we gone in terms of capacity building programmes for councils so that they can perform most of the functions that have been articulated in the Local Government Act pertaining to the sixty-three functions which include road administration?

The hon. Minister of Local Government and Housing must also tell us how far his ministry and the Ministry Works and Supply have gone in harmonising the functions of roads so that we do not go forward and backwards. The Act is very clear on this. Local authorities are supposed to look after the roads within their administration although under the guidance of the Ministry of Works and Supply as the key sector ministry. 

Sir, this takes me back to the issue of land allocation. Again, we have the Ministry of Lands which is the key policy ministry responsible for land alienation although this is administered through local authorities. However, there is a law that councils follow.

Mr Speaker, already, I am seeing some element of confusion. The other day, I heard the hon. Deputy Minister of Local Government and Housing telling us that the hon. Minister of Local Government and Housing would be sending guidelines on land alienation. I thought that guidelines on land alienation came from the Ministry of Lands. I think that there is a need for co-ordination. 

Sir, we also have the Markets and Bus Stations Act that this House passed. How far has its implementation gone? I get confused when I still hear about the collection of levies by ZANAMA.  How can it collect levies when the law says that it is not supposed to? Could the hon. Minister, again, shed some light on that? We must just reduce politics in the way we govern our country.

 Mr Mwenya: Hear, hear!

Mrs Masebo: Once a political party is elected for five years, let us all work together, both those who won elections and those who lost.  This way, we can move the country forward. Then, in the last year, we can, again, start politics. The politicisation of offices will not help us. 

Sir, in fact, my experience has taught me that when one has power, as long as they use it properly, even their enemies will appreciate them. However, this may take a bit of time, but, at the end of the day, they will know that one is only abiding by the law and what they are doing is right. Therefore, one’s enemies will end up voting for them. If one plays to the gallery of politics, they are bound to make more enemies and even lose the votes of those who voted for them initially owing to the lack of leadership qualities. 

Therefore, I implore the Ministry of Local Government and Housing to be firm and advise, as a key ministry, on these matters. Let us also advise the President. If the President comes up with a policy which is in conflict with his own policy, it is the duty of the hon. Minister to quietly go the President and say, “Sir, here, there is a problem because the policy states otherwise unless we are changing it.” If we do not come out truthfully because we are scared of losing our jobs, we might keep the jobs, but in the process, cause the President or the Government of the day to become unpopular. 

Really, my point is that there are a lot of good things happening, but we just have to continue being steadfast and focused and not get derailed by politics. Let us just do our work so that at, the end of the day, the best person will carry the day.

 I thank you, Sir.

Hon. Members: Hear, hear!

Mr Chongo (Mwense): I would like to thank you for giving me this opportunity to contribute to the debate on the report before us.

Mr Speaker, to start with, I would also like to join those who have congratulated you on your election as Deputy Chairperson of Committees of the Whole House.

 Hon. Members: Hear, hear!

Mr Chongo: Mr Speaker, a number of issues have been raised by those who debated before me. Just as a matter of emphasis, I also want to echo their sentiments although I want to indicate one thing in reference to Mwense District Council that is contained in the report of your Committee on pages 90 to 92.

Mr Speaker, I am interested in debating this issue because, as councillor, I am part and parcel of that council. What saddened me most are the anomalies that have been highlighted in the report. 

Mr Speaker, we have seen issues of cash withdrawals, grants used to pay borrowed money and unretired imprest. In a period of twelve months, 1st January, 2008 to 31st December, 2008, an amount of K1.529 billion has been indicated as either having not been accounted for, no goods received or notes not seen. 

Mr Speaker, this saddens me, as a people’s representative, who gave my service to try and develop Mwense as a district because it houses Mwense Constituency. 

Mr Speaker, like the Chairperson of your Committee indicated, I want to indicate that these anomalies keep coming up time and again. It looks like there is nothing happening to correct the situation. I was once a member of this Committee for three years and these are the issues we talked about year in and year out. The question is if hon. Members of Parliament are not pleased with what is coming up in the reports, what is happening in the ministries because these are the people who are supposed to intervene in such anomalies? These are the people who come and stand on the Floor of this House to indicate that measures are being taken to intervene, and yet we do not see anything being corrected. In the case of Mwense, it appears that this might have happened in one year in which an amount of K1.5 billion was misappropriated or not accounted for.

Mr Speaker, this is not the kind of thing we can continue to tolerate in this country, especially when you look at a districts like Mwense, which is very poor. Maybe, this amount of money can be associated with places like Lusaka looking at the kind of money they handle. 

In the last four years that I have been hon. Member of Parliament for Mwense Constituency, probably, it has only handled less than K3 billion. Out of this money, K1.5 billion has not been accounted for. I suppose this problem started at the ministry, although it may also start at district or council levels. However, every hon. Member of Parliament or councillor should participate in ensuring that such anomalies are eradicated. I have personally made an effort to this effect, but had a lot of difficulties to address the problem. I have written a lot of letters to the ministry mentioning the areas which have been indicated in this report, but then what is the ministry doing about the issues that have been raised?

Early this year, the President lamented that councils that are run by particular political parties on the Copperbelt had some kind of political interference. I am prompted to agree with what Hon. Masebo said that even though these councils are being run and controlled by certain political parties, the onus is on Government to correct the anomalies in their operations.

Mr Chota: Hear, hear!

Mr Chongo: That is what is supposed to be done. However, I also agree that there is a lot of political interference in most councils.

Mr Speaker, a case in point that I have in mind is that, early this year in January, the Council Chairperson of Mwense got tired of the anomalies that were prevailing in our council and called for a special council meeting to discuss the misappropriation of funds and the manner in which the council was being run. He called for this meeting with a view to disciplining the administration running the council on the people’s behalf. However, what I saw was political interference. Certain members of some political parties literally defended the officer who was in charge because they thought that he was helpful to a particular political party in its efforts to disrupt the work of the hon. Member of Parliament in the area. This is very unfortunate. The Ministry of Local Government and Housing was informed about this issue and we were hoping that it would intervene but up until now, nothing has happened. What kind of a country are we running if we can allow such serious anomalies to continue happening?

If an officer is not found with a case to answer at that moment and people have alleged that these anomalies are happening in a particular council, the Government should act by suspending that particular officer to pave way for investigations. If, at that particular time he is not found wanting, then he can continue with his job. I am not saying that people should be fired anyhow. However, if there is a problem and we have sounded the alarm, the higher authorities should intervene.

Mr Speaker, in as much as I want to blame the politicians causing all these problems, I also realise that there is an Executive at the helm that must intervene and sort out the problems.

As a representative of the people of Mwense Constituency, I wish to indicate on the Floor of this House that this kind of administration will not be allowed to continue in our district, especially with the Local Government Commission coming up which will have powers to transfer officers. We do not want such kind of administrators in our area and so, they should be transferred to another area. If this is not done, we will accuse you of having helped them to contribute to the downfall of our area. 

Sir, with these few words, I thank you.{mospagebreak}

The Minister of Lands (Ms Lundwe): Mr Speaker, I thank you very much for according me this opportunity to make comments on land issues.

Mr Speaker, converting customary land to leasehold tenure, as it stands today, can be a bureaucratic process. At present, the conversion of customary land to leasehold tenure entails that one firstly approaches the village headman or family in that particular area. The applicant’s name is then added to the village register after which the village headman approaches the chief. This is then followed by a team of Indunas sitting to scrutinise the application. The interested person will, at this stage, formally apply to the chief and the application will either be approved or rejected based on the advice from the indunas, in some cases because there are no consultations made in other chiefdoms.

If the application is approved, it is at this point that the planning authority then prepares the layout plans for approval by the local authority for the conversion of customary land to leasehold tenure which will formally make its recommendation to the Commissioner of Lands. The Commissioner of Lands then allocates land to the applicant.

Mr Speaker, this is a tedious process. As can be seen from the illustration given above, there are so many steps involved and each step is not time bound. This means that the headman and chief can move at their own pace.

Mr Speaker, in view of the bureaucracy, depending on the outcome of the National Constitutional Conference legislation on land, the Government will streamline this process. In doing so, the Government intends to institutionalise the traditional authority in as far as land administration is concerned. This entails giving guidelines to the chiefs on how best to administer land.

With regard to the finalisation of the draft policy, it will only be done after the new Constitution has been formulated. It is anticipated that the legislation in the new Constitution will give direction on how land will be administered in the country and, as such, will have a bearing on the Land Policy. The Constitution, being the supreme law of the land, takes precedence over all other laws and policies.

Mr Speaker, on the issue of the Government taking a strong stance on the matter of speculation by evoking the law on re-entry and repossession of land, the ministry has already started re-entering land that is not developed. This can be seen from our recent print media advertisements. The ministry will continue following its important mandate to ensure that land is administered and repossessed from those who have kept it idle.

Mr Speaker, in addition, we will revisit the law of repossession to curb the speculations and also make it easier to deal with present day challenges.

I thank you, Sir.

Hon. Members: Hear, hear!

The Minister of Finance and National Planning (Dr Musokotwane): Mr Speaker, I thank you for giving me this opportunity to make a few remarks on the Motion before us.

First of all, I wish to join others who have congratulated you on having been elected to your new office. With your background, both in the profession of law and long years of being a Parliamentarian, we are all confident that you will perform well.

Mr Speaker, in view of time, I will restrict myself to the issue of housing finance which has been referred to in the report and which many hon. Members here have commented on. Housing finance is another example of an area where we need reform, especially that of our mindsets. 

I say so because I think the report refers to the need for more budgetary resources to solve the housing problem. Also, a number of colleagues, as they debated, emphasised the need for more money from the Budget to solve the housing problem that is emerging in the country. This is an example I would liken to the tug-of-war in our mines, today, regarding what happened just after the 1960s, 1970s and what the modern practice is in other countries today. 

Mr Speaker, at that time, in the 1960s, the approach taken by the Zambian Government was to solve the housing problem by allocating money in the Budget to the construction of houses for members of the public either directly, through councils, or indirectly, through institutions such as the National Housing Authority (NHA). In fact, this kind of thinking was not just adopted in the housing sector. We saw it in the provision of passenger and cargo transport and health services, when private hospitals were taken over by the State. This was done because the State opted to provide essential services. We saw it in the education sector and, indeed, in other areas such as trading.

Mr Speaker, the results, contrary to the expectations, were quite unsatisfactory. Instead of the country making progress, it slowed down quite substantially. The good experience and knowledge is that, there are areas where we, as a country, reformed. For example, in trading, we have seen how this sector has expanded and people can now shop with a lot of pleasure with a wide range to pick from. In the passenger transport sector, as opposed to the days when people slept at the bus station for five days waiting for a bus, these days, the buses are the ones that wait for people. This positive trend can be seen in many other sectors.

Mr Speaker, the Movement for Multi-Party Democracy (MMD) Government’s approach, like in many other areas, is its need to tap into innovation and the enterprise of the private sector so that there, also, it can make a lot of progress in terms of providing accommodation rather than to wait for taxpayers, through the Treasury, to finance accommodation for members of the public. 

Mr Speaker, when you look at the current housing stock in large cities like Lusaka, it is very easy to notice that the number of houses constructed out of public funds is a very tiny fraction compared to the rest of the accommodation provided in the city and it is only restricted to areas like, maybe, Matero, Libala, Chilenje and so on and so forth. The rest of the houses have been provided by private enterprises and funds and this is the approach that needs to be encouraged.

Mr Speaker, in line with this, a number of factors have been looked into. For example, commercial banks are being encouraged to lend money for property development. In fact, at the moment, the largest number of property under construction in this country, especially in Lusaka, is financed by commercial banks and not the Treasury. 

Mr Speaker, the results are very easy to see. If one looked around the streets, they would see new sites being constructed. We, as a Government, believe that this is the correct approach and if we continue this way, the issue of housing is going to be resolved. 

Mr Speaker, it is interesting to note that even some of the areas like the informal settlements, which have turned out to be eyesores, along key roads and places in towns are being bought out by private developers who are putting up structures that are more acceptable. 

So, once again, this is the type of approach that we need to encourage. Other than encouraging commercial banks to provide financing for housing, the Government is also utilising the public-private partnership (PPP) mode to encourage the private sector to expand housing.

Mr Speaker, recently, the PPP unit advertised for the construction of 4,000 housing units countrywide using private money. These houses will be sold to members of the public upon completion. The contribution of the private sector has been to arrange for land in councils which are willing to provide the land on which these houses are to be built. I am happy to report that the response has been overwhelming. There are so many companies that have come forth to indicate that they are willing to provide financing or construct houses under the PPP arrangement so that we can make progress in terms of reducing the housing deficit.

Mr Speaker, in conclusion, let me say that we need to reform or change our mindsets and realise that some of the things that we have been insisting on doing such as using taxpayers’ money to build housing are a thing of the past. Let us join the group of countries in the world that have made progress without resorting to public finances. Countries like Malaysia have a lot of houses that have been developed by the private sector. Funds for the development of this housing did not come from their national budget. Places like the United States of America, in fact, have excess houses built from funds that did not come from the Treasury. Many other places such as Germany and Thailand also have well developed housing. So, engaging in a tug of war on what was practiced in the past and what the rest of the world is doing presently should end. Let us move with the times.

I thank you, Mr Speaker.

Hon. Government Members: Hear, hear!

The Minister of Local Government and Housing (Dr Kazonga): Mr Speaker, I thoroughly digested your Committee’s report. Through what I call ‘cross-section analysis’, I came up with two main issues. Furthermore, all the issues that have been said in the various debates fall into two fundamental categories. The first one is that of financial management. The concerns raised, in the report, of council officers not retiring imprest or preparing financial statements, all fall under financial management. 

The report also talks about sources of finance for councils such as the issue of property rates, which has also been adequately debated in this House. This is one of the major sources of financing for our local authorities and is part of financial management, including misapplication of funds, irregular payment or wrong payments and failure to prepare statements. When we talk about sources of revenue, we also take into account how this money is utilised.

Mr Speaker, the other category is what I simply call infrastructure for municipals or municipal infrastructure, ‘for short’. 

Laughter 

Dr Kazonga: In this case, we are talking about infrastructure such as markets, roads, and houses. All these are captured within that category. Hence, my calling the two categories financial management and municipal infrastructure. 

Now, let me come back to the issue of financial management. A number of concerns have been raised by hon. Members on this issue and one of them is that of property rates as part of the sources of revenue for our councils.

The law is very clear and there is no doubt that property owners pay property rates to the rating authorities which are councils. The concerns that have been raised over a period of time are, sometimes, due to the way these resources are utilised and, in some cases, it is the way in which they are demanded. If, for instance, one is supposed to pay K60,000 in a year as property rates, it is possible to negotiate with the council to be allowed to pay K5,000 per month. By the end of the year, that K60,000 would have been in the coffers of the councils. Therefore, modalities of payment have been an issue and also the usage of these resources.  

The other issue, which is encompassed in the financial management concept is that of audits, particularly statutory audits. Indeed, a number of issues have come out from these audits and, as part of good corporate governance, we are ensuring that the local authorities are audited in accordance with the law at the end of each financial year.

As part of the response to some of the concerns raised, as a Central Government, through my ministry, we are committed to adding value to these audits and the value addition are the actions that follow after these reports. We want to change the attitude of business as usual and add value to the audits through taking appropriate action. As we all aware, audits are supposed to assist us improve our financial systems and also strengthen some of the capacity gaps that have been noted in the reports.

Indeed, the Government is committed to ensuring that, once these audits are carried out, it emphasises on the action taken as a result of the findings.

The ministry is really geared and shall do its best to ensure that appropriate action is taken. If anybody is found wanting in the misuse of these resources, the law will not spare him or her. It has to take its course.

Regarding the issue of the municipal infrastructure, I have captured a number of issues such as that of markets and housing. Fire tenders are also part of the services to be provided and these are cardinal issues which require that we work together. 

As regards housing, I have two responses and the first one is on how far the Government has gone with the Housing Policy. The Government is working on the review of the Housing Policy and hopes to fast track this particular process so that the policy is in conformity with the current environment. 

With regard to the issue of financing, my colleague has already captured that. Housing, in Zambia, can directly be provided by the local authorities themselves. There is nothing to stop them. The NHA as well as individuals are contributing a lot in terms of reducing the deficit of houses. In addition, the Government has also put in place the PPP Policy and its legal framework as another avenue as my colleague, the hon. Minister of Finance and National Planning, indicated. 

Mr Speaker, therefore, with these measures, I am confident that we should go a long way in reducing the housing deficit in the country. This leads me to the issue of information management that was raised your Committee.

Indeed, we have to work hard in order to have up to date data regarding our housing deficit. We are fortunate enough, this year, to have the census on population and housing. As a ministry, we take this exercise seriously to ensure that data is available for planning purposes and decision-making.

Sir, in general terms, we have taken note of all the Committee’s observations. The ministry will carefully study its recommendations and come up with the action-taken report, as is the practice, at an appropriate time.

With regard to infrastructure development, I wish to also inform the hon. Members of this House that a lot is being done within the available limited resources. For instance, the Government released K1 billion to each of the twelve newly-created councils, which are Lufwanyama, Nyimba, Mambwe, Chavuma, Itezhi-tezhi, Kazungula, Mpongwe, Chienge, Milenge, Mpulungu, Shang’ombo and Mungwi. This way, they have, at least, been assisted to develop appropriate infrastructure. 

Sir, on the issue of housing, the ministry released K9 billion to ten selected councils for them to develop low cost houses across the country. These are some of the efforts that the Government is making in order to address the issue of housing. 

Another issue which was raised by hon. Members of Parliament is one which I call a hypothesis. It stated that commercial water utilities (CUs) were not viable and I challenge that assertion. As far as this Government is concerned, its CUs are viable. As a Government, we fully understand the challenges the CUs face in order to deliver what we have asked them to deliver and we are addressing those challenges. We have captured the issues of dilapidated infrastructure and metering among others. Therefore, these CUs are viable. If only the hon. Members understood how much it costs to supply water to a household, I do not think they would have talked the way they have regarding this issue. 

I am convinced that the Government will continue to implement water reforms, particularly, in the sub-sector of water supply and sanitation. It shall also continue using CUs in urban and peri-urban areas because that is the right way to go.

Mr Speaker, we take note of some of the issues raised by hon. Members of Parliament. We shall attend to those we feel are feasible and viable. 

As for the report in general, I wish to thank the Committee for the wonderful job. It was quite comprehensive. 

Mr Lubinda: Mulongoti.

Dr Kazonga: Indeed, it adds value to the local government system. 

Mr Lubinda: You should learn.

Dr Kazonga: The hon. Members on your left, Mr Speaker, are like a mirror to the Government. Some of the areas will enable us improve service delivery to the people of Zambia. We shall study a number of critical issues that you have raised, particularly the recommendations. I thank the Committee for the wonderful job. 

I thank you, Sir.

Hon. Members: Hear, hear!

Mrs Musokotwane: Mr Speaker, I would just like to thank all the hon. Members of the House for the overwhelming support for the report.

I thank you, Sir.

Hon. Members: Hear, hear!

Question put and agreed to

ADJOURNMENT

The Vice-President and Minister of Justice (Mr Kunda, SC.): Mr Speaker, I beg to move that the House do now adjourn.

Question put and agreed to.

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The House adjourned at 1912 hours until 1430 hours on Thursday, 22nd July, 2010.