THE 2022 BUDGET BY THE NEW DAWN GOVERNMENT
The Minister of Finance delivered the inaugural New Dawn Budget yesterday on 29th October 2021.
This budget has been eagerly awaited by supporters and non-supporters of the UPND alike, as the budget gives an indication of how the UPND intend to actualise their plans for the nation.
We recognize that the government was always faced with a huge challenge of balancing what needs to happen to meet our debt obligation while taking the economy into growth.
As stakeholders which all Zambians are, it would be remiss of the New Heritage Party and indeed myself not to make our observations regarding the same.
As Zambians, we must avoid the temptation to only pick out the negatives of the budget but must also acknowledge the positives and the context in which both have been arrived at for the better appreciation, by the people we are representing – the Zambians. We must analyse the budget in its totality.
Whilst greater technical analysis may take some more input from every sector, we choose to point out some aspects so that we may applaud or question as we should.
We would describe this budget as progressive and thought through. There are some bold measures
and new thinking employed, with a re-allocation of funds which gives an indication of what
government’s priorities are. There is nearly an 80% increase in expenditure which has been justified by the priority areas that have been outlined.
The most telling of these is the decentralization via the Constituency Development Fund (CDF). This has been very cleverly done.
The intent for this Fund is spelt out as a development agenda and consolidates empowerment programs and growth enhancing measures.
The additional 41,000 jobs should have a multiplier effect.
In addition to this, the planned farming estates akin to Nakambala should go a long way towards the nation becoming a breadbasket for Africa. We also take note that the export of maize has been
opened up.
This is as it should be.
We however have some observations for which we are requesting for some clarifications.
- This economy is not yet out of the doldrums. What are the fiscal adjustment measures being
put in place to support this budget? - With the additional 41,000 jobs, the wage bill has just increased by K1.5bn and debt service
which is high at K78bn, this adds up to K108 bn whilst domestic revenue is at K98bn. We see
a mismatch and thus will have to resort to further borrowing. The Government borrowings,
if done locally, will see the (continued) crowding of the private sector. - With regard to the CDF – these funds have been reallocated from ‘somewhere’. Which areas
have been dismantled to give rise to the availability of thisenhanced Fund? How will those affected areas be catered for. A clearer picture of how this has been effected will be useful
for our better appreciation. - The practical outworkings for the enhanced CDF raises some concerns. What measures have
been or are being put in place to ensure that the availability of K25.7m will not lead to
widespread looting?
The economy has been in recession for some time but this budget focuses more on doing things differently rather than addressing that very critical issue. It is important to introduce a ‘factor’ or ‘factors’ that will kickstart the growth process. Please note the following:
• It is the private sector that grow the economy – not Government.
The Government merely
provides an enabling environment to the private sector. SMEs form the bedrock of businesses and should be the engine of growth in Zambia. The K350m provided for them is not adequate to have an impact on Zambia’s economic growth.
• What are the other measures that have been put in place to help them grow their businesses?
• We note that the incentives for operating in Development Zones have been increased and that
the minimum requirement to invest therein has been reduced from $500,000 to $50,000. We
salute this as a move in the right direction. However Realistically speaking, even at the $50,000
minimum, not many of our SMEs will be able to migrate their businesses into the Economic Zones without a target budget line to enable access to appropriate finance.
How then will our SMEs take advantage of those incentives? Who will benefit from the incentives if enablement is not provided? If Zambians can not benefit from those incentives, it means their cost of doing business is not reduced – that means that they remain uncompetitive.
• The introduction of Nakambala type of estates is commendable as this will create some jobs,
however, the majority of our people are small scale farmers and it is these that produce the bulk of our agricultural produce. FISP has been increased to K5.4m.
The direct targeting of these small-scale farmers (as the SMEs) will have an impact at both micro and macro levels. Agriculture is a low hanging fruit; thus, we feel that targeted initiatives towards the small-scale farmers would go a long way towards addressing the plight of a lot of Zambians.
• Finally, how is the New Dawn Government addressing the current very high cost of living, the interest rates, the foreign exchange and inflation in the immediate term?
Chishala Kateka
President – New Heritage