Friday, 25^th September, 2020

 

The House met at 1415 hours

 

[MR SPEAKER in the Chair]

 

NATIONAL ANTHEM

 

PRAYER

 

_______

 

BUSINESS OF THE HOUSE

 

The Vice-President (Mrs Wina): Mr Speaker, I rise to give the House an indication of the business it will consider next week.

 

Sir, on Tuesday, 29^th September, 2020, the Business of the House will begin with Questions for Oral Answer. This will be followed by presentation of Government Bills, if there will be any. Thereafter, the House will commence the debate on the Motion of Supply on the 2021 National Budget, which will be moved by the hon. Minister of Finance this afternoon.

 

Mr Speaker, on Wednesday, 30^th September, 2020, the Business of the House will start with Questions for Oral Answer. This will be followed by presentation of Government Bills, if there will be any. Thereafter, the House will consider Private Members’ Motions, if there will be any. The House will, then, continue with the debate on the Motion of Supply on the 2021 National Budget.

 

Sir, on Thursday, 1^st October, 2020, the Business of the House will commence with Questions for Oral Answer. This will be followed by presentation of Government Bills, if there will be any. The House will, then, consider the Second Reading stage of the following Bills:

 

1. The Banking and Financial Services (Amendment) Bill, 2020; and
2. The Public Procurement Bill, 2020.

 

Thereafter, the House will continue with the debate on the Motion of Supply on the 2021 National Budget.

 

Mr Speaker, on Friday, 2^nd October, 2020, the Business of the House will start with the Vice-President’s Question Time. This will be followed by Questions for Oral Answer. Thereafter, the House will consider Government Bills, if there will be any. The House will, then, continue with the debate on the Motion of Supply on the 2021 National Budget.

 

Mr Speaker, I thank you.

 

Hon. Members: Hear, hear!

 

_______

 

MOTIONS

 

BUDGET ADDRESS

 

The Minister of Finance (Dr Ng’andu): Mr Speaker, I beg to move that the House do now resolve into Committee of Supply on the Estimates of Revenue and Expenditure for the fiscal year 1^st January to 31^st December, 2021, presented to the National Assembly on Friday, 25^th September, 2020.

 

Sir, I am a bearer of a message from His Excellency the President of the Republic of Zambia, Mr Edgar Chagwa Lungu, recommending favourable consideration of the Motion that I now lay on the Table.

 

Hon. Members: Hear, hear!

 

Dr Ng’andu: Mr Speaker, during the Official Opening of the Fifth Session of the Twelfth National Assembly, His Excellency the President of the Republic of Zambia, Mr Edgar Chagwa Lungu, outlined the policy direction that the Patriotic Front (PF) Government will take in steering our country to greater heights amidst numerous socio-economic and environmental challenges exacerbated by the Coronavirus Disease 2019 (COVID-19) pandemic.

 

Sir, over 32 million people globally have contracted COVID-19 and close to 1 million have sadly succumbed to the disease. This has stressed health systems in most countries across the world, resulting in an unplanned and an escalation in health related expenditure.

 

Mr Speaker, Zambia has not been spared from the pandemic. To date, more than 14,000 people have contracted the virus and over 300 deaths have been recorded. The COVID-19 pandemic has not only been a health crisis but has also adversely impacted the economy. Global business activity has contracted, as supply and value chain disruptions dampened demand for goods in general and commodities in particular. The consequence has been loss of jobs and livelihoods for millions of people as countries implemented containment and mitigating measures.

 

Mr Speaker, domestically, economic activity has also contracted, impacting negatively on the cost of living and employment levels. In addition, revenue collections have been lower than projected, resulting in expenditure realignments.

 

Mr Speaker, to mitigate the negative effects of the pandemic, the PF Government has instituted specific health, fiscal and monetary policy measures. These measures are expected to contain the spread of the virus and place the economy on the road to recovery. To this end, the Government has developed a medium-term economic recovery programme as a successor to the Economic Stabilisation and Growth Programme that ended in 2019. The Economic Recovery Programme provides incentives to reinvigorate growth and build resilience while safeguarding livelihoods and protecting the vulnerable. It also contains measures to restore debt sustainability.

 

Sir, as stressed by His Excellency the President of the Republic of Zambia, Mr Edgar Chagwa Lungu, the success of the Economic Recovery Programme will require a mindset change, innovation, entrepreneurship, dedication, endurance and resilience of our people in the face of the current challenges.

 

Mr Speaker, above all, we require to entrench national values and principles that include hard work, good governance, integrity, patriotism and national unity, as enshrined in our Constitution. These values are fundamental in helping us, as a nation, to navigate through economic headwinds.

 

Hon. Members: Hear, hear!

 

Dr Ng’andu: Sir, to overcome the challenges we face, and drawing inspiration from the address by His Excellency the President, the theme for the 2021 Budget is “Stimulate Economic Recovery and Build Resilience to Safeguard Livelihoods and Protect the Vulnerable.”

 

Mr Speaker, therefore, the 2021 Budget aims at stimulating economic recovery through practical and tangible support to businesses. The Budget also embraces our social protection response programmes to prevent the poverty levels from becoming worse despite constrained fiscal conditions.

 

Sir, allow me now to provide an outline of my Budget Address. In Part I, I will highlight the global and domestic economic developments in 2020. In Part II, I will present the macroeconomic objectives, policies and strategies for 2021. In Part III, I will provide details on the estimates of revenue and expenditure for 2021 and in Part IV, I will conclude my address.

 

PART I: GLOBAL AND DOMESTIC ECONOMIC DEVELOPMENTS IN 2020

 

Global Economic Developments

 

Mr Speaker, the global economy is projected to contract by 4.9 per cent due to the adverse effects of the COVID-19 pandemic. Advanced economies are expected to contract the most by 8 per cent this year compared to growth of 1.4 per cent recorded in 2019. Emerging markets and developing economies are forecasting to decline by 3 per cent after growing by 3.7 per cent in 2019. China is the only economy expected to register a positive growth of 1 per cent in 2020 compared to 6.1 per cent recorded in 2019.

 

Sir, in Sub-Saharan Africa, economic activity is projected to contract by 3.2 per cent from a positive outturn of 3.1 per cent in 2019. The larger economies of Nigeria and South Africa are projected to contract by 5.4 per cent and 8 per cent, respectively.

 

Mr Speaker, commodity prices have been volatile in 2020. For instance, during the first half of the year, copper prices averaged US$5,500 per metric tonne compared to US$6,200 in the corresponding period in 2019. Over the same period, crude oil prices averaged US$41 per barrel compared to US$66. The fall in copper and crude oil prices was mainly on account of reduced global demand. For crude oil, excess supply and the lack of storage capacity exacerbated the decline in prices.

 

Sir, copper prices have since risen, peaking at US$6,840 per metric tonne in September 2020. Crude oil prices have also started rising, reaching US$46 per barrel. This is as a result of the easing of lock-down measures in most economies. In addition, production disruptions at key mining operations in South America have contributed to the recovery in copper prices.

 

Mr Speaker, let me now turn to domestic economic developments in 2020.

 

Mr Speaker, the real Gross Domestic Product (GDP) growth is projected at negative 4.2 per cent in 2020, the first recession since 1998. Almost all the sectors are expected to record negative growth. Disruptions in supply chains and containment measures have had a severe impact on sectors such as tourism, construction, wholesale and retail trade as well as manufacturing. In addition to the effects of the COVID-19 pandemic, electricity rationing has contributed to the contraction of overall economic activity.

 

Sir, despite the negative growth in most sectors, the agriculture and information and communications technology (ICT) sectors are projected to register positive growth. Favourable weather conditions and early distribution of farming inputs in the 2019/2020 Agriculture Season boosted crop production. The ICT sector is also projected to grow mainly driven by increased demand for data services and mobile money transactions in the wake of the COVID-19 pandemic.

 

Budget Performance

 

Mr Speaker, execution of the 2020 Budget has been challenging mainly due to the impact of the COVID-19 pandemic. Revenues and grants amounted to K42.8 billion during the period January to August 2020, which was 7.7 per cent below the target of K46.4 billion. The underperformance is on account of subdued economic activity. Revenues and grants are now projected at K65.9 billion by the close of 2020, which is 12 per cent below the target of K75 billion.

 

Mr Speaker, for the period January to August 2020, total expenditure, including amortisation, amounted to K72.1 billion and was 27.2 per cent below the target of K99 billion. This outturn was due to the underperformance on revenues and lower disbursements on foreign-financed projects.

 

Sir, by the end of the year, total expenditure is projected to be K111.9 billion, representing 5.6 per cent above the target of K106 billion. The higher than programmed expenditure is mainly attributed to COVID-19 mitigating measures and agricultural related expenditures.

 

Mr Speaker, due to the fall in revenue and grants and the increase in spending, the fiscal deficit, on a cash basis, is expected to rise to 11.7 per cent of the GDP by the end of 2020 against the target of 5.5 per cent.

 

External Sector Performance

 

Mr Speaker, over the first half of 2020, preliminary figures indicate that the current account recorded a surplus of US$656.5 million or 2.9 per cent of the GDP. This was against a deficit of US$5 million or 0.02 per cent of the GDP during the same period in 2019. This outturn was due to a significant drop in imports relative to exports.

 

Sir, in the first half of this year, imports of goods declined to US$2.3 billion from US$3.3 billion in the corresponding period in 2019. This represented a decline of 30 per cent. Subdued domestic economic activity, depreciation of the Kwacha and supply chain disruptions due to the COVID-19 pandemic largely underpinned the decline in imports. Similarly, export earnings were US$3.2 billion compared to US$3.8 billion realised over the same period in 2019, representing a decline of 15.8 per cent.

 

Mr Speaker, copper export earnings over the same period were lower by 14.8 per cent at US$2.3 billion compared to US$2.7 billion on account of a drop in average realised prices. However, Copper export volumes, increased to 523,000 metric tonnes, which was 16.5 per cent higher than the 449,000 metric tonnes achieved over the same period in 2019. This was as a result of higher production.

 

Sir, in the first half of 2020, non-traditional export earnings declined by 17.9 per cent to US$762.4 million from US$929.5 million in the first half of 2019. The fall was largely due to reduced demand and trade disruptions.

 

Mr Speaker, as at the end of July 2020, gross international reserves declined to US$1.38 billion from US$1.45 billion at the end of December 2019. This level of reserves represents 2.3 months of import cover. The decline in reserves was largely on account of external debt service payments. However, mining tax receipts amounting to US$203.5 million and net direct purchases of foreign exchange from the market by the Bank of Zambia (BoZ) of US$126.6 million moderated the decline in reserves.

 

Sir, the Kwacha depreciated to K19.95 against the United States (US) Dollar, as at 22^nd September, 2020 from K14.05 at the end of December 2019. This represents a depreciation of 41.9 per cent. The depreciation largely reflects supply constraints and increased demand for foreign exchange, particularly the importation of agricultural inputs, health related supplies and procurement of petroleum products.

 

Debt Position

 

Mr Speaker, the external public debt stock increased to US$11.97 billion as at the end of June 2020 from US$11.48 billion as at the close of 2019, representing an increase of 4.3 per cent. This increase is attributed to disbursements on existing loans that are financing various projects in the energy, education, road and health sectors.

 

Sir, the stock of Government guarantees, on a net basis, was US$1.58 billion as at end of June 2020. These guarantees are mostly for power projects in the energy sector.

 

Mr Speaker, the stock of Government securities increased to K114.3 billion, as at the end of August 2020 from K80.2 billion, as at the end of December 2019, and this includes the COVID-19 Bond. The increase of 42.5 per cent was on account of the need to finance key expenditure areas such as the Farmer Input Support Programme (FISP).

 

Sir, the COVID-19 Bond proceeds were used to stimulate economic activity through the dismantling of arrears, payment of Value Added Tax (VAT) refunds and liquidation of outstanding pension arrears. In addition, the National Savings and Credit Bank (NATSAVE) has been recapitalised to facilitate the provision of financing to small and medium enterprises. The proceeds were also used to finance youth empowerment programmes, procurement of medical equipment, drugs and medical supplies.

 

Monetary and Financial Performance

 

Mr Speaker, over the first eight months of 2020, inflation exceeded the medium-term target range of 6 to 8 per cent, averaging 15 per cent. Inflation rose to 15.5 per cent in August 2020 from 11.7 per cent in December 2019. This was mainly driven by the upward adjustment in energy prices, higher food prices and the pass through from the depreciation of the Kwacha.

 

Sir, the commercial banks’ average lending rate declined to 25.8 per cent in August 2020 from 28 per cent in December 2019. This was primarily driven by the reduction in the monetary policy rate to 8 per cent from 11.5 per cent and the improvement in liquidity levels in the market.

 

Mr Speaker, credit to the private sector grew by 10.4 per cent to K38.4 billion in June 2020 compared to a growth of 17.2 per cent in December 2019. Credit to the Government grew by 46.9 per cent, year-on-year, in June 2019 compared to 17.2 per cent in December 2019.

 

Sir, the overall performance and condition of the banking sector was rated satisfactory as at July 2020. This was largely explained by the sector’s capital adequacy position, earnings performance and improvement in liquidity. However, profitability declined due to higher provisions for non-performing loans. The ratio of non-performing loans to total loans rose to 12.6 per cent in July 2020 from 8.9 per cent in December 2019, exceeding the prudential threshold of 10 per cent. The increase in non-performing loans was attributed to the slowdown in economic activity, which negatively impacted borrowers’ capacity to meet their loan servicing obligations.

 

Mr Speaker, as at the end of July 2020, the overall performance of the non-bank financial institutions sector was rated fair. This largely reflects satisfactory capital adequacy, earnings performance, liquidity position and foreign exchange exposure, but unsatisfactory asset quality. The ratio of non-performing loans to total loans remained above the prudential maximum benchmark of 10 per cent at 24.9 per cent.

 

Sir, to encourage the use of digital financial services, BoZ in consultation with the industry, waived charges for electronic money transfer of up to K150 in April 2020. Transactions and balance limits for individuals and enterprises were also revised upwards. In addition, the processing fees under the Real Time Gross Settlement System were reduced, leading to a significant increase in the use of digital financial services.

 

Part II: MACROECONOMIC OBJECTIVES, POLICIES AND STRATEGIES FOR 2021

 

Mr Speaker, the COVID-19 pandemic has stifled economic growth worldwide, including ours. The focus in the medium-term will be on containing the spread of the virus, mitigating the effects of the pandemic and restoring macroeconomic stability as well as growth. In addition, priority will be to move towards attaining fiscal fitness and restoring debt sustainability, dismantling domestic arrears and safeguarding social protection spending. Therefore, this Budget sets a foundation for the achievement of the objectives, in line with our economic recovery programme.

 

Sir, the specific macroeconomic objectives for 2021 will be as follows:

 

1. achieve a real GDP growth rate of, at least, 1.8 per cent;
2. reduce the inflation rate towards the 6 to 8 per cent medium-term target;
3. increase Gross International Reserves to, at least, 2.5 months of import cover;
4. reduce the fiscal deficit to 9.3 per cent of the GDP; and
5. achieve domestic revenue collections of not less than 18 per cent of the GDP.

 

Mr Speaker, I will now review the performance of the various sectors under the pillars of the Seventh National Development Plan (7NDP) and present the key 2021 macroeconomic policy interventions.

 

PILLAR I: ECONOMIC DIVERSIFICATION AND JOB CREATION                    

 

Mr Speaker, economic diversification and job creation is a key pillar in supporting our economic recovery. In this regard, agriculture, mining, tourism and industrialisation are expected to drive growth while energy and infrastructure development will be the key enablers.

 

Agriculture, Fisheries and Livestock

 

Mr Speaker, the agriculture sector performed very well in the 2019/2020 Farming Season. In most crops, the country recorded an increase in production. For instance, maize production recorded a 69 per cent increase to 3.4 million metric tonnes from 2 million in the 2018/2019 Farming Season. This was on account of early distribution of farming inputs and favourable weather conditions.

 

Sir, notwithstanding the increase in output, productivity among small-scale farmers remains low. Therefore, the Government will strengthen extension services and it is committed to see to it that all FISP beneficiaries adopt climate smart agriculture technologies and practices.

 

Mr Speaker, the Government will migrate all beneficiaries under FISP to the cost reflective Electronic-Voucher (e-Voucher) system. In this regard, the proportion of beneficiaries on the e-Voucher system will be increased to 100 per cent over the medium-term.

 

Sir, to promote the livestock sub-sector, the Government will continue with the Livestock Stocking and Restocking Programme out of which, at least, 30 per cent of the beneficiaries are youths. In the first half of 2020, a total of 3,100 households benefitted from the programme. With regard to animal health, a total of 283,000 animals have been vaccinated out of the 2020 target of 290,000 under the Livestock Vaccination Programme.

 

Mr Speaker, the Government is implementing the Zambia Aquaculture Enterprise Development Project aimed at stimulating a viable agriculture subsector. In 2020, the project, through the Citizens Economic Empowerment Commission (CEEC), has disbursed loans worth K6.3 million to 637 aquaculture entrepreneurs. These loans are targeted at empowering youths and women.

 

Sir, in Part III of my address, I will outline specific measures to attract more investment in the agriculture sector.

 

Tourism

 

Mr Speaker, the tourism sector is the hardest hit by the COVID-19 pandemic with virtually no international tourist arrivals since March 2020 due to travel restrictions and subdued domestic tourist activity. To revive the sector, the Government has implemented relief measures such as time to pay agreement covering Income Tax and VAT. I will later announce additional relief measures that the Government will implement to revive the sector.

 

Sir, I am pleased to note that domestic tourism has started to rise. I wish to encourage all citizens to continue supporting the tourism industry while observing the COVID-19 health guidelines.

 

Mining

 

Mr Speaker, the Government will continue to diversify the mining sector from copper to other minerals, particularly gold. In this regard, the Zambia Gold Company Limited has been established to spearhead gold mining and trading activities in the country. Further, the Government will continue to enhance the regulatory framework in order to optimise returns from our mineral wealth.

 

Sir, the Government is actively working towards finding a strategic investor to improve operations and production at Konkola Copper Mines (KCM). The investor will be expected to make firm commitments to develop the mine and support domestic supply chains. With regard to Mopani Copper Mines (MCM), the Government has been offered additional shares in the mine, through the Zambia Consolidated Copper Mines-Investment Holdings (ZCCM-IH). Further, the Government is in the process of negotiating with Glencore Plc on the terms of purchase of the shares. To this end, the nation will be updated on the progress made in due course.

 

Energy

 

Mr Speaker, in the energy sector, electricity generation has been constrained by the adverse effects of climate change over the last few years. To mitigate this, the Government has been investing in additional electricity generation capacity, including solar energy. So far, the Musonda Falls Hydro Power Station has been upgraded to 10 MW from 5 MW and has been commissioned.

 

Sir, the construction of the Kafue Gorge Lower Power Station is almost complete and it will add 750 MW to the national grid. It is expected that 300 MW will come on board by the end of this year. This should significantly reduce load-shedding.

 

Information and Communication Technology

 

Mr Speaker, in order to increase access to ICT services for people in unserved and underserved areas, the Government continued with the construction of communication towers. So far, 774 communication towers out of a target of 1,009 have been constructed, bringing the total network coverage to 91 per cent.

 

Sir, in my last address to this august House, I indicated that the Government, through the Smart Zambia Institute, would connect twenty-eight public services to the Government Service Bus. I am glad to report that the twenty-eight services have been connected, resulting in reduced transaction costs and enhanced delivery of public services. By the end of 2021, a total of 100 services are expected to be made online on the Government Service Bus.

 

Road Transport Infrastructure

 

Mr Speaker, a key milestone in the road sector has been the completion of the US$298 million Kazungula Bridge linking Zambia and Botswana. The bridge will facilitate increased regional trade and reduce transit time for freight and passengers.

 

Hon. Members: Hear, hear!

 

Dr Ng’andu: Sir, the performance of the National Road Tolling Programme has been satisfactory. As at the end of August 2020, a total of K911.1 million was collected compared to K767.3 million over the same period in 2019. The increase was due to the coming on board of additional toll plazas.

 

Air Transport

 

Mr Speaker, air transport has been adversely affected by the COVID-19 pandemic. In the first half of the year, domestic and international passenger movements at the four major airports declined by more than half a million. This was on account of the suspension of international flights by all the airlines except one. Following the easing of lockdown measures, it is gratifying to note that some international airlines have since resumed flights to Zambia.

 

Sir, with regard to air transport infrastructure, the upgrading of the Kenneth Kaunda International Airport (KKIA) is at 90 per cent completion while the construction of the Copperbelt International Airport, renamed Simon Mwansa Kapwepwe International Airport, is at 76 per cent completion. The delay in the completion of KKIA was exacerbated by the impact of COVID-19. Both airports are now scheduled to be opened in 2021.

 

Industrialisation

 

Mr Speaker, to support industrialisation, the Government is promoting the procurement of locally produced goods. To enhance the market opportunities for the local industry, the Government has presented a Bill to this august House to repeal and replace the Public Procurement Act No. 12 of 2008.

 

Sir, the construction of industrial yards across the country to further promote industrialisation has advanced. The construction of Chipata, Kasama and Mongu industrial yards has been completed and it will be operationalised in 2021. The remaining industrial yards in Kafue, Kitwe, Ndola and Solwezi will be completed in 2021. When operational, the yards are expected to create, at least, 4,000 employment opportunities.

 

Mr Speaker, to promote linkages between agriculture and manufacturing, the Industrial Development Corporation will establish a tomato and fruit processing plant in 2021. I urge our farmers to take advantage of this development.

 

Sir, with regard to youth empowerment, the Government launched the Youth Empowerment Fund with an allocation of K470 million. This demonstrates the commitment of the PF Government to creating an environment in which the youths can participate and benefit from the economic development agenda. In 2021, the Government will continue with various youth empowerment programmes.

 

Mr Speaker, to support the growth of small medium-scale enterprises, the Government will provide financing through a facility at NATSAVE and continue to dismantle arrears to local contractors and suppliers.

 

Sir, with the coming into force of the Africa Continental Free Trade Area Agreement in 2021, Zambia will reposition herself to take advantage of the expanded market to the rest of Africa. Let me urge the private sector to harness the opportunity of the agreement so as to grow their business and access the market.

 

PILLAR II: POVERTY AND VULNERABILITY REDUCTION

 

Mr Speaker, as we steer the economy towards recovery, the Government will continue to safeguard livelihoods and protect the vulnerable by scaling up social protection programmes and climate change interventions.

 

Social Protection Programmes

 

Sir, in 2020, the country experienced the unfortunate confluence of floods and the COVID-19 pandemic, which required an emergency response over and above the traditional social protection programmes. In this regard, a total of 90,202 households were supported under Floods and Droughts Emergency Cash Transfers in twenty-three districts while 258,000 households were supported under the COVID-19 Emergency Cash Transfer across the country.

 

Mr Speaker, the number of beneficiaries under the traditional Social Cash Transfer Scheme will be increased to 994,000 households in 2021 from the current 700,000 households. Further, the amount per household will be increased to K110 from the current K90 per month.

 

Hon. Members: Hear, hear!

 

Dr Ng’andu: Sir, to enhance household food security, the Government will increase the number of beneficiaries under the Food Security Pack Programme to 288,492 vulnerable, but viable households in 2021 from 80,000 in 2020.

 

Mr Speaker, the Government has been implementing the Girls Education and Women’s Empowerment and Livelihood Programme (GEWEL) aimed at increasing access to livelihood support for extremely poor women and access to secondary education for disadvantaged girls. To date, 129,400 women and girls have benefitted from this Programme of which 54,780 are under the Keeping Girls in School component and 74,620 are under the Women Empowerment and Livelihood component. The Government has secured additional funds for the programme that will increase the number of beneficiaries to 208,400 over the medium-term.

 

Climate Change

 

Mr Speaker, the Government will accelerate the implementation of climate change programmes. One such programme is the US$100 million Transforming Landscapes for Resilience and Development Programme, which will enhance resilience among communities to climate change shocks.

 

Sir, to strengthen the national response to the effects of climate change, the Government is developing legislation on climate change. This will provide a legal framework for the implementation of the National Climate Change Policy of 2016.

 

PILLAR III: REDUCING DEVELOPMENTAL INEQUALITIES

 

Mr Speaker, the Government is undertaking various interventions aimed at reducing developmental inequalities. Key interventions include the construction of roads to facilitate market linkages between urban and rural areas and the electrification of rural areas.

 

Sir, with regard to rural roads, the Improved Rural Connectivity Project is being implemented and it will cover 3,375 km across the country over a period of five years. To date, 501 km have been contracted out of which 82 km have been rehabilitated.

 

Mr Speaker, under rural electrification, twelve grid extension projects have been completed out of the twenty-five that are being implemented. The construction of the Kasanjiku Mini Hydro Power Station in the North-Western Province, the Lunga and Chunga Solar Mini grids in Luapula Province and Central Province, respectively, have been completed.

 

PILLAR IV: ENHANCING HUMAN DEVELOPMENT

 

Mr Speaker, human development remains important in improving the quality of life and livelihoods of the citizens. In this regard, the Government will continue to prioritise education and skills development, health and water and sanitation in 2021.

 

Education and Skills Development

 

Mr Speaker, the education and skills development sector has not been spared by the COVID-19 pandemic. Schools and institutions of higher learning were closed, resulting in the loss of learning time. However, it is gratifying to note that on 11^th September, 2020, His Excellency the President of the Republic of Zambia, Mr Edgar Chagwa Lungu, announced the re-opening of learning institutions.

 

Sir, with regard to Technical Education, Vocational and Entrepreneurship Training (TEVET), the Government will aim at enhancing development of requisite skills for the labour market.

 

Mr Speaker, in order to increase science literacy and promote the next generation of innovators and critical thinkers, the Government has established Science, Technology, Engineering and Mathematics (STEM) schools of excellence in all the ten provinces. Further, to improve quality and increase the number of teachers, STEM programmes have been introduced at Mukuba, Chalimbana and Kwame Nkrumah universities.

 

Sir, the Government will continue to improve the provision of equitable services in learning institutions by rolling out the Home Grown School Meals Feeding Programme and the Keeping Girls in Schools Initiative to eighteen and twenty-two additional districts, respectively. Further, the infrastructure development programme will continue.

 

Mr Speaker, to enhance access to tertiary education, the Government will focus on increasing the number of students accessing loans in higher learning institutions.

 

Health

 

Mr Speaker, the Government has continued to prioritise the health of the people of Zambia through interventions aimed at achieving universal health coverage.

 

Sir, the COVID-19 pandemic has strained the health care system in the country. To address the situation, the Government had to realign the 2020 Budget to provide more resources to the health sector so as to strengthen the health care system and make it more resilient. To this end, 2,232 health workers were recruited and deployed.

 

Mr Speaker, allow me to commend our co-operating partners and the private sector, that came on board to complement the Government’s efforts in combating the pandemic whilst maintaining support to other essential areas of health care.

 

Sir, in order to reduce the prevalence and impact of communicable and non-communicable diseases, the Government continued to invest in health promotion programmes and made available critical health system inputs.

 

Mr Speaker, to increase access to quality health care, 439 health posts out of 650 have been completed and are operational.

 

Hon. Members: Hear, hear!

 

Dr Ng’andu: Further, twenty-four mini hospitals out of 108 have also been completed. To strengthen the referral health system, the Chinsali and Kalindawalo General hospitals and the upgraded Levy Mwanawasa University Teaching Hospital have been operationalised.

 

Hon. Members: Hear, hear!

 

Dr Ng’andu: Sir, other notable projects under construction include the Lusaka Specialist Hospital, surgical wards at the University Teaching Hospital (UTH), Bangweulu General Hospital and the expansion and modernisation of the Maina Soko Military Hospital.

 

Mr Speaker, in order to have sustainable financing to the health sector and ultimately, achieve universal health coverage, the National Health Insurance Scheme has been operationalised. So far, 540,000 beneficiaries have been registered on the scheme and 126 health facilities have been accredited. Let me urge all citizens, stakeholders and health providers to take advantage of this scheme.

 

Water Supply and Sanitation

 

Mr Speaker, to improve coverage, quality and efficiency of water supply and sanitation services, the Government is implementing the National Urban and Rural Water Supply and Sanitation Programme. Major projects under these programmes include the Kafue, Nakonde, Chinsali, and Chongwe Water Supply Projects and the Lusaka Water Supply Sanitation and Drainage Project. The projects are all above 90 per cent completion and will benefit an additional 90,000 residents once completed.

 

Hon. Government Members: Hear, hear!

 

Dr Ng’andu: Sir, other water supply and sanitation projects are being implemented in Kafulafuta, Serenje and Mufumbwe. The Kafulafuta Water Supply System Project will be completed in 2021, and will supply water to more than 1 million people in Ndola, Luanshya, Masaiti and Mpongwe.

 

Hon. Government Members: Hear, hear!

 

Dr Ng’andu: Mr Speaker, with regard to the Rural Water and Sanitation Programme, six piped water schemes in Central Province, the Southern Province, Luapula Province and the Western Province have been completed, benefitting more than 155,000 people. In addition, 432 boreholes have been drilled and 107 rehabilitated. The Government will continue with this programme in 2021.

 

PILLAR V: CREATING A CONDUCIVE GOVERNANCE ENVIRONMENT FOR A DIVERSIFIED AND INCLUSIVE ECONOMY

 

Policy, Regulatory and Structural Reforms

 

Mr Speaker, achieving economic recovery and building resilience to safeguard livelihoods and protect the vulnerable, especially in the wake of the COVID-19 pandemic, requires us to undertake policy, regulatory and structural reforms. Therefore, the Government will undertake reforms in the areas of domestic resource mobilisation, debt management and public procurement, among others.

 

Domestic Resource Mobilisation

 

Mr Speaker, the Government will continue to implement measures aimed at enhancing the domestic resource envelope. To this end, the following measures will be undertaken in the medium-term:

 

1. modernise tax administration by providing innovative technological solutions such as Tax-On-Phone, Tax-On-App and WhatsApp payment to reduce the cost of compliance;
2. improve tax compliance through enforcement of mechanisms for identifying tax evaders, stiffen the reprimand for tax offenders and strengthen the penalty regime to deterrent levels;
3. improve compliance levels of taxpayers in identified risk areas by developing centralised data analysis and segmentation;
4. appoint local authorities as tax agents to collect turnover tax, base tax and withholding tax, on a commission basis, in their areas of jurisdiction;
5. enforce the mandatory use of electronic fiscal devices from accredited suppliers, following the issuance of Statutory Instrument No. 33 of 2020; and
6. digitise more public services to run on the Government Service Bus and the Payment Gateway to provide efficiency, accountability and monitoring of revenues.

 

Sir, to support the domestic resource mobilisation measures, the Zambia Revenue Authority Act, Cap 321 of the Laws of Zambia will be amended to improve tax administration. Further, the Government will provide for the establishment of a fund that will improve and develop infrastructure at our borders to enhance trade facilitation and border processing efficiency. The Government will put in place measures to manage container scanners in a sustainable manner in order to efficiently and effectively fight smuggling and other vices. The Government will conduct a thorough review of existing tax incentives to make them more effective in reinvigorating economic activity.

 

Debt Management Policy

 

Mr Speaker, the Government remains committed to restoring public debt sustainability and has embarked on a number of initiatives to achieve this objective. These include cancellation, postponement and re-scoping of projects. Further, the contraction of new commercial external debt has been stopped.

 

Sir, so far, US$1.1 billion pipeline loans have been cancelled and US$280 million has been saved from the re-scoping of projects. Further, with the help of international financial and legal advisors, the Government will devise a liability management strategy aimed at putting our public debt on a sustainable trajectory.

 

Mr Speaker, the Government has taken steps to benefit from the G20’s Debt Service Suspension Initiative. In this regard, a Memorandum of Understanding (MoU) has been entered into with the Paris Club creditors. In addition, negotiations with G20 members are ongoing. This Initiative is expected to provide debt service relief during the suspension period, which currently runs from May to December 2020. The Government has also made similar debt service suspension requests to all external commercial creditors, including international capital market investors.

 

Mr Speaker, the strategy on domestic debt will be to:

 

1. alter the domestic debt portfolio from shorter to long-term instruments;

 

1. reduce domestic arrears; and
2. broaden investor participation in the Government securities market.

 

Mr Speaker, the Government remains committed to enhancing efficiency, price discovery and transparency in the secondary market for Government bonds. Therefore, I am pleased to report to this august House that BoZ launched the e-Bond Electronic Trading Platform in August 2020. This allows for the trading of Government bonds electronically, initially between banks. The trading of bonds on this platform will be rolled out to other investors in 2021.

 

Public Procurement Reforms

 

Mr Speaker, the Government remains committed to promoting good financial governance, value for money and participation of local suppliers. To this effect, the Government has presented before this august House, the Public Procurement Bill to repeal and replace the Public Procurement Act No. 12 of 2008. The Bill will, among others, give priority to citizens to participate in the supply of goods and services, introduce price benchmarking, penalise fronting and selling of contracts, improve contract management, make it mandatory to use the Electronic Procurement System and penalise offenders.

 

Hon. Government Members: Hear, hear!

 

Dr Ng’andu:

 

Energy Sector Reforms

 

Mr Speaker, the Government is implementing key structural reforms to enhance efficiency and attract investment in the energy sector. In the electricity subsector, the Government has, this year, issued a commencement order for the Electricity Act No. 11 of 2019, which regulates the generation, transmission, distribution and the supply of electricity to enhance the security and reliability of supply of electricity. The implementation of further reforms will be informed by the results of the cost of service study. These include a comprehensive review of the electricity supply chain and the renegotiation of tariffs with independent power producers.

 

Mr Speaker, with regard to the petroleum subsector, the Government policy is that fuel pricing be cost reflective through periodic reviews of pump prices. The Government will prioritise getting value for money in the procurement of petroleum products for the benefit of the consumers.

 

Monetary and Financial Sector Policies

 

Mr Speaker, the Government is mindful of the adverse effects of the current high inflation rate on our citizens, particularly the most vulnerable. In the recent past, food inflation has been a key driver of inflation. In this regard, improved food supply, following the policies we have implemented to improve agriculture production, will help reduce the current high level of inflation towards the medium-term target of 6-8 per cent.

 

Sir, the health of the financial sector is key to economic stability and growth. The Bank of Zambia will continue to pursue regulatory policies that strengthen the resilience of the financial sector in the wake of the COVID-19 pandemic. In this regard, the BoZ has adopted financial stability and financial inclusion as two focus areas in its 2020 to 2023 Strategic Plan.

 

Mr Speaker, to strengthen the resilience of the financial sector, the BoZ introduced the Targeted Medium-Term Refinancing Facility with an initial amount of K10 billion. The facility allows financial service providers, under the supervision of BoZ to access funds at relatively low interest rates, currently at 8 per cent, for on-lending to businesses and households. The facility is being reviewed and adjusted to address identified implementation challenges so that it achieves the intended objectives.

 

Sir, to achieve universal access to and usage of a broad range of financial services, the Government will continue to implement the National Financial Inclusion Strategy and the National Strategy on Financial Education. Increased use of digital financial services is a critical component of the measures being implemented to address the COVID-19 pandemic.

 

External Sector Policies

 

Mr Speaker, the Government will maintain a flexible and competitive exchange rate regime. In this regard, the Government will continue to pursue measures that support relative stability in the exchange rate such as the diversification of exports, attraction of Foreign Direct Investment (FDI), import substitution and securing balance of payments support. Further, measures will be undertaken to improve domestic production capacity and local value addition.

 

Public Investment Management Reforms

 

Mr Speaker, I wish to report that the Public Investment Board is now operational. Ministries, provinces and other spending agencies are now mandated to submit their public investment proposals to the board for approval prior to inclusion in the Budget. This will entail that only public investment projects that help achieve developmental objectives and are viable are included in the Budget for implementation.

 

National Development Plan

 

Mr Speaker, the 7NDP comes to an end in 2021. In this regard, the Government has commenced the preparation of the Eighth National Development Plan covering the period 2022 to 2026. The plan will provide a clear development agenda towards the attainment of the National Vision 2030. Let me urge all citizens and stakeholders to actively participate in the preparation of the plan, in line with the National Planning and Budgeting Policy.

 

Census of Population and Housing

 

Mr Speaker, the preparation of the 2020 Census of Population and Housing encountered a number of challenges, including the outbreak of the COVID-19 pandemic. As a result, the census will now be conducted in 2021. Let me urge citizens and all stakeholders to co-operate and actively participate in this very important exercise.

 

PART III

 

THE 2021 BUDGET

 

Mr Speaker, the Government proposes to spend K119.6 billion in 2021, which translates to 32.6 per cent of the GDP. Of this amount, K68 billion, representing 18.5 per cent of the GDP, will come from domestic revenues and grants. The balance of K51.6 billion will be raised through financing.

 

Sir, the fiscal deficit is targeted at reducing to 9.3 per cent of the GDP in 2021 from the 11.7 per cent projected outturn for 2020.

 

Mr Speaker, let me inform this august House that all ministries, provinces and spending agencies have now migrated from activity-based budgeting to output-based budgeting. This budgeting system is more performance oriented and enhances transparency and accountability.

 

2021 Expenditure by Functions of Government

 

Mr Speaker, the allocation of resources in this Budget is based on priority areas identified in the Economic Recovery Programme, which is aligned to the re-scoped 7NDP and further reflects the Government’s response to the COVID-19 pandemic.

 

2021 Budget Allocations by Functions of Government

 

Function                                                            2021 Budget              Share of Budget

                                                                                       K

General Public Services                                        57,819,227,707           48.3%

Domestic Debt Interest                                      18,338,481,000

External Debt (Interest & Principal)                  27,745,178,541

Dismantling of Arrears                                         2,762,080,579         

Local Government Equalization Fund                  1,164,567,612         

General Elections and Voter Registration              598,112,678         

Constituency Development Fund                           249,600,000         

MPs Gratuity                                                           202,073,000         

Public Affairs and Summit Meetings                      200,000,000

Contingency                                                            125,000,000

Compensation Fund                                          100,000,000

Defence                                                                 5,642,820,724                  4.7%

Public Order and Safety                                        3,078,694,172                  2.6%

Economic Affairs                                                 21,499,987,741               18.0%

Road Infrastructure                                           6,214,145,268

Farmer Input Support Programme                     5,701,404,933

International Airports                                           567,334,377

Strategic Food Reserves                                       517,500,000

Rural Electrification Fund                                    307,199,557

Empowerment Funds                                            266,285,212

o/w Youth Empowerment Funds                         155,237,025

Environmental Protection                                         955,530,142                  0.8%

Housing and Community Amenities                      2,221,524,168                  1.9%

Water Supply and Sanitation                            2,172,274,286

Health                                                                   9,653,313,513                  8.1%

Infrastructure Projects                                       1,731,846,564

Drugs and Medical Supplies                             1,392,443,990

Operations for Hospitals                                       627,263,831

Recreation, Culture and Religion                             151,357,265                  0.1%

Education                                                             13,772,752,981               11.5%

Infrastructure Projects                                       1,216,937,500

Skills Development Fund                                     178,857,469

Social Protection                                                    4,820,803,202                 4.0%

Social Cash Transfer                                          2,344,175,162

Public Service Pension Fund                             1,067,955,725

Food Security Pack                                           1,100,000,000

TOTAL                                                              119,616,011,615                100.0%

 

General Public Services

 

Mr Speaker, I propose to spend K57.8 billion on general public services. Of this amount, domestic debt interest will account for K18.3 billion while external debt service will be K27.7 billion. In addition, K598.1 million is for the 2021 General Elections while K1.2 billion has been allocated to the Local Government Equalisation Fund (LGEF).

 

Sir, K2.8 billion will be spent on dismantling of arrears owed to suppliers of goods and services and personnel. This will help improve liquidity and stimulate economic activity.

 

Economic Affairs

 

Mr Speaker, the economic affairs function has been allocated a total of K21.5 billion. Notable expenditure includes K5.7 billion on the Farmer Input Support Programme (FISP), targeting 1 million farmers across the country. Further, for the country to be food secure, I have set aside K517.5 million for the national strategic food reserve.

 

Sir, I propose to spend K6.2 billion on roads and K567.3 million on Simon Mwansa Kapwepwe Airport and KKIA.

 

Mr Speaker, to increase access to electricity in rural areas and contribute to improved quality of life, I propose an allocation of K307.2 million to the Rural Electrification Programme.

 

Sir, to support women, youth, and small to medium enterprises, I propose to spend K266.3 million on various empowerment programmes. Out of this amount, K155.2 million will be allocated specifically to the youth.

 

Education

 

Mr Speaker, to increase access to, and improve quality of education, I propose an allocation of K13.8 billion to the education sector.

 

Hon. Government Members: Hear, hear!

 

Dr Ng’andu: Of this amount, K7.1 billion will go towards early childhood and primary education, K2.7 billion to secondary education and K1.9 billion to tertiary education.

 

Health

 

Mr Speaker, to provide for equitable and quality health care services, I propose to allocate a total of K9.7 billion to the health sector. Out of this amount, K3.2 billion is for primary health care while K5.1 billion is for hospital services. Of the allocations to primary health care and hospital services, K1.4 billion is earmarked for the procurement of essential drugs and medical supplies. This amount includes a provision for the COVID-19 vaccine once it is developed and made available.

 

Housing and Community Amenities

 

Mr Speaker, in order to enhance the quality of life of our people, I propose to allocate K2.2 billion towards housing and community amenities. The bulk of this amount is for improving water supply and sanitation systems.

 

Public Order and Safety

 

Mr Speaker, I propose to allocate K3.1 billion to public order and safety. Key interventions under this allocation will include modernisation and digitalisation of systems as well as construction and rehabilitation of infrastructure.

 

Hon. Government Members: Hear, hear!

 

Dr Ng’andu:

 

Social Protection

 

Mr Speaker, to mitigate the impact of COVID-19 and further enhance social protection, I propose to allocate K4.8 billion to this function. Out of this amount, K2.3 billion is for the Social Cash Transfer, which is more than the K1.0 billion allocated in the 2020 Budget. Further, I propose to increase the allocation for the Food Security Pack Programme to K1.1 billion from K100 million. Other allocations under this function include K1.1 billion to the Public Service Pension Fund.

 

Hon. Government Members: Hear, hear!

 

Dr Ng’andu:

 

Other Functions

 

Mr Speaker, I propose an allocation of K6.7 billion on other functions of the Government such as defence, environmental protection and recreation, culture and religion.

 

Revenue Estimates and Financing

 

Mr Speaker, I expect to raise a total of K119.6 billion to finance this Budget. Out of this amount, K53.3 billion will be raised from taxes while K12.7 billion will be from non-tax revenues. In addition, K2 billion will be grants from our co-operating partners. The balance of the total amount will be financed through borrowing K17.4 billion from the domestic market and K34.2 billion will be from external sources.

 

Sir, the estimates of revenue, grants and financing to support this Budget are summarised as follows:

 

Resource Envelop for the 2021 Budget

 

                                                                                                                     Share of     Share of

                                                                 Amount (K)                                  Budget       GDP

 

TOTAL DOMESTIC REVENUES,                                                         

GRANTS & FINANCING                                                                        119,616,011,615         100%         32.6%

TOTAL DOMESTIC REVENUE                                                              

AND DOMESTIC FINANCING                                                                 83,412,994,252          69.7%        22.7%

I. TOTAL DOMESTIC REVENUES                                            65,982,526,252          55.2%        18.0%

Tax Revenue                                                           53,273,038,520          44.5%        14.5%

Income Tax                                                             27,064,518,652          22.6%         7.4%

Company Income Tax                9,114,550,496

Personal Income Tax

(Incl PAYE)                             12,867,197,154

Withholding and Other               5,082,771,002

Value Added Tax                                                    16,937,964,272        14.2%         4.6%

Customs and Excise                                                  9,270,555,596          7.8%          2.5%

Customs Duty                            4,284,666,880

Excise Duty                               4,808,334,024

Export Duties                                177,554,692

Non-Tax Revenues                                                  12,709,487,732        10.6%         3.5%

Fees and Fines                           6,613,304,157

Skills Development Levy              178,857,469

Tourism Levy                                 18,902,963

Motor Vehicle Fees                        95,416,549

Insurance Premium Levy              116,901,948

Mineral Royalty                         5,686,104,646

II. DOMESTIC FINANCING                                               17,430,468,000        14.6%         4.8%

III. TOTAL FOREIGN FINANCING                                                                                  

AND GRANTS                                                                                    36,203,017,363        30.3%         9.9%

Programme Loans                  20,608,103,500

Project Loans                         13,608,714,695

Foreign Grants                        1,986,199,168

 

 

 

Direct Taxes

 

Mr Speaker, to increase disposable income of employees, I propose to raise the exempt threshold for Pay-as-You-Earn to K4,000 from K3,300 per month and adjust the income tax bands accordingly.

 

Hon. Government Members: Hear, hear!

 

Dr Ng’andu: This measure will result in K455.6 million additional income in the pockets of the Zambian workers. The tax bands are now as follows:

 

Current Regime             Proposed Regime

   Income Band (K)                 Tax Rate            Income Band(K)                       Tax Rate

       0 – 3,300 per month               0.00%                0 – 4,000 per month          0.0%

3,301 – 4,100 per month             25.00%          4,001– 4,800 per month          25.0%

4,101 – 6,200 per month             30.00%          4,801 – 6,900 per month         30.0%

Above 6,200                               37.50%           Above 6,900                           37.50%

 

Mr Speaker, in order to encourage the employment of differently-abled persons, I propose to increase the amount allowed for deduction by an employer for employing a person with a disability to K2,000 per annum from K1,000 per annum.

 

Sir, in order to cushion the suffering of the differently-abled persons in our society, I propose to increase the tax credit for individuals to K500 per month from the current K250 per month.

 

Hon. Government Members: Hear, hear!

 

Dr Ng’andu: Mr Speaker, to provide relief to the horticulture and floriculture subsectors, I propose to increase the number of years for claiming the 10 per cent development allowance to five years from the existing three years. This allowance is applicable to persons growing rose flowers, tea, coffee, banana plant or citrus fruit trees or other similar plants or trees.

 

Mr Speaker, to harmonise the presumptive tax structure for the gaming and betting industry, I propose to increase the tax rate on betting to 25 per cent from 10 per cent of gross takings. This measure will generate an extra K59.3 million.

 

Hon. Government Members: Hear, hear!

 

Dr Ng’andu:

 

Value Added Tax

 

Mr Speaker, to support the scaling up of agricultural productivity through mechanisation, I propose to zero-rate all tractors for VAT purposes. Currently, only tractors up to 90 Horse Power are zero-rated.

 

Sir, to combat the spread of COVID-19, I propose to zero-rate equipment used for full body sanitisation for a period of one year. This measure will take effect from midnight tonight.

 

Hon. Government Members: Hear, hear!

 

Dr Ng’andu: Mr Speaker, the VAT measures will result in a revenue loss of K5.1 million.

 

Customs and Excise

 

Mr Speaker, to revamp the horticulture and floriculture subsectors and to promote other non-traditional exports, I propose to:

 

1. suspend import duty on biological control agents;
2. remove import duty on greenhouse plastics;
3. reduce import duty to 15 per cent from 25 per cent on selected bulb plants and seedlings;
4. reduce import duty on secateurs and pruners to 5 per cent from the current 15 per cent and 25 per cent, respectively;
5. remove import duty on selected agricultural clippers; and
6. remove export duty on crocodile skin.

 

Mr Speaker, to stimulate economic activity in other sectors, I propose the following measures:

 

1. remove import duty on copper ores and concentrates to encourage local processing;
2. suspend import duty on the importation of refrigerated trucks to support the domestic and export markets;
3. reduce import duty to 5 per cent from 25 per cent on selected trimmings to promote the local garments and textile industry; and
4. lower import duty to 15 per cent from 30 per cent on electric motor vehicles to reduce the use of fossil fuel.

 

Hon. Government Members: Hear, hear!

 

Dr Ng’andu: Sir, to support local production, build resilience and mitigate the revenue loss arising from the aforementioned measures, I propose the following:

 

1. increase import duty to 40 per cent from 25 per cent on agro products such as beef and beef processed products, pork and pork processed products, chicken and chicken processed products as well as fish imported from outside the Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA) regions;
2. introduce excise duty at the rate of K1.50 per litre on reconstituted milk;
3. harmonise import duty rate on reconstituted milk with other forms of milk at 15 per cent;
4. adjust the specific excise duty rate on cigarettes to K302 per mile from K265;
5. introduce a surtax at the rate of 20 per cent on imported un-denatured ethyl alcohol of an alcoholic volume strength of 80 per cent or higher;
6. introduce excise duty on flat plastic bags at the rate of 30 per cent; and
7. harmonise the import duty rates of cotton and polyester fabric at 15 per cent ad valorem rate or K1.82 per kilogramwhichever is higher.

 

Hon. Government Members: Hear, hear!

 

Dr Ng’andu: Mr Speaker, I propose to exclude high value motor vehicles from the definition of used motor vehicles and subject them to ad valorem import duty.

 

Sir, to resuscitate the tourism sector and promote local tourism, I propose the following measures:

 

1. reduce the corporate income tax rate to 15 per cent from 35 per cent on income earned by hotels and lodges on accommodation and food services;
2. suspend import duty on safari game viewing motor vehicles, tourist buses and coaches;
3. suspend licence of renewal fees paid by hotels and lodges;
4. suspend the retention fees paid by tourism enterprises; and
5. suspend registration fees for hotel managers.

 

Hon. Government Members: Hear, hear!

 

Dr Ng’andu: Mr Speaker, I propose further tax incentives as follows: 

 

1. introduce a local content allowance for income tax purposes for utilisation of selected local raw materials to encourage local content and value addition; and
2. reduce the investment threshold for a Zambian citizen to qualify for tax incentives under the Zambia Development Agency Act No.11 of 2006 to US$100,000 from US$500,000 for those intending to operate in a priority sector, a multi-facility economic zone (MFEZ) or industrial park.

 

Hon. Government Members: Hear, hear!

 

Dr Ng’andu: Sir, the measures I have announced are in addition to the existing incentives and those granted in response to COVID-19 earlier this year.

 

Housekeeping Measures

 

Mr Speaker, I propose to amend the Income Tax Act, Customs and Excise Act, Property Transfer Tax Act, Value Added Tax Act, Zambia Revenue Authority Act and Zambia Development Agency Act to update, strengthen and remove ambiguities in certain provisions of the tax laws and make tax administration more effective. The details of the proposed changes will be contained in the respective legislation that I will later introduce in the House.

 

Non-Tax Revenue Measures

 

Mr Speaker, I propose to increase various immigration permit fees to cost reflective levels whilst remaining competitive. Further, I propose to remove the discount granted to the public on fees where payment for online registration of a private company limited by shares and the filing of annual returns made online on the e-PACRA System.

 

Sir, the non-tax revenue measures will result in a revenue gain of K173.0 million. The measures that I have outlined will take effect on 1st January, 2021.

 

Hon. Government Members: Hear, hear!

 

Dr Ng’andu: Mr Speaker, in conclusion, in the face of our current adversities, His Excellency Mr Edgar Chagwa Lungu, President of the Republic of Zambia, enjoined us to change the way we think and the way we do things so that we are able to seize the opportunities that the COVID-19 challenge presents to us.

 

Sir, the mindset change called for by His Excellency should drive us to channel our energies in the pursuit of local solutions to our economic challenges. In this light, the 2021 Budget is formulated to support innovation in order to achieve greater value addition, establish sustainable domestic value chains, diversify production and expand our export base. This will enable us to become a more productive nation.

 

Mr Speaker, the 2021 Budget clearly lays a foundation for economic recovery, builds resilience, safeguards livelihoods and protects the vulnerable. Therefore, the thrust and priority for 2021 and the medium-term will be to re-invigorate growth, restore macroeconomic stability, attain fiscal fitness, restore debt sustainability and dismantle domestic arrears and at the same time, safeguard social protection spending.

 

Sir, the PF Government remains committed to creating a prosperous Zambia. To this end, this Budget has been developed as a step towards restoring economic growth and enhancing the welfare of our people.

 

Mr Speaker, as I conclude, let me quote the words of His Excellency Mr Edgar Chagwa Lungu, President of the Republic of Zambia, when addressing this august House two weeks ago. He said:

 

“As a nation, together, in unity, we can and we must win the war … Now is the time to hold our hands together and ride over a situation we find ourselves in, as one people.”

 

Sir, allow me to also quote an African proverb which says, “If you want to go fast, go alone, but if you want to go far, go together.”

 

Hon. Government Members: Hear, hear!

 

Dr Ng’andu: This entails that, as a nation, we need to be united in the face of adversity. If we all put our hand to the plough, there is no limit to how far we, as a people, can go. 

 

Mr Speaker, I beg to move.

 

I thank you, Sir.

 

Hon. Government Members: Hear, hear!

 

Mr S. Banda (Kasenengwa): Mr Speaker, thank you for giving me this opportunity to be the first to debate the Motion of Supply that has been moved by the hon. Minister of Finance.

 

Sir, firstly, allow me to congratulate the hon. Minister of Finance for the able manner in which he has presented the 2021 National Budget. The speech that has just been delivered by the hon. Minister of Finance has covered a number of important issues concerning the economy of our country and, therefore, requires careful analysis by all hon. Members. Therefore, I am of the considered view that we defer debate on the Motion to Tuesday 29^th September, 2020, so that hon. Members can have ample time to read carefully and analyse the speech. This way, hon. Members will come back well-prepared to debate the Motion meaningfully.

 

Mr Speaker, with these few words, I wish to propose that the debate on the Motion of Supply by the hon. Minister of Finance be deferred to Tuesday, 29^th September, 2020.

 

I thank you, Sir.

 

Hon. Government Members: Hear, hear!

 

Mr Speaker: Is the proposal seconded?

 

Mr Kabanda (Serenje): Mr Speaker, I thank you for according me this opportunity to support the proposal by the hon. Member for Kasenengwa Parliamentary Constituency to defer the debate on the Motion of Supply, which has been moved by the hon. Minister of Finance, to Tuesday, 29^th September, 2020.

 

Sir, hon. Members will agree with me that the issues contained in the Budget Speech have an impact on the lives of the people that we are privileged to represent in this House. Therefore, we require sufficient time to study the speech.

 

Mr Speaker, for this reason, I agree with my hon. Colleague that more time be given to hon. Members to carefully study and analyse the speech, which has just been presented, so that we can engage meaningfully next Tuesday, 29 September, 2020.

 

I thank you, Mr Speaker.

 

Hon. Government Members: Hear, hear!

 

Question put and agreed to.

 

ADJOURNMENT

 

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

 

Question put and agreed to.

 

_______

 

The House adjourned at 1557 hours until 1430 hours on Tuesday 29^th September, 2020.

 

____________