Friday, 11^th November, 2016

 

The House met at 1415 hours

 

[MR SPEAKER in the Chair]

 

NATIONAL ANTHEM

 

PRAYER

 

__________

 

BUSINESS OF THE HOUSE

 

The Vice-President (Mrs Wina): Mr Speaker, I rise to acquaint the House with some idea of the business it will consider next week.

 

Sir, on Tuesday, 15^th November, 2016, the Business of the House will commence with Questions for Oral Answer, if there will any. This will be followed by presentation of Government Bills, if there will be any. Thereafter, the House will consider the Committee Stage of the Securities Bill, 2016. Then, the House will begin the debate on the Motion of Supply on the 2017 Budget.

 

Mr Speaker, on Wednesday, 16^th November, 2016, the Business of the House will begin with Questions for Oral Answer, if there will be any. This will be followed by presentation of Government Bills, if there will be any. Thereafter, the House will consider Private Members Motions, if there will be any. The House will then continue with the debate on the Motion of Supply on the 2017 Budget.

        

Sir, on Thursday, 17^th November, 2016, the Business of the House will start with Questions for Oral Answer, if there will be any. This will be followed by presentation of Government Bills, if there will be any. The House will then continue with the debate on the Motion of Supply on the 2017 Budget.

 

Mr Speaker, on Friday, 18^th November, 2016, the Business of the House will commence with the Vice-President’s Question Time. This will be followed by Questions for Oral Answer, if there will be any. After that, the House will deal with the presentation of Government Bills, if there will any. Thereafter, the House will consider the Second Reading Stage of the Compensation Bill, 2016. The House will then continue with the debate on the Motion of Supply on the 2017 Budget.

 

I thank you, Sir.

 

Hon. Government Members: Hear, hear!

 

__________

 

MOTIONS

 

BUDGET ADDRESS

 

The Minister of Finance (Mr Mutati): Mr Speaker, I beg to move that the House do now resolve into Committee of Supply on the Estimates of Revenue and Expenditure for the year 1st January, 2017 to 31st December, 2017, presented to the National Assembly in November, 2016.

 

Sir, I am the bearer of a message from His Excellency the President, …

 

Hon. Government Members: Hear, hear!

 

Mr Mutati: … recommending favourable consideration of the Motion that I now lay on the Table.

 

Hon. Government Members: Hear, hear! Boma! Boma!

 

Mr Mutati drank water.

 

Hon. Members: Hear, hear!

 

Mr Mutati: Mr Speaker, let me from the onset thank His Excellency the President of the Republic of Zambia, Mr. Edgar Chagwa Lungu for the trust and confidence he has bestowed upon me to carry out this enormous task of steering the fortunes of this nation.

 

Hon. Government Members: Hear, hear!

 

Mr Mutati: I am humbled by this great honour. What I pledge is to invest all my energies in this task.

 

Mr Speaker, in the same vein, I would like to pay tribute to my predecessor, Hon. Alexander B. Chikwanda for his stewardship in managing the affairs of the country …

 

Hon. Government Members: Hear, hear!

 

Hon. Opposition Members: Aah!

 

Mr Mutati: … during an economically difficult time. Hon. Chikwanda is a man of immeasurable dedication …

 

Hon. Opposition Members: Question!

 

Hon. Government Members: Hear, hear!

 

Mr Mutati: … to the development of this country. We honor him as one of Zambia’s most accomplished public servants and a respected citizen. We wish him well.

 

Hon. Government Members: Hear, hear!

 

Mr Mutati: Mr Speaker, three months ago, the people of Zambia re-elected the Patriotic Front into Government.

 

Hon. Government Members: Hear, hear!

 

Mr Mutati: Mr Speaker, the Patriotic Front (PF) pledged to continue with its ambitious developmental agenda. The PF Government under the competent and inspirational leadership of His Excellency the President, Mr Edgar Chagwa Lungu, is a Government for all Zambians.

 

Hon. Government Members: Hear, hear!

 

Mr Mutati: Sir, as a demonstration of this fact, resources in the 2017 Budget have been allocated to promote equitable development across the nation.

 

Mr Speaker, the past decade has been turbulent to our development agenda. Five Presidential elections have been held. This made it difficult to implement long term policies for economic stability and growth.

 

Hon. Government Members: Hear, hear!

 

Mr Mutati: Mr Speaker, this new five year mandate that the people of Zambia have given us provides ample time to achieve our set objectives. Accordingly, we shall ensure that we implement even those reforms that we could not previously undertake.

 

Sir, turning the economy around requires that we make hard choices and implement difficult decisions.

 

Hon. Government Members: Hear, hear!

 

Mr Mutati: We are all agreed …

 

Mr Speaker: Order! Hon. Minister, give me a moment, please.

 

Can we listen to this very important message in total silence.

 

Mr Mutati: … that the task of restoring stability and accelerating growth will not be easy. We have to be bold and decisive.

 

  Mr Speaker, only unity and hard work will help us overcome the current challenges for shared prosperity.

 

Sir, we are coginsant of the fact that the hard choices which we are making will have consequences on our society, in particular, the vulnerable. Thus, we commit to scale-up our social safety-net programmes. This is in fulfillment of the PF’s commitment to alleviate poverty and the philosophy that no one will be left behind.

 

Mr Speaker, the economic environment in which the 2017 Budget will be implemented will be challenging. Growth in the global economy is expected to remain subdued. Domestically, low water levels will continue to hamper electricity generation and, thus, constrain production. These realities mean that we have to act decisively to address the challenges which we face.

 

Mr Speaker, in order to restore economic stability, the Government has designed an Economic Recovery Programme dubbed, “Zambia Plus.” This Programme is aimed at ensuring sustained and inclusive growth. I would like to reiterate that, “Zambia Plus” is a home grown Economic Recovery Programme to be complemented by external support from our Co-operating Partners, including the International Monetary Fund (IMF).

 

Sir, I would like to clarify that Zambia has not yet discussed any programme with the IMF. Therefore, there are no conditions or financing arrangements that have been agreed upon. Discussions with the IMF will only be conducted in the first quarter of 2017 to augment our home grown economic recovery programme.

 

Hon. Government Members: Hear, hear!

 

Mr Mutati: Mr Speaker, our Economic Recovery Programme, “Zambia Plus,” is built on five pillars as follows:

 

1. enhance   domestic   revenue mobilisation and refocus public expenditure

on ore nte;

 

1. scaling-up the Government’s social protection programme to shield the

most ulnrale in or soity rom the te fts of te progm;

 

1. improving our economic  and fiscal governance by raising the levels of
2. countability and transparency in the allocation and utilisation of public resources;

 

1. restoring budget credibility by minimising unplanned expenditures
2. nd halting the accumulation of arrears; and

 

1. ensuring greater  economic stability, growth and job creation through 
2.  

 

Sir, this programme will not be achieved in one year, but over the medium term. This budget, therefore, aims to set the foundation and the direction for this programme.

 

Mr Speaker, I carry a message to my fellow Zambians this afternoon. The message is simple. We cannot spend what we do not have.

 

Hon. Members: Hear, hear!

 

Mr Mutati: We cannot borrow beyond our ability to repay.

 

Hon. Members: Hear, hear!

 

Mr Mutati:  Let us cut the cloth accordingly.

 

Hon. Members: Hear, hear!

 

Mr Mutati: Sir, on 30^thSeptember, 2016, during the Official Opening of the First Session of the 12th National Assembly, His Excellency the President, Mr Edgar Chagwa Lungu addressed the nation through this august House on his vision for an inclusive vibrant and robust economy.

 

Mr Nkombo: Question!

 

Mr Mutati: It is in this context that the theme of the 2017 Budget is: “Restoring Fiscal Fitness for Sustained Inclusive Growth and Development.”

 

Mr Speaker, my Address to this august House is in four parts. Part One, will review the global and domestic economies, their performances and give an outlook for 2017. In Part Two, I will set out the macro-economic objectives, policies and strategies. In Part Three, I will set out the 2017 Budget. In Part Four, I will render my concluding remarks.

 

PART I

 

GLOBAL AND DOMESTIC ECONOMIC DEVELOPMENTS IN 2016 AND THE OUTLOOK FOR 2017

 

Mr Speaker, the global economic growth in 2016 is projected at 3.1 per cent, a rate slightly lower than the 3.2 per cent recorded in 2015.This is on account of the lower economic activities in advanced economies. In the emerging and developing economies, growth is projected to strengthen slightly to 4.2 per cent in 2016 from 4 per cent in 2015. This is despite lower growth China. In Sub-Saharan Africa, growth is projected to fall to 1.4 per cent in 2016 from 3.4 per cent in 2015.   This is largely on account of a slowdown in the larger economies of South Africa, Nigeria and Angola.

 

Mr Speaker, world trade is projected to grow by 2.3 per cent in 2016. This is lower than the 2.6 per cent growth recorded in 2015. The main factors weakening world trade include the sluggish economic activities, waning pace of trade liberalisation and the recent increase in protectionist tendencies.

 

Sir, on the domestic front, the Zambian economy faced a number of challenges. These include low commodity prices including copper, electricity deficits, high inflation, a deteriorated external sector and Government’s challenge to finance its commitment. Growth is, therefore, projected to be just above 3 per cent in 2016 against a target of 5.0 per cent and to marginally rise to 3.4 per cent in 2017.

 

Mr Speaker, agriculture recorded favourable performance, notably for maize, soybeans, sunflower and sorghum. Copper production was up by 8.2 per cent to 575,000 metric tonnes in the first nine months of 2016, from 531,000 metric tonnes produced in the corresponding period in 2015.

 

Sir, there was improved performance in tourism, partly reflected in increased international passenger movements and higher entry into our major national parks. We recorded a 4.7 per cent increase to over 1 million international movements during the first nine months of 2016, compared to 957,300 over the corresponding period of 2015.

 

Mr Speaker, I am glad to note that we are increasing our usage of Information and Communication Technology (ICT). Our utilisation of mobile services including internet has increased. In the first nine months of 2016, mobile users increased to 11.5 million from 10.9 million recorded a year earlier.

 

Sir, we all know that our situation with electricity generation has been challenging. In the period up to September 2016, generation declined by 19.9 per cent to 1,329 Megawatts compared to 1,658.6 Megawatts in the corresponding period in 2015. This has constrained economic activities.

 

Mr Speaker, the stock of Government’s external debt as at end of September, 2016, was US$6.7billion, representing 35 per cent of the Gross Domestic Product (GDP). The stock of domestic debt in form of Government securities was K26billion, representing 12 per cent of GDP. Clearly, we are walking tight rope. We, therefore, have the responsibility to ensure debt sustainability. We must not burden the next generation with debt.

 

Sir, monetary policy helped to anchor restoration of macro-economic stability. Annual inflation declined significantly from a peak of 22.9 per cent in February, 2016, to 12.5 per cent in October, 2016. Inflation is expected to be single digit by the end of December, 2016.

 

Hon. Government Members: Hear, hear!

 

Mr Mutati: The exchange rate has remained relatively stable.

 

Mr Nkombo: Abracadabra!

 

Laughter

 

Mr Mutati: There is no magic.

 

Laughter

 

Mr Mutati: Mr Speaker, the total export earnings declined in the first nine months of 2016 compared with the corresponding period in 2015. Earnings from copper fell to US$3.2 billion from US$4 billion. Non-traditional earnings declined to US$1.3 billion from US$1.6 billion. This out-turn was mainly explained by unfavourable international commodity prices.

 

Sir, the cost of credit continued to be high with commercial bank average lending rates remaining high at around 28.9 percent in September, 2016. This is not conducive to growth of the Small and Medium Enterprises (SMEs) and the economy in general. Fiscal consolidation will help to lower the yield on Government securities and enable monetary policy to support growth.

 

  Mr Speaker, execution of the 2016 Budget has been daunting. The cash deficit is expected to close around 3 per cent of GDP, largely, on account of revenue shortfalls and planned external financing not coming through. The deficit on a commitment basis will be around 10 per cent of GDP. This is, largely, on account of arrears arising from unplanned expenditures related to fuel and electricity subsidies.

 

PART II

 

MACRO ECONOMIC OBJECTIVES, POLICIES AND STRATEGIES FOR 2017

 

Sir, the gravity of the estate of our economy requires that we immediately put in place bold measures that will stabilise and grow the economy. In this regard, our macro-economic objectives for 2017 will be to:

 

1. achieve real GDP growth of at least 3.4 per cent;

 

Hon. UPND Members: Question!

 

Hon. Government Members: Hear, hear!

 

Mr Mutati:

 

1. attain end-year inflation of no more than 9.0 per cent, remaining single
2.  

 

1. attain domestic revenue mobilisation of at least 18 per cent of GDP;

 

1. limit the overall fiscal deficit to no more than 7.0 per cent of GDP on a

 

1. ash basis;

 

1. maintain domestic borrowing to no more than 2 per cent of GDP;

 

1. build up foreign exchange reserves to at least 3 months of import cover by

 

the nd of 207; nd

 

1. support the creation of at least 100,000 decent jobs as a platform for the

next five years to reach the target of one million jobs.

 

Laughter

Hon. Government Members: Hear, hear!

 

Mr Livune: Question!

 

Interruptions

 

Mr Mutati: Mr Speaker, the Seventh National Development Plan (7^thNDP) is poised to give greater impetus to economic diversification and job creation. The under-pinning macro-economic objectives will, therefore, be supported by specific policy interventions related to the following:

 

1. agriculture;

 

1. industrialisation;

 

1. tourism; and

 

1. mining.

 

Sir, allow me now to share with the House, specific policy interventions that the Government will put in place.

 

Mr Speaker, to ensure greater economic stability and growth, we need to develop a sustainable, diversified and competitive agriculture sector. This will improve the livelihood of our people.

 

Sir, in 2017, the Government will promote diversification to cash crops such as cotton, cashew nuts, soya, cassava and rice. This will be done through the full migration to the Electronic Voucher (e-Voucher) System. The e-Voucher System will be used for all beneficiaries under the Farmer Input Support Programme (FISP) in the 2017-2018 farming season. In addition, the e-Voucher System will help reduce the excessive overheads and wastage associated with the current FISP arrangement. This will ensure the prudent use of our resources in line with our Economic Recovery Programme.

 

Mr Speaker, to further diversify the agriculture sector, we have launched the Cashew Nut Infrastructure Support Programme, valued at US$55.4 million. This project will target 600,000 beneficiaries in the Western Province.

 

Hon. Members: Hear, hear!

 

Mr Mutati: I can see the smiles.

 

Laughter

 

Interruptions

 

Mr Mutati: These will include 300,000 women and 100,000 youths.

 

Sir, to bridge the funding gap for emerging farmers, the Government will create a Fund under the Emergent Farmer Support Programme. The target is to support 1,000 emergent farmers. We have already secured US$40 million from our co-operating partners for on lending. This will promote mechanisation of crop production.

 

Mr Speaker, to mitigate the effects of climate change, the Government will continue with the construction of multi-purpose dams and promotion of irrigation schemes. In 2017, the Government will set up 20 irrigation schemes while scaling-up the sustainable utilisation of wetlands. In addition, irrigation projects will be undertaken using the PPP model, particularly in farm-blocks, such as, Nasanga in Central Province and Lwena in Luapula Province.

 

Hon. Government Members: Hear, hear!

 

Mr Mutati: Sir, extension services are a critical component of the agriculture sector. In this regard, the Government will utilise ICT to improve the delivery of extension services to the farmers.

 

Mr Speaker, policy consistency is important in the agricultural sector …

 

Hon. Government Members: Hear, hear!

 

Mr Mutati: …as it facilitates stability and predictable access to wider markets. Policies such as export bans and setting of prices above market rates have the effect of generating uncertainty which in turn, negatively affects production. To redress this, the Government will refrain from using these instruments to regulate agricultural markets. In short, no export bans.

 

Hon. Members: Hear, hear!

 

Mr Mutati: Sir, in the livestock sector, the Government will continue with the construction of eighteen artificial insemination centres in 2017. To control animal disease, the Government will scale-up production of vaccines at the Central Veterinary Institute. To prevent trans-border disease transmission, the Government will complete the construction of the cordon line …

 

Interruptions

 

Laughter

 

Mr Mutati: … cordon line from Shangombo to Jimbe.

 

Laughter

 

Mr Mutati: Mr Speaker, this was created to get the people to wake up.

 

Laughter

 

Hon. Members: Hear, hear!

 

Interruptions

 

Mr Mutati: Mr Speaker, with regard to fisheries, the Government will in 2017 complete the construction of fingerling centres in Rufunsa, Mungwi, Kasempa and Chipepo. In addition, the Government will train farmers in fish feed production. To enhance productivity, let me challenge the private sector to participate in the establishment of fish feed plants, freezing facilities and hatcheries. The Government will play its part by offering fiscal incentives to the aquaculture sub-sector in this budget. Further support to the sector will be provided through an expanded Fisheries Development Fund.

 

Mr Livune: Very good!

 

Mr Mutati: Sir, the Government will promote industrialisation as a means of diversifying the economy. This will be through facilitation of value addition in agriculture, mining and the forestry sectors. In 2017, the Government will facilitate the development of the Kafue Iron and Steel Economic Facility Zone and the Kalumbila Multi-Facility Economic Zone in the North Western Province. The private sector is ready to invest US$100 million in the Kalumbila Multi-Facility Economic Zone.  The Government will also assist in enhancing investment in the Lusaka South Multi-Facility Economic Zone.

 

Mr Speaker, industrialisation cannot take place without financing of SMEs that form the back bone of the economy. To address this, the Government has accessed US$70 million, which is resting with the Development Bank of Zambia (DBZ) for on-lending to SMEs. This will create dynamic SMEs that will contribute to growth and job creation.

 

Sir, in 2017, the Government will further develop financing instruments that will attract pension funds led by the National Pension Scheme Authority (NAPSA) and other investment companies to support industrialisation under the Industrial Development Corporation (IDC). Priority will be given to projects that add value to output in agriculture, mining and other primary sectors.

 

Mr Speaker, credit guarantee schemes are cardinal to alleviating the constraints facing SMEs in accessing finance. A significant number of our SMEs in Zambia demonstrate good commercial viability. However, they are limited to conventional bank credit facilities. This is due to inadequate collateral and lenders’ limited understanding of the SME business model.

 

Sir, the Government will in 2017, therefore, establish an Agricultural and Industrial Credit Guarantee Fund for SMEs to facilitate access to affordable financing. These facilities will ensure SMEs contribute significantly to employment generation and economic activity.

 

  Mr Speaker, in 2017, the Government is set to implement the Tourism Development Fund as provided for in the Tourism and Hospitality Act. This Fund will support tourism product development, tourism infrastructure and tourism marketing. This is intended to enhance the sector’s contribution to employment and wealth creation. It will also enhance the capacity to safeguard our wildlife resources.

 

Sir, as part of our strategy to boost tourism in Zambia, the Government will work with the private sector to come up with an integrated approach to develop the sector. This will ensure that initiatives that have commenced are completed before embarking on new ones. In this regard, the Government will in 2017, work to transform Livingstone into a premier conferencing centre in the Southern Province to leverage on the infrastructure developments that have been undertaken.

 

Sir, may I mention that the Hon. Minister of Tourism and Arts will be leading a delegation tomorrow to Livingstone to begin on this journey.

 

Hon. Members: Hear, hear!

 

 

Mr Mutati: Mr Speaker, the mining sector contributes over 70 per cent of Zambia’s total export earnings. This sector will thus continue to play a pivotal role.

 

Sir, the Government will ensure stable and responsive mining taxes. This is key to unlock pipeline investment in the sector, valued at over US$1.5 billion in the North Western Province. May I add that copper, in terms of price, is on the uplift. It is, today, selling at K5,610 from K4,800 …

 

Hon. Members: Dollars! Dollars!

 

Mr Mutati: I knew you would catch it.

 

Laughter

 

Hon. Member: Hear, hear!

 

Mr Mutati: Mr Speaker, we will also fully implement effective mine monitoring mechanisms such as the Mineral Value Chain Monitoring Project to enhance transparency in the sector.

 

Mr Speaker, the Government will accelerate the promotion of a diversified mining output base to other minerals such as gemstones, gold, nickel, manganese and iron ore. The Government will accelerate the promotion of exploration for oil and gas, and we will find it, Professor.

 

Prof. Lungwangwa: Hear, hear!

 

Mr Mutati: Sir, mapping the entire Zambian territory will be undertaken to update the geological database to support future investment in this sector.

 

Sir, in order to promote development in the key areas that I have highlighted, the Government will put in place policies to support the above sectors.

 

Mr Speaker, the energy sector has experienced a number of challenges. Pricing of fuel and electricity has not been cost reflective leading to unsustainable fiscal outlays. This has hampered investments in the sector.

 

Sir, in the electricity sub-sector, in sufficient investment in generation capacity has led to power deficits. This has not been cost-neutral on the economy. Going forward, Government will by the end of 2017, move to cost-reflective tariffs to attract private sector investment while maintaining the lifeline tariff to protect the poorer household.

 

Hon. Members: Hear, hear!

 

Mr Mutati: So, the poor will be protected. The rest of you hon. Members will have to pay cost-reflective tariffs.

 

Hon. Members: Hear, hear!

 

Mr Lubinda: Very good!

 

Mr Mutati: Mr Speaker, this, however, does not mean that consumers will end up paying for inefficiency.

 

Sir, increasing electricity generation capacity and moving to a better energy mix is imperative given the risks associated with climate change. The Government is pro-actively engaging with the private sector in delivering new generation facilities to increase on-grid and off-grid including the Scaling-Up Solar Project and the development of the US$1.5 billion Kafue Gorge, the initiation of the US$4 billion Batoka Gorge and the completion of the feasibility study in Kalungwishi.

 

Hon. Member: Hear, hear!

 

Mr Mutati: In addition, the Government is continuing to expand the national grid.

 

Sir, in the same vein, the Government has commenced discussions with mining houses and other bulk power consumers to ensure that they start migrating towards cost-reflective tariffs in 2017.

 

Mr Speaker, in moving towards cost-reflective tariffs, the Government will also consider options to improve both technical and commercial efficiency of the electricity industry. The Government will further ascertain the long term sustainability through a review of the overall structure, governance operation of the sector including generation, transmission and distribution.

 

Sir, the petroleum sub-sector is also embedded with inefficiencies and unsustainable Government involvement. In order to ensure efficiency, the Government will disengage from the sector. The procurement of finished products will with effect from 1^stMarch, 2017, be undertaken by the private sector.

 

Hon. Government Members: Hear, hear!

 

Mr Mutati: The Government’s role will be limited to regulation. The private sector will do the procurement. In the meantime, the Government is examining the viability of Indeni and TAZAMA pipeline. Let me mention here that prices will be adjusted in line with the changes in market condition.

 

Mr Mutati: Mr Speaker, over the last five years, the PF administration has been implementing road infrastructure projects such as the Link Zambia 8000 km Project, the Lusaka 400 and the Copperbelt 400.

 

Sir, these projects will continue with implementation being undertaken on a more realistic time-frame. Emphasis will be placed on construction of roads that support economic growth and foster regional trade.

 

Hon. Government Members: Hear, hear!

 

Mr Mutati: Mr Speaker, these include the Chingola/Solwezi Road, …

 

Hon. Members: Hear, hear!

 

Mr Mutati: … those contractors have started working on, Kitwe/Chingola Dual Carriage Way, Lusaka/Chirundu Road, Mpika/Chinsali Road, Chinsali/Nakonde Road and also important, in this equation, the Solwezi/Kipushi Road …

 

Hon. Members: Hear, hear!

 

Mr Mutati: … getting to Angola.

 

Hon. Muchima, you know Kipushi Road?

 

Mr Muchima: Yes! Jimbe!

 

Laughter

 

Mr Mutati: Mr Speaker, feeder roads and bridges will also receive attention to ensure connectivity for our farming communities to markets and essential social amenities. A total of 144 pre-fabricated bridges will be installed on feeder roads across the nation. Access roads within the game parks will also be rehabilitated to lengthen the tourism period to seven months.

 

Hon. Members: Hear, hear!

 

Mr Mutati: We want the tourists to stay a little longer so that they can pay Hon. Muchima’s allowance.

 

Sir, to   ensure   sustainable financing of the road sector, the Government has embarked on the National Roads Tolling Programme. Under this Programme, we will accelerate the construction of toll sites across the country in order to boost revenue generation capacity in the road sector. In this regard, the Government has commenced the construction of four additional toll gates in Shimabala, Chongwe, Mumbwa and Katuba.

 

Mr Speaker, to ease the pressure on the Treasury in financing road projects, the Government will upscale the utilisation of the  PPP arrangements. In this regard, this year, we shall work on the Lusaka/Ndola Road Dual Carriage Way under the PPP arrangement.

 

Hon. Members: Hear, hear!

 

Mr Mutati: We shall also make the Chingola/Kasumbalesa Road as a Dual Carriage Way under the PPP.

 

Sir, the major bridge project under construction is the US$260 million Kazungula Bridge. When completed, this will substantially enhance trade within the southern corridor. The Government has also embarked on strengthening the Kafue Hook Bridge on the Lusaka/Mongu Road to enhance trade with Angola.

 

Mr Speaker, rail transport continues to play a critical role in the socio-economic development of our country. In 2017, the Government will attract equity partners to revamp the operations of Zambia Railways Limited and the Tanzania Zambia Railways (TAZARA). Further, the inter-mine rail links operated by Zambia Railways will be rehabilitated to reduce the strain on the roads.

 

Sir, the Government has commenced the implementation of Greenfield railway infrastructure projects. The Petauke/Serenje Railway line and the Nseluka/Mpulungu Railway line will be financed under the Forum on China-Africa Co-operation (FOCAC) arrangement. This, perhaps, will be the first railway line in this part of Africa to be undertaken in so many years. Others are the North/Western Railway Line and the Livingstone/Sesheke Railway Line where the Government is seeking to partner with the private sector.

 

Mr Speaker, the completion of these projects will also help to leverage Zambia’s central location and make it a regional hub.

 

Sir, we need to prioritise international trade as a tool for attaining inclusive growth and development. In 2017, the Government will:

 

1. operationalise the Bilateral Trade Agreements with the Democratic
2.  

 

1. provide for advanced ruling on rules of origin for goods originating from
2. ountries with which Zambia has signed trade agreements. These include the Southern Africa Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA) countries as well as India and China;

 

1.  implement a Single Window platform for various

border ns to nne tre iito; nd

 

1. establish trade centres at the borders of our major non-traditional export
2.  

 

 Mr Speaker, limited broadband infrastructure, low application of ICT in industries and inadequate skills among citizens are challenges to attain the socio-economic development and competitiveness that we require.

 

Sir, to address these challenges, the Government has launched the Smart Zambia Master Plan whose vision is to have “a prosperous and globally competitive knowledge-based developed country”. In line with this plan, the Government intends to, among other things, harmonise the construction of National ICT infrastructure.

 

Mr Speaker, the Government has continued to support the development of water and sanitation infrastructure across the country. To improve access to safe and clean drinking water in rural areas, the Government in 2016 constructed 944 boreholes and rehabilitated 400 existing boreholes. Further, eleven small water schemes are under construction. This intervention will give 341,500 people access to a safe and clean water supply. In addition, the Government continues to promote community-led approaches to sanitation which has resulted in about 760,000 people in rural districts having access to improved sanitation.

 

Sir, other works include; the Lusaka Water Supply, Sanitation and Drainage Project, Lusaka Sanitation Programme, Kafue Bulk Water Supply Improvement Project, Kafubu Water Supply and Sanitation Project, and Mulonga Water and Sewerage Company Project. In addition, water supply and sanitation will be improved in selected towns in the Western, Luapula, Muchinga and the Northern provinces under the Integrated Small Towns Water Supply and Sanitation Programme.

 

Mr Speaker, in 2017, the Government will target to increase access to clean and safe drinking water from the current 51 per cent to 55 per cent and access to sanitation from 44 per cent to 47 per cent in rural areas. This will be done through construction of 2,000and the rehabilitation of 1,000 water points. The Government will also continue to promote community-led approaches to sanitation and construction of 300 sanitation facilities.

 

Sir, to improve solid waste management, the Government will continue to procure solid waste management equipment and construct engineered landfills to better manage waste and ensure a clean environment. The Government will also promote more research in sustainable solid waste management through recycling and waste-to-energy innovations. These interventions will be complemented by the Keep Zambia Clean and Healthy Programme.

 

 

Mr Speaker, increasing access to education is key to ensuring emancipation from poverty. As such, in 2016, the Government will recruit 2,289 primary and 3,410 secondary school teachers. The Government will complete the construction of sixty-two new secondary schools out of the targeted 115 while the first phase of upgrading 220 day secondary schools will be finalised.

 

Sir, in 2017, the Government will focus on completion of various school infrastructure projects currently under construction at both primary and secondary levels. In addition, teacher recruitment and retention at all levels will continue in order to reduce the pupil-teacher ratio, enhance the quality of lesson delivery as well as increase teacher-pupil contact time.

 

Hon. Members: Hear, hear!

 

Mr Mutati: Mr Speaker, at tertiary level, the Government in 2016 undertook construction of two universities and expansion of existing ones. The Kapasa Makasa University, which was recently completed, is already offering programmes under the auspices of the Copperbelt University. To improve the quality and relevance of tertiary education provided by public and private universities, the Higher Education Authority and the Zambia Qualifications Authority were operationalised in 2016.

 

Sir, in an effort towards reducing the financial challenges in our public universities, the Government will in 2017, work towards the operationalisation of the Higher Education Loans Scheme. The objective is to provide an efficient, effective and self-sustaining financing mechanism for university education. This loan scheme will replace the current bursary scheme, which has proved to be unsustainable. In 2017, the Government will continue with the bursaries scheme as we develop the loan scheme system, especially under disbursement, bonding and recovery.

 

Mr Speaker, in order to address the challenges of inadequate skills amongst our craftsmen and artisans, the Government will in 2017, introduce a Skills Development Fund. This is part of the long term financing solution for technical, entrepreneurial and vocational education. The Fund will be jointly managed by the private sector in order to ensure that the skills that are being developed are relevant to the requirements of the industry. This is particularly critical at this moment when our country is embarking on the path towards meaningful industrialisation.

 

 

Sir, the Government’s resolve is to achieve universal health coverage in line with the Sustainable Development Goal No. 3. This goal aims at ensuring healthy lives and promoting the well-being for all by 2030. The focus will, therefore, be on strengthening health systems with emphasis on primary health care, promoting innovative health financing strategies and rehabilitation of health facilities and training schools.

 

Mr Speaker, we will continue prioritising procurement and distribution of drugs as well as medical supplies, medical equipment, infrastructure and human resource development. In order to ensure that drugs are readily available in all medical facilities, the Government shall create more regional hubs. Further, the Government will roll out the Essential Medicines Logistics Improvement Programme and the Electronic Logistics Management Information System.

 

Sir, in order to ensure that health infrastructure developed in the recent years is fully operational in 2017, the Government will recruit up to 2,000 front-line medical personnel. In addition, the Government will focus on completion of on-going health infrastructure. This will include the completion of the remaining 350 health posts. Construction of thirty-five district hospitals will continue.  Levy Mwanawasa Hospital will also be upgraded from 120 to 850 bed spaces.

 

Hon. Members: Hear, hear!

 

Mr Mutati: Sir, higher level hospitals namely; the University Teaching Hospital (UTH), the Ndola Central, Livingstone General, Kitwe Central and Arthur Davison Children’s Hospitals will be modernised.

 

Hon. Members: Hear, hear!

 

Mr Mutati: Mr Speaker, the Government completed the construction of a modern 252 bed-capacity Cancer Diseases Hospital in June, 2016. This facility has state-of-the-art radiotherapy and chemotherapy services.

 

Hon. Members: Hear, hear!

 

Mr Mutati: In 2017, the Government will commence the establishment of satellite cancer treatment centres at provincial level to complement the Cancer Diseases Hospital in Lusaka. Through these satellite centres, Zambians will effectively be attended to during the early stages of cancer and most importantly, avoid reaching advanced stage by the time the patient is being referred to Lusaka.

 

Sir, the Government’s policy is to achieve universal health coverage where all citizens have access to affordable and quality health services. The Government will, therefore, Table the Social Health Insurance Bill in the House in this session. This Bill is to facilitate the implementation of a compulsory social health insurance scheme.

 

Mr Speaker, the Government is aware that the Economic Recovery Programme being embarked on is likely to have a negative effect on society. Consequently, as a caring Government, we will up-scale …

 

Mr Sing’ombe: Question!

 

Mr Mutati: … social protection programmes in 2017, even in Dundumwezi.

 

Hon. Members: Hear, hear!

 

Mr Mutati: Sir, to mitigate the adverse effects on vulnerable households, the Government will, in 2017, scale-up social cash transfer. This will be in terms of both the coverage and monthly amounts to be given to each beneficiary household in all the 105 districts. The number of beneficiary households will increase from 242,000 to over 500,000 in 2017.

 

Hon. Members: Hear, hear!

 

Mr Mutati: The monthly amounts given to each household will rise by 28 per cent.

 

Mr Speaker, the Government will also continue to implement the Food Security Pack Programme in all the ten provinces in order to alleviate hunger and poverty among vulnerable but viable farmers. The Government will scale-up this programme from the current 30,000to 40,000 beneficiaries in 2017.

 

Sir, in 2017, the Government will increase its support to incapacitated households through the Public Welfare Assistance Scheme. This is to enable the poor and vulnerable have access to health care and education. This will also provide resources for repatriation of stranded persons throughout the country. To demonstrate this commitment, the Government will support 134,000 beneficiaries in 2017.

 

Mr Speaker, the Government will scale-up the Home Grown School Feeding Programme to enhance the learning abilities of school going children, increase their attendance rates and combat malnutrition. The Government will increase the support to this programme from 1 million in 2016 to 1.25 million learners in 2017.

 

Sir, the Government will continue to implement the Women’s Development Programme, especially the micro-credit component which has proved to be viable and sustainable. The micro-credit scheme will be up-scaled over the next three years by adding 25,000 women beneficiaries each year. With the number of beneficiaries in 2016 being 7,000 and the total number of beneficiaries in 2017 will cover over 30,000.

 

Mr Speaker, in 2017, this programme will for the first time, support 14,000 girls from vulnerable households in sixteen districts by providing the requisites to retain them in school.

 

Mr Mutati drank water

 

Hon. Members: Hear, hear!

 

Mr Mutati: Sir, our country like in many parts of Africa, reproductive health matters are treated as taboo and with silence. This limits girls’ access to education as some fail to go to school due to lack of proper sanitary towels. In order to increase and retain the attendance of girls in schools, the Government will in 2017 commence distribution of free sanitary towels to girls in rural and peri-urban areas.

 

Hon. Members: Hear, hear!

 

Mr Mutati: I am sure that Hon. Kopulande will be very pleased about this move.

 

Mr Kopulande: Hear, hear!

 

Laughter

 

Mr Mutati: Mr Speaker, in line with the National Youth Policy and the Action Plan for Youth Empowerment and Employment, the Government will focus on equipping the youth with vocational and entrepreneurial skills. The youths will also be provided with affordable start-up capital. This will enable them to engage in meaningful economic activities. In addition, Youth Resettlement Schemes will be established through which land and start-up kits will be provided to the youths to enable them engage in agriculture and agri-business for their livelihood.

 

Sir, in line with the theme for this year’s budget and the Economic Recovery Programme pillars that aimed at restoring budget credibility, transparency and policy consistency, the fiscal targets and policies for 2017, are designed to rebalance the fiscal position. To this end, the Government will implement the following measures:

 

1. target public spending to activities that directly support our Economic Recovery Programme, increasing spending on social protection and delivery of core public services to our people;

 

1. realign the implementation strategy for the Farmer Input Support Programme and restrict the role of the Food Reserve Agency to procurement and maintenance of the strategic reserve. So, they only maintain strategic reserves;

 

1. dismantle arrears to suppliers and contractors, and immediately prevent the accumulation of arrears through effective monitoring of commitment control system. It is important that we dismantle arrears to contractors and suppliers. Beginning next week, we shall be making appropriate announcements;

 

Hon. Government Members: Hear, hear! Boma!

 

Hon. Member: The Government at work!

 

Mr Mutati:

 

1.  restrict new capital projects and major equipment procurements until all the on-going projects are completed;

 

1. implement the phased removal of electricity subsidies so as to reduce pressure on public finances, moving to cost-reflective tariff. We told you about the protection of the poor through a life-line tarrif;

 

Interruptions

 

Mr Livune: Question!

 

Hon. Government Members: Hear, hear!

 

Mr Mutati:

 

1. restrict new public sector recruitment only to frontline workers in the health and education sectors. So, recruitment in 2017 will be restricted to health and education; and

 

1. restore budget credibility and enhance transparency and accountability in accordance with the Constitutional provisions relating to supplementary and excess expenditure.

 

Mr Speaker, the composition of external debt portfolio has substantially changed over the past few years. This is on account of contraction of private commercial debt that now accounts for more than 50 per cent of the stock. Similarly, a larger proportion of the domestic debt portfolio comprises short term debt in the form of treasury bills. Our capacity as a country to carry and service our debt has been threatened, especially in the face of the macro-economic re-adjustments that our economy has recently experienced.

 

Sir, in order to ensure debt sustainability, the Government will undertake the following measures:

 

1. develop, publish and implement a robust Medium Term Debt Management Strategy in 2017. The            Strategy will guide the Government in coming up with an optimal composition of public debt. This is necessary to address refinancing, particularly, of the Euro Bonds, interest rates and exchange  risk management of the current debt portfolio;

 

1. use of the Government Securities as the main instrument for domestic financing as they offer competitive prices. In doing this, the Government will focus on longer dated instruments in the form of bonds;

 

1. slow down on capital infrastructure projects which are debt financed ;and

 

1. utilise the PPPs and Joint Ventures to finance Government projects. This will ensure a diversified base in 2017, and over the medium term.

 

Mr Speaker, in line with Article 207 of the Constitution, which provides for parliament to have oversight over the contraction of public debt, I will soon table before this august House, the proposed amendments to the Loans and Guarantees Act.

 

Sir, as espoused under the Economic Recovery Programme, it is essential that Government re-engages with Co-operating Partners to increase the level of assistance from 2017 onwards. The Economic Recovery Programme will attract commitments for direct budget support from Co-operating Partners after a number of years of limited support. The Government has, in this regard, commenced bilateral and multilateral discussions with Co-operating Partners.

 

Sir, hon. Members may wish to know that already, the level of enthusiasm to provide budget, programme and project support by the co-operating partners has been elevated.

 

Hon. Government Members: Hear, hear!

 

Mr Mutati: We are looking good.

 

Mr Speaker, monetary policy will remain focused on maintenance of price and financial system stability in order to support the restoration of macro-economic stability and growth. During 2017 and the medium-term, monetary policy will be re-aligned accordingly as the Government consolidates its fiscal position.

 

Sir, in the medium-term and beyond, the Bank of Zambia will adopt a target range for inflation of between 6-8 per cent from 2018 onwards. This will support the current implementation of a forward-looking monetary policy framework.

 

Mr Speaker, the exchange rate will continue to be market determined. Stability in the foreign exchange rate is essential for maintaining low and stable domestic prices as well as ensuring international competiveness and development of the Zambian exports. In this regard, the Bank of Zambia will continue to support the operations of the foreign exchange market by smoothening short-term volatility. It will also build-up the Gross International Reserves.

 

Sir, access to credit is necessary to grow the agriculture sector and hasten the pace of industrialisation. The Government, through the Bank of Zambia, will embark on a process of de-risking lending to the agriculture sector and put in place measures to provide affordable and long term finance to support SMEs. This will strengthen the country’s resilience to external shocks.

 

Mr Speaker, co-ordinated fiscal and monetary policy will spur economic activity and support financial system stability. Fiscal consolidation will not only reduce crowding-out of the private sector but increase the liquidity in the economy through dismantling of domestic arrears. The easing of liquidity coupled with price stability is expected to contribute towards lower lending rates. In addition, the Government will put in place a number of measures expected to enhance the resilience of the financial system to internal and external economic and financial shocks.

 

Sir, the Government is developing a national financial inclusion policy and strategy that will provide a framework for co-ordinating efforts of both public and private sector players towards achievement of effective financial inclusion. The policy and strategy are expected to be finalised and launched by mid2017.

 

Mr Speaker, improving transparency and accountability is one of the pillars in our Economic Recovery Programme. To attain this, I will be tabling before this House, revisions to the Public Finance Act of 2004. This will also involve strengthening of laws and regulations to make them more punitive to abusers. To ensure adherence to planned programmes, I will also table before this House, the Planning and Budgeting Bill.

 

Sir, the fight against corruption,

 

Mr Mutati drank water

 

Hon. Members: Hear, hear!

 

Mr Mutati: …money laundering and drug trafficking is a key tenet to good economic governance. National resources will be managed diligently, prudently and with accountability.

 

Mr Speaker, the accrual of arrears over the past years is in part due to weak controls in terms of commitment to expenditure. With the expected full roll-out of Integrated Financial Management Information System by the end of 2017, no ministry, province or spending agency shall be allowed to spend outside the system.  This will curb the accumulation of arrears.

 

Sir, in order to enhance cash management and reduce short-term borrowing and bank charges, the Government will accelerate the roll-out of the Treasury single account to major ministries by end of 2017. This will also facilitate timely disbursements and payments to implementing agencies to meet their financial obligations.

 

Mr Speaker, in order to minimise revenue leakages associated with manual processes, the Government will ensure that major revenue collection processes are automated by June 2017. This system has already been successfully implemented at the Passport Office.

 

Sir, to ensure that the Government gets value for money when procuring goods and services, the Zambia Public Procurement Authority has been directed to finalise and implement a price bench-marking framework. This framework provides for a guide on the optimal pricing for goods, works and services. In addition, the Government is piloting an e-Government Procurement System to enhance efficiency and effectiveness in the procurement of goods, works sand services.  The e- Government Procurement System is an automation of the procurement process to facilitate supplier registration, tender advertisement, bid submission and evaluation, and contract management.

 

Mr Speaker, since 2015, the Government has piloted Output Based Budgeting in the ministries of General and Higher Education. This system has recently been evaluated and useful lessons learnt, especially relating to the necessary pre-conditions that need to be in place before a further roll-out is made in 2018. In particular, starting January 2017, my ministry will strictly enforce commitment controls so that ministries, provinces and spending agencies adhere to approved budgets. Only then will this House be able to hold ministries accountable for delivering the outputs that they have budgeted for.

 

Sir, most of the land in Zambia is not on title as only about 200,000 parcels of land are on title. In order to redress this, the Government will in 2017, commission a pilot programme in Lusaka. This programme will commence the process of titling of all land in the province. This exercise is aimed at the following:

 

1. giving citizen’s titled  assets  for credit extension;

 

Hon. Members: Hear, hear!

 

Mr Mutati:

 

1. enhancing collection of land rates to finance Government activities;

 

1. establishing an integrated and sustainable land registry on the status of land and its use;

 

1. protecting vulnerable groups such as women; and

 

1. resolving challenges among parties involved in disputes.

 

Mr Speaker, lessons learnt from this pilot will inform the extent and timing of the roll-out of this programme to the rest of the country.

 

Sir, a conducive policy, regulatory and business environment is important for businesses to thrive. In order to ensure a favourable environment, the Government will put in place a legal and institutional framework that will give struggling businesses a greater chance to survive. This will be done through the introduction of bankruptcy related protection aligned to international best practice. The Government will also expand the use of co-operatives as a business model for many of our peri-urban and rural enterprises to come together to participate in economic activities and become the new frontier of employment creation.

 

Mr Speaker, my message to the private sector is straight forward. The Government is not in the business of doing business. Its role is limited to facilitation and regulation.

 

 

Sir, pension reforms have always been about giving people more freedoms and more choices. To move our reforms forward, the Government will in 2017 present legislation that will allow new entrants into public schemes, revise the employer and employee contributions upwards, facilitate private sector management of pension funds and revise the benefit scheme to ensure longer-term protection of pensioners.

 

Sir, as we embark on our economic recovery, timely and quality statistics will be critical in order for us to monitor and evaluate the progress that we are making. In this regard, I implore all the Government agencies to compile and maintain credible statistics. In 2017, the Government will bring before this august House, a Bill that will enhance the Central Statistical Office ability to collect pertinent statistics from public and private sectors.

 

Mr Speaker, the Government is concerned at the poor performance and low contribution to the Treasury and economy of many State Owned Enterprises (SOEs).

 

Mr Mutati drank water.

 

Hon. Members: Hear, hear!

 

Mr Mutati: Mr Speaker, the Government is concerned about the poor performance and low contribution to the Treasury and the economy of many SOEs. The Industrial Development Corporation (IDC) has been directed to conduct a situational analysis of all SOEs under its portfolio with a view to recapitalise those that have a good business case and hiving-off those that are not viable.

 

Interruptions

 

Mr Mutati: If they are not viable, we shall hive them off.

 

Interruptions

 

Mr Mutati: Mr Speaker, the SOEs to be reviewed include; Zesco, Zamtel, Zambia National Building Society, Indeni, TAZAMA Pipeline, Zambia Railways and Zambia State Insurance Corporation (ZSIC).

 

Hon. Opposition Members: IMF!

 

Mr Mutati: Sir, the structural reforms that I have mentioned provide a basis for a well- functioning accounting and public financial management system. This will underpin the Governments’ capacity to allocate and use resources efficiently, effectively and support the Government’s economic recovery programme.

 

PART III

 

THE 2017 BUDGET

 

Interruptions

 

Mr Speaker: Order!

 

Interruptions

 

Mr Lubinda: Lufuma, listen!

 

Mr Mutati: Hon. Lufuma, pay attention.

 

Hon. Government Members: Hear, hear!

 

Mr Mutati: Mr Speaker, I now present the 2017 National Budget, which lays out revenue and expenditure measures aimed at achieving the objectives of our Economic Recovery Programme.

 

Sir, the Government proposes to spend a total of K64.5 billion or 27.7 per cent of GDP. In terms of financing the budget, K42.94 billion will be through domestic revenues, K2.2 billion through grants from our co-operating partners and K19.3 billion through debt financing from domestic and external sources.

 

Mr Speaker, the resources have been allocated to ensure that we:

 

1. accelerate  the  dismantling  of arrears to suppliers of goods and services to unlock the crunch in the economy;

 

1. support growth in key areas of the economy;

 

1.  

sustain and enhance the critical services of health, education and public order and safety; and

 

 

1. mitigate the effects of the Economic Recovery Programme on the vulnerable in our society.

 

Sir, for General Public Services, I propose to allocate a total of K18 billion. Of this amount, K11.5 billion will go towards external and internal debt servicing.

 

Hon. Members: Hear, hear!

 

Mr Mutati: Mr Speaker, to ensure that resources follow functions, which is a key tenet in any decentralisation strategy, I have allocated a total of K887.9 million to the Local Government Equalisation Account.

 

Hon. Member: Hear, hear!

 

Interruptions

 

Mr Mutati: Further, K218.4 million has been allocated to the Constituency Development Fund to enhance community participation in development.

 

Hon. Members: Hear, hear!

 

 

Mr Speaker, to support growth in the key sectors of the economy, I propose to spend a total of K20.1 billion. This is to ensure growth in the economy and job creation.

 

sir, to enhance agricultural production and productivity, I have allocated a total of k2.9 billion to Fertiliser Input Support  Programme(FISP )which will be fully implemented through the e-Voucher system.

 

Hon. Member: Hear, hear!

 

Mr Mutati: This programme will target one million small-scale farmers.

 

Mr Speaker, I have further allocated a total of K428.5 million for irrigation development to support crop production all year round.

 

Sir, to enhance the development of fisheries, I propose to spend a total of K18.3 million to facilitate aquaculture entrepreneurship.

 

Mr Speaker, in order to effectively plan for livestock development interventions, I have allocated a total of K50 million to carry out a livestock census in 2017.

 

Sir, to promote animal health and prevent the trans-border transmission of diseases, I have allocated K30 million for the construction of dip tanks and K10 million for the condom (cordon) line.

Laughter

 

Interruptions

 

Mr Mutati: I know hon. Members that this reminds you of some essential things.

 

Laughter

 

Mr Mutati: Sir, to assure national food security, I have allocated K942.5 million for maintaining strategic food reserves.

 

Mr Speaker, in order to ensure that the economic diversification agenda succeeds, the aspect of roads and their connectivity is a crucial. I have, therefore, allocated a total of K8.6 billion for road infrastructure projects.

 

Sir, I have allocated a total of K3.3 billion in the 2017 Budget to pay down arrears owed to suppliers of goods and services.

 

Sir, to facilitate rural access to electricity, and therefore provide a platform for rural development, I propose to spend a total of K114.5 million for the Rural Electrification Programme.

 

Hon. Members: Hear, hear!

 

Mr Mutati: Mr Speaker, I have allocated a total of K219.0 million for the economic empowerment of our citizens. In addition, I have allocated an initial amount of K20.0 million for the Agriculture and Industrial Credit Development Fund. This is aimed at facilitating enhanced access to credit from financial sectors and ensure the growth of SMEs.

 

Mr Speaker, in the area of education and skills development, I propose to spend K10.6 billion. Of this amount, K1.0 billion is earmarked for various infrastructural projects, such as schools, universities, colleges and trades training institutes.

 

Sir, to enhance the learning ability of vulnerable children and encourage school attendance, I propose to allocate K35.6 million to the rolling out of the School Feeding Programme, which has so far been successful. A total of K314.9 million has been allocated towards the implementation of the Loans Scheme for university students. The Skills Development Fund has been allocated K233.5 million to enhance technical and vocational skills.

 

Mr Speaker, I propose to spend a total of K5.8 billion to facilitate health service delivery. This allocation will be utilised on preventive health care, opening up of cancer screening centres in each district and recruitment of frontline medical personnel.

 

Sir, I propose to spend K267.5 million for medical equipment and infrastructure as well as K769.1 million for drugs and medical supplies.

 

Mr Speaker, to facilitate the provision of various amenities, including the provision of water and sanitation, I propose to spend a total of K822.8 million on this Vote. The resources in this area will mainly be directed towards the rehabilitation and construction of water supply and sanitation infrastructure, investment in solid waste management systems and the implementation of housing development programmes.

 

Mr Speaker, I have allocated K2.3 billion for the maintenance of public order and safety to guarantee our country as a safe haven.

 

Mr Speaker, I have substantially increased the allocation for social protection by 85 per cent, to K2.7 billion in order to cushion the vulnerable. This includes K552million for the Social Cash Transfer Scheme and K1.7 billion for the payment of pension benefits under the Public Service Pension Fund.

 

2017 Budget by Function of Government

 

FUNCTION                                                K’MILLION               SHARE OF BUDGET

 

General Public Services                             17,970.34                       27.9%        

   Domestic Debt Payment                               4,969.31

Public Affairs and Summit                               100.00

Constituency Development Fund                    218.40

Local Government Equalisation Fund             887.85

Compensation and Awards                              100.00

Defence                                                         3,204.45                           5.0%

Public Order and Safety                             2,342.97                           3.6%

Economic Affairs                                       20,132.60                         31.1%

Farmer Input Support Programme                 2,856.40

Strategic Food Reserve                                    942.50

Rural Electrification Fund                                114.52

Roads Infrastructure                                     8,644.50

Dismantling of Arrear                                   3,269.51

o/w Fuel Imports                                     500.00

Electricity Imports                                   661.80

Empowerment Funds                                       219.03

o/w Agriculture & Industrial                                                          

Credit Guarantee Fund                             20.00

Environmental Protection                              616.47                           1.0%

Climate Change Resilience                               347.99

Housing and Community Amenities             822.81                           1.3%

Water Supply and Sanitation                           391.70

Health                                                           5,762.03                           8.9%

Drugs and Medical Supplies                            769.09

Medical Infrastructure and Equipment            267.51

Recreation, Culture and Religion                 323.50                           0.5%

Education                                                    10,641.93                         16.5%        

Schools Infrastructure                                      638.04                    

University and College Infrastructure              368.58

Student Loan Scheme                                      314.85

School Feeding Programme                               35.55

Skills Development Fund                                 233.50

Social Protection                                          2,693.21                         4.2%

Public Service Pension Fund                         1,655.00

Social Cash Transfer                                         552.00

o/w GRZ Contribution                                     500.00

Grand Total                                                64,510.30                    100.0%

                                                                    

 

Mr Speaker, in coming up with the proposed revenue measures, I have consulted to increase   the level of domestically raised resources while at the same time ensuring that the burden of taxis borne equitably. The proposed domestic revenue measures are expected to raise a total of K42.9 billion, representing 18.4 per cent of GDP.

 

Sir,  the    summary of revenue estimates and financing to support the 2017 expenditure estimates is as follows:

 

Resource Envelope for the 2017 Budget

 

                                                              (K’MILLION)     (K’MILLION)     % SHARE OF GDP           

TOTAL DOMESTIC REVENUE,                                                          

GRANTS & FINANCING                                            64,510.30             27.7%           

1. Total Domestic Revenue and                                  

Domestic Financing46,775.9920.1%

1. Total Domestic Revenues                                   42,939.79             18.4%

Total Tax Revenue37,622.46

Income Tax19,647.92

Company Income Tax4,858.31

1.  

Withholding & Other3,083.38

Mineral Royalty1,890.94

Value Added Tax9,463.344.1%

Customs and Excise7,992.623.4%

Customs Duty3,224.20

Excise Duty4,700.00

Export Duty68.41

Other Revenues518.580.2%

Non-Tax Revenues5,317.332.3%

1. Domestic Financing                                                3,836.20               1.6%          

1. Total Foreign Grants &
2.  

Project Grants2,231.47

Programme Loans8,033.33

Project Loans7,469.51

 

 

Interruptions

 

Mr Lubinda: Muuze!

 

Mr Mutati: These are measures for Hon. Syakalima.

 

Hon. Government Members: Hear, hear!

 

Laughter

 

Mr Mutati:  Mr Speaker, many of our citizens and stakeholders have implored the Government to take measures to ensure that the tax base is broadened, made fairer and enhances domestic resource mobilisation. In this regard, I propose the following measures:

 

 

1. mandate all statutory bodies to pay tax on rental income at the rate of 10 per cent;

 

1. require every person changing ownership of a motor vehicle to obtain a tax      clearance certificate from the ZRA;

 

1. increase the Advance Income Tax rate paid at importation of goods from 6 per cent to 15 per cent.

 

Hon. Members: Hmm!

 

Mr Mutati: Hon. Members may wish to know that the advance Income Tax is not a final tax. It is refundable at the end of the year upon proof of a person being a tax compliant. So, if you are compliant, you get the refund. If you are not, you pay the 15 per cent. It is simple; and

 

1. restructure the current

 turnover tax regime by introducing bands and presumptive amounts as follows:

 

 

Monthly Turnover Category   Proposed Regime

 

       K1            -         K4,200.00          K100  per month +3% of monthly turnover above  K3,000

 

     K4,200.01 -         K8,300.00          K225 per month +3% of monthly turnover above K4,200

 

 K8,300.01  -         K12,500.00        K400 per month +3% of monthly turnover above K8,300

 

 K12,500.01-         K16,500.00        K575 per month +3% of monthly turnover above K12,500

 

 K16,00.01  -         K20,800.00        K800 per month +3% of monthly turnover above K16,500

 

Above                    K20,800.00        K1,025 per month +3% of monthly turnover above K20,800

 

Sir, to support then economic diversification and promote capital investment, I propose to increase the capital allowances for plant, equipment and machinery used in farming and agro- processing to 100 per cent from 50 per cent.

 

Hon. Members: Hear, hear!

 

Mr Mutati: This is good for the farmers.

 

Mr Speaker, in line with the social protection pillar under the Economic Recovery Programme, I propose to increase the exempt threshold for Pay As You Earn (PAYE) from K3,000 …

 

Interruptions

 

Laughter

 

Hon. Government Members: Hear, hear!

 

Interruptions

 

Mr Mutati: … to K3,300 per month …

 

Interruptions

 

Mr Mutati: Hon. Members may wish to know that this is more money in their pockets …

 

Hon. Members: Aah!

 

Mr Mutati: … and I can see the happiness on your faces because there is more money in your pockets.

 

Interruptions

 

Mr Mutati: Mr Speaker, to mitigate the revenue losses, I propose to increase the top marginal tax rate from 35 per cent …

 

Mr Nkombo interjected

 

Mr Mutati: … for Hon. Nkombo, to 37.5 per cent.

 

Laughter

 

Interruptions

 

Hon. Government Members: The Speech is here!

 

Mr Mutati:  That is called unity. Is it not?

 

Hon. Government Members: Hear, hear!

 

Mr Mutati: Thinking in the same direction at the same time.

 

Sir, under the new system, a person’s income will now be taxed as follows:

 

Proposed PAYE Regime

 

Amounts                                          Rate

K0                                  -                 K3,300.00       0%

K3,300.01                      -                 K4,100.00       25%

K4,100.01                      -                 K6,200.00       30%

Above                            -                 K6,200.00       37.50%

 

 

Sir, under the Value Added Tax (VAT) regime, I propose the following:

 

1. make input VAT non-refundable for all supplies acquired by an entity prior to their registration for VAT purposes;

 

1. make input VAT on petrol non-claimable and limit the claimable threshold on diesel to 90 per cent;

 

1. make input VAT on domestic refrigeration equipment, air conditioners, mobile phones, motor vehicle parts, digital satellites,  television  sets, decoders, video players, curtains, and         construction of dwelling houses for staff, non-refundable;

 

1. put copper concentrates on the import VAT deferment. This will promote local mineral processing; and

 

1. avoid VAT Group registration to enhance the credibility of risk based tax audits.

 

 

Mr Speaker, we are faced with numerous development challenges but they are not insurmountable. It remains imperative that we generate more resources from taxation to address these challenges. Therefore, under customs and excise category, the Government proposes the following revenue measures, any guesses?

 

Laughter

 

Mr Mutati:

 

1. increase excise duty on airtime from 15 per cent to17.5 per cent;

 

1. increase duty from 5 per cent to 15 per cent on spare parts for various machinery and equipment;

 

1. raise the specific excise duty on cigarettes from K200 per mille to K240 per mille and remove the ad-valorem rate of 145 per cent;

 

Mr Lubinda: Hear, hear! Good for Gary!

 

Mr Mutati:

 

1. modify the excise duty collected on opaque beer to include presumptive rates;

 

1. introduce import duty on copper concentrates at the rate of 7.5 per cent; and

 

1. raise upwards, motor vehicle carbon tax rates …

 

Hon. Opposition Members: Hmm!

 

Hon. Government Members: Yes!

 

Interruptions

 

Mr Mutati: You cannot spend what you do not have.

 

Hon. Government Members: Hear, hear!

 

Mr Mutati: … as follows:

 

Engine Capacity                                                 Current Rates      Proposed Rate

                                                                             (K)                       (K)

Less than 1500cc including motor cycles             50                         70

1501cc – 2000cc                                                  100                       140

2001cc – 3000cc                                                  150                       200

3001cc and Above                                              200                       275

 

Sir, diversification of our economy and job creation remain the key strategies for wealth creation and poverty reduction. To actualize this, we must institute interventions that will nurture our infant industries, foster resilience to external shocks and enable competitive private sector led growth. To this end, I propose to introduce a surtax at the rate of 5per cent on selected imported goods which are also produced locally.

 

Hon. Government Members: Hear, hear!

 

Mr Mutati: So, if you produce locally and you are importing, it does not matter whether it is within SADC or COMESA, you will suffer a 5 per cent surtax and that is allowed in the protocols.

 

Hon. Members: Hear, hear!

 

Mr Mutati: I also propose to increase customs duty on semi-processed edible oils from 5 per cent to15 per cent.

 

Hon. Members: Hear, hear!

 

Mr Mutati: This is also to increase the capacity of local industry which has been suffering over the last few years.

 

Hon. Members: Hear, hear!

 

Mr Mutati: Mr Speaker, in the same vein, I propose to suspend customs duty on various aquaculture implements for a period of three years, and remove the 25 per cent customs duty on fittings used for irrigation.

 

Hon. Members: Hear, hear!

 

Mr Mutati:  So, irrigation in terms of fittings will come in duty free.

 

Hon. Members: Hear, hear!

 

Mr Mutati: I also propose to increase customs duty on plastic shopping bags from 25 per cent to 40 per cent.

 

Hon. Members: Hear, hear!

 

Mr Mutati: Sir, I further propose to remove the 15 per cent customs duty on lifting, handling and loading machinery and various inputs used in the shoe industry. So, we have made it competitive.

 

Hon. Members: Shoes?

 

Mr Mutati: Yes. You will buy shoes locally now.

 

Mr Speaker, to promote value addition in the forestry sector, I propose to introduce specific rates on the export of unprocessed and semi-processed timber products at the rate of K10 per kg and K5 per kg, respectively. I also propose to introduce an export duty at the rate of 10 per cent on maize.

 

Hon. Government Members: Hear, hear!

 

Mr Mutati: We are opening the borders. There will be no bans. You are free to export but the Government will benefit by getting a 10 per cent from your exports. You can export through Kipushi, Kasumbalesa and Chirundu borders.

 

Hon. Government Members: Hear, hear! Even Dundumwezi!

 

Mr Mutati: Mr Speaker, currently, the commencement date of the five day transit period, for goods in transit starts from the day of entry. In order to facilitate trade, I propose to move the commencement date to the date of release of goods from customs control. I also propose to provide for advance ruling on origin of goods from countries with which Zambia has signed trade agreements.

 

Mr Speaker, I propose to introduce a skills development levy to be computed at the rate of 0.5 per cent of total emoluments paid by an employer.

 

Prof. Luo: Hear, hear!

 

Mr Mutati: The revenues generated will be paid into the skills development fund that I stated earlier. This fund will be jointly managed with the private sector to ensure that the skills being supported are pertinent to the needs of the industry.

 

Hon. Government Members: Hear, hear!

 

Mr Mutati: Sir, I further propose to introduce fees to be applied on all motor vehicles exiting and entering the Zambian borders as follows:

 

Motor Vehicle Description                                      Prescribed Fee (US$) or Kwacha Equivalent

Trucks with abnormal loads laden or empty                                    75

Commercial Truck Laden or Empty                                                60

Passenger Buses                                                                               40

Passenger Vehicles                                                                           20

 

    Mr Speaker, in order to ensure that charges to access public services provided by various Government Departments are at cost recovery levels, I propose to adjust upwards, various user fees and charges. The civil service must also be cost reflective in their provision of services.

 

Sir, the Government has noted with great concern that most business houses do not comply with the requirement to issue tax invoices resulting in significant revenue losses. To ensure compliance, the Government will in 2017, make it mandatory for all VAT registered suppliers to use Electronic Fiscal Devices which will enable real time monitoring of business transactions. So, as you transact, VAT will be computed. In addition, the Government will be able to ascertain the credibility of VAT returns.

 

Mr Speaker, the Government has noted that VAT charged by some suppliers is not remitted to the ZRA. To ensure that this fraudulent practice comes to an end, the Government will appoint some companies and the Government agencies to serve as tax agents, to collect tax at source. So, when the National Road Fund Agency (NRFA) pays a contractor, it at the same time pays the ZRA. Do you not agree?

 

Hon. Members: Hear, hear!

 

Interruptions

 

Mr Mutati: Sir, given the need to maximise tax revenue collections, the Government would like to implore the business community to be compliant as failure to do so will result in prosecution.

 

Mr Speaker, to enhance tax compliance and mitigate revenue leakages arising from a limited use of information technology solutions or platforms, I propose to introduce an electronic excisable management systems and tax stamps on imported alcoholic beverages. This means that when you import, the stamp will indicate who the importer is. So, if you do not pay tax, you will be dealt with. In addition, an integrated border management system based on a single window will be introduced in order to streamline payments at border posts.

 

Sir, I propose to carryout amendments to the Customs and Excise Act, the Value Added Tax Act and the Income Tax Act so as to update, strengthen and remove ambiguities in certain sections of these laws in order to make tax administration more effective. The proposed amendments to these Acts are housekeeping in nature and are revenue neutral.

 

Mr Speaker, the tax and non-tax measures that I have announced today will take effect from 1^stJanuary, 2017.

 

PART IV

 

CONCLUSION

 

Sir, in formulating the 2017, Budget, I have consulted widely before providing the allocations and taking the revenue measures that I have announced today. These measures form a firm foundation for our Economic Recovery Programme called Zambia Plus.

 

Mr Speaker, although we face social and economic challenges, we remain masters of our own destiny. The Patriotic Front Government under the exceptional leadership of His Excellency the President of the Republic of Zambia, …

 

Hon. Government Members: Hear, hear!

 

Hon. Opposition Members: Aah!

 

Mr Livune: Question!

 

Mr Mutati: … Mr Edgar Chagwa Lungu, will continue to pro-actively address the difficulties that beset us.

 

Sir, with this Budget, the Government will rebalance the economic and financial position of our country, thus setting conditions for sustained economic growth. This is our pledge and responsibility. The Government will also play its part in creating and sustaining the conditions needed for all Zambians to unleash their potential to develop themselves, their families and the nation.

 

Mr Speaker, in these challenging times, the need for national unity becomes even more pronounced and imperative, if we have to cross the hurdles that threaten our prosperity today and in the future. Economic challenges affect all the people. To succeed in achieving the emancipation we so desperately desire as a people, we need to summon our collective wisdom and knowledge as a nation.

 

Sir, I am confident that with the support of our people, together with the unwavering resolve and commitment of the Government to implement the Economic Recovery Programme, Zambia’s future is promising. The resilience of the Zambian people gives us the conviction that in the spirit of our founding father, Dr. Kenneth Kaunda’s “Tiyende Pamodzi” we will be able to fly high above our challenges like the noble eagle. Like the confluence of the mighty Zambezi, Luangwa and Kafue rivers, we are stronger together. Together nothing is impossible. Together we can make Zambia fit again for the future. Together we can.

 

Mr Speaker, I commend the Government’s Economic Recovery Programme and the Budget for 2017 to this august House.

 

Mr Speaker, I beg to move.

 

Hon. Members: Hear, hear!

 

Mr Livune: Question!

 

Mr Speaker: Order! Please, take seats.

 

Mr Mung’andu (Chama South): Mr Speaker, allow me to thank you most sincerely for giving me this rare privilege to be the first hon. Member to debate the Motion moved by the hon. Minister of Finance on the 2017 Budget. I am profoundly elated to be associated with this momentous occasion.

 

Sir, allow me to congratulate the hon. Minister of Finance, Mr Felix Chipota Mutati, for presenting a well thought out and all-encompassing speech regarding the 2017 National Budget.

 

Hon. Government Members: Hear, hear

 

Mr Mung’andu: Mr Speaker, the Budget Speech brings renewed hope and expectations to the people of this beautiful country, Zambia.

 

Hon. Government Members: Hear, hear

 

Mr Mung’andu: Sir, it is evident that the hon. Minister has raised a number of pertinent issues bordering on the economy of our country that require reflection by all of us. It is, therefore, important that we defer debate on this Motion to Tuesday, 15 November, 2016, so as to give us ample time to reflect on the numerous issues which have been raised by the hon. Minister.

 

Hon. Government Members: Hear, hear

 

Mr Mung’andu: Mr Speaker, deferring debate on this Motion will also afford us an opportunity to converse with our electorates who we represent in this august House. It will also accord us an opportunity to analyse policies as espoused by the hon. Minister of Finance.

 

Sir, with these few words, I propose that we defer the discussion of the 2017 National Budget to Tuesday, 15 November, 2016.

 

I thank you, Sir.

 

Mr Phiri (Mkaika): Mr Speaker, allow me to thank you for according me this opportunity to support the proposal by the hon. Member of Parliament for Chama South Constituency that the debate on the Motion be adjourned until Tuesday, 15 November, 2016.

 

Hon. Government Members: Hear, hear

 

Mr Phiri: Sir, it is clear from the Budget Speech presented to this august House that the issues contained in it are thought-provoking and have an impact on the everyday lives of the citizens of this country. For this reason, it is important that hon. Members are given ample time to carefully study the Budget Speech which has just been delivered to this House in readiness for debate next week.

 

Mr Speaker, I, therefore, urge my colleagues on both sides of the House to come well prepared on Tuesday next week so that we can engage in serious and meaningful debate on the issues that have been raised in the Budget Speech, including those which may not have been raised but yet affect the lives of our people.

 

With these few words, I wish to support the proposal to defer the debate on the Motion to Tuesday, next week.

 

I thank you, Sir.

 

Hon. Government Members: Hear, hear

 

Question put and agreed to.

 

ADJOURNMENT

 

The Vice-President: Mr Speaker, I beg to move that the House do now adjourn.

 

__________

 

The House adjourned at 1628 hours until 1430 hours on Tuesday, 15 November, 2016.