FINANCE Minister Dr Situmbeko Musokotwane says government expects to have a full agreement with the International Monetary Fund (IMF) sometime in the middle of this year.
And Technology and Science Minister Felix Mutati says government has signed contracts with 80 institutions which will provide skills training to an average of 60 youths in every constituency.
Meanwhile, Local Government and Rural Development Minister Gary Nkombo says with the decentralisation of the constituency development fund, financial institutions should not continue shunning rural areas.
Speaking during the Bankers Association of Zambia meeting with government, Dr Musokotwane assured that there would be economic stability once the IMF deal was in place.
“Our national debt has been unsustainable for years. This unsustainable debt was at the centre of the loss in the value of the Kwacha and the shrinking of business in the country. As of now, having secured the IMF staff level agreement last year, next on the agenda is to engage the creditors so that we can obtain debt relief through restructuring of that debt. Thereafter, we expect this to culminate in a full agreement with the IMF sometime in the middle of 2022. Arising out of the agreement with the IMF, we expect economic stability that we have already seen to be even better so that the issue of rising inflation comes under control. We also expect the exchange rate to stop acting like a yoyo like we have seen in the past,” he said.
“In addition, some of the money that we budgeted for servicing debt, that money will be saved because we will be obtaining debt relief. Both the IMF and the World Bank are expected to make disbursements on concessional debts payable in a period of time with interest rates in certain cases being zero or close to zero. Other donors will also disburse. In other words, from the middle of the year onwards, we expect that there will be more money in the economy. We also want to revitalise industries so that jobs and wealth are created.”
Dr Musokotwane said government was committed to creating job opportunities in rural areas.
“Rural areas and industries are not to be left behind with the increased amount of CDF that is intended to be a catalyst for business and employment opportunities in the rural areas. Through CDF, government wants rural communities to construct modern bathrooms, teacher’s houses, police posts, manufacture school desks and many other items that are relevant to the rural communities. In the next 10 years, the issue of seeing classrooms made out of mud and seeing school children sitting on the floor must come to an end. These are serious opportunities that will help to slow down or even reverse the rural urban migration,” said Dr Musokotwane.
Meanwhile, Mutati said government signed contracts with 80 institutions which would provide skills training to an average of 60 youths in every constituency.
“We have 1.4 million youths with most of them under employed and others unemployed. So from our Ministry, we have developed a youth skills empowerment strategy. This strategy is aimed at delivering skills particularly to the rural youths who will participate in rebuilding the economy by creating jobs. Through our overarching institution called TEVETA, in Chongwe three weeks ago we picked approximately 60 youths. These youths are being trained in carpentry, bricklaying, metal fabrication and all those requirements to be able to undertake a construction project,” said Mutati.
“This is a three months programme and they will be given a competence certificate and register with the Engineering Institute of Zambia and the National Construction Council. Through TEVETA, we have signed contracts with 80 institutions with other private sector institutions. These will be able to provide the training on average of 60 youths in every constituency in Zambia. In the first round, we are targeting 100 constituencies. We are ready to go next month to deploy this training programme. We provide training materials through the collaboration with the Ministry of Local government that will provide the logistical part.”
Meanwhile, Local Government and Rural Development Minister Gary Nkombo said with the decentralisation of the constituency development fund, financial institutions should no longer shun rural areas.
“The expansion of the CDF serves many purposes. So now we feel that as financial institutions, you have every reason to exist in the entire parts of the country. What has been the case in the recent past is that financial institutions and banks have been shunning rural areas for reasons that are understood. With your government’s deliberate policy to decentralise governance and fiscal policy, I think you have sufficient reason to exist even in the most rural areas of our country. I emphasise this because there will be districts that will have more than one constituency and so it is clear that we have agreed that you will go and have a bite of the cherry. You will make sure that you assist government in managing these funds on behalf of the councils,” said Nkombo.
“Our programme for decentralisation and specific reference to the women and youths and the component of loans and not grants is something we have put focus on. We have to agree that there must be a cultural shift because in the past, there has always been a tendency of people thinking government money must remain government money. So it is not the most popular thing to do, especially among those who are opposing in the political realm. They argue that councils have no capacity to manage these funds. We are of a different mindset and we must have a cultural shift until everybody accepts.”
Meanwhile, Small and Medium Enterprise Minister Elias Mubanga expressed concern that SMEs were not able to meet conditions attached to accessing loans from financial institutions.
“The emphasis is on affordable financing. Our small and medium businesses may not meet the conditions that the institutions set. When you compare with developed countries, financing especially from institutions has been affordable but the Zambian setting is totally different. It is difficult for a small business to access funding from your institutions. We hope that this year, we will review. As government, we would like you to come forward and talk about it. This country will only be developed by ourselves including financial institutions. When we make it difficult for our SMEs to access funding, then we cannot develop,” said Mubanga.
“Your interest rates are too high and SMEs cannot afford it. Your conditions are difficult for SMEs to access. So we would like you to join hands with government and come up with solutions to finance SMEs. I am sure you understand that 60% to 70% of involvement in business is the SMEs. But if they cannot have access to affordable financing, then it will be difficult to develop our nation. Partner with government so that SME’s have access to capital so that they can get the required tools.”
And Bankers Association of Zambia (BAZ) chairperson Herman Kasekende said the association was confident that government was on track in terms of addressing the unsustainable debt.
“There is a lot of work that needs to be done. I think one of the key issues that is still outstanding is the negotiations with the lenders with the government of Zambia. This is a Pan African issue and some of the debt actually shows that developing nations owe about $35 billion that is due to the lenders in 2022. About 13 to 14 billion of that is owed to Chinese entities and about the same amount of money is actually owed to the private lenders including holders of Eurobonds,” said Kasekende.
“So that presents a bit of a challenge. I am sure the Ministry of Finance is focusing on that and other agencies of government. So we are looking at that as one of the challenges but we have confidence that government is dealing with that and we hope that the ink will be dry on paper by the time we end quarter two.”