Debates- Wednesday, 18th February, 2009

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Wednesday, 18th February, 2009

The House met at 1430 hours






The Minister of Commerce, Trade and Industry (Mr Mutati): Madam Speaker, I wish to inform the House and, indeed, the general public that the Government has been implementing a new business model called the multi-facility economic zones (MFEZs). This model has drawn considerable debate in this House.

Madam Speaker, allow me, from the outset, to give a comprehensive statement to this august House to clarify this issue.

Madam Speaker, the MFEZ falls under the auspices of the Triangle of Hope (ToH) Initiative, which was introduced to Zambia in 2005 by the Japanese Government through the Japan International Co-operation Agency (JICA).

The ToH is aimed at creating a platform for Zambia to achieve economic development by attracting significant domestic and Foreign Direct Investment (FDI) through a strengthened policy and legislative environment. The ToH emphasises political will and integrity, private sector dynamism and integrity, civil service efficiency and integrity as key forces that will enable the economy to attain accelerated economic development.

The ToH is being implemented through twelve taskforces appointed by the late President, namely the small and medium scale enterprises, MFEZs, the cotton cluster, streamlining government machinery, banking and finance, air cargo hub, health, education, mining, agriculture, Information and Communications technologies (ICT) and tourism.

My ministry has the leading mandate for the implementation of the MFEZ taskforces’ recommendations.

The implementation of MFEZs in Zambia is designed to make Zambia competitive through increased activity in the trade and manufacturing sectors which have numerous positive spillover effects on other sectors such as utilities, transport, agriculture and services. The MFEZ development responds to the vision articulated by the Ministry of Finance and National Planning in the 2009 Budget of a vibrant and diversified economy where hard work and the spirit of enterprise are rewarded.

Madam Speaker, the MFEZ are special industrial zones for both export oriented and domestic oriented industries. These zones will have the well appointed infrastructure in place in order to attract and facilitate establishment of world class enterprises in the zone (s).

The MFEZs blend the best features of Free Trade Zones, Economic Processing Zones and Industrial Parks/Zones concept and create the administrative infrastructure, rules and regulations that benchmark among the best dynamic economies. The blending of physical infrastructure with an efficient and effective administrative infrastructure will create the ideal investment environment for attracting major world class investors.

The legislation governing the MFEZs is mainstreamed in the Zambia Development Agency (ZDA) Act No. 11 of 2006 under section 18. In addition, the regulations and guidelines governing the declaration and establishment of MFEZs was put in place through Statutory Instrument No. 65 of 2007. Section 5 (p) of the ZDA Act No. 11 of 2006 mandates ZDA to administer, control and regulate MFEZs in Zambia. MFEZ incentives are non-discriminatory.

Madam Speaker, my ministry has, to date, identified five areas earmarked for MFEZs namely Chambishi, Lusaka Sub Zone, Lusaka South, Lumwana and Ndola (Sub Saharan Gemstone Exchange) as an industrial park.

The development of the Chambishi MFEZ is being under taken by the Chinese Non-Ferrous Metal Mining Co-operation Limited (CNMC). This is pursuant to action points within the framework of the China Africa Co-operation (FOCAC) where the Chinese President His Excellency Mr Hu Jintao committed to developing five trade and economic zones in Africa from 2007 to 2009. Zambia was selected as the first African country to benefit from this commitment.

The Chambishi MFEZ has already housed ten enterprises and these enterprises have provided more than 3,500 local jobs which are expected to increase as more enterprises locate in the MFEZ. For example, the Chambishi Copper Smelter is expected to start operations this year and will employ an additional 1,500 locals. The smelter will also increase copper processing capacity by 150,000 tones annually.

Further, the infrastructure construction is proceeding well and already, total investment in infrastructure development has reached US$100 million. A water pipeline and a ZESCO substation have already been put in place and vast expansion works are currently taking place. Those who have travelled to Chingola in recent times will have noticed land clearing in the MFEZ area.

Madam Speaker, the Chambishi MFEZ will house heavy and light industries, among them copper smelting, agro processing, manufacture of copper cable, household appliances, bars, wires and motor parts.

By 2011, the MFEZ is poised to accommodate fifty to sixty zone enterprises with an output volume exceeding US$1.5 billion per annum of which more than US$600 million will be exported while employing more than 6,000 locals.

Madam Speaker, the Lusaka Sub Zone, which is located adjacent to the Lusaka International Airport, whose construction and was launched on 14th January, 2009 by the Republican President His Excellency Mr Rupiah Bwezani Banda. This is an extension of the Chambishi MFEZ and will focus on light manufacturing activities and services such as the provision of conference facilities, hotel accommodation among others. The CNMC are currently developing a master plan and the actual construction work is expected to start before the end of this year.

Madam Speaker, the Lusaka South MFEZ site is reachable through two inlets and exits, namely the Chifwema Road about 1.8 kilometres off Leopards Hill Road and Mosi-O-Tunya Road is being developed by the Malaysian experts from Kulim Technology Park Corporation in conjunction with the Japanese experts from JICA and a team of local experts.

The construction of the Lusaka South MFEZ, a 2,100 hectare area will be in five phases. Phase 1 will require development of 414 hectares of land and will commence from the eastern side as it is closer to the already existing access roads which can easily be upgraded.

In addition, the water source and storage is nearer to the eastern side of the Lusaka South MFEZ which would result in less piping in the first phase. The existing communication duct and a power sub-station are located in Woodlands and could, therefore, be easily extended to the eastern side of the Lusaka South MFEZ. Phase I is expected to employ up to 4,800 workers once completed. The Lusaka South MFEZ will house a variety of industries and facilities. Among them are high tech industries, research and development, commercial, residential, golf course, institutions and community facilities with total investment flows expected to exceed of $1.2 billion. The master plan of the Lusaka South is expected to be finalised by next month.

Madam Speaker, the construction of access roads to the Lusaka South MFEZ is expected to begin in the second quarter of this year. It should be noted that the provision of infrastructure is the responsibility of the Government. The Government, in this year’s Budget, has provided K30 billion to support the development of infrastructure in the economic zones.

The fourth site to be developed is the Lumwana MFEZ. This is a 1,300 hectare area which will focus on light and heavy industries. Some notable activities that the MFEZ will house include manufacture of explosives, agro-processing, horticulture, fisheries, hotel accommodation among others. The developers of this MFEZ are finalising the master plan. The MFEZ is expected to be launched in the second quarter of this year.

In order to support this development, the Government will construct a hospital in the Lumwana area and other support infrastructure. Already, Investrust Bank Plc has opened a branch in the area to provide financial services to the growing population of Lumwana.

Madam Speaker, the fifth site is being developed in Ndola as an industrial park. It is called the Sub-Saharan Gemstone Exchange Industrial Park and will aim at creating a streamlined export procedure that will assist buyers, sellers and producers of rough and processed gemstones and jewelry to freely participate and conduct regular auctions and routine transactions and thereby making gemstone mining a sustainable venture to bring wealth to the nation as a whole. This is the first industrial park being developed by Zambian entrepreneurs. The industrial park is expected to house more than twenty companies of which five have already started operations employing about a 100 Zambians.

Madam Speaker, may I take this opportunity to clarify that all investors, both local and foreign, have equal opportunities to invest in any of the MFEZs and industrial parks as the principal Act, the Zambia Development Agency Act No. 11 of 2005, does not discriminate between local and foreign investors. The criterion for setting up a company in an MFEZ is meeting the required threshold of investing not less than US$500,000 in line with Section 56 of the Zambia Development Agency Act No. 11 of 2006.

In addition, the project to locate in an MFEZ has to, inter alia, demonstrate the following:

(a) amount and quality of local employment creation;

(b) extent of skills development and transfer of skills to local entrepreneurs and communities;

(c)  extent to which a project will lead to expansion of local production;

(d) level of utilisation of local raw materials and intermediate goods;

(e)  introduction of science and technology;

(f)  production of new products;

(g)  extent to which a product will lead to the diversification of the economy; and

(h) degree to which a project is export oriented.

Madam Speaker, allow me to comment on the issue of injury to local manufacturing companies. The Government will concentrate on attracting pioneer projects and export oriented companies that will strictly support the diversification agenda.

Before concluding my statement, Madam Speaker, allow me to make specific reference to some of the issues that may be of particular interest to the majority of the people in this House as well as members of the general public. These issues involve a gazetted forest area, water supply and environmental issues.

The area under consideration in the ministerial statement is, indeed, an aquifer for underground water for Lusaka and the source of the Chalimbana River. However, an environmental impact assessment will be undertaken to take into account these issues.

Madam Speaker, initially, water supply for the MFEZ will be sourced from just outside the MFEZ area. This is the Lusaka Park. However, in the long term, there are plans to source water from the Kafue River by laying additional water pipes within the existing one. The current MFEZ, Forest No. 26, was degazetted by the late President in 2007 through Statutory Instrument No. 65 of 2007.

Madam Speaker, as per requirements by the Environment Council of Zambia, a strategic environmental assessment will be included in the master plan where an environmental impact assessment will be conducted for each development phase of the Lusaka MFEZ (LS- MFEZ).

In conclusion, I wish to inform this august House that Zambia is not the first country to implement the MFEZ concept as a business model for accelerating industrialisation and diversification of the economy by placing strong emphasis on export oriented production. For example, some of the countries that have developed with high Gross Domestic Products (GDP) rates of around 10 per cent in the last fifteen years have been implementing MFEZ as a business development model. These success stories are Malaysia, Singapore, China and India and are a clear testimony of what an economic zone can do to achieve transformation and accelerated growth.

In 1964, Madam Speaker, Zambia had twice the per capita income of Malaysia. Today, Malaysia’s per capita income has increased to US$14,500 compared to Zambia’s US$1,044. In Africa, MFEZ is a business model which is being implemented successfully by Sudan, Egypt, Ethiopia and South Africa.

As we move forward, we must not be demoralised or intimidated by the challenges we face. We must remain focused on what needs to be done to break the curse for the slow implementation of the diversification of our economy. Job creation is key to economic growth and the MFEZs will contribute significantly to this goal while reducing unemployment. It sets a platform for enhancing our competitiveness, diversification and stimulating industrialisation. Once fully developed, the current MFEZs will create over 15,000 direct jobs and many more indirectly with investment flows in excess of $2.7 billion. The MFEZs will provide strong business linkages and set the momentum for business expansion opportunities as a basis for sustained economic growth. As we implement the MFEZs, our resolve and ingenuity will be challenged. We must remain fully committed to realise the 2030 Vision. The 2009 Budget is but a necessary step to achieve this vision.

I will lay on the Table, Madam Speaker, the development plan of the MFEZs which will be made available to all hon. Members for their study.

Madam Speaker, I thank you.

Hon. Government Members: Hear, hear!

Madam Deputy Speaker: Hon. Members are now free to ask questions on points of clarification on the ministerial statement given by the hon. Minister of Commerce and Industry.

Dr Scott (Lusaka Central): Madam Speaker, the hon. Minister said that the Government would give priority to pioneering industries to avoid competition between firms inside and those outside the MFEZs. However, the examples he gave of Chambishi included a smelter, of which there are many outside the MFEZ, including copper cable manufacturing, agro processing and many others. Can he enlighten us on how this is supposed to work? Does it mean that the Zambia Revenue Authority (ZRA) cannot collect money from the smelters that happen to be inside an MFEZ, but only from those outside? Do the ones outside come inside? Can he tell us how this tax apartheid system is going to work?

Hon. Opposition Members: Hear, hear!

Mr Mutati: Madam Speaker, with specific reference to the smelter located in Chambishi, the issue we are addressing is one of capacity of the mining industry. When Lumwana was constructed, the constraint was copper smelting. There was no sufficient existing plant capacity to take into account the concentrates of Lumwana. It is for this reason that we permitted the establishment of the copper smelter in Chambishi.

I thank you, Madam.

Mr Mbewe (Chadiza): Madam Speaker, I would like to know why these M …


Mr Mbewe: What do you call them?

Hon. Members: MFEZs.


Mr Mbewe: … MFEZs are only concentrated along the line of rail and not in towns such as Chipata that have potential to export products.


Madam Deputy Speaker: Order!

Mr Mutati: Madam Speaker, in any development journey, there is a starting point and in this case the starting point is to locate the MFEZs in areas where the following is sufficient:
 (a) infrastructure; and

(b) existing market.

 For example, we are putting an MFEZ in Lumwana to supply into the Lumwana Mines. It will be difficult to locate an MFEZ in Chipata to supply into Lumwana Mine because the cost of supply would increase. Therefore, it is a strategic decision, in Phase I, to locate the MFEZs to make them competitive locally, regionally and internationally.

I thank you, Madam Speaker.

Mr Hamududu (Bweengwa): Madam Speaker, the problem the MMD has is that of implementation. Can the hon. Minister be specific about the time frame or the roadmap of the implementation of the MFEZs because we have been talking about them for over a year?

Dr Katema: Yes, we are fed up.

Mr Mutati: Madam Speaker, I have said that the Chambishi MFEZ has already employed over 3000 employees. The master plan for the Lumwana MFEZ is being developed. However, even as it is being developed, a number of companies such as Investrust Bank and an explosive company have already located in the area.

Madam Speaker, in the case of the Ndola Industrial Park, the infrastructure has been developed and five companies have already been located in the Ndola Sub-zone. 
The Lusaka Sub-zone was only launched in January, 2008. A master plan is being developed and we hope to start the development of the Lusaka Sub-zone before the end of this year. We are also receiving the master plan for the Lusaka South next month that we will implement upon receipt. We are in a hurry to implement and meet the challenges that we have in job creation, wealth creation and creation of a competitive industry in Zambia.

 I thank you, Madam Speaker.

Hon. MMD Member: Quality!

Mr C. K. B. Banda, SC. (Chasefu): Madam Speaker, the Government has indicated in the budget that the way forward is through diversification into agriculture. What programme is there to introduce the MFEZs in areas such as the Eastern Province that are predominantly agriculture based?

Hon. Members: Hear, hear!

Mr Mutati: Madam Speaker, indeed, one of our key directions is diversification, and agriculture is also key. This is why in both the Chambishi and Lusaka Sub-zone, we are going to have agro-processing taking in materials from the surrounding areas, including Chipata. 


Mr Mutati: Madam Speaker, may I also add that agriculture activity has not been set aside. The hon. Minister of Finance and National Planning has set aside significant amounts of money for the completion of the Nansanga Farming Block in the budget.


Madam Deputy Speaker: Order! Hon. Members, please listen.

Mr Mutati: The reason for this is for us to consider auxiliary industries that will support the development of the Nansanga Farming Block which is an agricultural area.

I thank you, Madam.

Mr Lubinda (Kabwata): Madam Speaker, the hon. Minister informed this House in his statement that some important decisions have already been made relating to former Forest No. 26, namely that 414 hectares on the eastern side of the forest will be phase I.

 Secondly, starting this quarter, roads leading to the MFEZ will be provided. However, the hon. Minister has also said that in keeping with the provisions of the Environmental Pollution and Control Act, he is going to have an impact assessment study conducted to see the viability of the project with regard to environmental protection.

 Could he explain how he could possibly encourage the hon. Minister of Finance and National Planning to include K40 billion to provide infrastructure to an MFEZ which is bound to be assessed by the Environmental Council of Zambia (ECZ)?

Madam Speaker, finally, since his is a listening Government, would he also explain why the recommendations made to his ministry through the Committee I chaired on Economic Affairs and Labour, arising from the many submissions of people who thought that Forest No. 26 was not suitable for an MFEZ given the environmental conditions and also bearing in mind the gentrification that would take place in the surrounding areas of Kabwata, Kamwala and Chilenje as a result of giving that piece of land to the Chinese and the Malaysians, have been ignored.

Hon. Opposition Members: Hear, hear!

Mr Mutati: Madam Speaker, that is a critical question which must be addressed squarely. The process for turning Forest No.26 into an MFEZ is as follows:

 (a) degazetting; and

(b) creating a master plan that will give information on the location of development.

Once that has been done, the next step is to confirm whether the development will be done through an environmental impact assessment report. However, since budget will be approved, perhaps, at the end of next month, should the environmental assessment report inform us that it is viable to create and construct the MFEZ, we will need money to start the process. Therefore, the K30 billion that has been provided is catering for the Lusaka Sub-zone, the Lusaka South and, indeed, all the infrastructural needs this year.

Madam Speaker, it is important that as we make decisions regarding development, we take into account concerns of the general public. However, those concerns must be put into a formalised process. Therefore, what we have received so far will form part of the input of the environmental assessment report which will give us direction on what we need to do.

 Thank you, Madam

Hon. MMD Members: Hear, hear!{mospagebreak}

Mr Sichamba: Lubinda wachepa!

Dr Kalumba (Chienge): Madam Speaker, following a very articulate and comprehensive presentation by the hon. Minister who has indicated the need to put infrastructure in order to kick start Lumwana and make it viable on a long term basis, does this point of Lumwana make the case for prior investments in areas where potential exists, but where activities are not currently taking place? I am thinking of places such as Luapula Province, because nobody knew that the North-Western Province would be a big mining area, …

Hon. Members: Hear, hear!

Dr Kalumba: … but we know that Luapula Province potential for mining. Is it not about time we started creating the infrastructure necessary for future investments?

Mr Mutati: Madam Speaker, the statement made on the need to put infrastructure in advance in order to stimulate development, is correct. However, in doing so, we also remain cognisant of the fact that our resource base is quite narrow. To stimulate development in tourism, the hon. Minister of Finance and National Planning has provided resources in this year’s Budget to create infrastructure for Kasaba Bay. That is the direction that this Government is going to take.

I thank you, Madam.

Mr Milupi (Luena): Madam Speaker, in addition to the infrastructure within the MFEZ, there will be a requirement for infrastructure in the surrounding areas such as housing, schools, hospitals and sporting facilities. Why has the Government not considered locating some of the MFEZs in areas where we already have this support infrastructure such as Luanshya and Kalulushi?

Mr Mutati: Madam Speaker, when we had challenges at the Luanshya Copper Mines, the hon. Member of Parliament for Roan made a case for us to declare Luanshya as an MFEZ as part of a long term solution for the challenges in Luanshya. Any process must be done properly so that we move away from the haphazard development of the past. Therefore, the first step is for us to develop a master plan and see what kind of industries can be located in Roan before we declare it an MFEZ, and that is what we are doing.

I thank you, Madam.

Mr Bwalya (Chifubu): Madam Speaker, Chambishi MFEZ will attract a lot of people even from the Democratic Republic of Congo (DRC). Is the Government considering constructing a dual carriage way between Kitwe and Chingola?

Mr Mutati: Madam Speaker, recently, we passed the Public Private Partnership Policy. One of the elements in that policy is for us, in the first phase, to develop a dual carriage way between Chingola and Kitwe. The hon. Minister of Works and Supply is vigorously pursuing this particular agenda so that this is realised by 2011.

I thank you, Madam.

Mr Kambwili: Question!

Mr Kakoma (Zambezi West): Madam Speaker, in relation to the proposed Lumwana MFEZ, I would like to find out from the hon. Minister who the developers are, the total value of the investment that they are proposing and how many jobs are going to be created.

Mr Mutati: Madam Speaker, at the moment, Lumwana Mine is anchoring the development of the Lumwana MFEZ. They are providing the land and initial infrastructure for development. They also expect to create about 4,800 jobs, particularly arresting the situation in an area that does not have numerous job opportunities.

I thank you, Madam.

Major Chizhyuka (Namwala): Mr Speaker, without risking to be considered anti MFEZ, I would like to know from the hon. Minister …

Madam Deputy Speaker: Madam!


Major Chizhyuka: Madam Speaker.


Major Chizhyuka: Madam Speaker, given the fact that there already exists an impediment to the location of the MFEZ in Lusaka South, on the basis of the body of knowledge from the highest institute of learning in this country, the University of Zambia and a university in Italy, I would like to find out from the hon. Minister what is it that is still pushing him to go and sit an MFEZ on an aqua farm which is the source of 47 per cent of underground water for Lusaka? What is it that propels  him …


Major Chizhyuka: … to take this MFEZ in that location when we have Kafue which is already developed? In fact, it should have been the capital city of this country. Why not that option?

Hon. UPND Members: Hear, hear!

Mr Mutati: Madam Speaker, what propels the Government and I …


Mr Mutati: … is very clear. We have this body of knowledge from the University of Zambia and a university in Italy and there may be many others. This knowledge must be collapsed into an environmental assessment report so that we make an informed decision. We cannot, as a Government, make a decision without following proper procedures.

I thank you, Madam.

Hon. Government Members: Hear, hear!

Mr Mushili (Ndola Central): Madam Speaker, Ndola has been the centre of industrial activities in Zambia and has all the infrastructure. What difference will this intended Ndola Industrial Park make which has not taken place and the Government has not yet propelled to make sure that the industrial activities in Ndola are back to where they were? What difference will this make apart from the one man’s lapidary which is already there and a lot of suppliers of raw materials for jewellery have already resisted? Can the hon. Minister, please, enlighten the people of Ndola who are anxiously waiting?

Mr Mutati: Madam Speaker, in the Ndola area, we face many challenges with regard to job creation, wealth creation and reinstating Ndola to the industrial base that it once was. It is for this reason that, ten days ago, my Deputy Minister went to inspect the construction of a transformer factory that will be producing transformers for Zambia and the region under a joint venture agreement between Zesco and Sweden.

Madam Speaker, in addition, following our visit to India, we have also been able to attract an Indian company called Transformer Pole who have signed a joint venture agreement to produce transformers. They have moved their turnover from a meagre US$5,000 per month to US$30,000 per month and it is still growing. In addition, we have also finished the construction of a meter factory and this will be for both the local market and export. Our approach for Ndola is multi faceted. Whilst we focus on the Industrial Park, we also attract other industries which must be located in Ndola.

The hon. Member may also be aware that we are developing a $60 million palm oil production in Ndola. Those efforts must be recognised.

I thank you, Madam Speaker.

Hon. Government Members: Hear, hear!

Mr Mooya (Moomba): Madam Speaker, my worry is on the appearance of these buildings that will be put up. May I have a guarantee that we will not have Chinese or Malaysian looking buildings?


Mr Mutati: Madam Speaker, the hon. Member is well travelled and is very good in the discipline of studying. He has studied part of that process in the United Kingdom. Within the context of the United Kingdom to which he made reference a few days ago with regard to buildings, we have Victorian buildings. If he has been to Canary Hill, the new centre for financial services, the architecture is totally different because you have to take into account the environmental challenges and technology. You cannot hang on to Victorian designs when technology tells you that that is not cost effective.

I thank you, Madam Speaker.                                                           

Hon. Government Members: Hear, hear!

Mr Mwansa (Chifunabuli): Madam Speaker, I would to take the hon. Minister back to the Lusaka South MFEZ. Could he assure this House that if the environmental impact assessment proves that it will be dangerous to put the MFEZ in that area, he will not bow to pressure from the investor and will move them away from that site?

Hon. Opposition Members: Hear, hear!

Mr Mutati: Madam Speaker, in the Lusaka South MFEZ, there are five phases. Each phase will have an environmental impact assessment report. This Government will respect the decision of the environmental impact assessment reports and comply with their conclusion.

I thank you, Madam Speaker.

Mr Chanda (Kankoyo): Madam Speaker, Chambishi is surrounded by small, medium and large-scale farmers. What will be the impact on these farms?

Mr Mutati: Madam Speaker, when we last visited Chambishi, we interacted with the community surrounding Chambishi. Some of the messages from the people were that the opportunity for employment is much greater than the production of two bags from a hectare around MFEZ.

I thank you, Madam Speaker.

Hon. Members: Hear, hear!




133. Ms Limata (Luampa) asked the Minister of Agriculture and Co-operatives:

(a) whether the Board Chairperson of the Food Reserve Agency (FRA) was allowed to participate in FRA trading activities; and

(b) what measures the Government had taken to ensure that there was no conflict of interest among FRA Board members:

The Deputy Minister of Agriculture and Co-operatives (Mr Mulonga): Madam Speaker, the Food Reserve Agency is a board corporate established under Cap. 225 of the Laws of Zambia. In this respect, part 1 of the schedule of the administration of the agency, specifically section 6, is instructive and states:

“if any person is present at a meeting of the agency or any committee at which any matter is the subject of consideration and in which matter that person or spouse is directly or indirectly interested in a private capacity, that person shall as soon as practicable, after the commencement of the meeting, declare such interest or shall not unless the agency or the committee otherwise direct take that in any consideration or discussion or …


Madam Deputy Speaker: Order! Please have some lower consultations. Those who, like the Chair, want to listen, must listen. 
The hon. Minister may continue, please.

Mr Mulonga: Madam Speaker, I was saying that,

“… or vote on any question touching that matter and a declaration of interest met under this section shall be recorded in the minutes of the meeting at which it is made.”

Madam Speaker, in view of the above, the Chairperson of FRA can participate in FRA trading activities provided that there is strict adherence to the caveats therein. 

Madam Speaker, the only measure the Government has taken to ensure that there is no conflict of interest among FRA Board Members is the declaration of interest, as it is stated in section 6 of the schedule to the Act.

Madam Speaker, I thank you.

Mr D. Mwila (Chipili): Madam Speaker, I would like to find out from the Hon. Minister what the term of office for board members is and whether the members can serve for more than one term?

The Minister of Agriculture and Co-operatives (Dr Chituwo): Madam Speaker, the tenure of office for board members can be extended for a second term of a three year period.

I thank you, Madam Speaker.

Mr Mbewe (Chadiza): Madam Speaker, I would like to find out what the minimum qualification for one to be a member of the FRA board is.

Dr Chituwo: Madam Speaker, as set out in the FRA Act, the qualification for one to be a member is firstly, that the organisation that they belong to should nominate them. Secondly, the Act does not stipulate any academic qualification. I would imagine that to be appointed to this board, one must have the requisite managerial skills and ability to manage this very strategic institution.

I thank you, Madam Speaker.

Dr Machungwa (Luapula): Madam Speaker, notwithstanding the fact that board members must declare interest if there are issues in which they are interested, does the hon. Minister not see an inherent conflict of interest if members of this board are themselves farmers who trade in maize?

Mr Lubinda: Like Chilala the cadre.

Dr Chituwo: Madam Speaker, this law was made in this House. The farmers, bakers association, transporters and millers are all represented.  Surely, all these groups bring to the board a wealth of information regarding how the sector must behave. It, therefore, goes to show that our law took into account the aspect of declaring interest in the dealings of this organisation because it applies to everyone who is a board member. It also took into account the players in the industry.

Madam Speaker, I thank you.

Mr Imenda (Lukulu East): Madam Speaker, is the hon. Minister aware that the chairman of FRA is more or less involved in the running of the organisation on a daily basis, and that by his involvement, the organisation has in the past four years lost two chief executives officers?

Dr Chituwo: Madam Speaker, I am not aware of this allegation. The chairman of FRA …

Mr Kambwili interrupted.

Madam Deputy Speaker: Order!


Dr Chituwo: … lives about 100 kilometres away from Lusaka. To imagine that he is involved in the everyday activities at FRA is a serious exaggeration.

Hon. Opposition Members: Aah!

Dr Chituwo: Secondly, Madam, there could be other reasons why these chief executive officers left the organisation, and not necessarily due to this allegation.

Madam Speaker, I thank you.

Mr Lubinda (Kabwata): Madam Speaker, sometime in October, 2008 the price for a bag of mealie meal was increased from K35,000 to K55,000 through a board decision. Can the hon. Minister lay on the Table, minutes of the board meeting in which some of the board members declared interest and thereafter sold maize at K55,000. Is he able to do that?

Dr Chituwo: Madam Speaker, I would like to advise the hon. Member of Parliament for Kabwata to raise a question that we shall provide an answer to.

Mr Lubinda: Aah!

Dr Chituwo: I am, therefore, not able to lay the minutes of the meeting referred to on the Table.

Madam Speaker, I thank you.

Mr Lubinda: Malukula!

Madam Deputy Speaker: Order!

Mr C. K. B. Banda. SC. (Chasefu): Madam Speaker, if my memory serves me right and I hope it does, at one time, the hon. Minister of Agriculture and Co-operatives alleged that millers were hoarding maize. Is he aware that the board chairman of FRA is a member of the Millers Association? Is it not a conflict of interest for him to hold chairmanship of the FRA Board?

Hon. Opposition Members: Hear, hear!

Dr Chituwo: Madam Speaker, I admit that I alluded to some of the members of the millers association, farmers, and the traders association hoarding maize. We carried out a verification exercise where members of these organisations declared and we verified what they had in stock. The chairman of FRA is a very honourable man and we have on record what he declared.

Mr Kambwili: Question!


Dr Chituwo: Therefore, the question of hoarding does not arise.

Madam Speaker, I thank you.

Madam Deputy Speaker: Order! The hon. Member’s term “Question” has become part of parliamentary etiquette. Hon. Member, do not shout the term “Question” every time. Let it be a serious matter when you question.

Hon. MMD Members: Hear, hear!


134. Mr Chisala (Chilubi) asked the Vice-President and Minister of Justice:

(a) when the Government would start recruiting local court presiding officers on permanent and pensionable terms in order to promote efficiency; and

(b) what the minimum age for an individual to be appointed local court presiding officer was.

The Deputy Minister in the Vice-President’s Office (Mr Chilembo): Madam Speaker, the Judiciary started recruiting local court justices on permanent and pensionable terms in 2008. The decision will not only promote efficiency, but free resources which were used to pay end of contract gratuity because retired magistrates will get their pension from the Pensions Board.

Madam Speaker, the minimum age for one to be appointed local court presiding officer is forty.

Madam Speaker, I thank you.

Mr Chisala: Madam Speaker, apart from the problem of the age limit for one to qualify for the position of presiding officer, there is also a problem of inadequate qualifications for some of the people currently serving such that it becomes extremely difficult for them to interpret the law of the land and as a result …

 Madam Deputy Speaker: Order! Hon. Member, you are debating. You can ask that directly.

Mr Chisala: Madam Speaker, what is the minimum qualification for one to get employed as a local court presiding officer?

Madam Deputy Speaker: That was the answer to part (b) of the question.

Mr Kambwili (Roan): Madam Speaker, I would like to find out from the Vice-President if it is part of the proceedings of the local court to insult people. If not, what is this Government doing to educate local court justices to avoid belittling and insulting people who appear before them.

The Vice-President and Minister of Justice (Mr Kunda, SC.): Madam Speaker, the hon. Member has asked this question a number of times. Does this imply that he appears in the local court quite often?


Mr Kunda, SC.: Madam Speaker, the serious response is that we do not encourage insulting parties to proceedings. That is why from time to time, we train local court justices. If the hon. Member is aggrieved with the conduct of local court justices, he can lay a complaint with the Judicial Complaints Authority. That is why we have these institutions so that we can curtail unprofessional conduct.

Madam Speaker, I thank you.

Mr Kapeya (Mpika Central): Madam Speaker, His Honour the Vice-President and Minister of Justice just informed us that training is extended to local court justices. What form of training is extended to the justices since at times they also handle criminal cases?


Madam Deputy Speaker: Order!

Mr Kunda, SC.: Madam Speaker, the training for local court justices varies. They are trained in issues of civil and criminal procedure, principles of law and how to conduct proceedings. They are also trained in issues to do with Customary Law. Therefore, all the subjects encompassing their work are covered.

Madam Speaker, I thank you.

Mr D. Mwila: Madam Speaker, since local court justices do not have a union, I would like to find out from His Honour the Vice-President and Minister of Justice who determines their conditions of service and which package they are paid when they retire.

Mr Kunda, SC.: Madam Speaker, I have indicated before that the Judiciary is now autonomous. As such, it has its own conditions of services which are spelt out in various documents. In the earlier question, we said that is why we are engaging them on a permanent and pensionable basis. The conditions of service are determined by the Judiciary itself.

 I thank you, Madam Speaker.

Mr C. K. B. Banda, SC.: Madam Speaker, for clarity’s sake, do I take it that presiding officers are either appointed on a permanent and pensionable basis if they are forty years old and on contract if they are above forty-five years. Which is which?

Mr Kunda, SC.: Madam Speaker, we are moving away from appointing justices on contract so that we can save money, as stated in the answer. Therefore, the current practice is that we will be engaging local court justices on a permanent and pensionable basis. Of course, the issue of contract is for the Judiciary itself to determine. If people have reached the retirement age and they are still useful in accordance with their own conditions of service, they can be on contract.

 I thank you, Madam Speaker.

Mrs Musokotwane (Katombola): Madam Speaker, now that the local  court justices will be employed on a permanent basis, is it possible to lower the age from the minimum of forty to about maybe, twenty-five years because …


Mrs Musokotwane: … after fifteen years, they retire again.


Mr Kunda, SC.: Madam Speaker, if the hon. Member for Katombola was aware of the complex cases that are dealt with in the local courts, she would not have asked that question.


Mr Kunda, SC.: These courts deal with a lot of cases which touch on customary law and therefore, the presiding justices should be well vested in customary law. Twenty-five year olds of nowadays will not be able to handle such cases.

 I thank you, Madam Speaker.


135. Mr Imenda asked the Minister of Finance and National Planning when the ministry would implement Zambia’s commitment made by African Heads of State and Governments relating to the following:

(i) national budgetary allocation of 15 per cent to the health sector in accordance with the provisions of the Abuja Protocol; and

(ii) national budgetary allocation of 10 per cent to the agriculture sector in accordance with the Maputo Protocol.

The Deputy Minister of Finance and National Planning (Ms Kapwepwe): Madam Speaker, I wish to inform the House that the Government has remained committed to ensuring that adequate financing is made available to facilitate the provision of quality health services in Zambia.

The Government recognises the role the health sector plays in economic development. As everyone maybe aware, better health contributes to economic development by increasing workers’ productivity and also reduces the amount of money spent on curative care, thereby freeing resources meant for developmental projects.

Madam Speaker, as a demonstration of its commitment to the health sector, Zambia is a signatory to both the Millennium Development Goals and the Abuja Declaration in which the country will gradually increase the health allocation as a proportion of the total budget for improved service delivery. In this regard, the Government has targeted to raise the health budget (both Government and donor) to at least 14.1 per cent by 2010 from 10.6 per cent in 2006. In 2009, the allocation to health is expected to increase by 1.3 per cent from 10.6 per cent in 2006 to 11.9 per cent.

Madam Speaker, while the Government continues to prioritise health, there are other demands on the national budget such as agriculture where similar international commitments exist. Therefore, it may take some time to meet all the commitments.

Madam Speaker, as regards part (b) of the question, I wish to report that the Government has remained committed to the Maputo Declaration of raising the budget allocation to agriculture to 10 per cent of the total budget

Madam Speaker, the agriculture sector remains the key priority in economic growth and poverty reduction in Zambia. It is for this reason that in duration of the Fifth National Development Plan (FNDP), the budget allocation is planned to be increased to about 9 per cent of the total budget by 2010 from 5 per cent in 2006. In 2009, the allocation to agriculture is expected to increase by 2.2 per cent from 5 per cent in 2006 to 7.2 per cent. Even though this may be a marginal improvement, it demonstrates the Government’s commitment to the Maputo Declaration.

Madam Speaker, as earlier emphasised, the scaling up of resources will be on a gradual basis to ensure that the Government meets other international commitments as well as adequately finance other core sectors of the economy.

I thank you, Madam Speaker,

 Hon. Government Members: Hear, hear!

Dr Kalumba (Chienge): Madam Speaker, in determining the extent of budget allocation to this sector in accordance with the protocols, for practical purposes in Zambia, how is the ministry accounting for disability as well as quality of life in its partnership as per capita cost for health sector.

The Minister of Finance and National Planning (Dr Musokotwane): Madam Speaker, the way the cost is accounted for, at the moment, is that all health facilities, irrespective of the ministry, are combined. For example, we know that there are health facilities in the Ministry of Defence and other ministries. All these are combined to come up with the percentage that we are talking about.

With respect to the disabilities, I am of the opinion that in fact, most people with disabilities are quite comfortable and able in the manner in which they are. Obviously…

Mr Kambwili: Question!


Dr Musokotwane: Therefore, I am yet to hear of a situation where, for example, somebody who has one leg, goes to the hospital everyday to seek treatment. They may go there now and then for some comfort, but we do not consider that a disease that can be treated.

 I thank you, Madam Speaker.

Hon. Government Members: Hear, hear!


136. Mr Imenda asked the Minister of Works and Supply when the Mongu-Lusaka Road entrance into the City of Lusaka would be expanded to double lane as is the case for the Great North and the Great East roads.

The Deputy Minister of Works and Supply (Mr Ndalamei): Madam Speaker, I wish to inform the House that the design for the expansion of the Mongu-Lusaka Road entrance into the City of Lusaka will be considered in the 2010 Annual Work Plan. The actual expansion of the road will be considered in the 2011 Annual Work Plan though the expansion will be expensive due to the water storage tanks for the Lusaka Water and Sewerage Company and business houses along the route.

Madam Speaker, in the meantime, the Lusaka City Council intends to provide an alternative route to join the Mongu/Lusaka Road by placing a box culvert on the Kalambo/Lumumba Road junction and upgrade the gravel section of the Kalambo extension to bituminous surfacing to ease the congestion.

Njolwe Road is also being upgraded to bituminous standard under the forty-five kilometre contract rehabilitation and upgrading of selected roads in Lusaka to ease congestion on the Mongu/Lusaka Road.

I thank you, Madam Speaker.

Hon. Government Members: Hear, hear!

Mr Muyanda (Sinazongwe): Madam Speaker, I am not delighted with the hon. Minister’s answer. The culverts being made along Kalambo Road are an initiative of the business community, in which case I should declare interest because I am one of the people who donated money to put up that culvert. Where is the Government going to construct the dual carriage way leading to Mongu? Why is he misleading the House?


The Minister of Works and Supply (Mr Mulongoti): Madam Speaker, firstly, I must congratulate the hon. Member for being a responsible citizen.

Hon. Government Members: Hear, hear!

Mr Mulongoti: We are grateful that initiative was taken. However, I hope that the hon. Member does not direct his anger at the hon. Minister of Works and Supply but the Lusaka City Council because they are supposed to take care of that junction.

Hon. Lubinda, …

Mr Lubinda: Aah iwe!


Mr Mulongoti: … with a little luck, will wake up to realise that the council should provide services to the people of Lusaka. Other than the initiatives of the community, I would like to hear the initiatives of the hon. Members of Parliament who are very vocal to my ministry but are not vocal with regard to the activities of the council.

I thank you, Madam Speaker.

Hon. Government Members: Hear, hear!


Mr Lubinda: Madam Speaker, from 2002 to date, this hon. Member of Parliament …

Hon. Government Member: Which one?

Mr Imenda was pointing at Mr Lubinda.

Mr Lubinda: … has been talking about the establishment of ring roads around Lusaka which have been included in the Annual Work Plan for the Lusaka City Council from.

Hon. Government Members: Question!

Mr Lubinda: Madam Speaker, why is it that his Government is not giving back taxes to local authorities to capacitate them so that they can build ring roads which the Lusaka councillors have been calling for since 2002? When is the Government going to do that so that the pressure is relieved from the business community for the Lusaka City Council to provide these very important roads and railway infrastructure in the city?

Mr Chota: Hear, hear!

Mr Mulongoti: Madam Speaker, it is the same hon. Member of Parliament on the Floor who interrupted a meeting of development in Kamwala.

Hon. Government Members: Hear, hear!

Mr Mulongoti: … when the Permanent Secretary called …


Mr Mulongoti: … a meeting to discuss development …


Dr Katema: Question!

Mr Mulongoti: … of Lusaka. I do not know at what point he expects the ring roads to be constructed if he does not want people to meet and plan.

Hon. Government Members: Hear, hear!

Mr Mulongoti: We must be consistent.

Hon. PF Members: Awe!

Mr Mulongoti: The Local Government has its own obligations to the communities. That is why they are empowered with that authority.

The Road Development Agency has appointed the Lusaka City Council as the road authority …

Mr Chota: Answer the question!

Mr Mulongoti: … and as such, they have the obligation to provide the ring roads that the hon. Member is talking about. Money cannot necessarily come from the Central Government alone. The reason the councils have powers to rate and levy properties is to use that money for this purpose. The problem is that councillors are misapplying the money …

Hon Government Members: Hear, hear!

Mr Mulongoti: … instead of constructing roads.


Mr Mulongoti: Madam Speaker, I would like the hon. Member to understand that instead of using that money for development purposes, councillors have other ideas which do not serve the people of Lusaka. For example, there is so much garbage and dirt around Lusaka. What justification can they give us for rating us when they cannot employ that money even for providing drainages?

I thank you, Madam Speaker.

Hon. Government Members: Hear, hear! Waumfwa Lubinda!


137. Ms Limata (Luampa) asked the Minister of Community Development and Social Services when the Ministry would extend support to vulnerable people such as orphans, widows and those suffering from leprosy in Luampa Parliamentary Constituency, under the Social Welfare Assistance Programme.

The Deputy Minister of Community Development (Mr Malwa): Madam Speaker, …


Madam Deputy Speaker: Order!

Can we listen to the answer?

Mr Malwa: … the Ministry of Community Development and Social Services has already extended support to vulnerable people in Luampa Constituency under the Kaoma District Welfare Assistance office through the Public Welfare Assistance Scheme (PWAS) which is on going.

The Kaoma District Welfare Assistance Committee, in 2008, received K91,209,822. Out of this amount, Luampa Constituency received K15,250,000 which was spent on the following:

(i) orphans and vulnerable children – twenty students at Luampa High School were assisted with examination fees and school fees;

(ii) widows – thirty women received mealie meal, clothing and blankets;

(iii) disabled and people suffering from leprosy – twenty-six received mealie meal, clothing and blankets;

(iv) aged – twenty-four received mealie meal, clothing and blankets; and

(v) repatriation – one family headed by a widow, was assisted to meet their transport costs to Sesheke after the death of her husband.

Hence, eight-one people in Luampa Constituency were assisted.

I thank you, Madam Speaker.

Hon. Government Members: Hear, hear!



Budget 2009

(Debate resumed)

The Minister of Defence (Mr Mpombo): Madam Speaker, I am grateful for giving me this opportunity to briefly contribute to the debate on the motion.

Madam Speaker, the speech by the hon. Minister of Finance and National Planning is reinvigorating, robust and a beacon of hope in the face of unparalleled economic turbulences in seventy years.

Hon. Members: Hear, hear!

Mr Mpombo: Madam Speaker, the hon. Minister found an opener to unlock the prison of misery and poverty.


Mr Mpombo: Madam Speaker, we should, indeed, praise the hon. Minister for having presented the speech in a very able manner. We must also thank him for his extraordinary intellectual courage in facing these important issues boldly. The hon. Minister is one of the economists with the sharpest minds in this country.

Hon. Members: Hear, hear!

Mr Mpombo: He brings to this job a wealth of experience as former Deputy Governor at the Bank of Zambia, Secretary to the Treasury and Economic Advisor to the late President and, indeed, he has worked as an international civil servant.

Hon. Members: Hear, hear!

Mr Mpombo: Madam Speaker, the level of integrity that the hon. Minister has, can be seen in the way two provinces were jostling for his ownership. The Southern Province said he was their man and the Western Province also said he was theirs. I can say that people do not fight over junkies.


Mr Mpombo: Therefore, Madam Speaker, this is a strong indication that this hon. Minister is eminently qualified.

There has been a lot of criticism, some of it wholly bent on nothing but destruction. It is a load of political nonsense …


Madam Deputy Speaker: Order! Withdraw the phrase ‘political nonsense’.

Mr Mpombo: Madam Speaker, I withdraw that remark and replace it with political codology.


Mr Mpombo: Madam Speaker, the budget is held in very high esteem by important stakeholders, some of whom are highly qualified economists. This is what important stakeholders had to say about it.

Madam Speaker, Ms Obiageli Ezekwesili, who is the World Bank Vice President for Africa, praised this budget as being focused and pledged the World Bank’s continued support to the budget. For a person at that level to appreciate the budget is something significant. In addition, the president of ZICA, Mr Chintu Mulendema described the budget as one that meets the aspirations of Zambians in these very difficult times. Mr Chintu Mulendema is one of the highly qualified economists …

Hon. Member: Not accountant.

Mr Mpombo: … accountant, yes, and not the kind of accountants you come across these days. Mr Mulendema also continued to say that this budget is unique in the sense that it has included contributions from stakeholders such as those who went to the ministry to make proposals that have been captured in the budget. This shows the level of the budget, therefore, to continue to attack it amounts to people indulging in semi feudal and voodoo politics.


Mr Mpombo: Madam Speaker, on the global melt down, I get baffled when leaders give very simplistic analysis of a serious matter. This is a very serious matter because, as Zambians, this is also beginning to affect us in a bad way. The Livingstone Sun Hotel cannot attract the same number of tourists as it did in the past because of the credit crunch, but I get amazed to see or hear people continue to discuss a very important document in a very infantile manner.


Mr Mpombo: Madam Speaker, on the local scene, in Africa, we have been badly affected because of the slump in commodity prices which has shrunk the ability to buy our commodities. In South Africa, which is one of the biggest economic engines in Africa, the Minister of Finance, Mr Trevor Manuel said, “the South African economy will go through a very rough patch in the next three years”. This is an economic giant speaking out to analyse and appreciate the bad situation that is prevailing.

Madam Speaker, in the United Kingdom the exchequer, Mr Alistair Darling, said that last year they pumped in £13 billion into the economy to resuscitate it but to date, they are grappling with this problem because a solution is not in sight. They have done all kinds of things such as cutting interest rates and reducing tax, but all these have not worked and the economy in the United Kingdom is in a deep recession, sending the entire economy into a tailspin and this is how bad the situation is in the world.

Madam Speaker, in the United States of America, the Senate just approved a staggering US$8.5 billion in addition to US$7.50 billion which was approved when George Bush was in Government but to date, there is total economic chaos. The auto and mortgage industries have collapsed and this is a very serious matter. Therefore, it is important to appreciate the situation from that point of view. We must understand that we are sliding into a very serious political imbroglio.


Mr Mpombo: Madam Speaker, we must, therefore, thank the hon. Minister of Finance and National Planning when he comes up with measures to diversify our economic base because that is the only route we can take. Otherwise, we are headed for total kaput.


Mr Mpombo: Madam Speaker, the hon. Minister of Finance and National Planning must be applauded for increasing the allocation to agriculture to 37 percent. The farmers themselves have openly praised this budget. The entire membership of the Zambia National Farmers Union has said this is a good budget. Therefore, who are we to stand here and say it is a bad budget when we are not even farmers? The people who understand the issues have said we are on course and have praised the Government and are even having discussions with the Government on the way forward, but people have stood on this Floor saying that the Government has done nothing.

Madam Speaker, we must change this habit of perpetual negative criticism because it is important that these issues are supported.

Madam Speaker, the hon. Minister also made a bold move by putting K25.4 billion to improve agricultural extension services which had literally collapsed. The intention is to provide information to farmers and equip them with technical skills that will help them to boost agricultural activities. Certainly, as hon. Members, we should be able to say that the hon. Minister has done well. He has gone further to provide K70 billion for livestock development for areas such as the Southern Province which has been a very strong province economically, but has gone down because of the ravages of the corridor disease. Surely, this is a move in the right direction. We must thank the hon. Minister if our intentions are good. He has done perfectly well and he needs to be supported.

 Madam Speaker, let me now talk about the Fertiliser Support Programme (FSP). Yes, all of us have confirmed the structural weakness in the programme, but the Government has said we are going to carry out radical surgery of the system. We are going to make it meet the aspirations of Members of Parliament. I am sure hon. Members of Parliament will support this bold measure. The hon. Minister must be encouraged.

Madam Speaker, K77.6 billion has been allocated to the tourism sector. Again, this is a very welcome development. We must not complain just because this K77.6 billion is going to a particular province. That should not be the idea. What is important is that this money will go a long way in making the tourism sector undergo complete metamorphosis.

Hon. Opposition Members: Uko.

Mr Mpombo: Madam Speaker, again, we have been complaining here about constant load shedding and interruptions of power. Surely, how can we complain when the Government has set aside K16.8 billion for ZESCO so that these bottlenecks are emanated? We should have been the first people to thank the Government, and yet, no one has done so. All we are saying is that the budget is hollow and so on and so forth. Surely, if we are serious about what we are doing and all of us have been looking forward to the Government investing in the hydro-power sector to produce enough hydro-power that we can export.  Power is the major engine of development. If there are power outages everyday, then we have big problems.

Madam Speaker, we have seen that the Government has also made tremendous progress in the health sector. We have allocated K168.1 billion for the rehabilitation and expansion of fourteen districts hospitals. This is a welcome development. Everybody must support what the Government is doing. 

Madam Speaker, in light of what is happening in the country or worldwide, it is important that we present a proper image of the country. If, every day, when we wake up, we give the impression to the whole world that Zambia is on fire, Zambia is a haven of corruption and Zambia is this and what, we are shooting ourselves in the foot. We are not going to attract the much needed foreign investment. The little progress we would have made will plummet because we need to project a healthy picture of the country. We are sending a wrong signal. Each time people read newspapers, they see, “Zambia is on fire” and such and such things are happening in Zambia. Some of these issues are issues that we can sit down and resolve as Zambians rather than dancing into the international arena. We are going to damage the reputation of our country and will have very little investment in the country.

Hon. Opposition Member interjected.


Mr Mpombo: Madam Speaker, before I wind up, let me briefly comment on the issue of the Nansanga Farming Block. This is, again, …

Hon. Opposition Members: Defence.

Mr Mpombo: … a very important initiative. I also want to salute the hon. Minister for allocating K35 billion to the defence forces for building houses. I want to assure you that this money will be used for the intended purpose. We intend to have a builder’s brigade. The Zambia National Service already has a builder’s brigade. Therefore, we want to replicate this in the Zambia Air Force and the Zambia Army so that once this money is released, people can see the difference. We are very grateful to the hon. Minister for this.

Madam Speaker, let me end with a piece of advice to my colleagues here, particularly those from the PF. I would like to warn my colleagues, Hon. Guy Scott included, …


Mr Mpombo: … that they may be heading for the biggest political Armageddon.


Mr Mpombo: The consequences will be too gustily to contemplate.


Mr Mpombo: What I mean is that that their constitution must be revisited.

Hon. Opposition Member: Which one?

Mr Mpombo: The PF constitution which talks about palpable manifesto lazar, party cadres disciplining Judges and so on and so forth. We must ensure that we …

Mr Nsanda: On a point of order, Madam Speaker.

Madam Deputy Speaker: Order! A point of order is raised. Before, I allow a point of order, I would like to point out that a point of order must be called in a very proper manner. You do not have to shout as if you are angry with the Chair ...


Madam Deputy Speaker: … because it is the Chair that will allow the point of order.

 Where is the point of order coming from?


Mr Nsanda: Madam Speaker, when Armageddon comes, as stated in the bible, it will not leave anybody. Who is it going to leave?


Madam Deputy Speaker: Order! I will remind the hon. Members that when you call for a point of order on the hon. Minister, the same one you want to respond to your concerns, it should not be such kind of points of order, but factual ones. So, let us not just raise points of order anyhow in this House. We know exactly what constitutes a point of order. Therefore, for this particular one, the hon. Minister may consider as he winds up.


Mr Mpombo: I am very grateful, Madam Speaker. The point I was trying to drive at is that we must maintain our democratic tenets. We must show that Zambia is a democratic country that has democratic structures in both the Opposition and Ruling Party. When you draw up a manifesto which will say party cadres will discipline the Judges, and that constitutional and all public service jobs will be held by party cadres only, that is like dripping sulphuric acid on democracy.


Mr Mpombo: We are going to destroy the democracy.


Mr Mpombo: Madam Speaker, people must be democratic in their conduct and what to say. This is because when we become agents of intolerance like some hon. Members from PF, then we know that we are heading for problems.


We must also ensure that there is democracy and not jungle law in our political parties. People have to be given an opportunity to express themselves.

Mr Lubinda: On a point of order, Madam.

Mr Mpombo: Madam Speaker, I thank you.


Madam Deputy Speaker: Hon. Members, as you continue debating, do not draw interjections from others by mentioning individuals. Our rules are very clear. When you start drawing others into your debate by naming them, they have a right to start responding. So, do not mention, for example, hon. Daka’s name.

Mr Lubinda: Sibaziba.

Madam Deputy Speaker: Order!


Madam Deputy Speaker: Hon. Members, debate issues and policies and not people’s names.

The Minister of Energy and Water Development ((Mr Konga): Madam Speaker, I thank you for allowing me to debate the Motion on the 2009 Budget Address by the hon. Minister of Finance and National Planning, whose theme is, “Enhancing growth through competitiveness and diversification”.

Madam Speaker, like many other speakers before me, allow me to congratulate the hon. Minister of Finance and National Planning on presenting a very good budget to the House, which my ministry fully endorses.
Madam Speaker, the theme for this year’s budget could not be more timely, relevant and appropriate given the challenges faced by the global economy, and in particular our domestic economy. Indeed, this budget is in line with the speech by His Excellency the President, Mr Rupiah Bwezani Banda, delivered to this august House last month.

Allow me to also congratulate His Excellency the President, Mr Rupiah Bwezani Banda, for his resounding victory in the 2008 Presidential Election.

Hon. Government Members: Hear, hear!

Mr Konga: I further wish to congratulate His Excellency the President on being elected to the position of Acting Party President of the Movement for Multi-party Democracy (MMD).

Hon. MMD Members: Hear, hear!

Mr Konga: I wish to express my sincere appreciation for the budget speech by the hon. Minister of Finance and National Planning in which he outlines the Government’s vision on the need for reliable and renewable energy. This is important for enhancing competitiveness and diversification of our economy, as the theme so espouses.

Madam Speaker, Zambia has, in the last two years especially, been faced with a serious power shortage which has been attributed to, among others, the following factors:

(a) increased demand due to expansion in economic activities arising from the good policies promulgated by this Government;

(b) reduced generation capacity due to the ongoing power rehabilitation programmes; and

(c) lack of investment …

Madam Deputy Speaker: Order!

Business was suspended from 1615 hours until 1630 hours.


Mr Konga: Madam Speaker, just before business was suspended, I was indicating that the country has been faced with a power deficit attributed to, among others, increased demand and reduced investment in generation capacity.

Madam Speaker, therefore, in order to address the power deficit, the Government embarked on a power rehabilitation programme and investment in new power generation projects. I am equally pleased to inform this House that the Government is currently in the process of reviewing the Energy Regulation Act and Electricity Act to address the new challenges arising in the sector. In addition, the Government undertook measures to address demand side management, which included shifting of loads.

Madam Speaker, to improve energy efficiency, my Government noted that a reduction in power consumption in the country could be achieved by encouraging consumers to use energy efficient equipment and appliances such as Compact Florescent Lighting (CFLs). It is against this background that in March last year, the Government, through the Ministry of Finance and National Planning, waived taxes and duties on imports of energy efficient equipment and appliances.

By the way, the replacement of incandescent lighting bulbs by CFLs actually resulted in reduction in power consumption on lighting of up to about 80 per cent per bulb. Madam Speaker, I would like to urge hon. Members of this House to compliment the Government’s efforts by sensitising the electorate on the use of energy saving appliances.

Madam Speaker, it is very evident that electricity is the key drive to all economic activities in the country. In 2008, as alluded to by the hon. Minister in his Budget Address on 3. Preliminary indications showed that the Zambian economy grew by 5.8 per cent. Energy being a primary input in all major economic activities played a major part in this economic growth. The MMD Government, therefore, attaches great importance to the development of the energy sector.

This august House may wish to know that the existing power generation stations were commissioned more than forty years ago and since then the equipment has not been refurbished. This has led the constant breakdown of the machines, resulting in load shedding, affecting the economy and inconveniencing our people.

Therefore, the Government saw the need to rehabilitate and upgrade the power stations. In the Government’s view, the Power Rehabilitation Programme was going to achieve improved technical efficiency, quality and reliability of supply and therefore, enhance economic activities as well as extend the asset life of the equipment.

In this regard, our Government, through the Ministry of Finance and National Planning, during 2008, released K98.5 billion for the completion of the power rehabilitation project. It will be recalled also that during 2008, the nation experienced frequent load shedding due to the shutting down of the machines because of the loss of 450 megawatts from the power stations. I am pleased to note that the hon. Minister of Finance and National Planning has further committed K16.8 billion in this year’s Budget to ensure the completion of the Power Rehabilitation Project.

Madam Speaker, I would like to inform the House that upon completion of the Power Rehabilitation Project, the country will gain an additional 210 megawatts bringing the installed capacity to 1,968 megawatts. This should be able to, in the interim, meet our domestic power demand when the programme is completed in the third quarter of the year.

Madam Speaker, the Government will support the promotion of private investments in power generation through the development of a number of mechanisms which will help accelerate the development of the sector and diversification of the economy. For a long time now, electricity tariffs in Zambia have been below cost reflective levels. In line with the National Energy Policy, it is imperative that tariffs are migrated to cost-reflective levels, failure to which investments in the power sector will not be guaranteed. Without energy, investments in the economy will also be compromised. In addition, the financial performance of the Zambia Electricity Supply Corporation (ZESCO) itself will continue to be negative which, in turn, will affect the efficiency and service delivery of the institution.

Madam Speaker, the Government adopted the New Energy Policy in 2008 which among other things, as I said earlier, recognises the need for cost-reflective tariffs which is an important component for attractive private investments in the economy because energy will be guaranteed. To this effect, the Government has, therefore, constituted a committee of ministers to study the drafted energy strategy with a view to seeing investments in power generation in the coming years in excess of US$ 4 billion.

Madam Speaker, this will be able to address short, medium and long term projects. The Government is targeting to achieve cost-reflective tariffs by 2011. I would like to urge hon. Members of this House to support this initiative with their constituents.

Madam Speaker, I would also like to inform this august House that a number of power generation projects are under way. I commend the hon. Minister of Finance and National Planning for announcing to this august House through his Budget Speech that the Government will stimulate investment in the sector, particularly in hydro and thermal power generation projects by increasing the period for carrying forward losses for companies operating in the sector from five to ten years for income tax purposes.

Madam Speaker, I am pleased to inform the House that because of this enabling environment provided by the Ministry of Finance and National Planning, private investors have really shown a keen interest in investing in this sector. To this effect, we have seen projects such as the Kalungwishi Hydro Electricity with a capacity of 210 megawatts and Kabompo with 34 megawatts coming on board last year.

Madam Speaker, I would also like to inform the House that other power investment projects that are underway for developments are the Kafue Gorge Lower Hydro Power Project. To this effect, the Government has engaged the International Finance Company Corporation under the World Bank as transitional advisers. The other projects are the Itezhi-tezhi and the Kariba North Bank Hydro Power extension Project whose works have already commenced and the contractor has mobilised to site.

Once completed, more than 300 megawatts of energy will be available to enhance economic growth and enable competitiveness and diversification.

In 2008, the Government finalised the development of the famous Rural Electrification Master Plan (REMP) and it is preparing to formerly launch this project this year. Towards this project, the Ministry of Finance and National Planning will be requested to contribute about K250 billion annually to ensure that programmes in all the constituencies of this country are implemented. Once this is done, electrification levels will rise from 3 per cent currently obtaining to more that 50 per cent by 2030. The Government expects that there will be increased economic activity in rural areas once the REMP is implemented, therefore, once again, going towards enhancing economic growth and diversification.

Madam Speaker, I would like to indicate to this august House that through improved and efficient management of fuel supplies through long-term procurement contracts, the Government has managed to reduce the fuel pump prices, of course, complemented by the current obtaining global low fuel prices. It is the intention of this Government to see a further reduction of fuel prices by rehabilitating storage facilities which exist throughout provincial centres.

In this regard, the Government has completed the rehabilitation of 40 millimetre storage tanks facility in Ndola, once again, with the support from the Ministry of Finance and National Planning. This will increase the Government’s processed fuel storage capacity. This will also contribute to the Government’s objective of achieving uniform fuel prices throughout the country. Once again, low fuel prices will lead to reduction in the cost of production and increase competitiveness in our various industries.

Madam Speaker, allow me also to commend the hon. Minister of Finance and National Planning for giving support to the water sector as has been indicated in the budget where the Government intends to construct four large dams throughout the country annually starting this year.

With these few remarks, I thank you, Madam.

Hon. Government Members: Hear, hear!

The Minister of Tourism, Environment and Natural Resources (Ms Namugala): I wish to thank you, Madam Speaker, for according me this opportunity to contribute to the motion moved by the hon. Minister of Finance and National Planning, Dr Situmbeko Musokotwane, MP who, unfortunately, is not in the House.

Hon. Government Members: He is in.

Ms Namugala: Okay.


Ms Namugala: Let me begin by thanking the hon. Minister for a well thought out, focused and inspiring Budget Speech. I also wish to warmly welcome him to this House.

Hon. Government Members: Hear, hear!{mospagebreak}

Ms Namugala: Madam Speaker, Paragraph 5 of Page 1 of the Budget Speech sets out the strategic vision of a prosperous Zambia through a vibrant and diversified economy where hard work and a spirit of entrepreneurship are rewarded and an economy that will provide the opportunities for citizens to exploit their full potential and provide for their families.

Madam, the above strategic direction challenges all of us seated here, irrespective of our political affiliation, to work towards a common goal of growing the economy thereby improving the standards of living of all our people.

The House may wish to know, Madam Speaker, that tourism is one of the priority economic sectors. Others being agriculture and manufacturing that, if well developed, can provide opportunities for effective economic diversification away from a mono product base of mainly copper mining. This is because of the country’s numerous natural and cultural heritage resources which are yet to be exploited and this includes the nineteen national parks and the thirty-six game management areas. Other tourist attractions include over 4,000 registered heritage resources by best culture presented through the seventy-three dialects or tribes as we call them, adventure activities, water related activities provided by lakes and rivers, the peaceful nature of Zambia and above all the friendly warm and welcoming Zambian people are, indeed, our unique and great tourist assets.

Madam Speaker, the strategic position of tourism in economic diversification and improved standards of living can further be seen through its socio-economic benefits. Among others are job creation, foreign exchange earnings, revenue generation as well as being a catalyst for rural development and entrepreneurship through the multiplier effect.

Madam Speaker, an improvement in living standards of the host community can quickly be seen through tourist traffic and expenditure because tourism does not require sophisticated technology in the establishment of basic facilities such as cultural centres or villages, community museums, curio shops, camping sites and other ethno tourism products through which our local communities can easily participate.

Since much of the industry is labour intensive, it can, therefore, absorb unemployed labour resource which is particularly valuable in rural areas where most tourist attractions are found. In addition, some operational skills such as those associated to ethno tourism products are already being practiced on a micro level and can, therefore, be readily enhanced and developed for commercial purposes.

Madam, because of the numerous opportunities presented by tourism, it is often said that one of the limiting factors to tourism development is one’s imagination. In other words, there can be as many opportunities in tourism as one can imagine.

The other limiting factor, Madam, to tourism development is mainly accessibility. Tourism development requires requisite infrastructure such as roads, airports, telecommunication, electricity and water and sewerage.

The focus of this year’s Budget in relation to tourism is mainly on the development of infrastructure in priority tourism development areas as outlined in the Fifth National Development Plan 2006 to 2010.

Madam Speaker, in reacting to some of the hon. Members who do not support investment in tourism infrastructure, I wish to state that tourism infrastructure forms a base and stimulus for the diversification of the economy and development of other industries. Therefore, it should not be seen in isolation. An established tourism centre often acts as an attraction to new, unless directly related, economic activities. Road access to tourism centres, for example, stimulates farming and marketing of crops under agriculture. In addition, growth in tourism creates demand for local goods and services necessary for the creation and expansion of some local industries in sectors such as manufacturing, mining, information, technology and so on and so forth. For example, I am informed that the Sun International purchases fresh supplies worth US$8,000 per week from the local market. Therefore, tourist expenditure is known to stimulate an economy beyond a sector concerned with tourism and in this respect, tourism is well placed to diversify incomes even at the household level.

Madam Speaker, I, therefore, view the strategic intervention in the Budget Speech of constructing the Mbala/Kasaba Bay Road, Mbala Airport Terminal Building …

Hon. MMD Members: Hear, hear!

Ms Namugala: … and the Kafue National Spinal Road, the rehabilitation of the Livingstone/Zimba Road and the Kasaba Bay Airport and the upgrading of the Chipata/Mfuwe Road …

Hon. MMD Members: Hear, hear!

Ms Namugala: … as basic requirements to stimulate economic growth. It should be noted that tourism is only the conduit sector through which such infrastructural development will be undertaken, but the use of such infrastructure is multipurpose in nature.

Madam Speaker, I therefore, view calls not to support this noble cause of developing infrastructure in these areas I have mentioned, ill conceived and meant to perpetuate the suffering of the Zambian people, especially in areas where such infrastructure will be developed.

We are cognisant of the difficulties and misery the dependence on one product has brought to the general public. It would, therefore, be lack of foresight and leadership on our part as a Government to move from a mono-product economy and diversify yet into another single sector. There is no sector that is exempt from shocks, hence the need for a strategic mix of alternatives if we have to guarantee sustained economic growth and improved standards of living for our people. The sectors being focused on in the budget are, therefore, in my view, complimentary and mutually supportive and should be developed as such.

Madam Speaker, the theme of this year’s Budget “Enhancing Growth through Competitiveness and Diversification”, is befitting and could not have come at a better time than now, when there is a world economic down turn.

Hon. MMD Member: Hear, hear!

Ms Namugala: The Global Trends Report, 2009, of the World Travel Market, which I will lay on the Table, quotes the International Monetary Fund (IMF) that the world economic growth is said to slow down from 3.9 per cent in 2008 to 3 per cent 2009. The IMF is further reported to state that the economic and financial crisis has dramatically altered the shape of the global landscape for travel and tourism as liquidity dries up, commodity prices rise, inflation increases and consumer demand falls.

Major Chizhyuka: On a point of order, Madam.

Ms Namugala: It further states that the recession is expected in the world’s advanced and emerging markets …

Madam Deputy Speaker: Order! Hon. Member, I have not given a point of order. We have to come back to where we are, unless it is something that I cannot imagine. The hon. Minister is not supposed to be interrupted. This is exactly what our procedures entail unless it is a matter of life and death.

I think we should continue. The hon. Member will have time to debate later.

Major Chizhyuka: It is a matter of life and death, Madam Speaker.

Madam Deputy Speaker: Order!


Madam Deputy Speaker: We normally do not chat with hon. Members. However, I will remind the hon. Members that there are ways to present issues of life and death. It is very important not to forget the things that we know. There are issues that come as questions of an urgent nature. Provisions are there for such. That is why it is only procedural points of order that are allowed. All these things that we allow as Chair are simply to keep the House more lively. If you have a question of an urgent nature, there is a procedure that you should follow.

Hon. Minister may continue, please.

Hon. Members: Hear, hear!

Hon. MMD Member: Long live Chair!

Ms Namugala: Madam Speaker, the report, further states that the recession is expected in the world’s advanced and emerging markets, but predicts a recovery in 2010. My ministry is cognisant of the challenges of the global economic down turn, especially that Zambia is the long haul tourism destination.

In this respect, my ministry has embarked on strategies such product diversification. The intended opening up of the Northern Circuit is one such example. The above strategy will not only broaden the product base, but also increase the length of stay of tourists from the current five days. A further strategy is the consolidation of our positioning in the African market and especially, Southern Africa.

Hon. Members of the House may wish to know that 64 per cent of Zambia’s international tourist arrivals come from within Africa, out of which Southern Africa contributes 74 per cent.

It is, therefore, important to consolidate our efforts in this market because of proximity. In addition, Zambia stands to benefit from the regional pull of tourists through multi-destination travel.

A further strategy my ministry has embarked upon is the promotion of domestic tourism. Most countries with a developed tourism industry such as South Africa have a very strong domestic tourism base. The intention of my ministry is to engage the private sector operators to design packages for the domestic market and also encourage the development of facilities accessible by domestic tourists.

Madam Speaker, on the international front, and noting the fact that some forms of tourisms, for example, business, meetings, incentives, conferences and events are less resilient to external shocks, my ministry has embarked on the promotion of tourism in new source markets, including Russia, the Middle East and some Asian countries such as China.

The intention of my ministry is to ensure that as much as possible, tourism contributes meaningfully to the Gross Domestic Product (GDP) over and above the 14.2 per cent level of 2007, which in fact, surpassed the Fifth National Development Plan (FNDP) goal of 8 per cent.

Madam Speaker, countries that have a deliberate policy to invest in tourism have meaningful contributions to their GDP.  Such countries include Seychelles at 38.8 per cent and Mauritius at 18.4 per cent.

The infrastructure base of the above named countries is well developed and cannot be compared to that obtaining in our country. It is, therefore, right to state that investing in tourism is money well spent.

Hon. MMD Members: Hear, hear!

Ms Namugala: Madam Speaker, tourism in Zambia, as the case is in most parts of the world, is nature based. In other words, our comparative advantage is in the pristine wild life habitats complimented by other natural resources such as lakes and water falls. Therefore, much as we are working towards diversifying our tourism products, environmental protection and natural resources management remains a cardinal part of an integrated strategy to tourism development.

Madam Speaker, in this regard, it is encouraging to note that the hon. Minister of Finance and National Planning has also prioritised environmental protection and allocated to it  K117.3 billion.

Madam Speaker, a well looked after environment is not only critical to tourism, but is also a requirement for achieving the Government’s 2009 Budget objective of accelerating diversification and enhancing competitiveness. Such sectors as agriculture, manufacturing and mining, directly depend on the environment and natural resources whilst all others indirectly do so. It is for this reason that our Republican Constitution states that Zambia shall “promote sustenance, development and public awareness of the need to manage the land, air and water resources in a balanced and suitable manner for the present and future generations”.

Madam Speaker, considering the benefits of sound environmental protection and management I have spoken about, there is every need to encourage hon. Members of this House and the whole nation to work towards strengthening our constitutional provisions with regard to environment and natural resources management. It is absolutely necessary to ensure that we keep strengthening the policy and institutional framework for environmental protection and natural resources management. Otherwise, posterity will judge us harshly.

Hon. Government Members: Hear, hear!

Ms Namugala: Madam, as I conclude, let me say that, as Zambians, we are strong and resilient. I have no doubt that we have survived in the past, and we shall survive the current global economic down turn.

Madam Speaker, I thank you.

Hon. Government Members: Hear, hear!

The Minister of Agriculture and Co-operatives (Dr Chituwo): Madam Speaker, I thank you for giving me this opportunity to contribute to the debate on the Budget Speech by the hon. Minister of Finance and National Planning. Let me start by complimenting the hon. Minister of Finance and National Planning for his appointment to this very important portfolio. I am sure by now we all agree that he is a very well suited and qualified person for the job. However, to succeed, he needs the support of every one of us. Let us start to work now and for the time to come. His theme, “Enhancing Growth through Competitiveness and Diversification” is very appropriate at this time when the major world economies are experiencing a recession.

Madam Speaker, it is from this background that the hon. Minister of Finance and National Planning was conscious of the world economies and formulated his budget to respond locally.

Madam Speaker, I wish to pay tribute to our late President, Dr Levy Patrick Mwanawasa, SC, who, in his wisdom and judgement, I must say, as way back as 2002, from among the many qualified and credible Zambians, appointed me to join his Cabinet. Many of my colleagues and I shared many moments with him. He was truly a great leader in life and death.

Madam Speaker, let me congratulate our current President, His Excellency, Mr Rupiah Bwezani Banda on the statesmanship he exhibited during the illness and subsequent demise of the late President.

Dr Puma: Hear, hear!

Dr Chituwo: However, it is unfortunate to see the same pattern of hostility, lack of appreciation of policies and programmes we saw when our late President took office in 2002 repeated. Everything that the late President and his team tried to do was definitely not accepted, only to be appreciated when he has left us.

Madam, I see this happening at the moment and yet, we come from the same stalk. How is it possible that because now we are in leadership, we do not seem to know anything that we are doing? This cannot be possible. I would like to urge all of us to work together to achieve in the service to mother Zambia.

Madam Speaker, I have listened to well over seven budget speeches. Each of which has a particular theme and in the context of the prevailing circumstances. In this particular case, I must emphasise that in spite of the world economic recession in our major economies, Hon. Musokotwane’s spirit is bold, focused on growing our economy and ceasing on many opportunities in the sectors of agriculture, tourism and infrastructure development.

Madam, my ministry recognises the important role this sector plays in the economic development of our country. More than 60 per cent of the Zambia population depends on agriculture for their livelihood. Agriculture is so important to the welfare of both the rural and urban population that achievement of broad based poverty reduction may not be attainable without significant growth in agricultural output and productivity.

Madam Speaker, we are guided by our mission statement which reads, and I quote:

“To promote the development of an efficient, competitive and sustainable agriculture sector which assures food security and increased incomes, creation of employment opportunities and reduction in poverty levels”.

Madam Speaker, the ministry recognises the country’s enormous agricultural potential, the need to exploit that potential, strengthen and expand the emerging opportunities to deal with challenges in the agriculture sector such as rising input and food prices and climate change among many others.

Madam, I would like to thank the hon. Minister of Finance and National Planning for allocating resources to complete the Nansanga Farming Block. I must say that our ministry, in 2008, continued with the development of farming blocks aimed at expanding the existing commercial farming blocks that will revitalise and expand the agriculture sector in crop and livestock production for local and export markets. Works carried out at the Nansanga Farming Block include the settlement inventory for the final lay-out-plan in preparation for farm settlement. In addition to the 95 kilometres of the 33 kv overhead line from Serenje Boma to Nansanga (completed in 2007), 15 kilometres out of the 65 kilometres of the distribution power line into farms was erected under phase one of the Rural Electrification Programme.

On the ground, land identification and negotiations with various traditional leaders continued. So far Lundazi District, chiefs Zumwanda and Chikomeni have granted authority for a 100,000 and 20,000 hectares respectively whilst in Solwezi, a 100,000 hectares of land has been acquired from senior chiefs Munjimanzovu (40,000 hectares) and Kalilele (60,000 hectares). Negotiations are still going on in Lusaka, Copperbelt, Southern, Northern and Western provinces.

Madam Speaker, another sector, emphasised by the hon. Minister of Finance and National Planning is that of irrigation. This, he emphasised, would enable our small-scale farmers conduct farming business all the year round rather than depending on rain fed agriculture.

Madam, irrigation funds that were received by the ministry in 2008 were used in the completion of construction and rehabilitation works of irrigation schemes in various part of the country, namely Southern, Central, Northern, Eastern and North-Western provinces.

Madam Speaker, allow me now to touch on the issue of increased investment in the agriculture sector so that we can contribute significantly to improved food security thereby reducing hunger and extreme poverty.


Thus, investing in irrigation, farm machinery, agribusiness, agricultural infrastructure and others will improve the food security and gross domestic product of our country. My ministry is committed to agricultural diversification as ably articulated by the hon. Minister of Finance and National Planning through promoting production, marketing, value addition and provide primary agricultural commodities which include high value crops such as tobacco, cotton, coffee, soya beans, pineapples, cashew nuts and fresh vegetables.

Madam Speaker, the hon. Minister of Finance and National Planning ably diagnosed one of the factors inhibiting increased productivity and production that of low staffing levels. 

Madam Speaker, last year, the ministry recruited over 1,700 officers, mostly in the agriculture extension service. These newly recruited officers are being posted to various agriculture blocks and camps located in the rural areas of our country. In order for the existing facilities to be productive, they need this linkage between the actual resources and the skilled services.

Madam Speaker, let me now turn to the importance of strengthening the irrigation scheme especially, in the provinces that I alluded to and these are as follows, Lukulu North Scheme in Kasama, Chineke Scheme in Mbala,  Ikelenge Scheme in Mwinilunga, Shantumbu Scheme in Kafue, Tigone Scheme in Lundazi, Kabulamwanda Scheme in Namwala, Kapako Scheme in Kawambwa and Mulumbi Scheme in Mansa. Once these are strengthened, they can contribute significantly to job creation and increased income in our rural folks’ pockets.

Madam Speaker, for agriculture to flourish, I note the hon. Minister of Finance and National Planning placed emphasis on roads and other infrastructure. This is, indeed, welcome news. We shall also invest in strengthening the farm blocks, camp blocks, accommodation and strengthen the transport acquisition. We believe that in so doing, we shall significantly contribute to the economic growth of our country.

Madam Speaker, as Ministry of Agriculture and Co-operatives, we are engaged in development and research too. The Zambia Agriculture Research Institute (ZARI) will conduct farmer driven research services in soils and crops, plant protection and farming systems. This programme, if enhanced, will definitely heal many of the ills that we see in low productivity and production at the small-scale holder level.

Madam Speaker, let me now highlight the functions of the Food Reserve Agency in carrying out their mandate. This, as has been stated, needs to focus on purchase of crops in outlying areas for the strategic reserve. The private sector is expected to play an increasing and important role in purchases particularly of our staple food maize in areas that make economic sense.

Madam, Government also intends to continue with the Fertiliser Support Programme (FSP) in 2009/2010 farming seasons. However, Government has decided to make adjustments to the way the programme has been operating and this process is truly underway so that we can operationalise this in the 2009/2010 farming seasons.

Madam Speaker, my ministry is committed to spearheading in agricultural development through the co-operating development. Through this, we intend to intensify training activities for co-operators and provisional transport. This is meant to ensure that co-operatives are transformed into business ventures that should operate on sound management principles.

Madam Speaker, our ministry is committed to supplying quality seed in the country. The objective is to ensure that development is effective, efficient and sustainable through producing and supplying of high quality seed/plant materials to satisfy the national requirements and export the surplus. The seed industry is a success story in our country. The private sector and Government, having partnered together in the previous year has produced as much as 72,000 metric tonnes, and yet we only use 12,000 metric tonnes. The rest was for export.

Madam Speaker, I would like to end by urging my colleagues that we shall all gain as a country if we support the Ministry of Finance and National Planning’s vision by creating a strong committed team, be it on the Government side or on the Opposition. Let us invest individually and promote agriculture and avoid the world economic crisis caused by the credit crunch. The thrust by the hon. Minister on tourism, agriculture, infrastructure development and manufacturing is a perfect combination.

Madam Speaker, I conclude by appealing to all hon. Members of this august House to support the budget estimates for my ministry and the Budget as a whole in order for us to continue with the work that the New Deal Administration started in 2002. I know we can do it.

I thank you, Madam Speaker.

Hon. Government Members: Hear, hear!

Mr Imenda (Lukulu East): Madam Speaker, I make this speech on behalf of the Expanded Committee on Estimates, Chairperson of Portfolio Committees, Chairperson of the Public Accounts Committee and the Committee on Reforms and Modernisation. 

Madam Speaker, from the onset, let me state that your Committee acknowledge the very serious challenges facing the world’s  economy in 2009 due to the prevailing global economic crisis. In this regard, your Committee note that Zambia is not insulated from the developments in the world economy. On the contrary, in fact, the Zambian economy is very susceptible to such developments as it is export oriented and import dependent.

Madam Speaker, the country is faced with unprecedented challenges in that as a result of the global economic downturn, copper prices had gone up and fell drastically in 2008. The country failed to meet its inflation target of 7 per cent such that by the end of year 2008, it was around 16.6 per cent. In a related development, exchange rates rose from K3,500 to K5,200 to the United States of America dollar. It is against this background that, your Committee find the 2009 Budget theme, “Enhancing Growth through Competitiveness and Diversification” befitting.

Madam Speaker, given this gloomy picture, your Committee expected the Government to take very serious measures in an effort to hedge the Zambian economy from the global crisis. However, your Committee find that some of the provisions made in this year’s Budget are not in conformity with this spirit. Allow me now to briefly highlight some of the issues that your Committee encountered during their deliberations.

High Poverty Levels

Madam Speaker, Zambia has continued to be faced by high poverty levels despite all the strides made in terms of economic growth over the past years. The Central Statistics Office (CSO) living conditions monitoring survey for 2006 indicated that poverty levels in the country reduced only by 6 per cent from 70 per cent during the fifteen year period from 1991 to 2006. These statistics show that a number of people living below the poverty datum line is unacceptably large and this situation calls for urgent attention. 
Madam Speaker, with regard to the macroeconomic policies, your Committee agree with the Government’s observation that the weakening global demand and the global economic crisis will have a negative impact on the growth of the Zambian economy and further constrain efforts to reduce poverty. As poverty and unemployment still remain a huge challenge, there is a need to take deliberate steps to broaden the participation of rural people in the economic activities, thus stimulating growth through job creation in those areas unlike concentrating the growth in urban areas.

The major focus of the Government’s growth policy should be on employment creation in the sectors with direct pro-poor growth impact. These include rural development, agriculture, tourism and the manufacturing sectors. It is, therefore, of serious concern that the marginalised and the less privileged are not adequately catered for in the budget and may not benefit from any growth and wealth creation that might arise in 2009. In this regard, it is also of major concern that the Government’s macroeconomic targets do not include important social indicators such as employment creation.

Madam Speaker, your Committee strongly recommend that the Government urgently decreases its domestic borrowing, as continued Government borrowing from limited savings will have an adverse impact on the interest rates.  Higher interest rates will constrain the ability of the private sector and ordinary citizens to borrow from commercial banks.

Further, increased Government borrowing will mean that the Government will be competing with the private sector for the limited funds from banks and this will crowd out the private sector. This will result in slow private sector growth and lead to little, if any, employment creation as well as reduced contribution by the private sector to the tax revenues of the country.

Furthermore, the Government’s intention to increase domestic borrowing is inconsistent with the Fifth National Development Plan (FNDP) goal of reducing domestic borrowing to less than 1 per cent from 2008. Your Committee also implore the Government to pay particular attention to ensuring a low and stable inflation rate, as this would help sustain interest rates and encourage borrowing for investment purposes.

Revenue Measures

Madam Speaker, your Committee note that there is more emphasis placed on expenditure than there is on revenue in our budgeting process, a situation that leads to failure by many of us to appreciate the challenges faced in mobilising revenues to meet the public expenditures. It also means that the Government misses a great opportunity to receive suggestions and counsel on how to ensure improved yields from its resource mobilisation efforts.

Madam Speaker, related to the issue of revenue, your Committee noted that the budget failed to relate the cost of living to the tax exemption. As the cost of living is based on the cost of essential food items and non-food items for a family of six in Zambia was currently close to K2,000,000 per month, the tax exempt threshold of K700,000 per month was totally inadequate, especially in view of the high cost of living in Zambia today. In fact, your Committee noted that for an individual earning K1,500,000 per month, this translated into tax relief of K30,000. Taking into account the levels of the inflation, the relief may actually be much lower than this in real terms.

Madam Speaker, your Committee also wish to express their displeasure at the fact that corporate tax still contributes such a minimal proportion of total tax revenue to the detriment of individual taxpayers who contribute a significant proportion. With regard to the expenditure proposed expenditure for 2009, your Committee made some pertinent observations, a few of which I shall now highlight.

Staff Sensitisation

Madam Speaker, your Committee find the provision of K34 million to be spent on sensitisation of staff about the use of Government transport baffling. It is even more shocking that out of this venture, the Government expects to make a revenue gain of K50,250. It is difficult to make economic sense out of this provision. They reiterate that such provisions tend to show lack of appreciation and concern for the very difficult situation that the country is faced with.

Independent Broadcasting Authority (IBA)

Madam Speaker, your Committee call for an urgent review of the provision for 2008 for the Independent Broadcasting Authority. Once again, they find the provision rather wasteful and stress that a provision for this activity be reinstated only after a satisfactory explanation of what the money provided in 2008, amounting to K500 million was used for. Additionally, your Committee note that the IBA Board has in fact not been appointed despite funds having been allocated.

Hon. Opposition Member: Shame!

Mr Imenda: They strongly suggest that these funds be redirected to support some of the older farming blocks which require infrastructure such as electricity.

Continuous Voter Registration

Madam Speaker, your Committee welcome the provision of K5 billion for continuous voter registration under the Electoral Commission of Zambia (ECZ). While this is a very good move, it is inadequate. Considering that there are 150 constituencies, this means that each constituency will receive K33 million for the whole year or K2.7 million per month. Given that there are indications that the ECZ may consider further delimitation of constituencies, the spread of funds per constituency may even be thinner than it is now. Your Committee call upon the Government to ensure that adequate resources are allocated for this exercise in the 2010 Budget so that the commission is able to prepare itself for the forthcoming 2011 general elections.

Kasaba Bay Integrated Development Plan

Madam Speaker, your Committee welcome efforts by the Government to develop the northern tourism circuit through the Kasaba Bay, as it will open that region and contribute to employment creation in one of our rural areas. However, they are concerned that the amount provided for preparation of the plan appears to be too big and advise that some of this money be redirected towards the actual implementation of the plan.

Rural Rehabilitation Programme

Madam Speaker, your Committee strongly feel that the drastic reduction in the allocation of rural road rehabilitation from K18 billion to K200 million is unacceptable, especially in the year when the Government claims that they will focus on infrastructure development. Your Committee cannot understand how the Government hopes to open up the rural areas to investment and facilitate the marketing of rural produce if the road network in those areas is not attended to. They further note that if these roads are not attended to, the Zambians who live in those areas will forever be condemned to poverty. They, therefore, call for the immediate withdrawal of the allocation of the “Remembrance Day” under the Office of the President which has an allocation of K349 million so that these funds can be moved to rural rehabilitation programmes.

Hon. Opposition Members: Hear, hear!

Ministry of Finance, Review of Ministerial Strategic Plan

Mr Imenda: Madam Speaker, following the allocation of K200 million and K205 million in 2007 and 2008 respectively to this activity, your Committee find the allocation of K197 million to this activity unacceptable as smacks of lack of seriousness on the part of the Government at a time when the country is faced with an economic crisis of such magnitude. They call for withdraw of this allocation and that the fund should be re-directed towards rural road rehabilitation.


Madam Speaker, your Committee applaud the Government for deciding to expedite the Decentralisation Programme through the Local Government Capacity Building Programme which will equip the local councils with a human technical and financial capacity to deliver quality and responsive services. However, your Committee are disappointed at the manner in which the decentralisation programme has been handled and in particular, the apparent lack of commitment exhibited by the Government in this matter. They wish to earnestly implore the Government to make an adequate financial provision for the implementation of Decentralisation Programme so that the programme takes off. Short of this, your Committee fail to see how the Government will achieve its processed development goals.

Madam Speaker, such allocations are a clear testimony to the fact that the Government has taken the business as usual approach to the economic challenges as well as the high poverty levels that the country is facing.


Madam Speaker, your Committee do not agree that there has been a 37 per cent increase in the allocation to the agriculture sector. In fact, considering the total allocation to the sector in 2008, which is K800.5 billion and K567 billion Supplementary Budget compared to the proposed allocation of K1,096 billion in 2009. They will contend that there has been a decrease of over 20 per cent. In this regard, they call upon the Government to practically implement the Diversification Policy by allocating adequate funds to the promotion of the sector. In steering the Zambian economy on the path of diversification away from copper and into agriculture, your Committee stress that the Government should heed calls to diversify into other crops apart from maize.

Your Committee, further call upon the relevant authorities to revisit the appointment of a minister in charge of livestock without providing a budget line for his operations

Hon. Opposition Members: Hear, hear!

 Mr Imenda: … with a view to resolving it so that the problems besetting the livestock and fisheries sub-sectors can be effectively addressed.

Your Committee also not that the Fertilizer Support Programme (FSP) continues to consume a huge share of the resources allocated to the agriculture sector. In this regard, your Committee recommend that a time frame be set for the comprehensive review of the FSP as stated in the 2009 National Budget.

Mr Lubinda: Hear, hear!

Mr Imenda: Madam Speaker, in addition, your Committee noted that in 2008, crop production reduced from 7 per cent and overall contribution of agriculture to Gross Domestic Product shrunk by 4 per cent.  The poor performance was attributed to the high cost of inputs, limited access to credit, inputs and extension services, inadequate infrastructure, poor livestock management, weaknesses in the FSP and failure to attract adequate private investment in the sector. Your Committee call upon the Government to take measures to quickly redress these issues. They stress that there is an urgent need to work towards increasing the levels of productivity in the agriculture sector.


Madam Speaker, your Committee note with concern that funding of critical programmes such as retention of health workers has been left to donor institutions. They reiterate that issues of national interest which are critical to the lives and development of Zambians must be funded using domestic resources as these are the core obligation of the State. Your Committee further note that in the wake of the global economic crisis, these donor funds may not be forthcoming and that would throw the whole programme into disarray resulting into untold suffering for the poorest Zambians. Paradoxically, Madam Speaker, Zambia’s health workers are leaving for greener pastures to these same countries that purport to be helping in the retaining health workers.

Further, Madam, as very few ordinary Zambians have access to international specialised health care service, your Committee are concerned that Government proposes to substantially increase the allocation for international specialised treatment from K6.2 billion 2008 to K8.4 billion in 2009. On the other hand, the provision for local specialised treatment which stood at only K1.2 billion in 2008 was earmarked for a negligible increase to K1.26 billion. Your Committee strongly feel that the Government must move towards reducing the allocation to international specialised treatment while redirecting the resources to improving health services for the benefit of the majority of Zambians especially the poor.

In line with his, your Committee implore the Government to reduce the provision for international specialised health care services by K4.4 billion. This amount must be redirected to the purchase of specialised medical equipment for the use in Zambian hospitals. They further, strongly recommend that the reduction on the allocation to international specialised treatment and increased allocation to procurement of specialised equipment should be the trend henceforth.


Madam Speaker, the important role that education sector plays in the formation and accumulation of human capital cannot be underestimated. The sector provides skills that drive economic and social development as well as equality of opportunities for individuals to participate in local and national development. In cognisance of this fact, it is pleasing to note that the allocation to the ministry have been steadily rising between 2007 and 2009.

However, your Committee further observe that these allocations have been falling short of the FNDP targets of 17.1 per cent and 19.5 per cent for the same period. Specifically, the 2009 Budget, like the 2008 Budget before it, had set aside resources to recruit 5,000 teachers for both basic and high schools countrywide. However, the reduction in funding for settling in and rural retention allowances from K1,401 billion in 2008 to K840 million in 2009 for the same number of teachers is worrying, especially, in light of the indication in the 2007 Annual FNDP Progress Report that the pupil/teacher ratio for Grades 1 to 4 stood at 75, a reduction from 76.6 per cent in 2006. Your Committee reiterate that the retention of these teachers is as important as their recruitment. Your Committee also wish to make it clear that the Government has an obligation to prioritise such developmental programmes by financing them from the core budget rather than to relying on donor assistance. This is the only way to assure the sustainability of such important programmes.

Madam, your Committee also implore the Government to take steps to ensure that all children, regardless of their sex, geographic location, physical disability or any other status have access to primary education, as required by the anti-discrimination principle which is the cornerstone of all human rights. In particular, the Government must take into consideration the special needs of children living with HIV/AIDS and those who are disabled, and dedicate an independent budget line to ensure that these vulnerable children are not unintentionally excluded from Zambia’s classrooms.

Water and Sanitation

Madam Speaker, your Committee strongly recommend that the Government’s contribution to the water supply and sanitation sector must be reviewed as a matter of urgency, as this is another sector over which the Government has a primary responsibility. It is unacceptable that 97 per cent of the Ministry of Local Government and Housing budget is donor funded. The Government needs to move away from reliance on donors, as their money usually comes with conditionalities and has sometimes proved to be erratic depending on the country’s relations with donors. Taking into account the unstable global economic situation and lack of Government commitment exhibited through failure to provide counterpart resources, the availability of donor financing to the sector is thrown into even further doubt.

Madam, the water and sanitation sector, unquestionably, plays a critical supportive role to economic activity in the country since people in poor health are not able to engage in productive activities. Therefore, at this time of global economic challenges when the possibility of attracting foreign investment is slim, Zambia should be seen to be investing in her own people’s health and well being so that they can take up the mantle and fill the gap left by the absence of foreign investors. It is also cheaper to provide water and sanitation facilities than it is to resolve cholera outbreaks and other related diseases. Your Committee’s Report provides the necessary information and statistics to support this assertion.

Multi Facility Economic Zones

Madam Speaker, as regards the establishment of the Multi Facility Economic Zones, your Committee note that to encourage local production and support the manufacturing sector, there is a need not only to reduce the taxes but also remove business hurdles. While the mining sector has received considerable reprieve, the same cannot be said for the manufacturing sector. In this light, your Committee recommend that investment incentives should be applied in a non-discriminatory manner on a sectoral or geographical basis, without favouring particular companies or investors.

Mr Lubinda: In this country! Wamvela!

Mr Imenda: If this is not done, Zambia would in truth get only a few job opportunities and industrial complexes with the potential for becoming ghost towns after the expiry of the tax holidays offered to these investors.

Hon. PF Members: Hear, hear!

Mr Imenda: Further, the location of the zones must be revisited with a view to locating some of them in rural areas to stimulate rural development …

Mr Lubinda: Hear, hear!

Mr Imenda: … and take advantage of the abundant natural resources, instead of concentrating them in the Lusaka and Copperbelt provinces.

Mr Lubinda: Hear, hear! Kalabo and Chilenje! You want me to win again!

Mr Imenda: Madam Speaker, I now turn to tourism.


Madam, with regard to this sector, your Committee agree that tourism is key for the growth and diversification of the economy. Some of the constraints identified as inhibiting the growth of the sector include inadequate infrastructure, poor service delivery and limited marketing activities. Major investment in tourism could create anchor enterprises which would encourage small-scale operators to dovetail with the large tourism operations and entrench the country on the path to diversification.

Madam Speaker, your Committee are pleased to note the efforts being made by the Government to support infrastructure development in the tourism sector. However, they are of the view that what has been done so far is inadequate and that more needs to be done, …

Hon. PF Members: Hear, hear!

Mr Imenda: … if Zambia is to be truly competitive in this sector. Notably, the constraints identified above should be effectively addressed. Further, your Committee also wish to emphasise that the Government need not be apologetic for advocating for the development of a cadre of local entrepreneurs in the tourism industry. This would go a long way in ensuring that moneys earned from Zambia resources are kept within the country for the benefit of Zambia. In this regard, the Citizens’ Economic Empowerment Fund must be efficiently used to support this objective.


Your Committee wish to echo the concern raised by various stakeholders regarding the accountability of the funds collected from the mining sector and held in the special account at the Bank of Zambia. In the spirit of accountability and transparency, your Committee emphasise the need for the Government to inform the people of Zambia on the status of this account. In the same vein, your Committee also call upon the Government to ensure that the renegotiations with mining companies are not shrouded in mystery longer than necessary to avert unnecessary acrimony.

As regards to the windfall tax, your Committee are in agreement with the stakeholders who see no need to repeal the provisions for this tax as it is self regulating and will not take effect unless the copper prices reach certain thresholds. Your Committee note that the introduction of windfall tax was arrived at after extensive consultations, both locally and internationally, by a high level technical committee constituted by the Government that concluded, based on their inquiries, that it was the internationally accepted mode of taxing the sector. Therefore, they believe that the tax should not be scrapped.

Madam, let me state that your Committee do not believe that a country should not repeal the law on murder simply because no murders have occurred within a particular period of time.

Hon. PF Members: Hear, hear!

Mr Imenda: In addition your Committee are worried about the proposal by the Government to allow hedging income as part of the mining income for tax purposes. They feel that hedging income may pose serious risks with regard to disclosures of operational information, more so in the light of the limited capacity of Government agencies to fully monitor the activities of the mining companies. They, therefore, strongly recommend that this measure be shelved until appropriate capacity has been developed.

Madam Speaker, your Committee also wish to emphasise that there is a need for Government to handle the unfolding situation of job loses on the Copperbelt very cautiously but decisively to minimise the suffering of our citizens. Where it is necessary that these investors take over the operations of these mines, it is incumbent for the Government to facilitate expeditious and smooth transition periods for all concerned.

Madam Speaker, on Constituency Development Fund (CDF) …

Hon. Members: Hear, hear!{mospagebreak}

Mr Imenda: Madam Speaker, your Committee wish to add their voice to calls by most hon. Members that the amount allocated as CDF must be increased without further delay. They are happy to note that the hon. Minister of Finance and National Planning , during his deliberations with your Committee, indicated that he may consider some reasonable increase, but not to hon. Members’ expectations.

Madam Speaker, due to brevity of time, let me simply state that other issues of concern to your Committee arising out of the 2009 Budget are related to social protection, gender considerations, Judiciary and the Human Rights Commission, trade and competition and energy. I urge all hon. Members to take time to study your Committee’s report as it will arm them with very useful information as the House proceeds with consideration of the 2009 Budget.

Madam Speaker, I thank you.

Hon. Members: Hear, hear!

The Minister of Finance and National Planning (Dr Musokotwane): Madam Speaker, I thank you for the opportunity to wind up the debate on the Motion that I introduced in this House on 30th of January, 2009. I also wish to thank all the hon. Members who contributed to the debate.

Hon. Members: Hear, hear!

Dr Musokotwane: Madam Speaker, once again, I recognise the difficult circumstances prevailing at the time that I have started to serve, but with the support of this House, especially that from my colleagues in Government and the entire nation, I feel very much strengthened. Together, therefore, our combined efforts can move this nation forward.

Hon. Members: Hear, hear!

Dr Musokotwane: Madam Speaker, my contribution to this joint effort is the experience I have gathered over the years, working closely with previous Ministers of Finance and National Planning like Ronald Penza, Emanuel Kasonde, Katele Kalumba and indeed, my predecessor whom I served as Secretary to the Treasury. In this sense, therefore, I can also claim recognition along with the others for successes that our economy has achieved in the past as well as the shortcomings, of course.

Hon. Members: Hear, hear!

Dr Musokotwane: Madam Speaker, it is not possible to respond to each and every issue that has been raised. Let me, however, focus on three things which arise from the issues which were frequently raised and these are as follows:

(a) not enough financial resources have been allocated in the budget to meet specific needs;

(b) the budget policies and measures do not respond adequately to the challenges caused by the global economic crisis; and finally

(c) inadequate and unjust reduction in the tax burden.

Hon. Member: Where is CDF?


Dr Musokotwane: Madam Speaker, many hon. Members have complained that the resources allocated for certain needs and wants in the budget are inadequate. Nearly everyone who spoke, for example, complained that CDF was inadequate.

Hon. Members: Hear, hear!

Dr Musokotwane: For others, it was the FSP that was deemed to be inadequate, and yet for others it is the funding for roads in their constituencies that is considered inadequate. The list, Madam Speaker, is endless.

Madam Speaker, it is true that the money is in many instances inadequate. What I find disheartening is the impression created by some hon. Members that the limited funding provided is done deliberately. The real reason is that the national financial base is extremely small even when we add the contributions from our donors.

Madam Speaker, you will recall that I announced a K15 trillion budget for 2009 for our country. Here are a few comparative statistics to illustrate just how small the Zambian National Budget is.

Madam Speaker, the budget for the city of London is K94.5 trillion compared to our K15 trillion; for the city of New York, it is K225 trillion; and even more revealing, the budget of Harvard University in the United States, exceeds that of the entire republic of Zambia at K18 trillion.


Dr Musokotwane: It is out of this small National Budget, that is smaller than that of Harvard University, that our country must finance all her national requirements such as schools, health facilities, our legislative housing processes, the civil service, defence, three public universities, the Judiciary, diplomatic missions and so on and so forth. Clearly then the situation is not easy.

Hon. Members: Hear, hear!

Dr Musokotwane: Madam Speaker, the only solution to the problem of a small budget is to get to work and increase our resource base several folds over.

Hon. Members: Hear, hear!

Dr Musokotwane: Madam Speaker, two routes are possible to achieve this, firstly we can improve our effectiveness in collecting tax revenues, and the Government will continue to push hard on this matter. However, this route has limited scope for making that critical difference that we seek.

Madam Speaker, economists measure the efficiency in tax collection by the so-called tax to Gross Domestic Product ratio. In a layman’s language, this is a ratio of tax collected for every unit of income made in the country. The higher the ratio, the better the collection efficiency.

Madam Speaker, at 17.8 per cent of GDP, our tax collection effort is in fact better than that of many of our peers in the region. Clearly, therefore, the more fundamental problem we face is that of growing the taxable capacity and less so for the efficiency in tax collection.

Hon. Government Member: Hear, hear!

Dr Musokotwane: This is evident when you move around the country. Many of our towns are in fact just cost centres because they contribute little or nothing to the Treasury. On the other hand, they need amenities such as schools, hospitals, electricity, roads and so on and so forth. Our challenge is to turn all these place into centres of real production, through modern industries and farms, not through the rampant informal sector, whose capacity to pay taxes is limited.

Madam Speaker, this is why in the 2009 Budget we have put aside the resources for schemes such as Kasaba Bay, Nansanga Farm Block, livestock disease free area, Multi Facility Economic Zones and others. These schemes are the backbone of our future economic growth. They will grow our financial base over time as similar initiatives get replicated to other parts of the country.

From this side of the House, there are two clear messages on growing our financial base. Firstly, those who are trying to underplay the potential of the development initiatives we have announced in the budget must think again. The Government on its part is convinced that the route it has chosen is a correct one.

Hon. Government Member: Hear, hear!

Dr Musokotwane: I find it disturbing, therefore, that some of us can scone Government’s plan to develop Kasaba Bay area as a thriving tourist area. This area has all the necessary elements for success such as water body, beaches, wild life and so on and so forth. Yet, our critics know of less endowed areas even in our region that have become very successful tourist areas.

The second message is that the budgetary resources earmarked for economic development initiatives, must proceed because they are establishing the base for our future economic growth and enhance tax revenue. The expenses incurred in developing these initiatives is the seed we need to plant now to enable us have increased financial harvest in the near future.

However, Madam Speaker, what I have outlined is the solution for the medium and long term. What do we do about present day inadequacies of financial resources? There is little we can do except to intensify improved revenue collections and spend this money as wisely as possible.

Madam Speaker, in the particular case of CDF, the Government will make an amendment to the 2009 Budget …

Hon. Members: Hear, hear!

Dr Musokotwane: … at an appropriate time to enhance it. However, it is impossible to give K1 billion for each constituency in one goal. The enhancement of CDF is only possible because other lines in the budget have to be reduced, but this reduction should not be done at the expense of abandoning the economic development initiatives announced in the budget which, as indicated earlier, are the seeds for future revenues for our country. Compromise is necessary and I am therefore, proposing that CDF be now at K600 million per constituency …

Hon. Members: Hear, hear!

Dr Musokotwane: … from K400 million in 2008.

Hon. Members: Hear, hear!

Dr Musokotwane: Reaching K1 billion should, therefore, be seen as a process towards the target.

Hon. Members: Hear, hear!

Dr Musokotwane: Madam Speaker, let me turn to the second of my three themes which was raised by many hon. Members …


Madam Deputy Speaker: Order! Let the House listen.

Hon. Members: Hammer!

Dr Musokotwane: … this was the allegation …


Madam Deputy Speaker: Order! The hon. Minister is on the Floor, can we cheer him since things are happening.


Madam Deputy Speaker: Can the hon. Members listen without using any other instrument apart from the ear.


Madam Deputy Speaker: It is time to listen.

Can the hon. Minister continue, please.


Dr Musokotwane: … that the 2009 Budget has not addressed the threats to our economy arising from the global economic crisis. Questions were raised about the need for a stimulus package for our country akin to what is being introduced in USA, China and other countries.

Madam Speaker, it is important that as we agitate for schemes to respond to the global economic crisis, we should also reflect deeply on the nature of this crisis and then relate it to our own specific circumstances. This is the only way to intelligently design a response strategy.

Madam Speaker, let us consider a few facts about the crisis. In the industrialised world, the major cause of this crisis is that consumers have drastically reduced their expenditures, leaving many firms with no markets. They are not spending because banks have reduced their lending.

Madam Speaker, in the countries in question, most items including small household goods tend to be bought on credit. It follows that when banks reduce credit to consumers, the latter will also reduce their spending.

Madam Speaker, consumers have also reduced their spending because they have become cautious. Their preference has shifted towards saving rather than spending because they are not sure whether they will still have a job or not in the near future. The stimulus package will provide a solution towards the crisis because public spending is expected to perform two functions, namely helping to repair banks so that they can lend to consumers once again. The package also helps by augmenting the subdued spending by the private sector. This stimulus package is appropriate under these circumstances.

Hon. Government Member: Hear, hear!

Dr Musokotwane: Madam Speaker, we should also remember that in these economies, the stimulus package finds an already existing productive infrastructure whose only problem is a collapse in demand for their goods and services. The stimulus then works by restoring consumer confidence.

Let me add, Madam Speaker, that the public spending under the stimulus package is financed by massive borrowing by the Government. In the case of USA, the amount involved is nearly US$800 billion, excluding the amount meant for the banks. This borrowing is only possible if the Government has the borrowing capability both in the domestic and foreign financial markets. This capability varies across countries with the USA leading the pack.

Madam Speaker, the USA Government borrows mostly from external sources to fund its deficit. This is possible largely because the dollar is a prime reserve currency of the world. As other countries accumulate international reserves, they buy USA Treasury bonds as part of their foreign exchange investments and the USA Government uses the proceeds of those bonds to expand their deficit. Other industrialised countries have less scope to behave like the USA Government. This is one important reason their stimulus packages have been more modest.

Back home, Madam Speaker, the main thrust of our economic crisis has not originated from reduced spending due to a local credit crunch or reluctance by consumers in our country to spend. Rather, the predominant channel by which the global economic crisis has influenced us is through reduced incomes from our main export commodity, copper, whose price has fallen. Mining companies with high costs have, as a result, seen their viability eroded and many jobs have been lost. In turn, jobs have also been lost in companies whose fortunes are closely tied to those of the mining sector. More jobs may be lost if the price of copper declines to much lower levels.

Further, revenue from mining taxation has declined, affecting the Government’s ability to carry out development projects.

Madam Deputy Speaker: Order!

Business was suspended from 1805 hours until 1830 hours.


Dr Musokotwane: Madam Speaker, when business was suspended, I was proceeding to say that under these circumstances, our main appropriate response to the global economic crisis can only be a stimulus package premised predominantly on restoring consumer confidence, at least for now. However, in some limited extent, that is reflective of our capacity, the 2009 Budget has its own stimulus. The domestic borrowing this year has widened to 1.8 per cent of GDP from 1.4 per cent last year and this has helped to finance economic infrastructure mentioned in the Budget.

Madam Speaker, I must add here that part of this expanded borrowing includes the K319 billion from the Treasury Mineral Royalty and Windfall Taxes Account at the Bank of Zambia which was collected in 2008. We have also reduced taxes, again measured to our capacity, as part of the stimulus. More than this is currently beyond our capacity because we do not have that borrowing capacity.

Madam Speaker, our main response must instead aim at achieving two important objectives. Firstly, it must stabilise or even improve the business environment for the mining industry so as to minimise possible further job losses in the sector. It is such job losses that can induce a secondary impact of the crisis since the lost purchasing power of the miners negatively affects local industries. Secondly, the country must take more urgent and stronger practical steps to hasten economic diversification so as to lessen dependence on copper.

Madam Speaker, we need to get deeper and examine the measures taken to moderate the effects of the economic crisis on our mining industry. For the mines that have already closed such as the Luanshya Copper Mine, discussions are underway with other potential investors to revive them. The Government intends to conclude these discussions as quickly as possible so that the miners can get back to work.

Hon. Government Members: Hear, hear!

Dr Musokotwane: On the fiscal front, under the 2009 Budget, the following mitigation measures have been proposed:

(a) removing the windfall taxes in copper incomes while returning the variable income tax. I shall return to this matter later during my remarks;

(b) reducing the customs duty on heavy oil fuel, a major fuel in the mining industry, from 30 per cent to 15 per cent; and

(c) introducing Value added Tax (VAT) deferment on copper concentrate imports. This measure has made our expanded smelting capacity at Mufulira, Nchanga and Chambeshi attractive for ores from other countries. This will enhance job creation.

Madam Speaker, I would like to now turn to the measures planned in the 2009 Budget for economic diversification. In the Budget Speech, I outlined the following measures, sector by sector:

In terms of agriculture, the FSP, enhanced livestock disease prevention programmes, transport provision for extension workers, irrigation fund and zero rating VAT for basic agricultural machinery will benefit small and medium-scale farmers.

Secondly, the Irrigation Fund will benefit commercial farmers also. Further, the creation of, at least, one disease free zone for livestock somewhere in the country will open the Zambian beef industry to export markets. This will benefit both large and small-scale farmers depending on the design and location of the zone.

Thirdly, the establishment of infrastructure in the Nansanga Farming Block will benefit small and medium scale, commercial and institute agriculture. As I stated in the Budget Address, the Government’s vision for this block is to have an area such as the Nakambala Estate, except that it will be more than ten times its size.


Madam Deputy Speaker: Order! Order! The hon. Minister is still making a very important statement to the House. The grand finale is not in CDF.


Madam Deputy Speaker: Can the House listen to more information. There is loud consultation. Please lower your voices and listen.
You may continue, hon. Minister, please.

Dr Musokotwane: Madam Speaker, I was just saying that the Government’s vision for this block is to have an area such as Nakambala Estate, except that it will more than ten times its size, with the necessary infrastructure for agriculture. All scales of farmers will coexist inside the block, producing different types of produce both for the local and export markets. In the coming few years, other farming blocks such as Kalumwange in Kaoma, Luena in Kawambwa and others will be provided with similar infrastructure.

Madam Speaker, as for tourism, the following is planned under the 2009 Budget:

For the Kasaba Bay and the surrounding area, the Mbala Airport and Kasaba Bay Airstrip will get facelifts, power will be connected to Kasaba Bay and the Mpulungu to Kasaba Bay road will be worked on.

For the Luangwa National Park area, funds have been provided for the improvement of the Chipata/Mfuwe Road and the Mfuwe Airport terminal will receive a facelift.

For the Livingstone area, the road from Zimba to the tourist capital is being worked on to improve accessibility. Within the vicinity of the tourist capital itself, the Government is providing money to open up space for more hotels, conference and entertainment centres.

As regards manufacturing and other sectors, the Government has provided various tax incentives on top of many others which have been provided over the years. In particular, custom duty on various construction equipment has been removed or reduced so that contracting capacity which has been inadequate in the recent years can be encouraged to grow. The Government has provided incentives for the private sector to establish industrial parks in response to the shortage of space for building factories in large cities such as Lusaka. Lastly, the programme for the Multi Facility Economic Zones has started.

Madam Speaker, in all the sectors of intervention, two things will happen. Firstly, the processes for establishing and running businesses will be simplified so as to reduce red tape. Secondly, the Ministry of Commerce, Trade and Industry has been given adequate resources to strongly market the investment opportunities that are being created.

Madam Speaker, some hon. Members questioned this approach. Whence comes the wisdom of imagining that foreign investment will come into Zambia at a time such is this in the world, they asked. In any event, they continued, why focus on foreign investment at the expense of the local people?

The responses are as follows:

With regard to willingness of capital to flow into Zambia, it must be remembered that even at a time such as this one, there are still people and institutions with money to invest. We know this because the Zambia Development Agency (ZDA) and other line ministries receive inquiries all the time. If only we can manage to attract even a modest investment inflow of US$1 billion per annum, the impact on our small economy in the next five to ten years will be impressive.

A simple illustration of this is to imagine the presence of a village in the vicinity of a large city that is undergoing economic problems. If for some reason, a village attracts K50 million each year as investment from the city, which is possible given the size of a city even when it is facing economic problems, that village may end up experiencing an economic boom. The city in this illustration is the global economy, the village is Zambia.

On the accusation that the Government is paying more attention to foreign investors, nothing can be further from the truth. All the incentives that the Government has in place are applicable to both local and foreign investors.

Additionally, Zambians have other advantages such as access to cheaper credit, for example from the Citizens’ Economic Empowerment Fund (CEEF). However, without any shame or apology, as one hon. Member urged us during the debate, Zambians should embrace Foreign Direct Investment (FDI). With more than 300,000 youths coming on the labour market each year, and these numbers will be increasing due to the current demographics, Zambia cannot afford to wait for enough jobs to be created by local entrepreneurs only. When the unemployed look for jobs, the least thing they look for is the origin of the employer. The most critical consideration is always the availability of the job.

As we continue to promote citizens’ empowerment therefore, let us not forget also that empowerment has different meanings to different persons. I believe that at this stage of our development, the most critical form of empowerment for the vast majority of our people is employment opportunities. We should therefore, not stand in the way of getting our people employed, regardless of the origin of the employer.

Madam Speaker, the shunning of foreign investment in Africa since independence is one of the most critical elements explaining the little development the continent has made in comparison to other developing areas of the world, especially Asia which took an opposite approach. As a result, we increasingly saw high technology items such as computers, television sets, radios, telephones and many others, all belonging to foreign firms setting up in Asia to produce for world markets. Such firms have helped to create jobs for thousands of youths, lifted the technological skills of the local people and generally, led to the advancement of these economies.

The initiative that this Government is putting in place to create infrastructure such as MFEZ and farming blocks, that attracts both local and foreign investment must therefore, be seen in this light so that we re-align our approach to development to the present realities of the global economic village. What do our colleagues find objectionable about taking the route that successful economies have taken in the world?

The final theme I wish to tackle is that regarding the unfair distribution of the tax burden. An example that was frequently mentioned is feeling that we have not done enough to reduce PAYE for the workers. Another example that was also mentioned by a number of us was that in abolishing the windfall revenue tax for the mines, we have left them off the hook while retaining excessive tax burdens on the workers. Let me tackle the tax issues using these two examples.

On PAYE, let me start by stating a proposition that is self evident, namely that in giving tax concessions in any fiscal period, and the Treasury has a limit in how far it can go because, as we just heard from the hon. Members demands for expenditure on diverse items are still many. Once the quantum of the revenue loss due to concessions is established, we must then think of how to best distribute this benefit to society. An important stakeholder in this distribution is the working class who stand to benefit through reduced taxes no matter how small they are.

We have provided for this class of people in the 2009 Budget. In fact, the reduction PAYE in has absorbed most of the tax concessions we have made in 2009. Extending the tax free threshold to K1 million per month would have cost us K322 billion as opposed to the K101 billion that we are foregoing at the rate of K700,000 per month. The loss of K322 billion would have compromised other national expenditures required for our future well being, but there are other important stakeholders with legitimate claims to tax concessions. For example, there are miners who are currently working, but may lose their jobs in the near future because of the global economic crisis. Tax concessions have been given to their employers as the Government’s contribution to the minimisation of job losses in these mines.

Hon. Government Member: Hear, hear!

Dr S. Musokotwane: Some people also have already lost their jobs either in the mines or elsewhere. They need alternative livelihoods now. To partially cater for them, we have had to lose revenue by giving up VAT revenue on agricultural implements and machines. In short, it cannot just be workers. We must benefit from the reduction of taxes. The payers of PAYE must share that cake of tax concessions with other important stakeholders in our economy. I, therefore, urge all hon. Members of this House to accept what has been provided in the PAYE deductions in the 2009 Budget.

Hon. Government Members: Hear, hear!

Dr S. Musokotwane: On the Windfall Revenue Tax, let me state that the Government is fully committed to the principle that Zambians must benefit from their copper resources if the prices escalate beyond some level. Two taxes were introduced by the Government in 2008 for this purpose. These are the Windfall Revenue Tax and Variable Income Tax. Essentially, the difference between the two is that the former is a tax on gross revenue attributable to the threshold high price for copper. Companies pay this tax and are not allowed to take out the costs associated with the marginal increase in revenue due to the high price before assessing the taxable income.

The variable income tax on the other hand allows for costs to be deducted before arriving at a taxable income. The windfall revenue tax’s strongest attribute is that companies must pay it whether they declare profits or not because it is a tax on gross revenue rather than on profit depending on whether the company declares tax or not. The variable income tax on the other hand is payable depending only whether the company declares a profit. The weakness of the windfall revenue tax arises from the fact that it is imposed without allowing for costs of production to be deducted before tax.

Madam, with this regime and when metal prices are above US$3.50 per pound, the higher rate of 75 per cent of windfall tax will be triggered. Under such circumstances, the marginal rate will be about 107.1 per cent. In simple terms, this means that as companies get revenues of US$1 from increased prices above US$3.50, they have to pay US$1.07 cents in taxes. This is clearly not intended and it demonstrates the current tax system with windfall taxes cannot attract investment.

Madam Speaker, at the time your Committee on Estimates will be considering the Income Tax (Amendment) Bill, I will make a detailed presentation on the windfall tax system to the Committee. I will also give simulations that will highlight the advantages and disadvantages of the windfall tax compared to the variable profit tax.

Madam Speaker, some hon. Members asked why the windfall tax must be dropped now, when the price of copper is too low to attract it, anyway. The tax has affected attraction of new investment and expansion of existing investments, as it is now viewed to be punitive.

For example, the Mopani Copper Mines Plc suspended the sinking of a new synclinorium rock hoisting shaft in Kitwe which should have extended the life span of the mine. It is, therefore, necessary to resolve this matter now, because its presence affects current investment decisions which, of course, have a bearing on jobs in the future.

Madam Speaker, I note the concern as to whether variable profit tax can still capture the intentions for which the windfall tax was introduced and whether or not there is capacity at the ZRA to enforce this tax. The Government appreciates these concerns.

Madam Speaker, with assistance from our co-operating partners, the Government has embarked on a rigorous training programme at ZRA in tax enforcement and, in particular, enforcement of transfer pricing provisions. At the moment, ZRA, with some consultants from Norway, are currently undertaking a comprehensive technical and financial audit of the mining companies. Any mining company found wanting will obviously face the force of law.

Madam Speaker, the Government is committed to ensuring that tax arrears are paid by all the mining companies that did not pay their liabilities. There are enough legal provisions to ensure this is done.

Madam Speaker, I now wish to conclude by recapping some of the key points that I have made.

Firstly, our national financial base is extremely small to cater for our needs as a nation. We need to push hard to attract investment in the country in order to improve.

 Secondly, the global economic crisis is going to make matters worse, unless we respond adequately by taking measures to protect our key mining sector and encourage the emergence of stronger non-mining industries.

The 2009 Budget has taken decisive steps in this direction. This is true on the expenditure as well as the revenue side.

As the Government moves in this direction, I wish to appeal to all Zambians to reject gloom and despair. No nation has it easy in this world as they all have their own problems. However, they move forward because they always have hope and are willing to try out new things and move forward.

Hon. Members: Hear, hear!

Dr Musokotwane: Madam Speaker, I beg to move.

Hon. Members: Hear, hear!

Mr Kambwili: Dr CDF, ulimwaume iwe.

Hon. Members: Hear, hear!

Question put and agreed to.


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

Question put and agreed to.

The House adjourned at 1856 hours until 1430 hours on Thursday, 19th February, 2009.