Friday, 29^th October, 2021

 

The House met at 1415 hours

 

[MADAM SPEAKER in the Chair]

 

NATIONAL ANTHEM

 

PRAYER

 

_______

 

BUSINESS OF THE HOUSE

 

The Vice-President (Mrs Nalumango): Madam Speaker, I rise to give the House some idea of the business it will consider next week.

 

Madam Speaker, on Tuesday, 2^nd November, 2021, the Business of the House will begin with Questions for Oral Answer. This will be followed by the presentation of Government Bills, if there will be any.  The House will then commence the debate on the Motion of Supply on the 2022 National Budget.

 

Madam Speaker, on Wednesday, 3^rd November, 2021, the Business of the House will start with Questions for Oral Answer. Thereafter, the House will consider Private Members’ Motions, if there will be any. This will be followed by the presentation of Government Bills, if there will be any. The House will then continue with the debate on the Motion of Supply on the 2022 National Budget.

 

Madam Speaker, on Thursday, 4^th November, 2021, the Business of the House will commence with Questions for Oral Answer. Thereafter, the House will consider the presentation of Government Bills, if there will be any. After that, the House will continue with the debate on the Motion of Supply on the 2022 National Budget.

 

Madam Speaker, on Friday, 5^th November, 2021, the Business of the House will start with The Vice-President’s Question Time. This will be followed by Questions for Oral Answer. The House will then consider the presentation of Government Bills, if there will be any. Thereafter, the House will continue with the debate on the Motion of Supply on the 2022 National Budget.

 

Madam Speaker, I thank you.

 

_______ 

 

MOTION

 

BUDGET ADDRESS

 

The Minister of Finance and National Planning (Dr Musokotwane): Madam Speaker, I beg to move that the House do now resolve into Committee of Supply on the Estimates of Revenue and Expenditure for the period 1^st January, 2022 to 31^st December, 2022, presented to the National Assembly on Friday, 29^th October, 2021. This is pursuant to Article 202 Clause 3 of the Constitution of Zambia (Amendment) Act No. 2 of 2016.

 

Madam Speaker, I am a bearer of a message from His Excellency, Mr Hakainde Hichilema, the President of the Republic of Zambia, recommending favourable consideration of the Motion that I now lay on the Table.

 

Hon. Members: Hear, hear!

 

Dr Musokotwane: Madam Speaker, let me start by congratulating you and the entire presiding
leadership of this House on your election following the August, 2021 General Elections. Today, history is being made because for the first time since independence, the processing of the National Budget in this House will be presided over by a female Speaker, assisted by another female as First Deputy Speaker and a man as Second Deputy Speaker.

 

Hon. Members: Hear, hear!

 

Dr Musokotwane: Madam Speaker, the women are in charge. It is my honour and privilege to present the 2022 Budget. This is the second time that I am being entrusted with the task of being Minister of Finance and National Planning. May I take this opportunity to thank His Excellency President Hichilema for according me the honour to, once again, serve the Zambian people.

 

Madam Speaker, I also take this opportunity to acknowledge the work of my predecessor, Dr Bwalya Ng’andu, especially as he tried to find solutions to the crippling indebtedness of the country.

 

Interruptions

 

Dr Musokotwane: Madam Speaker, I spent the last ten years as an Opposition Member of Parliament for a poor rural constituency. From this experience, I have learnt valuable lessons which I will apply in the management of the Treasury. I trust that, with the guidance of the President, who himself is a very passionate person about rural development, our rural and other areas facing poverty will receive increased attention.

 

Hon. Members: Hear, hear!

 

Dr Musokotwane: Madam Speaker, this Government has inherited an economy suffering from the effects of extreme indebtedness and the Coronavirus Disease 2019 (COVID-19). The immense task we have as a new Government is not only to overcome these effects, but also to transform the economy, help the poor escape the vicious cycle of poverty and bring prosperity to all Zambians.

 

Madam Speaker, during the Official Opening of the First Session of the Thirteenth National Assembly, His Excellency the President outlined the policy direction that the New Dawn Government will take in the next five years.

 

Madam Speaker, the President emphasised the need to rebuild the economy, deliver jobs and better the livelihoods of our people. He also placed emphasis on creating an environment to invigorate economic activity in which every citizen will have the opportunity to participate
and benefit.

 

Madam Speaker, concerns have been expressed that the promises we made during the campaigns were made solely for the purpose of winning elections. For us as the UPND, there is no ‘Dochi Kubeba’.

 

Hon. Government Members: Hear, hear!

 

Dr Musokotwane: We stand by our campaign promises of yesterday, today and the future. The 2022 Budget is, therefore, the first step towards achieving our vision of transforming the economy. It is in this context that the theme for the 2022 Budget is: “Growth, Jobs and Taking Development Closer to the People.”

 

Madam Speaker, to transform our economy, this Budget provides incentives to support higher output and production of a wider range of products. This will create employment opportunities for our people and in turn improve their livelihoods.

 

Madam Speaker, through this Budget, we will increase support to the social sectors and social protection programmes. Further, resources will be taken closer to the people to improve service delivery and involve citizens in decision-making. This is a message of hope for
all Zambians to participate in taking the nation forward.

 

Hon. Members: Hear, hear!

 

Dr Musokotwane: Madam, my Budget Address this afternoon will be in four parts. In Part I, I will highlight the global and domestic economic developments in 2021. In Part II, I will present the macroeconomic objectives, policies and strategies for 2022. In Part III, I will provide the details on the estimates of revenue and expenditure for 2022 and in Part IV, I will conclude my address.

 

Part I

 

GLOBAL AND DOMESTIC ECONOMIC DEVELOPMENTS IN 2021

 

Global Economic Developments

 

Madam Speaker, the global economy is expected to rebound this year and grow by 5.9 percent. Last year, the global economy contracted by 3.1 per cent. The recovery in growth this year is attributed to the relaxation of the COVID-19 restrictions that allowed for the resumption of economic and other activities. Further, increased spending by governments and the provision of liquidity by central banks aided the recovery.

 

Madam Speaker, commodity prices have maintained an upward trend as the global economy is recovering. The average price of copper from January to September, 2021 was US$9,194 per tonne compared to only US$5,834 per tonne over the same period in 2020. Similarly, average crude oil prices rose to US$68 per barrel from US$43 over the same period. Currently, copper prices stand at US$9,850 per tonne. More recently, crude oil prices have shot up to US$84 per barrel due to constrained supply.

 

DOMESTIC ECONOMIC DEVELOPMENTS

 

Economic Growth

 

Madam Speaker, it is desirable that an economy must grow at all times as measured by the Gross Domestic Product (GDP). The GDP measures the growth in the value of goods and services produced in the economy per annum. It is desirable that this must always increase. At the very least, we must consistently grow the economy at a rate higher than the population growth currently estimated at 2.8 per cent. This is to ensure that the economy is able to meet the demands of a growing population.

 

Madam Speaker, the economy is steadily recovering from the adverse effects of the COVID-19 pandemic. Preliminary estimates indicate that the real GDP for the first quarter of 2021 grew by 0.5 per cent and improved to 8.1 per cent in the second quarter. Overall, the economy is projected to grow at 3.3 per cent in 2021 against a contraction of 2.8 per cent in 2020. This growth is, however, not sufficient to impact the high poverty levels that subsist in the country and to achieve our vision of becoming a prosperous country.

 

Budget Performance

 

Madam Speaker, the overall budget performance was unfavourable. This was on account of higher than planned expenditure despite revenue exceeding the target.

 

Madam Speaker, over the first nine months of 2021, revenue and grants amounted to K77 billion against a target of K51.1 billion, giving a positive variance of 50.7 per cent. The positive performance was mainly attributed to a dividend receipt from the Bank of Zambia (BoZ), higher collections from mineral royalty and corporate income tax from mining firms. The improved collections from the mining sector were mainly driven by high copper prices and the depreciation of the Kwacha against the United States Dollar.

 

Madam Speaker, we project the total revenues and grants for the fiscal year 2021, in other words up to the end of December, to reach K96.8 billion against the original target of K68 billion.

 

Madam Speaker, the total expenditure for the period January to September, 2021 stood at K112.9 billion and was 25.7 per cent above the target of K89.8 billion. This was largely due to higher than programmed spending on subsidies on agricultural inputs and fuel, election
related expenditure as well as domestically financed capital expenditure.

 

Madam Speaker, expenditure up to the year-end is projected at K139 billion, 16.2 per cent above the target of K119 billion. So in short, revenue rose sharply, but expenditure even rose sharper, leading to deficits.

 

Hon. UPND Members: PF!

 

Dr Musokotwane: Madam Speaker, when we spend more than we have generated in revenues and grants, we create a fiscal deficit. That deficit requires that we borrow either from domestic or external sources. Repeatedly done, the borrowings grow too big and the servicing of even just the interest charges becomes a problem. The fiscal deficit, on a cash basis, is projected to be K39 billion or 10.4 per cent of the GDP by the end of 2021, which is above the target of 9.3 per cent.

 

Madam Speaker, the level of our fiscal deficit and debt is unsustainable. This is so because as we pay external debt, a lot of the foreign exchange that we earn leaves the country contributing to the falling value of the Kwacha that we have seen in the past few years. At the same time, as we spend so much money to service both the domestic and external debt, this reduces the financial resources that remain for other purposes such as giving to the Constituency Development Fund (CDF) or hiring teachers.

 

Madam Speaker, we must gradually reduce deficits and debts to restore fiscal and debt sustainability.

 

Debt Position

 

Madam Speaker, the stock of public external debt amounted to US$14.71 billion as at the end-September 2021. Of this amount, the Central Government’s external debt was US$12.99 billion while guaranteed and non-guaranteed external debt by State Owned Enterprises (SOE) was US$1.56 billion and US$164.52 million, respectively.

 

Madam Speaker, the Central Government’s external debt increased by 2 per cent to US$12.99 billion as at the end of September, 2021 from US$12.74 billion as at the end of December, 2020. This was on account of disbursements from multilateral creditors and a few other creditors funding priority projects, particularly in the health sector. The stock of the Central Government’s external debt includes US$1.2 billion principal arrears arising from the ongoing debt service standstill. The Government has also accumulated interest arrears amounting to US$600 million.

 

Madam Speaker, the stock of Government guarantees, the guarantees that we give to state companies, was US$1.56 billion as at the end of September this year. The State-owned power utility company, ZESCO Limited, including the Kafue Gorge Lower Hydropower Project, accounts for 93 per cent of these guarantees.

 

Madam Speaker, the stock of government securities, that is Treasury bills and bonds, rose by 45.7 per cent to K189.7 billion as at the end of September, 2021 from K130.2 billion as at the end of September, 2020. The increase was largely attributed to the issuance of bonds to finance
agricultural and fuel subsidies as well as COVID-19 related expenditures.

 

Domestic Arrears

 

Madam Speaker, the stock of audited Central Government domestic arrears or pending bills, arrears are simply pending bills, excluding fuel and electricity stood at K46.9 billion as at the end of June, 2021 from K41.0 billion in December, 2020. The bulk of the arrears are to road contractors, suppliers of goods and services, Value Added Tax (VAT) refunds and personnel related emoluments to public service workers. The build-up of domestic arrears is largely due to budget constraints and weak commitment control systems and by that, I mean that you know very well you have no money, but you give out a contract to a road contractor, when you have no money to pay.

 

Hon. UPND Members: PF!

 

Dr Musokotwane: Madam Speaker, fuel arrears, that is diesel and petrol, have significantly risen due to price differential between the landed cost of the petroleum products and the pump price. The stock of fuel arrears as at the end of August, 2021, stood at US$478 million that we owe suppliers of these products who we have not paid.

 

Hon. UPND Members: PF!

 

Dr Musokotwane: Madam Speaker, the Government cannot afford to keep on accumulating arrears in the manner it has been doing. We must address the causes of these arrears whether it is subsidies or giving out contracts when the Government knows very well it has no money to pay.

 

Monetary and Financial Performance

 

Madam Speaker, the prices of consumer goods and services have been on an upward trend in the first ten months of 2021. Inflation averaged 22.9 per cent compared to 15.2 per cent over
the same period in 2020. This was beyond the target of keeping inflation between 6 and 8 per cent. When the prices of commodities rise too rapidly, it means that the Kwacha buys fewer goods and services, and subsequently makes our people worse off.

 

Madam Speaker, the rise in inflation is largely due to the sustained increase in food
prices induced by the constrained supply of meat, fish and vegetables as well as the depreciation of the Kwacha.

 

Madam Speaker, one of the consequences of rising inflation coupled with the high appetite for borrowing by the Government are the high interest rates, which constrain our people and businesses from borrowing to invest. Thus, average commercial banks’ lending rates remained high at 25.9 per cent in September, 2021. This is compared to 25.1 per cent in December, 2020.

 

Madam Speaker, the Kwacha denominated credit to the private sector grew by almost 42 per cent in August, 2021 against the contraction of 0.9 per cent in the year before. The increase was partly attributed to disbursements from the BoZ to support businesses through the Targeted Medium-Term Refinancing Facility. Credit to the Government to meet domestic financing needs continued to expand, although at a slower pace, growing by 29.3 per cent, year-on-year, in August, 2021 compared to 61.7 per cent in August, 2020.

 

Madam Speaker, the banking sector is the lifeline of business. The sector has remained resilient despite the economic challenges caused by the COVID-19 pandemic. The sector was well capitalised, supported by stable profitability as well as prudential measures taken by the BoZ to safeguard financial stability in the wake of COVID-19.

 

Madam Speaker, the ratio of non-performing loans to total loans, at 7.7 per cent at the end of August, 2021, was below the maximum prudential threshold of 10 per cent. The restructuring of distressed credit facilities for businesses severely impacted by the COVID-19 pandemic, through the Targeted Medium-Term Refinancing Facility, supported the improvement in loan performance.

 

Madam Speaker, in contrast, the non-bank financial institutions sector continues to face challenges, with the ratio of non-performing loans to total loans rising to 23.1 percent in August, 2021 from 20.4 percent in December, 2020. This was above the prudential maximum benchmark of 10 per cent. The unfavourable performance was largely due to poor underwriting procedures and delayed remittance of third-party payments on civil servants salary-backed loans. I am happy to tell you that the Government has since cleared all the outstanding third-party payments to non-bank financial institutions. All paid.

 

Hon. Members: Hear, hear!

 

Dr Musokotwane:

 

External Sector Performance

 

Madam Speaker, regrettably, since independence, the value of our exports has predominantly been from copper despite the enormous potential to export other products. The dependence on copper has left us vulnerable to external shocks. This situation needs to be addressed and I will
elaborate further on measures the New Dawn Administration will implement to support
export diversification.

 

Madam Speaker, preliminary data indicates that Zambia exported more goods and services than was imported by us to the tune of US$1.5 billion during the first half of 2021 compared to US$1 billion in the same period in 2020. This was largely due to the increase in value of copper exports. Our exports amounted to US$5.1 billion and were dominated by copper, which alone contributed US$4 billion to total exports.

 

Madam Speaker, as at the end of August 2021, gross international reserves amounted to US$2.9 billion, representing 5.5 months of import cover, from US$1.20 billion, representing 2.4 months of import cover, at the end of December, 2020. This improvement was explained by the receipt of a free gift from the International Monetary Fund (IMF) amounting to US$1.33 billion …

 

Hon. Members: Hear, hear!

 

Dr Musokotwane: … as well as the net market purchase of foreign exchange by the BoZ.

 

Madam Speaker, with regard to the exchange rate, the Kwacha strongly appreciated between December, 2020 and September, 2021 mainly on account of improved portfolio investments. The Kwacha appreciated by 22.4 per cent to a monthly average of K16.37 per United States (US) Dollar in September, 2021 from K21.09 in December, 2020.

 

Part II

 

MACROECONOMIC OBJECTIVES, POLICIES AND STRATEGIES FOR 2022

 

Madam Speaker, it is clear from the developments I have just outlined that our economy is at a crossroads. Growth is low, debt has reached unsustainable levels, fiscal space or public finances are constrained and the cost of living has escalated beyond the reach of many Zambians. In addition, successive strenuous COVID-19 waves continue to cause damage to the economy and to create uncertainty to the growth outlook.

 

Madam Speaker, addressing these challenges will require dedication, determination and hard work from all of us. To move forward, the New Dawn Administration plans to achieve the following objectives for 2022:

 

1. attain a real GDP growth rate of at least 3.5 per cent;
2. reduce inflation to single digits by end-2022 and within the target band of 6 to 8 per cent by mid-2023;
3. limit international reserves to at least three months of import cover;
4. increase domestic revenue to not less than 21.0 per cent of the GDP;
5. reduce the fiscal deficit to no more than 6.7 per cent of the GDP; and
6. limit domestic borrowing to no more than 5.2 per cent of the GDP.

 

Madam Speaker, the strategy to achieve these objectives will be founded on four thematic areas as outlined in the President’s Address delivered on the Official Opening of the First Session of the Thirteenth National Assembly. The address provided the policy direction for the development of the Eighth National Development Plan and the 2022 Budget. The four
thematic areas are:

 

1. economic transformation and job creation;
2. human and social development;
3. environmental sustainability; and
4. good governance environment.

 

Economic Transformation and Job Creation

 

Madam Speaker, I have come to this House with a Budget that begins our journey towards economic transformation. This is a journey of paying very special attention to getting our economy to grow strongly year after year. The economy growing year after year means producing and selling more minerals, raw agricultural products, processed agricultural products, manufactured items, services and others. It is the growth in production that will increase wealth and end poverty.

 

Hon. Members: Hear, hear!

 

Dr Musokotwane: Madam Speaker, it is this growth that will create jobs. It is this growth that will lead to more taxes being collected to pay for the health of our people and the education of our children. It will be this growth that will enable us to pay our debts and clear arrears without excessively tightening our belts. It will be this growth that will earn us more dollars.

 

Mr Speaker, this will neither be a sprint nor a marathon –

 

Hon. Opposition Members: It is Madam Speaker.

 

Dr Musokotwane: What did I say?

 

Laughter

 

Hon. Opposition Members: You said, Mr Speaker.

 

Dr Musokotwane: I apologise.

 

Dr Musokotwane drank water.

 

Hon. Members: Hear, hear!

 

Interruptions

 

Madam Speaker: Order!

 

Dr Musokotwane: Madam Speaker, this will neither be a sprint nor a marathon, but a well-paced and thought out race. It is a race travelled by other countries, especially in South East Asia, where some were poorer than us in 1964 and now they have become very rich. The key is to expand production in as many sectors as possible year after year. In the initial stage, our focus will be to increase output in agriculture, tourism, mining, manufacturing, energy and transport sectors to grow the economy and create employment opportunities, especially for the youth.

 

Madam Speaker, economic transformation will entail shifting resources to activities of higher productivity both within and across the sectors. So, let me now look at the sectors where the growth is expected to take place.

 

Agriculture, Livestock and Fisheries Sectors

 

Madam Speaker, agriculture presents us the best opportunity to attain growth, especially that the majority of our people, about 60 per cent, are dependent on it. This sector has a relatively short gestation period with low capital requirements, readily available labour, abundant water resources and, of course, the blessing of arable land.

 

Madam Speaker, the sector, however, has for a long time faced a number of structural and other impediments to the realisation of its full potential. These include, low production and productivity, limited market access, under-developed value chains and dependence on rain-fed agriculture. In the recent past, the frequency and intensity of climate events has also negatively impacted the sector.

 

Madam Speaker, the current Farmer Input Support Programmed (FISP), delivered through a combination of the Direct Input Support (DIS) and the Electronic Voucher (e-Voucher) System, has had a number of challenges. The DIS mode of delivering inputs is unsustainable to the Treasury with expenditures increasing significantly over the years with limited change in the number of beneficiaries and input package. It is also characterised by serious challenges in delivery as beneficiaries have received fewer inputs than they have paid for. Similarly, in areas where the e-Voucher System is being used, some farmers have not been receiving inputs despite making a contribution. Further, there has been no equity in terms of benefit between the two delivery modes as we have seen in the past few weeks.

 

Madam Speaker, there is, therefore, need to comprehensively address these challenges. To this effect, the Government will implement a new comprehensive agricultural support programme commencing in the 2022/2023 Season. This programme will be cost effective, better targeted and equitable across beneficiaries. It will also support the supply of quality inputs, attain diversification of crops as well as increase production and productivity.

 

Madam Speaker, it is only right that we continue to support our small-scale farmers for the reasons that we all know. However, and perhaps this is a departure point, we can do more in agriculture, as we support the small scale farmers, by promoting large scale estate production for both domestic and export markets. The estates can employ many people at different levels of skills, create associated business opportunities, support agro-industry, support viable out-grower schemes and earn foreign exchange.

 

Madam Speaker, a good example of a successful estate is the Nakambala Sugar Estate. A successful agriculture estate in fact can employ as many people directly and indirectly as a mine.

 

Hon. Members: Hear, hear!

 

Dr Musokotwane: So, Madam Speaker, engineers, agronomists, technicians, drivers, clerks and many more people will find jobs on estates if we expand them. The creation of viable farm blocks all over the country is therefore imperative in our quest to quickly create jobs for the youths.

 

Madam Speaker, the Government will promote the establishment of large scale agriculture estates across the country that will produce and process agricultural products that are suitable in the respective areas. The vehicle for doing so will be the farm blocks, which are sometimes also called growth poles. The task of the Government in realising this initiative is to provide the necessary infrastructure for farm blocks to be operational. So, this will not just be about creating roads to nowhere or taking power to nowhere, but taking this infrastructure to areas which will boost agricultural production.

 

Hon. Government Members: Hear, hear!

 

Dr Musokotwane: Madam Speaker, the Government is already discussing with co-operating partners to secure both the technical and financial support for the development of some farm blocks. For example, the Nansanga Farm Block, which has been abandoned in the last ten years.

 

Hon. Government Members: Hear, hear!

 

Dr Musokotwane: Let me inform this august House that the background work started this year and I am hopeful that actual work on the development of the farm blocks will start in 2022.

 

Hon. Government Members: Hear, hear!

 

Dr Musokotwane: Madam Speaker, the Government will also aggressively pursue the development of other farm blocks and the nation will be kept informed of these developments.

 

Madam Speaker, to reduce dependence on rain-fed agriculture, the Government will complete and operationalise the ongoing irrigation infrastructure projects. We will also mobilise highly concessional financing for irrigation equipments for small scale farmers.

 

Madam Speaker, to boost agriculture production, I will, in Part III announce measures to support agriculture mechanisation.

 

Madam Speaker, in the livestock sub-sector, the Government will recruit more extension officers to enhance provision of services to livestock farmers across the country. Livestock farmers will also be trained in open grazing management practices while animal disease prevention and control programmes will continue. The Government is also investing in a liquid nitrogen plant that will support increased use of artificial insemination. All these interventions are aimed at increasing production and productivity in the sub-sector.

 

Madam Speaker, in line with the New Dawn Administration agenda of alleviating poverty, we will empower youth and female headed households through livestock stocking and re-stocking as well as support livestock infrastructure.

 

Hon. Government Members: Hear, hear!

 

Dr Musokotwane: Madam Speaker, with regard to the fisheries sub-sector, the country in 2020 produced 94,943 metric tonnes of fish from our natural water bodies and 45,670 metric tonnes of fish under aquaculture. However, the country remains a net importer of fish. In 2020, the country imported an estimated 80,000 metric tonnes of fish. The sub-sector has potential to meet domestic demand, penetrate regional export markets and contribute significantly towards job creation.

 

Madam Speaker, notwithstanding the growth, the sub-sector faces numerous challenges such as overfishing from natural water bodies and limited investment in fingerling and fish feed production. To counter this, we will strengthen monitoring and fisheries conservation efforts in our natural water bodies. Further, to complement efforts by the private sector, aquaculture production will be supported through the establishment of additional hatcheries and completion of other infrastructure such as aquaculture parks. These investments are expected to increase fish production under aquaculture to 61,000 metric tonnes in 2020.

 

Mr Lusambo: 2020?

 

Dr Musokotwane: Sorry, 2022.

 

Hon. Members: Hear, hear!

 

Dr Musokotwane: I am happy that you are listening very carefully.

 

Interruptions

 

Dr Musokotwane:

 

Tourism Sector

 

Madam Speaker, the New Dawn Administration has identified the tourism sector as
another key sector in our transformative agenda as it stimulates economic growth. Recently, the sector has been severely hit by the COVID-19 pandemic.

 

Madam, cognisant of the expected gradual recovery of the global tourism market,
relief measures provided to the sector this year will be extended for another year. In addition, a stable economic landscape will be maintained to reduce the cost of doing business in the sector. This will include the review of the multiplicity of licences.

 

Madam Speaker, growing the tourism industry requires that the areas available for
visitation must be diversified so that Zambia receives more tourists who also spend more nights. Presently, Livingstone and the Victoria Falls area dominate. In the next five years, the Government will develop other parts of the country by establishing the necessary infrastructure and regulatory framework that will make them attractive for the private sector to establish hotels, lodges and other tourism facilities. In other words, here also there will be no roads to nowhere, no airports to nowhere, no electricity to nowhere, but where there is tourism potential.

 

Hon. Government Members: PF no plan.

 

Mr Lusambo: That is PF’s programme.

 

Dr Musokotwane: Madam Speaker, like in the case of agriculture, development partners and other stakeholders have been engaged to undertake studies with a view to launching some economic related projects in 2022. Of immediate interest in this respect is the need to complete developments in Kasaba Bay in the Northern Circuit, which was abandoned in the past ten years.

 

Hon. Government Members: Hear, hear!

 

Hon. PF Members: No!

 

Interruptions

 

Madam Speaker: Order!

 

Dr Musokotwane: Madam Speaker, Zambia is scheduled to host the African Union (AU) Assembly of Heads of State and Government next year. This presents an opportunity for the country to market itself as a favourable tourist destination. I urge tourism sector players to take advantage of the forthcoming summit to market our country and offer attractive tour packages to our visitors.

 

Mining Sector

 

Madam Speaker, the mining sector remains critical to the Zambian economy as it is the main contributor to foreign exchange. This role is destined to grow in importance due to the rising demand for copper boosted by its vital role in a number of rapidly growing industrial
sectors such as manufacturing of electric vehicles. The buzzword is that copper will be as lucrative for money making as was oil in the Middle East in the 1970s.

 

Madam Speaker, to benefit from the expected copper boom, Zambia must not depend just on the high prices. Rather, it is time now to ramp up production. The New Dawn Administration will facilitate the increase in copper output from the current 800,000 tonnes, where it has been stuck in the last ten years, to over 3 million tonnes in the next ten years.

 

Hon. Members: Hear, hear!

 

Dr Musokotwane: This means that existing mines must produce more while new mines must be opened. Complications surrounding the existing mines, where window dressing was done, will be resolved.

 

Hon. Members: Hear, hear!

 

Dr Musokotwane: Madam Speaker, the targeted copper production level will bring higher earnings, more jobs, business opportunities, taxes and foreign exchange. As an example, 3 million tonnes will keep our railways and truckers extremely busy in terms of just merely transporting the copper to the ports. The Government will ensure that Zambians will not be by-standers in this boom. I will outline the measures in Part III of my address to attract more investment in the sector.

 

Madam Speaker, the Government will promote diversification and value addition, not only to copper, but also to gemstones, manganese and other high value minerals like gold. I am aware of the local companies that intend to expand their mining operations while new investors have expressed interest in setting up new plants. I, therefore, urge these and other investors to take advantage of the reforms in the sector to add value to our mineral resources.

 

Madam Speaker, to promote the growth of small-scale mining and address illegal mining, the Government will formalise operations of artisanal miners through the formation of co-operatives, especially for the youth and women.

 

Hon. Members: Hear, hear!

 

Dr Musokotwane: The co-operatives will be equipped with skills and knowledge to enhance their productivity, as well as training in safe mining practices. These interventions will not only address illegal mining practices, but also create employment. In addition, we are currently undertaking a comprehensive audit of the mining licences issued that will be help us develop and implement reforms to enable Zambians participate in their own right or in partnership with foreign investors.

 

Manufacturing and Industrialisation

 

Madam Speaker, to create jobs and achieve higher economic growth, the Government will support value addition to products from the agriculture, forestry and mining sectors and so on and so forth. We will promote the growth of the manufacturing sector by facilitating trade and investment as well as enhance the competitiveness of local products.

 

Madam Speaker, to attract investment and help to concretise value addition, the New Dawn Government will reinvigorate the programme of the Multi-Facility Economic Zones (MFEZs) and industrial parks. As you will recall, these have also been abandoned in the last ten years. This will be achieved through the provision of tax incentives that will attract private sector investment into these zones. I will elaborate on this in Part III of the address. Apart from the tax incentives, we shall undertake a comprehensive review of the investment promotion strategy.

 

Madam Speaker, the Zambian internal market is too small, and this is very important, to support the sustained production of most goods and services such as crops, livestock products and manufactured products. Expanding output, therefore, requires that we penetrate in the regional and international markets. Access to export markets will be promoted through trade missions as well as the provision of trade facilitation and support services to markets such as the Tripartite Free Trade Area and the African Continental Free Trade Area.

 

Madam Speaker, export-led growth also requires reliable, but cheap transportation to the sea. Short of that, it will be hard to be price competitive. In this regard, discussions are underway with co-operating partners to look into the modalities of improving our railway systems. In the same vein, steps are being taken to significantly improve services at our borders in order to minimise delays. Subject to agreement with neighbouring countries, some of the border posts are planned to operate twenty-four hours a day.

 

Hon. Members: Hear, hear!

 

Dr Musokotwane: Madam Speaker, to facilitate trade to the Great Lakes Region, the capacity of Mpulungu Port will be expanded in the medium-term to handle more than 800,000 metric tonnes of cargo per annum from the current 200,000 metric tonnes.

 

Madam Speaker, to help reduce the cost of doing business, the Government will rationalise the number of licences and permits required to operate. To further support business growth and expansion, the Government will amend the National Pension Scheme Act, Cap. 256 of the Laws of Zambia, to make the penalty regime less punitive to employers.

 

Hon. Members: Hear, hear!

 

Dr Musokotwane: This will also encourage compliance and registration of new employers.

 

Small and Medium Enterprise Development

 

Madam Speaker, Small and Medium Enterprises (SMEs) play a key role in boosting growth and job creation. It is on this basis that His Excellency the President established a dedicated Ministry of Small and Medium Enterprise Development. The ministry is responsible for policy as well as the development, mentorship and the incubation of SMEs.

 

Madam Speaker, to enhance the smooth operations of SMEs, the New Dawn Administration will provide support to SMEs and co-operatives ranging from infrastructure development as well as access to markets and credit. There is already ongoing work in the construction of industrial yards.
 

Madam Speaker, with regard to access to credit, I am glad to inform this august
House that various international institutions such as the United Kingdom Aid (UKAid) and the European Investment Bank have come on board. This is in addition to our local institutions which have products tailored for SMEs. We have made provisions to guarantee the borrowing of SMEs through the Zambia Credit Guarantee Scheme.

 

Energy Sector

 

Madam Speaker, the energy sector is key to economic transformation. The focus will be on the development and management of energy resources in a sustainable manner. Currently, the energy sector is faced with many challenges. In the electricity sub-sector, tariffs are not cost reflective hence the low private sector investment. In the petroleum sub-sector, the procurement of petroleum products has been plagued by inefficiency and non-cost reflective prices.

 

Madam Speaker, to ensure an effective and efficient energy sector, reforms will be undertaken in the electricity and petroleum sub-sectors. In the electricity sub-sector, we will implement a renewable energy investment plan that will improve the energy mix. This will also reduce our vulnerability to climate shocks by leveraging the declining cost of technologies to harness our vast solar resources, complemented by wind and geothermal energy.

 

Madam Speaker, it is not a secret that the efficiency of ZESCO Limited under the existing corporate structure has been questioned. This will be reviewed. Additionally, the Power Purchase Agreements (PPAs) are being renegotiated as part of the strategy to sustain the company.

 

Madam Speaker, to attract investment within the electricity sub-sector, we will implement cost-reflective tariffs. We will work with countries in the region to accelerate the integration of electricity infrastructure projects so as to improve access to the regional power markets.

 

Madam Speaker, we will also scale-up the programme of rural electrification through the extension of the grid network and deployment of off-grid solutions.

 

Madam Speaker, in the petroleum sub-sector, the Government will restructure
the fuel supply chain to achieve least cost pricing while ensuring the stable supply
of petroleum products.

 

Hon. Members: Hear, hear!

 

Dr Musokotwane: As you may be aware, the design of the existing petroleum supply
lines were largely motivated by the geo-strategic realities of the 1960s as Zambia sought
to disengage from the economic connections with Southern African countries under apartheid and colonialism. Economic efficiency was considered secondary.

 

Madam Speaker, here is an example of the inefficiencies that exist today. Fuel may come into Zambia from Dar-es-Salaam. Whether it comes in the form of raw stuff for the Indeni
Refinery or finished imported stuff, it travels all the way to the storage tanks in Ndola. From Ndola, some of that fuel returns to Mpika, Kasama and even Nakonde, where it passed through en-route to Ndola in the first place.

 

Interruptions

 

Madam Speaker: Order!

 

Hon. Members, let us listen to the Budget Speech.

 

Dr Musokotwane: This inefficiency contributes to the high cost of fuel unless it is subsidised. After fifty-seven years of Independence, it is time to redesign the supply lines so as to achieve efficiency. This is what the Government is doing right now so as to remove the inefficiencies.

 

Transport Sector

 

Madam Speaker, transport infrastructure and systems are the arteries through which the economy pulses. Good roads, rail, air and maritime infrastructure are the backbone for facilitating economic activities as well as trade and investment domestically and within the region and beyond.

 

Madam Speaker, in road transport, priority will be placed on maintenance, rehabilitation and upgrading of feeder roads. We have commenced the Improved Rural Connectivity Project to maintain and rehabilitate a total of 4,300 km of rural feeder roads. Emphasis will also be placed on the rehabilitation of economic roads some of which are in a bad state such as the Lusaka/Ndola, Chinsali/Nakonde and Kazungula/Sesheke roads.

 

Hon. Members: Hear, hear!

 

Dr Musokotwane: Madam Speaker, railway transport has been facing a number of challenges, the major one being the poor state of the infrastructure. To ensure sustainability, priority in the near-term will be the maintenance of the infrastructure.

 

Madam Speaker, the financing requirements to construct new roads as well as rehabilitate and maintain existing roads is beyond the financial capacity of the Government. The same applies to railway infrastructure. This will remain so for a long time because of the previous practice of awarding road contracts even when there was no money to pay the contactors.

 

Hon. Government Members: PF!

 

Dr Musokotwane: Madam Speaker, arrears in the road sector have risen to almost US$1 billion.

 

Madam Speaker, the Government will, therefore, aggressively pursue Public-Private Partnerships (PPP) in the overhauling of the existing line and construction of new railway spurs as well as roads. I have no doubt that the PPP mode of financing will be very
successful because we have already received so many proposals.

 

Hon. Government Members: Hear, hear!

 

Dr Musokotwane: Madam Speaker, in the aviation sector, focus will be on the completion of the Kasama and Mbala airports. Further, the rehabilitation and maintenance of provincial airports and aerodromes will continue to facilitate air transport for both cargo and passengers.

 

Information and Communication Technology Sector

 

Madam Speaker, Information and Communication Technology (ICT) enables economic growth by facilitating the delivery of services through the internet and mobile broadband. In the advent of the COVID-19 pandemic, this sector has proved to be vital in the social and economic affairs of the country.

 

Madam Speaker, ICT is an important tool for innovation and financial inclusion. It is increasingly creating employment opportunities for the youth in various sectors such as transport, trade and financial services. To enhance these opportunities, the Government will increase the number of communication towers so that this technology reaches all our citizens, especially in the unserved and underserved areas. The New Dawn Administration will actualise the digital transformation agenda.

 

Human and Social Development

 

Madam Speaker, we must put people at the centre of development. This is not so for its own sake. It is good economics because it is now known or common knowledge that a country with skilled and healthy people can achieve development even if it has no natural resources. We have, therefore, made significant allocations to education, skills development and health. We have also scaled up allocations to water and sanitation as well as the provision of social safety nets.

 

Madam Speaker, let me now elaborate on these aspects.

 

Interruptions  

 

Dr Musokotwane:

 

Education and Skills Development

 

Madam Speaker, the New Dawn Administration believes that education is the greatest equaliser. Sound education requires teachers. Unfortunately, most of our schools, especially those in rural areas, do not have enough teachers. It is not uncommon to find two teaches at one school, say from Grades 1 to 7, and two teachers from Grades 1 to 9. That is what we find all across the country.

 

Hon. Government Members: PF!

 

Dr Musokotwane: Madam, despite this limited number of teachers in some schools, there are at least 55,000 young trained teachers who have not been employed. Some have been waiting for six years or more post training to be hired. The New Dawn Administration has found money to recruit teachers.

 

Hon. UPND Members: Hear, hear!

 

Interruptions

 

Dr Musokotwane: Madam Speaker, the New Dawn Administration has found money to recruit teachers. For the first time in the history of this country, we will recruit 30,000 teachers.

 

Hon. Members: Hear, hear!

 

Interruptions

 

Madam Speaker: Order! Hon. Members, can we have some order in the House.

 

Dr Musokotwane: I repeat, for the first time in the history of this country, in 2022, we are going to recruit 30,000 teachers.

 

Hon. UPND Members: Hear, hear! Game over!

 

Interruptions

 

Madam Speaker: Order!

 

Dr Musokotwane: Madam Speaker, this is more than we have hired in the past ten years put together.

 

Hon. UPND Members: PF!

 

Dr Musokotwane: The recruitment will help reduce the backlog of unemployed teachers. Over the next five years, the Government will continue to hire more teachers in net terms and the plan is to be current by 2026.

 

Hon. UPND Members: Hear, hear!

 

Dr Musokotwane: Madam Speaker, these recruitments are aimed at improving the quality of education by reducing the pupil-teacher ratio. The teachers will be deployed equitably to serve across the country in all districts.

 

Madam Speaker, the Government is aware that in some instances, the shortage of teachers is because some of them do not want to serve in remote places. They join the teaching service merely for the purpose of getting a job, but thereafter insist on transfers so as to serve in urban or in peri-urban areas. The Government will work out measures within 2022 to end this practice, bearing in mind that the interests of the children are paramount above anything else.

 

Madam Speaker, to further improve the quality of education through the provision of teaching and learning materials, grants to primary schools will be increased three-fold in 2022.

 

Hon. UPND Members: Hear, hear!

 

Dr Musokotwane: Madam Speaker, to increase access to education, the Government will construct an additional 120 secondary schools in 2022.

 

Hon. UPND Members: Hear, hear!

 

Dr Musokotwane: The financing for this initiative will be through a concessional loan that I recently signed with the World Bank.

 

Interruptions

 

Madam Speaker: Order! Hon. Members, order!

 

Dr Musokotwane: Unlike the loans which were borrowed for building all sorts of things and payable over five years, this loan will be payable over a period of thirty years.

 

Hon. UPND Members: Hear, hear!

 

Dr Musokotwane: Madam Speaker, the UPND has always advocated for free education for the child whose family is unable to pay. It is such support during the United National Independence Party (UNIP) era that enabled many of us to be where we are today. We shall always be committed to this ideal. As such, the 2022 Budget envisages concrete steps towards this goal. The Government already provides free educational services for learners –

 

Mr Lusambo: Under PF!

 

Interruptions

 

Dr Musokotwane: Madam Speaker, the Government already provides free educational services for learners at primary schools. At secondary school level, however, learners currently pay. Typically, they pay K600 per annum per child for tuition when not in boarding. If in boarding, they pay a total of K3,600 inclusive of K600 tuition fee. In addition, Parent Teacher
Association (PTA) fees and examination fees are paid.

 

Madam Speaker, tuition fees, PTA fees and examination fees will be abolished.

 

Hon. Members: Hear, hear!

 

Interruptions

 

Madam Speaker: Order! Hon. Members, order!

 

Dr Musokotwane: Madam Speaker, I will repeat that. Tuition fees, PTA fees and examination fees will be abolished in 2022.

 

Hon. Members: Hear, hear!

 

Interruptions

 

Madam Speaker: Order!

 

Dr Musokotwane: Madam Speaker, to this end, the Government will provide grants to public schools and those supported by the Government to meet the increased operational costs of the schools. In other words, we will remove those fees because the Government is going to pay.

 

Madam Speaker, regarding boarding fees for secondary school learners, a bursary scheme will be introduced for vulnerable learners. The one to determine whether a child will benefit or not, will not be a permanent secretary in Lusaka, a permanent secretary in the province or the District Education Board Secretary (DEBS). The ward is going to determine which child deserves to receive the bursary.

 

Hon. Members: Hear, hear! Bally!

 

Interruptions

 

Madam Speaker: Order!

 

Hon. Members, can we maintain the dignity and honour of the House. I know there is excitement, but let us hold it. Otherwise we will be here the whole day. Can we have order.

 

Dr Musokotwane: Madam Speaker, I am sure you will agree with me that in a situation where the most deserving child must be identified, the community itself is the best to choose who that child is. The exact modalities are being worked out ahead of the opening of the schools in 2022.

 

Hon. Members: Hear, hear!

 

Dr Musokotwane: Madam Speaker, to ensure that a girl child has equitable opportunities to quality education as a boy child, the Government will address challenges that a girl child faces such as walking long distances to school, early marriages and so on and so forth. In this regard, we will expand the support to a girl child through the Keeping Girls in School Programme from the current 28,964 to 43,520 girls in 2020.

 

Mr Lusambo: 2022.

 

Dr Musokotwane: 2022. I am glad you are so attentive.

 

Laughter

 

Dr Musokotwane:

 

Health Sector

 

Madam Speaker, just like in the education sector, the New Dawn Administration is breaking the record of recruitment in the health sector. In 2022, we will recruit and deploy 11,200 health workers.

 

Hon. Members: Hear, hear!

 

Dr Musokotwane: This is unprecedented.

 

Interruptions

 

Madam Speaker: Order! Hon. Members, can we have order!

 

Dr Musokotwane: The amount we have provided for in the Budget will also enable the Ministry of Health to put on the payroll health care staff who have been working without receiving salaries, in certain cases for two to three years.

 

Madam Speaker, the recruitment will improve the quality of healthcare while reducing the backlog of unemployed frontline health personnel. Measures have been put in place to improve supply management systems to ensure the availability of essential medicines and medical supplies. The procurement of medicines and medical supplies will be undertaken by the Zambia Medicines and Medical Supplies Agency in accordance with the Zambia Medicines and Medical
Supplies Agency Act No. 9 of 2019, and not the Ministry of Health. Further, we will prioritise equipping and re-equipping of health facilities with modern equipment.

 

Madam Speaker, to increase access to quality and affordable healthcare,
the Government will continue with the programme of construction and completion of health infrastructure throughout the country. To ensure that healthcare is affordable, we will reform the National Health Insurance Scheme to benefit all.

 

Madam Speaker, to further enhance healthcare in the country, the Government will partner with the private sector to create centres of specialisation so that Zambians can access specialised healthcare locally while attracting regional medical tourism.

 

Madam Speaker, we will increase financing towards epidemic and pandemic management to prepare for unforeseen diseases such as Ebola and COVID-19. As we do so, efforts will be made to ensure that there is no disruption in the delivery of routine health programmes. In addition, the Government will pay particular attention to addressing communicable and non-communicable diseases.

 

Madam Speaker, let me take this opportunity to thank the frontline healthcare workers for their sacrifices and courage during the time when we have had outbreaks of COVID-19.

 

Water and Sanitation Sector

 

Madam Speaker, the New Dawn Administration is undertaking a number of water and sanitation projects to improve access to clean and safe drinking water as well as to provide sanitation services. We will also work with our co-operating partners to ensure that these projects are completed in good time. One of the key outcomes of these interventions is to reduce the distances our mothers and children cover to fetch water.

 

Madam Speaker, to reduce the cost of drilling boreholes, the Government has scrapped fees for application and registration and annual fees to drill domestic boreholes.

 

Hon. Members: Hear, hear!

 

Dr Musokotwane: Application, registration and annual fees will only apply to commercial boreholes. However, it will still be a requirement to register all boreholes or apply to drill a borehole failure to which penalty fees shall apply. These measures are with effect from 1^st January, 2022.

 

Hon. Members: Hear, hear!

 

Social Protection

 

Madam Speaker, to ensure sustained and continued protection for the poor and vulnerable, the New Dawn Administration will scale-up social protection.

 

Madam Speaker, the Social Cash Transfer Programme will be scaled up by increasing the number of beneficiaries and the transfer value. In 2022, the number of beneficiary households under the programme will be increased to over one million from the current 880,539.

 

 Madam Speaker, in 2022, the transfer value for households will be increased from K150 to K200 per month.

 

Hon Government Members: Hear, hear!

 

Dr Musokotwane: For households with severely disabled members, the transfer value will increase from K300 to K400 per month.

 

Hon Government Members: Hear, hear!

 

Madam Speaker, the Social Cash Transfer Programme has been characterised by high administration costs, delayed payments and misappropriation. To address these challenges, we will improve and strengthen the payment mechanisms and oversights of the programme.

 

 Madam Speaker, with regard to the Food Security Pack Programme, the number of beneficiaries will be increased to 290,000 households in 2022 from 263,700 as at end-August 2021. This Programme is targeted at the vulnerable, but viable farmers.

 

Madam Speaker, other social protection interventions that will be scaled up include the Girls Education and Women’s Empowerment and Livelihood Programme, the Home-Grown School Feeding Programme, Public Welfare Assistance Scheme, and child welfare programmes.

 

Madam Speaker, as at end September 2021, pension benefit arrears for retired public service workers stood at K1.2 billion. This has negatively impacted their livelihood. To safeguard the livelihoods of retirees, in 2022, the New Dawn Administration will dismantle all outstanding pension arrears …

 

Hon. Members: Hear, hear!

 

Hon. Member: PF, 10:0, beaten home and away!

 

Dr Musokotwane: … for Public Service workers and curtail the accumulation of arrears going forward.

 

Hon. Government Members: Game over!

 

Dr Musokotwane: Madam Speaker, to make the pension system financially sustainable …

 

Madam Speaker: Order!

 

Dr Musokotwane: … and provide social security to retirees, the Government will review and amend relevant legislation including the Public Service Pensions Act, Cap. 260 of the Laws of Zambia, the Local Authorities Superannuation Fund Act, Cap. 284 of the Laws of Zambia and the Pension Scheme Regulation Act No. 27, 2005. The new pension system will also enable retirees to access accrued benefits before retirement as pronounced by His Excellency, the President.

 

Interruption

 

Madam Speaker: Order!

 

Environmental Sustainability

 

Madam Speaker, the New Dawn Administration places environmental sustainability at the centre of all our development efforts. To bequeath future generations with a better environment, a ministry dedicated to champion the development of a green economy and a sustainable environment was created.

 

Madam Speaker, in environmental sustainability, focus will be to strengthen climate change adaptation and mitigation, promote sustainable natural resources management and enhance the coverage of early warning systems. With the renewed focus of the New Dawn Administration on greening the economy, we will ensure that our social and economic activities are sustainable and efficient.

 

Madam Speaker, we will also promote innovative financing for climate change interventions. This will be done through mechanisms such as the use of green bonds, of carbon trading and putting in place legislation that establishes a national climate change fund.

 

Madam Speaker, the Government will review the fee structure for environmental impact assessments. This is to reduce the cost of doing business and align them to international best practices.

 

Good Governance Environment

 

Madam Speaker, we need to create a good governance environment in which the conduct of public affairs is done in a responsible, accountable and transparent manner. This is the commitment of the New Dawn Administration. Our priorities in this regard will be the fight against corruption, strengthen the rule of law and ensure sound public financial management. We will also take resources closer to the people through decentralisation.

 

Hon. Government Members: Hear, hear!

 

Fight Against Corruption

 

Madam Speaker, the New Dawn Administration has placed a high premium on the fight against corruption. Corruption takes away resources that would have been used to better the health of our children, give them a better quality education and improve livelihoods for our people. Corruption also leads to the adoption of policies that rob future generations of opportunities.

 

Madam Speaker, to strengthen the fight against corruption, we have increased the allocation in the 2022 Budget for law enforcement agencies and investigative wings. This is in line with the pronouncements made by the President.

 

Interruption

 

Madam Speaker: Order!

 

Public Financial Management

 

Madam Speaker, sound public financial management is the key in meeting the development agenda of the New Dawn Administration. The major focus will be on strengthening national planning, internal controls and audit, resource mobilisation, procurement as well as transparency in debt contraction and management, among other areas.

 

 Madam Speaker, to reposition the country in line with the economic transformation agenda, I will bring to this House the Eighth National Development Plan (8NDP) for approval within this session.

 

Madam Speaker, to enhance internal controls and ensure timely financial reporting, the Government will expand the coverage of the Financial Management System (FMS) to the district level and develop a standardised local authorities financial management information system framework. This will further strengthen the financial governance of the Constituency Development Fund (CDF).

 

Madam Speaker, let me turn to one of the consequential issues in our public financial management, public procurement, which forms a significant portion of public expenditure and has been subject to abuse. The New Dawn Administration will ensure that all public procurements are at the right price, of the right quality and delivered on time.

 

Hon Government Member: Hear, hear!

 

Dr Musokotwane: This will be achieved through strict adherence to the provisions of the Public Procurement Act No.8, 2020 and ensuring that all public investment projects are appraised.

 

Debt Management

 

Madam Speaker, our external debt is unsustainable. With high debt servicing obligations, the Government has had very limited resources to spend on programmes that contribute to economic growth and poverty reduction. Our public and publicly guaranteed debt situation calls for restructuring to release cash. In this regard, the Government applied for debt restructuring under the Common Framework for Debt Treatment beyond the Debt Service Suspension Initiative.

 

Madam Speaker, to provide an anchor to our debt restructuring engagement, the New Dawn Administration is actively engaging the International Monetary Fund (IMF) for a funded programme. It is very imperative that Zambia gets support from the IMF for our economic reform programme. Once attained, Zambia will be able to engage creditors to restructure its debt under the Common Framework for Debt Treatment.  To engage the creditors and successfully negotiate the debt, the gateway is to have an IMF programme, which has been illusive for so many years. Once we negotiate the debt, cash resources will be released, which will enable us to finance more developmental needs in 2022. For now, we aim to conclude with creditors for restructuring of debt and we hope this can be done by the first quarter of 2022.

 

Madam Speaker, I, therefore, urge this House and the nation at large to rally together and support the Government to reach an agreement with the IMF by mid-November this year.

 

Hon. Government Members: Hear, hear!

 

Dr Musokotwane: There is no option to this. Otherwise, the debts we owe will choke this nation to a standstill. So, the IMF programme is an absolute necessity.

 

Madam Speaker, as I have already stated, to give an example, the salaries we pay to the Public Service and the debt service are not sufficiently covered by the taxes that we collect.

 

Interruption

 

Madam Speaker: Order, Order!

 

Dr Musokotwane: As I have already stated, debt service and Public Service salaries exceed domestic revenues. In 2022, we shall only manage to finance other activities because of that grant or gift that we received from the IMF of UD$1.3 billion, which we have put to good use by hiring teachers and doctors.

 

Hon. Government Members: Hear, hear!

 

Dr Musokotwane: Madam Speaker, it is therefore, essential…

 

Mr Lusambo: Pressure, pressure!

 

Dr Musokotwane: … that we get to a programme with the IMF.

 

Interruption

 

Madam Speaker: Order!

 

Dr Musokotwane: Madam Speaker, we are engaging collaboratively with our various categories of creditors with the assistance of our financial and legal advisors to work towards a consensual debt resolution. In so doing, we will adhere to the principles of transparency and equitable treatment of all creditors.

 

Madam Speaker, to curtail the further accumulation of debt, the Government will not contract any external non-concessional loans except in instances of refinancing. With regard to domestic debt, we will ensure that the issuance of Government securities will be primarily through auctions. Private issuances of bonds will be minimised.

 

Madam Speaker, I shall be bringing to this august House, within this session, the Loans, Grants and Guarantees (Authorisation) Bill, which will repeal and replace the Loans and Guarantees (Authorisation) Act Cap 366, 1969.

 

Hon. Government Members: Hear, hear!

 

Dr Musokotwane: The Bill will, among others, propose to enhance transparency in public debt management, including loan contraction, and provide a framework for evaluation, issuance, and monitoring of public guarantees.

 

Fiscal Policy

 

Madam Speaker, the New Dawn Administration’s fiscal policy agenda is to progressively reduce fiscal deficits to sustainable levels while supporting growth that generates jobs and reduces poverty. To achieve this, we will employ a combination of revenue mobilisation, administrative reforms and expenditure rationalisation measures.

 

Madam Speaker, in the medium-term, our target is to increase domestic revenue to at least 21.0 percent of the Gross Domestic Product (GDP). To achieve this, the Government will streamline the tax system and place a high priority on fair and equitable taxation as well as establish a stable and predictable tax policy environment. Further, we will rationalise the mining tax system to attract investment, which will in turn increase production. We will also address base erosion and profit shifting to boost domestic revenues.

 

 Madam Speaker, to take advantage of the ICT for revenue collection, the Government will connect an additional 100 public services to the Government Service Bus and Payment Gateway. This will bring the total number of services to 300 by the end of 2022. Further, the Zambia Revenue Authority (ZRA) systems will be interfaced with the Government Service Bus and other systems to improve on regulatory compliance and seal revenue leakages.

 

Madam Speaker, to rationalize expenditure, we will reduce areas of wastage of resources in the Budget and channel them to other needy areas that will improve the livelihoods of our people. The migration of beneficiaries under the Farmer Input Support Programme to the cheaper Comprehensive Agriculture Support Programme is one such measure.

Madam Speaker, to further reduce expenditure on goods and services, the New Dawn Government will strictly enforce the provisions of the Public Procurement Act No.8, 2020. We will ensure that the procurement of public goods, works and services are done at the right price in accordance with the quarterly market price index published by the Zambia Public Procurement Authority (ZPPA).

 

Strategies on Dismantling of Domestic Arrears

 

Madam Speaker, to curtail the accumulation of arrears and dismantle the stock, we have developed an arrears dismantling strategy. The key measures in the strategy include increased budgetary provisions, debt and/or cheque swaps, as well as debt refinancing and restructuring. We plan to liquidate a substantial amount of domestic arrears over a period of five years.

 

Monetary Sector

 

Madam Speaker, the Government is committed to lowering the cost of living for our people by reducing the current high level of inflation. In this regard, the BoZ will take all the necessary action to bring inflation down to the target band of 6 to 8 percent by mid-2023, at the latest. Further, implementation of the Monetary Policy will continue to rely on the forward-looking framework anchored on the Monetary Policy Rate. This will take into account subdued economic activity and existing vulnerabilities in the financial system.

 

Financial Inclusion

 

Madam Speaker, the country has made significant progress in financial inclusion. The level of financial inclusion amongst adults increased to 6.6 million or 69.4 percent in 2020 from 4.8 million or 59.3 percent in 2015. This was largely driven by a surge in the use of digital financial services, particularly mobile money, to 58.4 percent in 2020 from 14.0 per cent in 2015.

 

 Madam Speaker, despite the progress made towards enhancing financial inclusion, 2.9 million or 30.6 percent of adults remain financially excluded with women, the rural based population, as well as Small and Medium Scale Enterprises being the most challenged. In this regard, the Government will up-scale the implementation of the National Financial Inclusion Strategy 2017-2022 aimed at enhancing financial inclusion in collaboration with various stakeholders.

 

Decentralisation

 

 Madam Speaker, the next issue is decentralisation.

 

Hon Members: Hear, hear!

 

Interruptions

 

Dr Musokotwane: Madam Speaker, you may note that until now, the CDF has been pegged at K1.6 million per constituency, if it got released at all. The anchor for the New Dawn Administration is taking resources closer to the people.

 

Hon Government Member: Hear, hear!

 

Dr Musokotwane: To this end, we have significantly increased the CDF to K25.7 million per constituency.

 

Interruptions

 

Madam Speaker: Order, order!

 

Hon. Government Members: Bally, Bally!          

 

Madam Speaker: Order, order!

 

Interruptions

 

Madam Speaker: Order! Let us allow the hon. Minister of Finance and National Planning   to continue.

 

Hon. Government Members: Repeat!

 

Dr Musokotwane: I repeat as demanded.

 

Hon. Government Members: Yes!

 

Dr Musokotwane: Madam Speaker, you may note that until now, the CDF was pegged at K1.6 million per constituency.

 

Hon Members: Yes!

 

Dr Musokotwane: The anchor for the New Dawn Administration is taking resources closer to the people.

 

Hon. Members: Hear, hear!

 

Dr Musokotwane: To this end, we have significantly increased the CDF to K25.7 million per constituency.

 

Interruptions

 

Madam Speaker: Order, order!

 

Dr Musokotwane: Madam Speaker, the increased allocation to constituencies, especially the rural ones, is unprecedented in the history of our country.

 

Hon. Members: Hear, hear!

 

Dr Musokotwane: A significant amount of money is now getting into communities for them to identify their priorities, make budgets and undertake the development programmes that are dear to their hearts.

 

Hon Members: Hear, hear!

 

Dr Musokotwane: Madam Speaker, given this increased allocation for constituencies, we have widened the scope for the utilisation of the CDF. This means that certain tasks that were previously under the Central Government through the district offices will no longer be performed by them. They will be undertaken by local authorities working with the local communities through the CDF. For example, primary school classrooms, teachers’ houses, school desks, rural clinics, staff houses, local courts, small bridges, clearance of canals, community boreholes, dip tanks and small dams must be funded under the CDF.

 

Hon. Opposition Members: Shachepa!

 

Interruption

 

Madam Speaker: Order! Hon. Members of the House can we maintain some decorum. We are not in a market.

 

Dr Musokotwane: Madam Speaker, the difference now is as follows: There was segregation in the allocation of projects such as the building of classrooms, schools and bridges. If an hon. Member belonged to the right group he/she would receive funding, if not, he/she would not receive anything. Through the CDF, that broadens everything and takes everything to the constituency, and everyone is assured of getting something.

 

Hon. Government Members: Hear, hear! 

 

Dr Musokotwane: Madam Speaker, in addition to the traditional community based projects, empowerment schemes that were previously funded through relevant ministries such as youth and gender, where there was discrimination too, this time around, will now be funded under the CDF. Just like bursaries will no longer be funded from Lusaka, Kabwe or Chibombo, but in the wards.

 

Madam Speaker, under this model, rural communities will also benefit unlike in the past when concentration was in the urban areas.

 

Madam Speaker, the Government will ensure that the CDF and other resources that will be provided to local authorities are used prudently. To attain this, guidelines and standards for utilisation, management, monitoring and evaluation of resources are being developed together with capacity building programmes. Here is a stern warning. The abuse of the CDF and failure to sanction those who will misbehave with this money will attract heavy punishment.

 

Madam Speaker, to expand the tax base and revenue collection from the informal sector, thirty-three local authorities, which signed contracts with ZRA will start the implementation in 2022.

 

External Sector Policies

 

 Madam Speaker, the Government will maintain a flexible exchange rate regime. To this effect, we will promote measures that support the stability of the exchange rate. These include, stepping up the accumulation of international reserves, to accumulate a buffer, to cushion the economy against external shocks, fast-tracking the diversification of exports through export-led industrialisation and promotion of viable foreign direct investment.

 

Public Private Partnership

 

Madam Speaker, during the Official Opening of the First Session of the Thirteenth National Assembly, His Excellency, the President, emphasized leveraging on PPP investments to deliver balanced and integrated infrastructure development. The PPP approach will not only supplement the Government efforts in infrastructure development, but also free resources to support social sectors such as health and education.

 

Madam Speaker, we will repeal and replace the Public Private Partnership Act No. 14, 2009. The new Act will address the shortcomings of the current law by ensuring mutual benefits to the public and private sectors and will also enhance the enabling environment for local and foreign investors.

 

Madam Speaker, I wish to appeal to investors to come forth and express their interest in PPP projects.

 

Media Reforms

 

Madam Speaker, to provide universal access to the media by all citizens, especially those in far-flung areas, the Government will in the short to medium-term reform the media landscape, including the public media. In this regard, the Government will facilitate the installation of towers as well as FM radio services in all the districts. Further, both the public and the private media will be allowed to operate freely without interference and restrictions. We expect media houses to walk the talk on self-regulation and professionalism as they discharge their duties.

 

Hon Government Members: Hear, hear!

 

Census of Population and Housing

 

Madam Speaker, the New Dawn Administration is committed to undertaking the Sixth Census of Population in 2022. To this effect, I will in due course issue a Statutory Instrument.

 

Madam Speaker, may I appeal to the private sector, co-operating partners, as well as other stakeholders to partner with us for a successful census of population and housing.

 

Keeping the Campaign Promises

 

 Madam Speaker, before I get to Part III of the Address, I wish to make reference to some of the very important campaign promises that the UPND made and indicate how they are being addressed in the 2022 Budget. I have already touched on this, but it is helpful to explicitly put them together. I only will touch on two, namely, not allowing any child who is academically capable to fail to progress in their education due to lack of funds and youth employment.

 

Madam Speaker, in education, at a stroke of a pen, we have removed tuition fees at public secondary schools. Totally out!

 

Hon. Member: Malanji!

 

Dr Musokotwane: On top of that, we have provided bursaries for vulnerable children who cannot afford to pay for their upkeep. Very importantly, it is the community themselves and not us the bureaucrats who will choose the most deserving children because they know each other in their communities. It is clear that we have taken decisive steps to holding the hands of capable children who might otherwise fall off from realising their academic potential. This is a gigantic step not witnessed for decades. We shall do more, as we move forward, including addressing meal allowances for students and recovery modalities for student loans.

 

Mr Syakalima: We are moving forward.

 

Dr Musokotwane: Madam Speaker, let me now turn to the important issue of employment, a vexing problem especially among our youths.

 

Hon. Member: We are matching forward.

 

Madam Speaker: Order, order!

 

Dr Musokotwane: Jobs are created either in the public or in the private sector. The Government on its part, as already indicated, will create a minimum of 44,000 jobs through the recruitment of teachers and healthcare personnel.

 

Hon. Opposition Members: 41, not 44! It is 11+30.

 

Interruption

 

Madam Speaker: Can we have some order. Hon. Members on my left, can we have some order please.

 

Dr Musokotwane: Madam Speaker, the enhanced CDF is another initiative that the Government has put in place to help in job creation. Within the CDF are the empowerment schemes that will now reach each and every constituency. Youths and women can access this assistance for business opportunities.

 

Madam Speaker, the most interesting aspect of the enhanced CDF as far as job creation is concerned, is that the Government wants to see the local people themselves to be the beneficiaries of the enhanced CDF. What it means is that, if there is a classroom to be constructed, the local builders in that area must do it.

 

Hon. Government Members: Yes!

 

Dr Musokotwane: If there are clinics to be constructed, local builders in that place must construct them. If there are desks to be made – And by the way, the importation of desks is history. There will be no more importation of desks by the Government.

 

Hon. Government Members: Hear, hear!

 

Dr Musokotwane: Madam Speaker, what it means is that, with this money, if the community wants to have desks, it will be a matter of giving the tender to the local people in that community to do the job.

 

Mr Sing’ombe: No mpukunya matobo.

 

Dr Musokotwane: Madam Speaker, this means there will be no handouts, but asking our youths to do serious work and getting paid for it.

 

Mr Lusambo: Very important.

 

Laughter

 

Dr Musokotwane: Only when the local people are not available should communities search for contractors outside their locality like the district or the province. As I have said already, in a similar vein, the Government will no longer tolerate the importation of desks and school furniture. The local timber in Sioma, Kaoma and Sinda …

 

Mr Mubika: Shangombo!

 

Dr Musokotwane: … using local labour must now produce the desks for the children in that area.

 

Hon. Government Members: Hear, hear!

 

Dr Musokotwane: Madam Speaker, to ensure that …

 

Hon. Member: Mukula!

 

Dr Musokotwane: … local people in the constituency are prepared to partake in these jobs, some money is being put aside in the Ministry of Technology and Science to accelerate the training of youths in every constituency.

 

Hon. Members: Hear, hear!

 

Dr Musokotwane: So that in the next two to three years, each constituency will have thirty to sixty young people that can build schools, make desks and build clinics. We have created these jobs through the CDF.

 

Madam Speaker, logically, there are only so many jobs that can be created in the public sector. How many police officers and civil servants are we going to hire? The number is limited. The rest of job opportunities must come from the private sector and for such jobs, there is no limit as long as the policy environment attracts investments.

 

Madam Speaker, in that respect, the initiatives that we have taken to expand the existing mines to create new mines and putting activity in the MFEZs and farming blocks will create thousands and millions of jobs in the next ten years.

 

PART III

 

THE 2022 BUDGET

 

2022 Expenditure by Functions of Government

 

Madam Speaker, I wish to indicate that our Treasury truly is very tight because of the excessive borrowing of the recent past.

 

Mr Lusambo: Aah! Efyo mwaamba ifyo?

 

Mr Samakayi: PF!

 

Dr Musokotwane: Madam, the Government proposes to spend K173.0 billion in 2022 equivalent to 37.1 percent of GDP. Of this amount, revenues and grants are K100.7 billion representing 21.6 percent of GDP. The gross financing of K72billion, which translates to a Budget deficit of 6.7 percent of GDP, will be raised through external and domestic sources including, the major part of it, the drawdown on the Special Drawing Rights, the gift I spoke about from the IMF.

 

Madam Speaker, I will now present the details of the Government proposed spending for the 2022 fiscal year.

 

2022 BUDGET ALLOCATIONS BY FUNCTIONS OF GOVERNMENT 2022

 

General Public Services

 

Madam Speaker, I propose to spend a total of K86.4 billion for General Public Services (GPSs) translating to 49.9 percent of the total budget. Of this amount, K51.3 billion is for external debt service while K27.4 billion will go towards domestic debt service.

 

Madam Speaker, in our resolve to continually empower local authorities, I propose to allocate K1.3 billion to the Local Government Equalization Fund. I have also proposed an allocation of K3.1 billion towards the dismantling of arrears to various suppliers of goods and services.

 

Economic Affairs

 

Madam Speaker, to support Government’s agenda for economic transformation and job creation, I propose to spend a total of K33.7 billion towards the Economic Affairs function. Of this amount, K4.9 billion is for road infrastructure. This will include the continuation of ongoing road projects as well as opening up strategic economic routes. Government will further undertake significant works to rehabilitate and upgrade feeder roads across the country.

 

Madam Speaker, to enhance agricultural production, productivity and diversification, a provision of K5.4 billion has been proposed for agricultural inputs. This will support one million beneficiaries through FISP, which will be implemented via the Comprehensive Agriculture Support Programme. The Government contribution will be more than doubled to K3, 600 per beneficiary from the current K1,700. I have also proposed to spend K960 million on strategic food reserves for next year.

 

 Madam Speaker, to make rural areas attractive for investment and promote rural industrialisation, the Government will accelerate the Rural Electrification Programme. To this effect, I propose to spend K362 million.

 

Madam, I propose to allocate K4.0 billion to the CDF as explained earlier on. Of this amount, K3.2 billion will go towards development interventions in underserved communities in all constituencies while K792.0 million has been allocated to secondary school and skills development bursaries. This translates to an average of K25.7 million per constituency compared to K1.6 million allocated in 2021.

 

Interruptions

 

Education

 

Madam Speaker, to increase access to education, improve the quality of education provision while promoting equal opportunities for girls, learners with disabilities and the vulnerable, I propose to spend a total of K18.1 billion in 2022 on the education sector. Of this amount, K1.7 billion has been set aside for the recruitment of the 30,000 teachers I spoke about and K2.2 billion is for general operations of schools across the country. The Government has also set aside funds to provide free education by paying school fees in all public schools for all learners at early childhood, primary and secondary education levels. Grants to public schools have also been increased, as I indicated earlier on.

 

Madam Speaker, further, I have allocated K694.3 million for the construction and completion of ongoing school infrastructure. There are so many schools scatted all over the place, which have been left hanging. So, each school, without exception is going to get something from this money so that they push forward.

 

Health

 

Madam Speaker, in the health sector, we will focus on providing equitable access to quality healthcare services at all levels of service delivery. In this regard, I propose to spend a total of K13.9 billion which includes an allocation for recruitment of 11,200 healthcare personnel. Of this amount, K3.4 billion is for the procurement of essential drugs and medical supplies, including for COVID-19 vaccines. This represents more than double the allocation in the 2021 Budget towards drugs and medical supplies.

 

Housing and Community Amenities

 

Madam Speaker, I propose to spend a total of K2.4 billion on housing and community amenities. Of this amount, K2.3 billion is for water supply and sanitation. This allocation will enhance the interventions being made by water utility companies to improve and ensure adequate supply of safe and clean water in our communities.

 

Public Order and Safety

 

Madam Speaker, public order and safety plays a significant role in maintaining law and order in the country. In this regard, I propose to allocate K3.5 billion towards this function. This allocation will also be used to address the infrastructure deficiency in security wings including correctional facilities.

 

Social Protection

 

Madam Speaker, I propose to spend K6.3 billion on social protection. Of this amount, K2.1 billion will go towards the payment of retirement benefits to former Public Service workers under the Public Service Pensions Fund (PSPF). The allocation has been increased to K2.1 billion from K1.1 billion to clear the backlog on pension benefits and reduce vulnerability among retirees as mentioned earlier on. Further, K3.1 billion has been allocated to the Social Cash Transfer Programme to support over one million vulnerable households while K1.1 billion has been allocated to the Food Security Pack to support vulnerable, but viable farmers.

 

Other Functions

 

 Madam Speaker, I propose to allocate K8.8 billion for the functions of Defence, Environmental Protection, Recreation, Culture and Religion. This amount includes an allocation of K971.9 million towards climate change adaptation programmes and projects to ensure that our pursuit for economic growth takes into account the protection and sustainability of the environment.

 

REVENUE ESTIMATES AND MEASURES

 

Resource Envelope for the 2022 Budget

 

Madam Speaker, to meet the proposed expenditure, the Government expects to raise a total of K173.0 billion. Of this amount, K77.9 billion will come from taxes, K20.7 billion from non-tax revenue and K343.8 million from other revenues. Further, K24.5 billion will come from domestic borrowing while externally sourced financing is projected at K49.7 billion. Of these external sources, K39.3 billion will be in form of budget support, K8.5 billion from existing project disbursements while grants from co-operating partners will be K1.8 billion.

 

Revenue Measures

 

Madam Speaker, I now present the 2022 revenue measures.

 

Direct Taxes

 

Madam Speaker, in order to cushion the rise in the cost of living, I propose to increase the exempt threshold for Pay-As-You-Earn (PAYE) to K4,500 from K4,000 and adjust income tax bands.

 

Hon Government Members: Hear, hear!

 

Interruption

 

Dr Musokotwane: This means that we are putting K600 million in the hands of our employees.

 

Madam Speaker, to attract investment and boost production in the mining sector, I propose to reintroduce the deductibility of mineral royalty for corporate income tax assessment purposes. This measure is in line with international best practices and it will promote the production of copper towards the target of 3 million that I spoke about. The revenue loss from this measure is projected at K3.2 billion.

 

Madam Speaker, to align with the current legislation on tax carry forward limit of losses, I propose to increase the period for disallowed interest deduction carry forward to ten years from five years.

 

 Madam Speaker, the Government will in the medium-term, amend the law so that mineral royalty determination reflects a measure of both incremental and aggregate norm values.

 

Madam Speaker, to broaden the tax base, I propose to extend Property Transfer Tax on transfers of mineral processing and other mine related licenses at the applicable rate of 10 percent.

 

Madam Speaker, to promote the manufacturing of ceramic products, I propose to suspend Corporate Income Tax for persons carrying on the business of manufacturing ceramic products for the charge years 2022 and 2023.

 

Mr Lusambo: Marcopolo.

 

Dr Musokotwane: This will also facilitate the entry of new players into this industry. This measure will result in a revenue loss of K7.1 million.

 

Madam Speaker, to allow companies to retain some funds for further investments as well as attract foreign direct investment, I propose to reduce the standard Corporate Income Tax rate to 30 percent from 35 percent. However, the top marginal tax rate for telecommunication companies will be maintained at 40 percent. The revenue loss from this measure is projected at K599 million.

 

Madam Speaker, in the medium-term, the Government will harmonise Corporate Income Tax rates for all sectors.  

 

Madam Speaker, I propose to extend the 15 percent Corporate Income Tax rate on income earned by hotels and lodges on accommodation and food services to 31^st December, 2022 from 31^st December, 2021. This is in view of the continued negative effects of the COVID-19 pandemic on the tourism sector.

 

Hon. Government Members: Hear, hear!

 

Dr Musokotwane: The revenue forgone from this measure is projected at K23.2 million.

 

Madam Speaker, I propose to reform the Rental Income Tax regime by charging Turnover Tax at 4 percent for income below K800,000 per annum. For rental income above K800,000, the income tax regime for individual or corporate entities will apply. The revenue loss from this measure is K169.1 million.

 

Madam Speaker, to encourage a culture of saving and promote financial inclusion, I propose to extend the tax exemption relating to payments of interest to all interest earning bank accounts held by individuals. The revenue loss from this measure is projected at K9.2 million.

 

Madam Speaker, to support the growth of local reinsurance, I propose to introduce a 20 percent withholding tax on reinsurance placed with reinsurers not licensed in Zambia. The revenue gain from this measure is projected at K48.6 million.

 

Madam Speaker, I propose to revise upwards the bands for presumptive taxes. The tax bands were last reviewed in 2018. The revenue gain from this measure is projected at K107.2 million.

 

Madam Speaker, to enhance tax compliance on betting, casino, lottery and gaming activities, I propose to introduce a mandatory requirement for tickets to display the withholding tax payable on potential winnings. Further, this will be a condition for holding a license whether operating online or through a physical store.

 

Value Added Tax (VAT)

 

Madam Speaker, to improve productivity through mechanisation in the agricultural sector, I propose to zero-rate VAT on selected agricultural equipment and accessories. These include:

 

1. manure spreaders;
2. balers;
3. combine harvesters;
4. commercial sprinkler irrigation systems;
5. animal feed grinder-mixer;
6. pelleting machines;
7. sprayer;
8. trailers of a specific Harmonized System (HS) code; and
9. dryers for agricultural products of a specific HS code.

 

Madam Speaker, this measure will result in a revenue loss of K19.0 million

 

 Madam Speaker, to promote the use of alternative renewable sources of energy, I propose to zero-rate the VAT on solar charge control units and solar streetlights. This measure will result in revenue loss of K54.0 million.

 

Madam, to increase the taxable-base for VAT, I propose to standard rate the supply of the following:

 

1. property and non-life insurance, and abolish the current applicable insurance premium levy; and
2. booklets and newspapers.

 

Madam Speaker, these measures will result in a revenue gain of K178.9 million.

 

Madam Speaker, to encourage compliance and enhance proper identification of mobile phones and security, I propose to change the tax collection point for VAT on mobile phones from importation and point of sale to the point of registration by the Zambia Information and Communications Technology Authority (ZICTA). So, taxes will be collected by ZICTA and not by the Customs Division.

 

Customs and Excise

 

Madam Speaker, to promote alternative energy sources, I propose to reduce Customs Duty to zero percent from 15 percent and 25 percent on solar street lights and solar charge control units, respectively. This measure will result in revenue loss of K20.2 million.

 

Madam Speaker, to support the livestock sub-sector, I propose to remove the 5 percent Customs Duty on the importation of cattle breeding stock. Further, to address the shortage of day-old chicks, I propose to suspend the 5 percent Customs Duty on grandparent and/or parent stock of day-old chicks when imported by a breeding company for a period of twelve months effective 1st November, 2021.

 

 Madam Speaker, to improve competitiveness and efficiency of the local manufacturers of plastic products, I propose to remove the 5 percent Customs Duty on filler masterbatch. The revenue loss from this measure is projected at K2.7 million.

 

Madam Speaker, to harmonise Customs Duty rates applicable on tyres for lorries and buses as well as construction and agriculture machinery, I propose to harmonise the rates at 15 percent from 40 percent or K5 per kilogram, whichever is greater. The revenue loss from this measure is K16.0 million.

 

Madam Speaker, to continue cushioning the tourism sector amidst the COVID-19 pandemic, I propose to extend the waiver of customs duty on safari game viewing vehicles, tourist buses and coaches to 31^st December, 2023. This will only apply to accommodation establishments, convention centres and tourism enterprises. The revenue forgone from this measure is K2.9 million.

 

Madam Speaker, to support agro processing in general, …

 

Dr Musokotwane drank water.

 

Mr Lusambo: Pressure, pressure!

 

Dr Musokotwane: … I propose to extend to 31^st December 2022, the suspension of customs duty on the importation of refrigerated trucks. Further, I propose to extend the relief to processors of milk and manufacturers of medicaments. The revenue loss is minimal.

 

Madam Speaker, for a single petty consignment, I propose to increase the exemption value of goods on which duty is paid to US $500 from US $50 inclusive of freight and insurance. This excludes goods consigned through parcel post or airfreight. The revenue loss from this measure is K161.4 million.

 

Madam Speaker, to open the market for maize while ensuring food security, I propose to remove the 10 percent export duty on maize.

 

Hon. Members: Hear, hear!

 

Dr Musokotwane: This measure is effective 1^st November, 2021. So, next week, you can export maize without sacks. The revenue loss from this measure is K18.1million.

 

Hon. Member: Tu PF.

 

Dr Musokotwane: Madam, to promote the growth of the ceramic industry, I propose to increase customs duty to 25 percent from 15 percent on floor and wall tiles imported from outside the Common Market for Eastern and Southern Africa (COMESA) and the  Southern African Development Community (SADC) regions.

 

 Madam Speaker, to promote the manufacturing industry, I propose to increase customs duty to 25 percent from 5 percent and 15 percent on yarn made from acrylic fibre of specific HS codes imported from outside the COMESA and SADC regions.

 

Madam Speake, to promote domestic production and create jobs, I propose the following measures:

 

1. introduce surtax at a rate of 5 percent on imports of yarn made from acrylic fibre of specific HS codes;
2. introduce surtax at the rate of 5 percent on knitted or crocheted jerseys, pullovers, cardigans, waistcoats and similar articles;
3. introduce surtax at the rate of 10 percent on imported cement bags;
4. introduce surtax at the rate of 5 percent on imported floor and wall tiles;
5. introduce surtax at the rate of 20 percent on imported glass on selected HS codes;
6. increase surtax on Flexible Intermediate Bulk (FIB) containers to 20 percent from 5 per cent; and
7. remove the 5 percent surtax on importation of Bovine Semen (BS).

 

Madam Speaker, I also propose the following revenue raising measures:

 

1. introduce 5 percent excise duty on coal;
2. increase the specific excise duty on opaque beer to 50 ngwee per litre, when packaged and to one Kwacha for unpackaged beer from 15 ngwee;
3. increase specific excise duty on cigarettes from the current K302 per mille to K355; and
4. increase specific excise duty on unmanufactured tobacco, tobacco refuse, smoking tobacco whether or not containing tobacco substitutes, water pipe tobacco and cutrag to K355 from K240.

 

Madam Speaker, despite the MFEZ framework having been embarked on more than a decade ago to drive the industrialisation agenda, to date, investment directed into these established economic zones remains dismal. To revamp and remodel the economic zones and make the incentives more targeted, I propose the following measures:

 

1. introduce zero percent tax for a period of 10 years from first year of commencement of works in a MFEZ or industrial park, on dividends declared on profits made on exports by companies operating in these economic zones under the Zambia Development Agency Act No. 11, 2006;
2. introduce zero percent tax for a period of 10 years from the first year of commencement of works in a MFEZ or industrial park, on profits made on exports by companies operating in these economic zones under the Zambia Development Agency Act No. 11, 2006. For years eleven to thirteen, only 50 per cent of profits will be taxed and 75 per cent of profits for years fourteen and fifteen; and
3. reduce the threshold to US$50, 000 for a Zambian citizen to qualify for incentives provided under the Zambia Development Agency Act No. 11,  2006. Previously, this was USD$500,000, now it has been reduced to UD$50,000, to encourage Zambians to invest.

 

Hon. Government Members: Hear, hear!

 

Housekeeping Measures

 

Madam Speaker, to update, strengthen and remove ambiguities in certain provisions of the tax laws and make tax administration more effective, I propose to amend the Income Tax Act, the Customs and Excise Act, the Property Transfer Tax Act, the Insurance Premium Levy Act and the Value Added Tax Act, among others.

 

Non-Tax Revenue Measures

 

Madam Speaker, to adjust for inflation since the last review over a decade ago, I propose to revise upwards fees charged by the Road Transport and Safety Agency (RTSA), the Department of National Registration, Passport and Citizenship, the Forestry Department and the Seed Certification Control Institute, among others.

 

Madam Speaker, to support organisations that complement the Government efforts in provision of services to the vulnerable, I propose to revise downwards the immigration permit fees under the non-governmental and non-profit organisation category. The revenue loss from this measure is K89.1 million.

 

Madam Speaker, to reduce the cost of renewing driving licences, I propose that the renewal of the licences for the Public Service Vehicles (PSV) should no longer be mandatory every year. Instead, it will be done once in five years.

 

Hon. Members: Hear, hear!

 

Dr Musokotwane: Madam Speaker, Zambia remains a destination of choice for tourism.

 

Hon. Member: PF will close.

 

Dr Musokotwane: To improve our competitiveness, …

 

Madam Speaker: Order, order!

 

Dr Musokotwane: … I propose to reduce visa fees of all categories by 50 per cent.

 

Hon. Government Members: Hear, hear!

 

Dr Musokotwane: Madam Speaker, unless otherwise stated, the measures that I have outlined will take effect on 1st January, 2022.

 

PART IV

 

                                     CONCLUSION                                    

 

Madam Speaker, 12^th August, 2021, was a watershed moment in the history of our great nation that, for too long, has not realised its full potential. A nation that is rich in natural resources and heritage and where sustained prosperity for all has remained elusive. Two and a half months ago our people, particularly the youth, resoundingly called for tangible and lasting change in their lives and future generations.

 

Hon. Government Members: Hear, hear!

 

Dr Musokotwane: Madam Speaker, as the New Dawn Administration, we are walking the talk.

 

Mr Mushanga: Are you sure?

 

Dr Musokotwane: The 2022 Budget has illustrated that the promise of economic transformation is a reality. The promise of an enabling environment for macroeconomic stability and job creation is a reality. The promise to take resources and development closer to the people is now a reality.

 

Hon. Government Members: Hear, hear!

 

Dr Musokotwane: Madam, our notion of economic transformation is genuine and aimed at ensuring that our people benefit from the rich endowment of this country. This Budget is, therefore, an initial step towards repositioning the country to fully exploit its human and natural resources for decades to come.

 

Madam Speaker, I recognise the assistance from our co-operating and development partners and implore them to continue supporting our development agenda.

 

Madam Speaker, as I conclude, allow me to state that the task ahead of us is enormous and requires a fundamental shift in mind-set and the way we do things. I, therefore, implore all Zambians to work hard, individually and collectively, as we transform the country.

 

Madam Speaker, let me assure you that the New Dawn Administration is equal to the task. The journey to fix the economy starts now.

 

Madam Speaker, I beg to move.

 

Hon. Members: Hear, hear!

 

Interruptions

 

Madam Speaker: Order!

 

Mrs Sabao (Chikankata): Madam Speaker, I thank you for giving me this opportunity ...

 

Mr Matambo crossed the floor.

 

Hon. Members: Order, order!

 

Mrs Sabao: … to be the first one to speak on the Motion of Supply that has just been moved by the hon. Minister of Finance and National Planning.

 

Hon. Government Members: Hear, hear!

 

Mrs Sabao: Madam Speaker, firstly, allow me to congratulate the hon. Minister of Finance and National Planning for the able manner he has moved the Motion of Supply and presented the 2022 National Budget.

 

Hon. Government Members: Hear, hear!

 

Ms Sabao: Madam Speaker, the speech that has been delivered by the hon. Minister of Finance and National Planning has raised a number of important issues concerning the economy of our country and requires careful analysis by all hon. Members. I am, therefore, of the considered view that we defer debate on this Motion to…

 

Hon. Opposition Members: Why?

 

Mrs Sabao: … Tuesday, 2^nd November, 2021, …

 

Hon. Government Members: Hear, hear!

 

Mrs Sabao: … so that hon. Members have ample time to read …

 

Mr Lusambo: We are ready!

 

Mrs Sabao: … and carefully analyse the speech. This will enable hon. Members to come back next week well prepared to debate the Motion meaningfully.

 

Madam Speaker, with these few remarks, I wish to propose that the debate on the Motion of Supply moved by the hon. Minister of Finance and National Planning be deferred to Tuesday, 2^nd November, 2021.

 

Madam Speaker, I beg to move.

 

Hon. Government Members: Hear, hear!

 

Madam Speaker: Order, order!

 

Mr Mwambazi (Bwana Mkubwa): Madam Speaker, I thank you for according me this opportunity to support the proposal by the hon. Member of Parliament for Chikankata that the debate on the Motion of Supply moved by the hon. Minister of Finance and National Planning be deferred to Tuesday, 2^nd November, 2021.

 

Hon. Opposition Members: Why?

 

Mr Mwambazi: Hon. Members will agree with me that the issues contained in the Budget Speech –

 

Mr Lusambo: Which issues?

 

Madam Speaker: Hon. Members can we please have some order.

 

Interjection

 

Hon. Member: Which page?

 

Mr Mwambazi: I will educate some of you, just wait.

 

Madam Speaker, 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 and therefore, we require sufficient time to study the speech.

 

Madam 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 been presented so that we can engage meaningfully next Tuesday.

 

Madam Speaker, I thank you.

 

Hon. Members: Hear, hear!

 

Madam Speaker: Order!

 

Question put and agreed to.

 

­­_______

 

ADJOURNMENT

                                                                                          

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

 

Question put and agreed to.

 

_______

 

The House adjourned at1651hours until 1430 hours on Thursday, 2^nd November, 2021.

 

____________