26 December 2012

Zambia: 2012 Policy Analysis Recap


AS we conclude the 2012, this column continue with the recapitulation of the issues covered since its inception.

On October 3, we continued looking at policy-related measures likely to affect the 2013 Budget, as espoused in the Presidential address during the official opening of the Second Session of the 11th National Assembly.

I reiterated that the underpinning objective for most of these measures seemed to have been the need to tackle poverty among the poor of the poorest.

To ensure that national wealth is distributed as evenly and as widely as possible, the Patriotic Front (PF) had created 15 new districts.

On October 10, I focused on the expansion of the Farmers Input Support Programme in Zambia to include sorghum, groundnuts and cotton.

I noted that it was ill-timing for the Government to extend the support towards the cultivation of cotton given the trouble the cotton farmers went through this year as the result of the low prices of the commodity.

Therefore, it was untimely for the Government to extend the support towards the cultivation of more cotton in Zambia.

Instead of introducing support towards the production of the crop the Government should have looked at the market side of it since the major challenge for the sector is the price not production.

Given the low prices of the crop on the world market, the option is to stimulate and enhance local consumption by boosting the local production of the textile products.

On October 17, I featured a discussion on one year of Patriotic Front (PF) in office organised by the Jesuit Centre for Theological Reflection (JCTR) where I was invited to facilitate.

The speakers said the national economy had performed extremely well in the last few years including during the one year of the PF rule.

On Zambia's Independence Day I featured some of the contributions you, the readers, have made since inception.

The contributions are on various topics tackled so far.

The following week, I looked at some of the macro-economic and fiscal policy targets under the recently announced 2013 Budget.

I noted that the Zambian Government aims at achieving a real Gross Domestic Product (GDP) growth of above seven per cent.

This is achievable considering that, on average, the country has been recording GDP growth of about 6.5 per cent in the past few years.

The Government further wants to attain end-year inflation of not more than six per cent from the current levels of about 6.8 per cent as announced by the Central Statistical Office (CSO) at the end of last month.

The target is seemingly too modest but better than this year's benchmark of not more than seven per cent.

The 4.3-per cent overall deficit objective has been maintained for two consecutive years and is well within attainment.

The domestic borrowing will be restricted to 1.5 per cent which is higher than this year's target of 1.3 per cent.

On November 7, I featured India as one of the major sources of credible investments.

According to Wikipedia the economy of India is the 10th largest in the world by nominal Gross Domestic Product (GDP) and the third largest by purchasing power parity (PPP).

The country is one of the G-20 major economies and a member of BRICS.

BRICS is a unique grouping for five south-south countries with shared opportunities and common challenges.

BRICS is derived from the initial of the five member countries - Brazil, Russia, India, China and South Africa.

India is the 19th largest exporter and 10th largest importer in the world.

It is, therefore, against that backdrop that investors from this vast Asian country are seen as coming from a solid economy with a firm foundation.

Zambia's export to India increased from US$51.4 million in 2009 to $102.67 million in 2010 while India's exports to Zambia stood at $131.6 million in 2009 and $88.34 in 2010.

By February 2012 India-related investments had helped to create about 13,000 job opportunities in various sectors in Zambia.

Already Indian has registered investment presence in the banking, telecommunication, power generation, manufacturing, transport and other key sectors of the Zambian economy.

Mention the Konkola Copper Mine, Airtel Zambia, Tata Zambia and many more! One of the biggest common denominators of these companies is credibility.

Zambia is, therefore, in the right track by courting investors from such big economies as India.

On November 14, Istated that until then Government's efforts aimed at increasing the lending portfolio for the banks and reducing lending interest rates seemed not to have been supported by the banks.

Under the current national budget the Government reduced the corporate tax for the commercial banks from 40 per cent to the standard rate of 35 per cent, offering a relief of K65 billion to the financial institutions.

This was in the hope that banks too will pass the relief on to the borrowers through reduced lending rates.

The measure was intended to mobilise additional resources to enable banks to participate more effectively in growing the economy by increasing credit available.

In November last year the Government cut the bank reserve ratio in another effort to reduce the cost of borrowing.

I noted some encouraging news from the Banker Association of Zambia (BAZ) which last week said the country's total lending portifolio increased from about K11 trillion in January 2012 to nearly K13trillion as at August 31 2012.

In fact the total bank's lending portfolio has increased from K10,760 billion at the beginning of January 2012 to K12,951 billion at the end of August this year.

I briefing talked about the 2012 Science and Technology Print media award which I scooped during the week and reproduced my acceptance statement.

The following week I looked at the Financial Intelligence Unit following President Michael Sata's swearing in of five members of the board the previous week.

The Unit or is it the Centre, is a creation of the Financial Intelligence Centre (FIC) Act of 2010 which falls under the Government's bigger struggle against money laundering, terrorist financing and other serious offences.

In terms of actual work, nothing much has been reported on the FIU, making one to wonder whether it was founded moribund.

But with the unveiling of the board now, a lot is expected from the body corporate whose offices are housed at the Bank of Zambia in Lusaka.

On November 28, I looked at the national Information and Communication Technology Policy which the Zambian Government started developing in 2001.

Legislatively, the ICT Act was passed in 2009 together with its sister Act, the Electronic Communications and Transaction Act, to further stimulate growth in the sector.

The ICT Act which transformed the then Communications Authority of Zambia (CAZ) into the current Zambia Information and Communication Technology Authority (ZICTA), broaden the mandate for the regulator.

Although the ZICTA is empowered to check that, it is seemingly having a challenge in that some of the issues emerging now may have not been fully taken care of in the available laws and examples abound.

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