Wednesday, 21st June, 2017

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Wednesday, 21st June, 2017


The House met at 1430 hours


[MR SPEAKER in the Chair]












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


Sir, there has been a rebound in the performance of the economy, with inflation having reduced to single digit, the exchange rate remaining largely stable while the gross domestic product (GDP) has started recovering. I will now give the highlights.           


GDP Growth


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




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


Exchange Rate and External Factor Development


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


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


Foreign Reserves


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


Lending Rates


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


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


Fiscal Policy


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


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


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


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


External and Domestic Debt Performance


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


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


Stock of Government Arrears


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


Structural Reforms


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


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


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


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


The Medium-Term Outlook


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


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


The Government’s Engagement with the IMF


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


Sir, during the meetings, the Government and the IMF agreed on the remaining actions needed to reach agreed upon staff levels. One of the actions was the implementation of a programme that could be supported under the IMF’s Extended Credit Facility. With the required actions agreed upon, we are now on course to present the programme to the board in August, 2017.


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




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


Mr Speaker, I thank you.


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


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


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


I thank you, Sir.


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


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


We are now transforming FISP into the e-Voucher system in order to target the recipients better. It is also important that we eliminate the wastage that was associated with FISP. Ultimately, the recipients carried almost 40 to 60 per cent of the cost burden without the corresponding benefits. So, these are some of the mechanisms that we are using in order to target people whose living standards we want to improve.


Mr Speaker, I thank you.


Mr Ng’onga (Kaputa): Mr Speaker, I would like to commend the hon. Minister for the timely update. My question is on non-payment of arrears to local suppliers. Some transporters in the agriculture sector, who provided services in 2014, 2015 and 2016, have not yet been paid. What is our able Government doing to ensure that local suppliers are paid?


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


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


Mr Speaker, I thank you.


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


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


Mr Speaker, I thank you.


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


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


Mr Mutati: Mr Speaker, I must admit that, perhaps, in our effort to explain the debt and a number of programmes that the Government is carrying out, we have not been as effective as we should be. For example, we have not fully explained that we now have more resources under the Social Cash Transfer Scheme. As a result, there are more beneficiaries of the scheme. We have not fully explained that as the electricity tariffs are being increased, 200 KW will be subsidised for the common man. Indeed, there is a lot of infrastructural development that has taken place in in the road, education and health sectors the last five years which, perhaps, we have not fully explained to the common man. We shall, therefore, step up our effort in conveying the information to the common man.


I thank you, Sir.


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


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

Hon. Government Members: Hear, hear!


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




Mr Ngulube: Five hundred years from now!


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


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


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


Mr Speaker, I thank you.


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


Mr Mutati: Mr Speaker, our engagement with the IMF has been purely based on the 2017 Budget pronouncements. For example, under the agriculture reforms, the Government committed to supporting a million farmers, limiting the amount of produce bought by the Food Reserves Agency (FRA) to 500,000 tonnes, removing subsidies in the energy sector, scaling up social protection, debt management and the target for the Budget deficit. That is the basis of our engagement with the IMF, including the. Otherwise, there is no external financing in our Budget other than the Estimates of Revenue and Expenditure that were presented to Parliament and which were approved.


I thank you, Mr Speaker.


Mr Ngulube: Hear, hear!

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


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


Hon. Government Members: Hear, hear!


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


Sir, one of the ways of addressing the challenges concerning the bumper harvest is to put in operation the warehouse receipt system which this Parliament approved. That way, farmers can store their maize in designated warehouses, get some money and sell their maize at a better price in future. So, tomorrow, we will elaborate that issue, including the export and tax policies which relate to agriculture,.


Mr Speaker, I thank you.


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


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


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


Sir, however, my concern is the K750 minimum wage for the common man who works on contracts that are worth millions of dollars which I am sure we have to pay for in future. This means that the people who work on such contracts should start contributing to the tax revenue now. What strategy does the ministry have in place to ensure that salaries are improved to a level where the Government can also collect Pay-As-You-Earn from common man?


Hon. Government Members: Hear, hear!


Mr Mutati: Mr Speaker, the Government has awarded a number of contracts such as road construction and other asset formation. However, it is concerned about employment opportunities offered to people and their remuneration as the hon. Member has stated.


Sir, the hon. Minister of Labour and Social Security is seized with this matter. We, therefore, need to put in place a condition, particularly for Government contracts, to increase the remuneration. This matter is before the hon. Minister of Labour and Social Security.


I thank you, Sir.


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


Sir, at the start of this year, the stock of arrears stood at K17.4 billion. By mid this year, K4.3 billion of the arrears were dismantled. This is just 24 per cent of the arrears. About 76 per cent of the arrears remain unpaid, and the hon. Minister has indicated that the Government has a time-specific strategy to deal with this issue. What is the exact timeline that the Government has set to settle the 76 per cent balance of the stock of arrears?


Mr Mutati: Mr Speaker, sometimes, as solutions are created, problems are also created. When we started clearing the arrears, particularly in the road sector, most of the contractors went back on site to carry out more work and issued us with new invoices. So, the increase in arrears to K17.4 billion by the end of March, 2017, is partly due to the new works that have been done. We have programmed to pay an additional K8 billion between now and the end of the year, which will bring the total payments to K12.3 billion. The balance will be paid next year.


I thank you, Mr Speaker.


Mr Ngulube: Hear, hear!


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


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


I thank you, Sir.


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


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


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


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


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


I thank you, Sir.


Mr Zimba (Chasefu): Mr Speaker, the statement on the removal of subsidies on electricity emanated from the fact that the benefits were not trickling down to the common man, as it was the well-to-do man who was actually benefiting from them. In response to a question by one of the hon. Members of Parliament, the hon. Minister said that for benefits to trickle down to the common man, there was a plan to subsidise electricity tariffs. Therefore, I wish to understand how the subsidies have been removed. Which subsidies on electricity tariffs are we removing? If the removal of subsidies on electricity is done partially, will it not seem like we are backtracking because it was supposed to be done holistically? Since the hon. Minister has talked about subsidising the common man, why do we have subsidies, again, on electricity tariffs?


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


Sir, in removing the subsidies, we have what is called a lifeline tariff. This means that the first 200 MW will support basic lighting in the house. However, beyond that, the 75 per cent increase is applicable.


I thank you, Sir.


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


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


I thank you, Sir.


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


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


I thank you, Sir.


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


Mr Mutati: Mr Speaker, we have had challenges in setting up the sinking fund. As indicated earlier on, from the end of last year, we have had a significant fiscal deficit. Under those circumstances, it will not be prudent for us to set up and operationalise the sinking fund because whatever we will gain from it will be less than the cost of carrying the deficit we have. So, clearly, the sinking fund has not been made operational.


I thank you, Sir.


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


Hon. Government Members: Hear, hear!


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


Mrs Fundanga: This particular decision is very special because it also involves me.


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


Mr Ngulube: Old governess! Ema governess!


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


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


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




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


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


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


Regarding the question on whether there is an alternative, I would say that yes, there is always an alternative. So, the IMF is saying we can be on its programme in addition to other alternative programmes. It is not restricting us from borrowing from anybody else. Moreover, we are members of the IMF. Therefore, we are free to use the privilege that we have as members of the club. So, we can use the IMF and other alternatives.


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




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


I thank you, Mr Speaker.


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


Hon. Members: Hear, hear!


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


Mr Speaker, also, we cannot afford to subsidise electricity tariffs. Instead, we can use the money meant to subsidise electricity tariffs to develop infrastructure. Is that a condition? We should be doing that in a normal way.


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


Sir, we are saying that we cannot borrow beyond our ability to pay. That is an IMF condition. So, we have engaged the IMF on the pronouncements that we made in the 2017 Budget and nothing else. However, the only role the IMF is playing is to monitor what we agreed upon. So, the engagement with the IMF is on a home grown programme and nothing external.


I thank you, Sir.


Mr Kakubo (Kapiri Mposhi): Mr Speaker, in his statement, the hon. Minister of Finance gave some statistics. In any modern economy, one of the key statistical issues on which we ought to interact is that of jobs, yet I did not hear him mention any statistics on jobs we are creating month by month, quarter by quarter or annually.


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


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


Hon. Government Members: No!


Mr Kakubo: … and, according to the Jesuit Centre for Theological Reflection (JCTR), the price of kapenta has also gone up. I would like the hon. Minister of Finance to clarify what food he is really referring to whose price has gone down. The prices of food still remain high. He has also talked about the exchange rate. However, as an import country, having a stable currency is not enough. The exchange rate needs to go down because if it remains at K9.00 per United States Dollar –


Mr Speaker: Order!


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


Mr Ngulube: Ema ministerial statement!


Mr Kakubo: Mr Speaker, my question to the hon. Minister of Finance is: According to the statistics that he has given, which food prices have gone down. Please, may he share with us.




Mr Mutati: Mr Speaker, like the hon. Member has stated, we are an import-oriented country. So, when we have a stable exchange rate, it helps with the cost of commodities in the country? A stable exchange rate also attracts investments from outsiders, particularly in Government securities because, then, you will have a predictable platform on which to plan. Also, when there is stability in the exchange rate, it helps to minimise debt service that is foreign-oriented.


Sir, as for the factors that affect inflation, I am sure the hon. Member has received a monthly bulletin from the Central Statistical Office (CSO) in which they are outlined. If he has not received that, I will bring him a copy for the month of May for him to study.


I thank you, Sir.


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


Hon. Members: Hear, hear!


Mr Ngulube: Chachoka lelo chizungu!




Mr Daka (Msanzala): Mr Speaker, I would like to thank the hon. Minister for a well-articulated statement. Could the hon. Minister confirm to me that there is a correlation between the exchange rate and a bag of mealie meal in Zambia. At one time, the exchange rate was K5 to the United States Dollar, and the minimum price of breakfast mealie meal was K45. Considering that agriculture is pivotal to our economy, and now that there is a reduction in price of maize, what is the Government doing to ensure that money trickles down into the pocket of the peasant farmer or small scale-farmer in Petauke or Msanzala or Ukwimi farmer, who produces maize at the lineage of the exchange rate of K9.5 per United States Dollar, while a bag of mealie meal is at K100?


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




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


I thank you, Sir.


Hon. Government Members: Hear, hear!




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


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

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


  1.      developing and implementing measures aimed at preventing and controlling pollution;


  1.      developing standards and guidelines on the protection of air, water, land and other natural resources, and preventing and controlling pollution, the discharge of waste and toxic substances;


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


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


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


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


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


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

Sir, results from the study also showed that the middle course of the Kafue River was affected by pollutants from manufacturing industries that were involved in food processing and detergent manufacturing. Other pollutants were from activities such as agriculture along the lower basin of the river with the main source of pollution being agrochemicals such as fertilisers, especially from Mazabuka District.


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


Mr Ngulube: Hear, hear!


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




Mr Ngulube: Ema mix-up, aya!




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




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


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


I thank you, Sir.


Hon. Government Members: Hear, hear!


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


Mr Ngulube: Mr Speaker, I am aware that the Zambia Environmental Management Agency (ZEMA) is doing a very good job in terms of protecting our environment and controlling pollution in this country. I am also aware that in my constituency, there are two or three Chinese companies that ZEMA has failed to control. We have complained about this, but it appears ZEMA only targets local people. It is not shocking to see the sky changing colour during the night due to pollution. Why is it that ZEMA takes more than a year to visit a place where people have raised complaints with regard to pollution?


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


Mr Speaker, I thank you


Hon. PF Members: Hear, hear!


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


Mr Ngulube: Ema neighbour, aya!




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


Mr Kaziya: Mr Speaker, like the hon. Member has mentioned, this country is in a hurry to develop, just as, and I am sure that ZEMA is up to the task ensuring that Environmental Impact Assessments (EIAs) are conducted. ZEMA does not issue certificates for projects with a view to creating jobs only. It also produces detailed reports that should warrant the creation of industries.


Mr Ngulube interjected.


Mr Kaziya: Mr Speaker, I thank you.


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


Mr Speaker: Order!


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




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


Hon. Members: Hear, hear!


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




Hon. PF Member: Senior counsel!


Mr Mecha: State Counsel!

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


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


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


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


Mr Speaker, I thank you.


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


Hon. PF Members: Hear, hear!


Ema questions, aya!


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


Mr Speaker, I thank you.


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


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


Mr Speaker, I thank you.


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


Hon. Members: Hear, hear!


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


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




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


Mr Speaker, I thank you.


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


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


Mr Speaker, I thank you.


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


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


I thank you, Mr Speaker.


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


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


I thank you, Mr Speaker.


Mr Jamba (Mwembezhi): Mr Speaker, before, I have noted, with concern, that when responding to questions, the hon. Minister is always saying that he will go back and check. For me, those are very serious words. Has the hon. Minister worked together with the Ministry of Mines and Minerals Development to check whether the Environmental Impact Assessments (EIAs) with the mines are updated? I have noted that some of the EIA reports are ‘cut and paste’. For instance, something that is user-friendly in Chama South is brought to Nampundwe Mine. Has the hon. Minister checked with the Ministry of Mines and Minerals Development whether the EIAs are updated?


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


I thank you, Sir.


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


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


I thank you, Mr Speaker.


Mr Zimba: Mr Speaker, most of the natural water reservoirs are being contaminated, and we do not have even the contaminated water to talk about. When is the ministry rolling out boreholes that are earmarked for rural constituencies?


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


I thank you, Mr Speaker.


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


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


I thank you, Mr Speaker.


Mr Kabanda (Serenje): Mr Speaker, I wanted to find out whether the fines that are slapped on the polluters are deterrent or not. You will find that a person is fined today, but he/she continues carrying out the same pollution activities the following day. What is the ministry doing about that?


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


I thank you, Mr Speaker.


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


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


I thank you, Sir.


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


Mr Kaziya: Mr Speaker, I think the hon. Member can engage me on that question because I feel it does not touch on the water pollution that my statement is about.


I thank you, Mr Speaker.


Hon. Government Members: Hear, hear!








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


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


  1. Kobola; and
  2. Chipundu;


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


  1.      what the total cost of each project was.


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


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


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


Mr Speaker, I thank you.




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


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


         Year     No. of Jobs


         2014    163,277


         2015    152,287


         2016    178,908


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


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


Mr Speaker, I thank you.


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


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


Thank you, Mr Speaker.


Mr Lufuma: Mr Speaker, I agree that the target was 200,000 jobs. However, according to the figures that the hon. Minister has given, we have fallen short of that number. How, then, does the Government expect to create the 1 million jobs that it envisaged within the five years?


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


Thank you, Mr Speaker.








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


Mr Speaker: Is the Motion seconded?


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


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


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


Farmer Input Support Programme (FISP)


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


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


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


Mr Speaker, FISP has been maize-centred and mistakenly assumes a homogenous group of target beneficiaries, leading to poor targeting. Your Committee is aware that the process of migrating from the traditional FISP to the electronic-Voucher system (e-Voucher) has not produced the desired results. There have been complaints, such as unloaded vouchers, long distance farmers have to travel to commercial banks and, in some cases, non-availability of inputs. However, your Committee is positive that if properly implemented, the e-Voucher system will promote effective targeting, agricultural diversification, timely access to inputs by small-holder farmers and help minimise transaction costs and reduce direct Government involvement in input procurement.


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


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


Food Reserve Agency (FRA)


Mr Speaker, your Committee notes that the FRA was established to buy specified quantities of grain from remote areas of the country purely for strategic food reserves. Therefore, it is concerned that over time, this mandate has been extended to include purchasing crops beyond the prescribed quantities. The FRA has also been buying and selling grain, thereby crowding out the participation of the private sector.


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


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


Fuel Subsidies


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


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


Electricity Subsidies


Mr Speaker, with regard to electricity subsidies, your Committee is concerned about the delay in the commencement of the cost of service study. Once successfully completed, the study should provide a benchmark tariff for determining a cost-reflective tariff and address the concerns among some stakeholders in regard to the basis for which the Zambia Electricity Supply Corporation (ZESCO) requested upward adjustment of tariffs.


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


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


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


Mr Speaker: Order!


Business was suspended from 1640 hours until 1700 hours


[MR SPEAKER in the Chair]


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


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


Fiscal Decentralisation and Budget Process


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


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


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


Mr Ngulube: Hear, hear!


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


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


Mr Speaker, the House may wish to note that most of the councils in Zambia are highly indebted. Some of this indebtedness is due to the non-remittance of statutory contributions to the Zambia Revenue Authority (ZRA), the National Pensions Scheme Authority (NAPSA) and the Local Authority Superannuation Fund (LASF). The councils’ debt has also arisen from huge arrears owed to various utility companies and suppliers of goods and services. The huge debt may adversely affect the ability of local councils to finance and perform devolved functions.


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


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


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


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


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


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


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


Mr Speaker, I beg to move.


Hon. Members: Hear, hear!


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


Mr Kakubo: Now, Mr Speaker.


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


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


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


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


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


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


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


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


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


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


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


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


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


Mr Speaker, I thank you.


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


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


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


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


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


Mr Speaker, let me talk about agriculture, particularly FISP. Your Committee’s report ably highlighted that from its inception, the aim of FISP was to address food shortages, following the years when we did not have enough rains. The introduction of FISP was received very well by most Zambian farmers. However, one of the challenges that have arisen from the introduction of FISP are behavioural. Oftentimes, some people want to do things that are not in line with the programme. FISP was planned in such a way that over time, beneficiaries of the programme should be weaned off the programme. However, I have seen that over the years, people who do not own farms are on the list of FISP beneficiaries. They have abused the programme, yet deserving farmers do not benefit from it. The Government introduced the electronic voucher (e-Voucher) system in order to properly target farmers and deliver inputs to them in good time. However, your Committee’s report also highlighted that even the e-Voucher system may not necessarily be a panacea to the abuse of the FISP.


Sir, your Committee’s report also talked about the way forward for FISP. It recommended that FISP be restructured. I agree with your Committee’s report that FISP in its current form cannot benefit farmers as intended. So, the programme has to be restructured so as to target farmers better and diversify the crops and livestock to provide them with. In addition, money should be put where it matters. If this country is to benefit from the e-Voucher system, funds for the programme must be disbursed as early as February or March. Beyond that time, we will be fighting a losing battle. If funds are disbursed in time, this will enable agro-dealers and suppliers to plan for deliveries.


Mr Speaker, Committee’s report also said the Government intends to roll out the e-Voucher system to almost all the districts of this country. This is June, yet the people in Kaputa, Chama and Kasempa still do not have access to this system. Had the system been rolled out to these places, agro-dealers and other big suppliers would have gone there to set up their businesses.


Finally, Sir, let me talk about the Food Reserve Agency (FRA). Your Committee also recommended that the FRA be restructured. Its report also stated that the FRA’s mandate was to buy grain for strategic reserves from far flung areas like Kaputa, Chama, Milenge, Lupososhi and Chilubi where the private sector cannot reach because of the poor road infrastructure and long distances from the market. If the FRA can buy grain from distant areas and leave the urban areas to the private sector, then, it will meet its objectives. I sincerely hope that this will be done.


Mr Speaker, with these few remarks, I support your Committee’s report.


I thank you, Sir.


Hon. Government Members: Hear, hear!


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


Hon. Members: Hear, hear!


Mr Mecha: Sir, this is a very interesting debate, and your Committee has made many valid recommendations. In view of this, I wish to focus on two issues. The first one relates to the subsidies in agriculture and the second one the subsidies on electricity.


Mr Speaker, I have one serious concern over the statement made by the Chairperson of your Committee that the Farmer Input Support Programme (FISP) must continue to exist on the basis that it has provided a social safety net. That is a very serious concern for me. The agriculture sector does not fall under the category of social sectors, as perceived the Government. It falls under the category of economic sectors. So, when we start talking about the social safety net in relation to the agriculture sector, that raises serious concerns.


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


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


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


Mr Speaker, the importance of research cannot be over emphasised. Therefore, we should talk about developing technologies that can help us develop agriculture. If we do not finance research properly, we will not get the technologies. These are technologies that are taken up by the Agriculture Extension Services Department. The allocation to the agriculture sector is disproportionate. The major funding goes to FISP and the FRA, while we starve the extension and research subsectors. The implication on the intra ministerial budget is obvious.


Mr Speaker, the hon. Minister of Agriculture has said on the Floor of the House that Treasury authority to employ extension staff has been sought, yet we do not have a sufficient number of extension staff. How do we expect productivity in the agriculture sector to increase? The ratio of extension staff to farmer is about 1:300. How can an extension officer be efficient in his/her job? Even if we were to deploy mechanisms such as group approach to service farmers, it is simply impossible to be efficient. So, the budgetary implications on the other subsectors of agriculture are obvious because more emphasis has been placed on FISP and the FRA.


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


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


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


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


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


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


Hon. Member: Hear, hear!


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


The people of Zambia have welcomed the new electricity tariffs. We are able to buy power and enjoy its benefits. However, I want to say that the fact that the people have accepted the new electricity tariffs should not be taken for granted. I know that there is a temptation by the ZESCO board and management to think that the revenue that they anticipate to generate from the new electricity tariffs are due to the increased operational efficiency of ZESCO. If anything, we can project how much money will be made at the end of the year following the removal of subsidies. We should not allow a situation where ZESCO uses this huge amount of money to pay bonuses. We really need to have mechanisms in place to monitor closely the use of the money so that it is not abused by the ZESCO board and management.


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

Sir, with these few remarks, I support the adoption of your Committee’s report.


I thank you, Sir.


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


Please, take that into account.


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


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


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


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


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


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


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


Sir, three quarters of the agro-dealers in this country only thrive during the rainy season. They seem to disappear just after March. Agro-dealers are used to distribute fertiliser. For example, if there is no agro-dealer near an area, a farmer will be forced to travel to Lusaka to get the product. The people who transport the fertiliser add transport costs to the price of the commodity. A a result, the fertiliser being delivered to areas which are far from the line of rail will cost more. If a farmer is supposed to receive three pockets of fertiliser, he/she ends up receiving one or one-and-a-half. Therefore, the e-Voucher system must be analysed to stop the Government from allocating money which goes to waste.


Mr Speaker, there many areas like my constituency where there are no banking facilities. How does the Government hope to implement the programme when there are no banking facilities? The poor farmers who are given the e-Vouchers do not have transport money to travel from far-flung areas to the banks.


Sir, I am not sure if there is much collaboration between the Ministries of Agriculture and Finance. It seems there is reluctance on the part of the Ministry of Agriculture to roll out the e-Voucher system. Allow me to speculate. Maybe, the people who implement these programmes own the trucks that distribute fertiliser and, if –


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


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




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


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


Mr Ng’onga: Iwe, who was rushing!


Mr Jamba: Yes, we rushed. I, therefore, request the hon. Minister of Finance to propose that the ministries and your Committees go through the issues which have been raised in your Committee’s report so that most of the issues are dealt with before the Budget is presented.

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


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


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


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


Mr Speaker, a person in Kasama where I come from and the one in Petauke cannot manage to find buyers outside the country for their produce. So, the Government should create a marketing platform where produce by Zambian farmers can be advertised. If the Government does not do that, the purpose of alleviating poverty levels in Zambia will not be achieved because we are just creating a big margin between the rich and the poor. The poor farmer will remain poor while the rich will continue to be rich.


Sir, the major product which we get from soya beans is cooking oil. The cost of soya beans is very low. Currently, farmers are forced to sell their soya beans cheaply because they need finances to meet their daily needs. For the buyer of soya beans to meet the cost of purchase, he/ she will convert it into soya cake to sell as stock feed. The major product of soya bean, which is cooking oil, is actually profit. Meanwhile, the farmer who sweated for months to grow, harvest and transport the crop to the market would have made a loss. The Government should look at this issue and ensure that the poor farmer makes a profit.


Mr Speaker, it is also important that the hon. Minister of Energy looks closely at the issue of electricity subsidies so that the savings from subsidies are reinvested. For the Zambia Electricity Supply Corporation (ZESCO) to operate at a profit, it needs to reinvest in good technology which will improve the generation of electricity in Zambia so that it can do away with load shedding.


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


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


Hon. Government Members: Hear, hear!


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


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


Mr Speaker, I know that if we do not address the actual process or the issue of integrity in the process of administering subsidies, even the people whom we call “economically marginalised” may not be helped. We might use the same strategies, but will not improve their economic situation.


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


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


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


Mr Speaker, the same logic applies to the agriculture sector. We are talking of subsistence agriculture, but commercial agriculture depends on electricity. The hon. Minister has been talking about value addition to agricultural products, but that requires energy. Therefore, as we embrace the removal of subsidies, let us not focus on the consumption side. Let us also look at the production side.


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


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


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


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


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


Mr Speaker, this is hurtful tax. Tax is established not only to finance Government or public expenditure, but also to redistribute wealth. However, if you look at our taxation system, it is like the Zambia Revenue Authority (ZRA) focuses on the few people who are in formal employment. Mr Speaker, the ZRA should increase the number of tax inspectors. How many hon. Members or citizens have houses that are on rent? Maybe, where I come from, I rent a residential property. Rental income per month, especially in prime areas, is in excess of K10,000. The Government pays rentals for residential properties of about K20,000 per month. How many of these properties –


Mr Speaker: Order!


Business was suspended from 1810 hours until 1830 hours.


[MR SPEAKER in the Chair]


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


Hon. Members: Hear, hear!


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


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


Mr Musukwa: Mm!


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


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


Sir, we know that in most cases, Auditor-General’s Reports are presented five or six years later and some office holders may have retired or passed on. However, with the proposed fiscal decentralisation and budget making process, we should be able to carry out the duty of budget approval effectively.


Mr Speaker, with these remarks, I support your Committee’s report.


Thank you, Mr Speaker.


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


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


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


Hon. PF Members: Hear, hear!


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


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


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


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


Mr Speaker, I am surprised that your Committee proposed that Indeni Petroleum Refinery’s structures be reviewed. I am of the view that the Government takes the same additional expansion it undertook on Kariba North Bank when it upgraded it from thev340 MW generational capacity. I think that this same policy can be applied at Indeni.


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


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


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


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


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


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


I thank you, Sir.


Hon. Government Members: Hear, hear!


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


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


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


Mr Speaker, let me assure my hon. Colleagues that even in the context of the Government allowing the private sector to participate in the fuel supply chain in the Republic Zambia, the Energy Regulation Board (ERB) will always have the powers to regulate the pump price and quality of the petroleum product.


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


Mr Speaker, for example, milling and mining companies were privatised. Therefore, we shall move in a similar fashion in the petroleum subsector using a gradual process with a view to building capacity by having a positive relationship with the oil marketing companies (OMCs) and dealers in the sector so that we do not allow a situation where there are artificial fuel shortages.


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


Mr Speaker, actually, we will seek the Cabinet’s approval over the matter. Therefore, I will update the House on the details of our proposal which includes the issue of mothballing the refinery. We will not mothball the refinery because of the issues Hon. Ng’ambi spoke about.

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


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


Sir, with regard to the electricity subsector, I wish to thank my colleagues who have supported the adjustments or removal of the subsidy in a gradual process. I also wish to thank those who criticised us because by doing that, they are only strengthening the Government’s capacity to make decisions that are in the best interest of the country.  


Mr Speaker, the power deficit that this country has experienced since 2015 is simply because our tariff levels have been very low. A comparative study, which was conducted in 2015, found that Zambia had the lowest electricity tariffs in the region of about 3.3 cents per KWh. This made it very difficult for the country to attract private sector investment in the electricity sector. This also made it difficult for the Zambia Electricity Supply Corporation (ZESCO) to generate internal funds to invest in the generation, transmission and distribution of electricity. Our statistics show that rural electrification is at 4 per cent. This is simply because we cannot attract investment in the electricity subsector. ZESCO cannot generate sufficient funds to procure distribution lines in for rural areas. This is why hon. Members of Parliament continue complaining about schools and some townships in their constituencies not being electrified. I have visited eight provinces in the country. So, and it is true that our electrification rate is very poor.


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


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


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


Mr Speaker, my colleagues have lamented the need for a study on the electricity sector and I totally agree with them. Therefore, we have commissioned a cost of service study because we believe that there are emotions in the determination of electricity tariffs in this country. In future, what we want to ensure that the consultancy that I launched on 13th April, 2017, gives us a tariff determination framework that will remove the emotions and complaints, and create predictability. For example, we will come up with a more tiered tariff system for three years where the tariff will be determined in advance so that the people are able to know how much a tariff will be and there will be a proviso for cost escalation. So, I wish to assure my hon. Colleagues that this will be done and that the consultant is already carrying out the works. We believe that the works will be concluded as soon as possible.


Mr Speaker, the other complaint from my colleagues which was included in your Committee’s report is that of the efficiency of ZESCO. We totally agree that if ZESCO’s operations are not improved, even with the new tariffs, we might just waste our time. The issue of the cost reflectivity of electricity tariffs is just one option in restructuring the electricity subsector. We are still discussing the major reforms, which would also include looking at the performance and restructuring of ZESCO. I am not ready with the details. However, once approval is given, we will come to this House to share with our colleagues the restructuring process so that we are able to reposition ZESCO and the electricity subsector in general. We want to find ways of improving the quality of service that we provide to the Zambian people.


Mr Speaker, lastly, we will look at the demand side management of power. I totally agree with my colleagues that there has to be a change of mindset. As we increase the electricity tariffs, one of the key measures we should take is to change people’s mindsets. We produce liquefied petroleum gas (LPG), which we export to Kenya but, in Zambia, people think that gas is too dangerous to use. ZESCO will continue promoting the use of gas and sensitising people about it. We need a change of mindset, and to encourage people to consider using alternative sources of energy.


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


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


I thank you, Sir.


The Minister of Finance (Mr Mutati): Mr Speaker, I thank the Chairperson of your Committee on Estimates for the well-reasoned report.


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


Hon. Government Members: Hear, hear!


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


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


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


Sir, in your Committee’s report, there was an issue of debt management that was mentioned. I had earlier on that we are putting in place a medium-term debt management strategy so that our future borrowings are driven by a debt sustainability analysis in order to ensure that we capable of repaying, particularly future debts.


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


As regards the Budget Planning Bill, I wish to say that the hon. Minister of Justice is giving it active consideration. Similarly, issues relating to decentralisation and effective participation of hon. Members of Parliament through your committees, will only be secured once the Bill is in operation.


Mr Speaker, an issue was raised on domestic resource mobilisation. I had indicated earlier on that we declared a tax amnesty in order to increase compliance. We are also modernising and automating processes at the Zambia Revenue Authority (ZRA), including introducing systems that will increase revenue collection through taxes.


Particularly, on the question of shops that was raised, we are hoping to have what is called fiscal devices. This will assist the ZRA to monitor sales using cash tills and computing the VAT component, which has been problematic in the past. This will be made possible by using gadgets through the Zambia Information and Communication Technology Authority (ZICTA), which will determine the sales volume for airtime and compute value added tax (VAT) and Excise Duty independent of the operators.


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


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


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


I thank you, Sir.


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


Sir, I beg to move.


Question put and agreed to.


(Debate resumed)




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


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


Mr Speaker, currently, we have people who do not value morals due to the love of money. There is too much pretence in this country. Some people are magicians who have disguised ing


Mr Ngulube: Hear, hear!


Mr Mukosa: It makes me wonder what value the miracles are add to people’s lives. Such kind of people should not be tolerated in our society. The same people who call themselves men of God threaten hon. Ministers. What kind of a Christian can threaten and insult elderly?




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


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


Mr Speaker, the Government has come up with the initiative of empowering Zambian citizens through the Citizens’ Economic Empowerment Commission (CEEC). The CEEC is aimed at empowering the Zambians, especially youths. However, when the youths borrow money from the CEEC, they do not want to pay it back. They think that since the money is from the Government, they should not pay back. That is a sign of lack of morality. Therefore, I wish to advise everyone to have good morals. If the Government has good intentions of helping people, they should support the Government. If they borrow money from the Government through the CEEC and other institutions, they should pay back.


Sir, many hon. Members of Parliament talked about the Farmer Input Support Programme (FISP) which is abused in this country. The Government has intentions of giving subsidised fertiliser to the intended beneficiaries. However, the people who get the fertiliser end up selling it at very low prices to the well-to-do. That, too, is a lack of morality. People with good morals cannot do such things. In fact, good morals and ethics should start with us, the leaders. If we, the leaders, have friends or relatives who abuse FISP, we should advise them that FISP is there to achieve its intended purpose.


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


Mr Speaker: Order!


(Debate adjourned)




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