PF-Government Should Present 2012 Budget in 2011

We are hereby disagreeing with Mr. Lawrence Chileshe, a Business Consultant who has advised the PF government to postpone the 2012 Budget presentation before parliament....Our reasons are that;

1. In as much we would agree with Mr Chileshe's rationale that the Minister need to align the 2012 Budget to the PF Manifesto we contend that the period is sufficient enough for technocrats in the Ministry of Finance to work through various areas that need adjustment to suit contentious PF policy, program and structure changes..However this requires that the government start work now.

2. That differing Budget presentation this year consequently affects its implementation thereby defeating the very policy change that was instituted to avoid overlaps in Expenditure disbursements and fund utilization by various departments and programs. This we saw under Mwanawasa when government departments started spending the money in October due to procurement procedures that take long...    

In discussing Policy we also would like to urge the PF Cabinet especially the Ministry of Finance to critically adopt the below said Policy advances by MMD as submitted to IMF.

DEYOS Directorate of Policy Research has extracted below information from the letter of Intent by the former Minister of Finance Dr. Situmbeko Musokotwane to Mr. John Lipsky acting Managing Director at IMF......We have sort to agree on the four key Structure reform areas that we implore the PF to continue pursuing as regard to Economic reforms.


"During the period under review, the Government launched the 2011–2015 Sixth National
Development Plan (SNDP). The plan's main areas of emphasis are the binding constraints
to growth and poverty reduction in Zambia: inadequate infrastructure and human
development. Invest me nt s  in  the se  areas will  be  increased  in  line with  the
Government's strategic objectives of accelerating economic diversification and meeting
its Millennium Development Goals through inclusive growth to ensure job creation and
poverty reduction.
With the assignment of a credit sovereign rating of "B+" by Fitch and Standard and Poor's in
February 2011, the Government intends to enter the sovereign bond markets to raise
finances to support the implementation of the Plan. The amount to be raised will take into
account the need to maintain debt sustainability objectives.
The ECF arrangement has played an important role towards the consolidation of
macroeconomic stability particularly during the global economic and financial crisis. It has
also created a platform for accessing technical assistance from the IMF and other
institutions and provided important signals on Zambia's economic performance and
prospects. With the ending of the current programme in June 2011, the Government is
discussing the way forward regarding further programme engagement with the Fund.
The Government authorizes the IMF to publish this letter, the attached Memorandum of
Economic and Financial Policies and the related Staff Report, including placement of
these on the IMF website subject to removal of market-sensitive information, following the
IMF Executive Board's conclusion of the review."
/s/
Situmbeko Musokotwane, (Dr.), MP
Minister of Finance and National Planning


Key Areas of the former MMD Government Policies as Submitted together with the Letter of Intent as extracted above...


1. Work is ongoing in implementing the Treasury Single Account (TSA) across
expenditure categories. As at end-January 2011, government attained 99.4 percent of the
monthly wage bill and 100 percent of foreign debt service transacted through the TSA. This
brings the total expenditure processed through the TSA to 40 percent. With regard to the
remaining grants, capital and domestic debt expenditure, a plan has been drafted to
consolidate domestic debt transactions into the TSA structure, whilst further consultations are
underway with various stakeholders for capital transactions. It is expected that the remaining
expenditure categories will be processed through the TSA by end-June, 2011 bringing total
expenditure processed through the TSA to 60 percent.

2. In March 2011, Zambia was assigned a sovereign credit rating of B+ by Fitch
and Standard and Poor’s Ratings. With this assignment, government intends to issue its
debut sovereign bond in 2011. The bond issue will be used on infrastructure development, in
particular roads and power projects. In this context, the government will carefully consider
maturity and exchange rate risks, and the debt sustainability and cashflow implications. The
government intends to take appropriate measures for a successful bond issue, which include
the procurement of legal and financial advisors, and the use of collective action clauses, and
will consider phased issuance.  

3. Work on the legislative arrangement is currently underway and so far, the
following has been done; (1) Amendments have been proposed in the draft Bank of Zambia
Act to include the provisions of the LOLR policy; (2) The Deposit Protection Bill has also
been finalized and is with the Ministry of Finance and National Planning; (3) Proposals are
underway to enhance crisis prevention by the inclusion of Prompt Corrective Actions in the
draft Banking and Financial Services (BFSA) Act; (4) Proposals to broaden bank resolution
options have also been included in the draft BFSA; and (5) Proposals to include provisions to
facilitate cross-border sharing of supervisory information have also been included in the draft
BFSA.

4. The government remains committed to improving the management of public
finances. The pilot implementation of the Integrated Financial Management System (IFMIS)
has been successful in its first pilot site. IFMIS has been in use at the Ministry of Finance and
National Planning since January 2010, with most financial transactions being processed
through the new system. The rollout of IFMIS to the next seven MPSAs commenced in
January 2011. These are: Ministry of Education; Ministry of Transport and Communications;
Ministry of Foreign Affairs; Ministry of Works and Supply; the provincial administration in
Eastern and North-Western provinces; and the Office of the Auditor General. By end 2011
we envisage rolling out IFMIS to another 8 MPSAs.  

We call upon the new Minister of Finance to pursue these four key structure reforms for purposes of maintaining and improving macroeconomic fundamentals.

DEYOS-ZAMBIA
Directorate of Policy Research
Suite 508, Musi-O-Tunya House
Livingstone, Zambia
deyos.zambia@gmail.com

Economic Outlook - President Sata 90 Days

The victory implies that after 20 years in power, and despite the recent economic performance of the Zambian economy, a majority of the Zambian voting population was dissatisfied with MMD government policy. In short, this election appears to have been primarily a call by Zambians that:

• They want a stake in the national economy via tangible and direct economic empowerment to improve their livelihoods; and
• The youth want a future, they want jobs.

Market’s response

The Lusaka Stock Exchange (LuSE) was expectedly somewhat restrained this week, with total volumes traded and turnover for Monday, Wednesday and Thursday totalling 2.8 million and ZMK 985 million respectively, versus total volume of 4.8 million shares and total turnover of ZMK 4.3 billion last week. However, on this limited activity, the index rose consecutively day-on-day by 0.03% on Wednesday 21st and 0.47% on Thursday 22nd.

The LuSE has not been negatively affected in terms of direction this year by the prospects of an election, generally maintaining its upward trajectory and perhaps being reflective of the expectation of a peaceful election and continued economic stability. Interestingly enough, it has also shown very little correlation with the copper price, suggesting that investors view the long term prospects for the listed companies to be positive, despite any short term negative fluctuations in the price of Zambia’s key commodity.

Outlook

President Sata campaigned on the basis of change and benefit within 90 days. We expect cautious trading on the LuSE over the next few weeks, primarily from foreign investors, which will be a combination of recent uncertainty in the greater global economy, as well as uncertainty around the implications of the new president, and primarily the structure of any policy adjustments especially with regard to foreign investment in Zambia.

We are of the view that there will likely be a divergence in policy from that of the MMD with respect to mining in particular given Sata’s leftist leanings, although we expect this to largely be carried out via a renegotiation of terms with current investors. The first 90 days will be telling regarding the new appointments expected in key government ministries and institutions such as the Finance Ministry and the Reserve Bank. However, we are still positive on the Zambian economy, and maintain our favourable outlook for the LuSE.

US$68 Million in Diaspora Remittances-Voting Rights

“Zambia in 2009, received an estimated US$68 million in remittances from those living in Diaspora through formal channels. What this entails is that there more funds that come through informal channels that are not captured on record. With well structured system that offers incentives for investments, Zambians living in Diaspora can become a giant investor in realizing our Zambia’s development agenda. In the recent past, the line has been drawn and clearly acknowledged that Zambians living in Diaspora can contribute immensely to the development of our country given a well structured advocacy strategy that demands that government  tap into the capital of the huge Zambian Diaspora population worldwide by offering them incentives to invest back home. There is no doubt many Zambians in the Diaspora would like to invest back home, if anything over 70% would like at some time to return home and settle. This as maybe the case, there are NO clear policies by our government that help the integration of our fellow countrymen and women back into our society”. 
DEYOS-ZAMBIA is launching an advocacy Campaign to have the following issue handled by the government of Zambia:

·         Establishment of Citizenry Section in all Zambian Embassy’s and High Commission’s Abroad

·         ECZ to begin immediately start working on a framework and system on which will ensure that Zambians abroad can Vote in 2016 General Elections in their Embassies’

·         Zambia Development Agency to initiative incentives for medium to large scale Investment portfolios originating from Zambians in the Diaspora.

·         The new government under the Leadership of Mr. Michael Sata to implement  an inclusive Constitution adoption of the Mung’omba Draft Constitution  with minor amendments as noted by NCC while returning critical clauses discarded by NCC (Note: the Mung’omba and the NCC Constitutions recommended for dual Citizenship).

·         Diaspora Liaison Office at the Office of the President to be placed under the Ministry of Foreign Affairs in order to ensure that there is no political interference. We need this Office to be non partisan. 

DEYOS-Zambia would like to know what your views are on this very important issue which does not only affect Zambians living Abroad but even the larger Citizenry back home through the remittances.
Please leave a comment below and click where it says follow on the side of this page and let know if you would like to receive e-mail alerts on related issues.


DEYOS-ZAMBIA
Suite 508, Musi-O-Tunya House,
Livingstone.
E.mail: deyos.zambia@gmail.com
USA 
8 C London Court
Lexington, NC. 27292

Zambia's Economy Outlook I - President Sata

Before we look at the future development in Zambia, we have to remember that there are four factors that power an economy: consumers, investors, government, and a favourable trade balance. Some economies such as China rely on favourable trade balance and Foreign Direct Investment (FDI) for their growth. For example according to the Chinese Ministry of Commerce, from 1990 to 2007, China received $748.4 billion in FDI. At the same time, since its economic liberalization, China has recorded consistent trade surpluses with the world.  For example China has registered trade surpluses of $102 billion for 2005, $177.47 billion for 2006, $262.2 billion for 2007, and $295.47 billion for 2008.  China currently has accumulated nearly two trillion dollars in foreign exchange reserves.


In contrast to the China, the United States has relied on consumers and the government for its growth. According to Peter G. Gosselin citing Roach of Morgan Stanley Asia, U.S. consumers constitute only about 4.5% of the global population, yet they bought more than $10 trillion worth of goods and services last year. In contrast the Chinese and Indian consumers combined which account for 40% of the global population bought only $3 trillion worth. He goes on to point out that according to government statistics, from 2001 to 2007, U.S. consumer spending shot up from a little over 73% of the economy to nearly 77%.


Coming to our scenarios in Africa, mostly Zambia...with the US$13 billion economy running at an average of 6.5% annual growth, Zambia's new leaders have no choice but to continue attracting FDI into the country and foster a two way approach to economic development. The expansion of mining Industry especially in the North Western province need to be encouraged and further collaborations on a win to win basis on issues of Taxation need to be looked at with sober minds. Increasing trade surplus by providing an environment for non-traditional exports to increase dramatically will help Zambia fast track its diversification activities, causing a reduction risks related to depressed commodity prices. Zambia with an estimated export of US$7.181 and Import of US$ 4.676 in 2011 will need to continue recording trade surplus in the later 2011 and the next 2 years to be able to accommodate government expenditure on various campaign promises by Mr Sata. The new leadership will need to approach their poverty issues through creation of employment opportunities using the private sector as opposed to government increasing the civil service in order to fulfill campaign promises. if the later is what the government will pursue, a significant increase in non productive will exert immense pressure on the country's ability to maintain inflationary challenges... 


DEYOS-ZAMBIA
Policy Analysis Directorate

ZAMBIA AN ICON OF DEMOCRACY IN AFRICA

Zambia yet again will demonstrate to the World that it is possible to have a thriving Democracy in Africa, the people of Zambia will be exercising their most important duty of electing leaders at various levels.

DEYOS-Zambia would like to take this opportunity to thank Mr. Rupiah Bwezani Banda for leading the Country into a democratically conducted By-Election in 2008 in which he emerged as winner after the death of Levy P. Mwanawasa. We implore all Zambians to vote peaceful and urge all Parties to accept the outcome of the elections, we also call upon young people to work with the Zambia police in order to ensure that elections are free of malpractices and fraud. Let us stand united as we have done before in the past and continue the struggle to economic emancipation of a country that is a beacon of peace to Africa.

DEYOS-ZAMBIA

STOP ELECTION VIOLENCE IN ZAMBIA

We call upon all patriotic Zambians to sign a petition to the Zambian Police to stop all violence activities during the 2011 tripartite Elections....All Political Parties, Law enforcement agencies, Electoral Commission of Zambia and the Civil Society Organizations should condemn violence in the strongest possible terms..

We will not keep quiet and we will use every peaceful means available to be heard, and we re-emphasize to the young people you will be the ones that will suffer out all the happenings, you will be the ones to be jailed, you will be the ones to be prosecuted while the political top brass will say, "we never sent them"...Please be wise..

DEYOS-ZAMBIA   

Call for Peace

To: Youths,

DEYOS-Zambia is hereby calling on all Youths that registered to turn out in numbers and vote, this is the only way that young people can feel ownership of the democracy and also participate in the civic and political life of our young democracy. 

We implore Youths to be sober minded and exercise restrain in the event of electoral disputes, Zambian has always been a hub of peace and an example of what civility entails in a society, we have always resolved issues through dialogue and indeed have used our legal system for achieving justice for all. We call upon the Zambian Police to equally execute their duties diligently and professionally, we know sometimes there are challenges but our resolve to remain a nation that evolves around rule of law should never be compromised at any cost. We pray for peace and may God bless Zambia.


Executive Director
DEYOS-ZAMBIA