National Restoration Party (NAREP) president Elias Chipimo says there is need for a full audit of how government used the US$1 billion Eurobond which it acquired to recapitalise parastatals.
Last week Zambia Railways Chief Executive Officer Christopher Musonda told the parliamentary committee on parastatal bodies that there was no prior plan on how the company was going to used the US$120 million allocation from the Eurobond. He explained that the company started looking for plans on how to use the money after it had already been deposited in the bank.
Speaking in an interview with News Diggers! Chipimo observed that there was no assurance that Zambia Railways would make any profit from the unplanned for US$120 million grant.
“The Zambia Railways issue is very troubling. They should have had a plan in place and they should have been held accountable to how that money was going to be spent. But the biggest problem is on the part of the government itself for giving money to an entity which actually didn’t have a plan on how they were going to spend that money and didn’t put in place an accountability framework to ensure that the expenditure was going to be as agreed,” Chipimo said.
He wondered why the PF went to borrow money which institutions had no plan for.
“So you may even wonder why they were borrowing in the first place? And these are the symptoms of the kind of recklessness that has gotten our country into the huge debt problem that we are facing. This reckless is only getting worse and we need a full audit of not just the Zambia Railways expenditure, we need the full audit of the entire Eurobond and other borrowings,” he said.
“But again we are seeing that there is lack of proper planning and we are not getting value for money; for that money which is being put into the projects even if they have a justifiable investment basis.”
Chipimo said government should have ensured that all Eurobond recipient companies put in place a credible plan prior to the disbursement of funds.
“When the Eurobond was acquired, the plan should have been in place already from all the potential recipients. But there was a serious failure on the part of the government, not only on the part of Zambia Railways because if you look at what tends to go wrong in our country, its the same with CEEC, DBZ, and all these institutions that tend to lend money. There is no capacity usually on the part of the recipients of these fund to actually deliver nor is there a clear and credible plan in place which can justify the lending which is taking place. And so that is why our delinquency and default rates are so high,” he said.
“And now when you come to bigger amounts which are borrowed on behalf of the country and lent to institutions within the country, there hasn’t been an insistence on the part of the Ministry of Finance and the government in general to see a clear and credible plan prior to the disbursement of funds. Secondly there is no proper system of accountability that takes people to task and ensures that consequences for failure to deliver according to the agreed parameters are in place. So with the Zambia Railways issue, its just symptomatic of the problems that we are seeing right across many areas of governance and we see this even in the auditor general’s report where there is misapplication, mis allocation, no proper follow-ups. I don’t know how many people have ever been prosecuted for either disciplinary reasons or criminal reasons for non compliance with the budgetary requirements, which non compliance has been exposed by the auditor general’s report.”
And Chipimo said the Zambia Railway’s projection of starting to make profits in two to five years had no credence.
“So if we cant plan as they said ‘he who does not plan actually plans to fail’ so where are we going to get the credibility and assurance from Zambia Railways that there will ever be any profits?” asked Chipimo.