Minister of Finance Dr Bwalya Ng’andu says the Treasury will endeavour to ensure that money from the Constituency Development Fund (CDF) is released within the first quarter of each financial year.
And Local Government Minister Charles Banda has warned councils against using the Local Government Equalization Fund as collateral for borrowing purposes.
The members of the House were debating a motion moved by Ikelengi UPND member of parliament Elijah Muchima to adopt the Report of the Committee on Local Government Accounts on the Utilization of the Constituency Development Fund and Local Government Equalization Fund in Zambia, for the Third Session of the Twelfth National Assembly, laid on the Table of the House on July10, 2019.
Dr Ng’andu said the money would be released early to allow for the procurement of projects to be completed within the financial year.
“With respect to timely funding of CDF, funds permitting, the Treasury will endeavour to ensure that the CDF funds are released within the first quarter of each financial year to allow the procurement of projects to be completed within the financial year. With respect to accrued CDF, as regards CDF not dispersed from previous years, the current budget process only allows for funds appropriated by the House to be dispersed and utilize within that financial year. For any carryover funds, Ministries are encouraged to apply for supplementation before utilization of funds that are mopped and secured within the Treasury,” Dr Ng’andu noted.
He added that the Ministry of Finance had set up a team to develop guidelines, which shall address misapplication of funds in local authorities.
“The Ministry of Finance, together with the Ministry of Local Government, shall review the amounts allocated for administration costs in order to enhance the monitoring of projects by local authorities. As regards the weaknesses identified in the Equalization Fund in local authorities, the Treasury has set up a team to develop guidelines, which shall address misapplication of funds, which will have punitive measures in line with the Public Finance Management Act Number 2 of 2018. These guidelines will not allow local authorities to use the Equalization Fund to guarantee their acquisition of loans,” said Dr Ng’andu.
And Banda warned councils against using the Local Government Equalization Fund (LGEF) as collateral for borrowing purposes.
“Madam Speaker, one other concern that the Committee raised is on the misapplication of the Local Government Equalization Fund citing the use of the LGEF by the local authorities as collateral for borrowing purposes. Madam Speaker, this matter is of great concern to the Ministry. To this effect, government is actively investigating the matter of using the 20 per cent capital component of the Local Government Equalization Fund for collateral purposes. Further, to address the issues of misapplication, government, through the Local Government Service Commission, has commenced disciplinary action against erring officers. Very key on the issues that need to be addressed is the failure to share activity reports with MPs and other stakeholders,” said Banda.
And in her debate, Chiengi FDD member of parliament Given Katuta backed recommendations by the Report to increase the amount of CDF allocated from K1.6 million to K5 million and K3 million per year for rural and urban constituencies, respectively.
“Madam Speaker, what I can say is the CDF should be married with the 20 per cent Equalization Fund. You find that you bought a grader; they cannot even afford to find fuel, but where is the 20 per cent? So, we need to marry the two, and this CDF should be channelled through the constituency office. I would want to talk about the amounts that we are given as members of parliament; I think we need to emphasize the needs of the people of Chiengi are not the same needs of the urban people. In urban areas, there are certain projects, which are done by the government; as a result, the urban constituencies receive more than us in rural areas. It will only help us to develop our constituencies if we are given much more. Please, may I also urge the government and us lawmakers to revisit this CDF Bill? It has to go through the constituency office,” urged Katuta.
But adding to the debate, Chimwemwe PF member of parliament Elias Mwila called for the CDF to be increased to K5 million across the board.
“I would like to agree with the Report that the current CDF that is being given to constituencies is not enough. That is K1.6miilion per year. Two proposals were made: the first one was K5 million for rural constituencies and also K3 million for urban constituencies. But I do not agree with the recommendation that the rural constituencies get K5 million and urban constituencies get a less amount. In my view, that equitability concern can be addressed by the Local Government Equalization Fund, that’s why it’s there. CDF must be given across the board. Yes, some constituencies are very big, and we can handle that by agreeing to amend the clause in the Constitution so that we give effect to delimitation exercise,” explained Mwila.
And Serenje MMD member of parliament Maxwell Kabanda highlighted the need for specialized skills in the running of local authorities in the country.
“Development, Madam Speaker, does not hang in the air. Development takes place at the local level. All of us here come from a particular area and at the end of the day; government has to show for what it has achieved. There is no need, Madam Speaker, to send money to institutions, which are misapplying resources! What are you going to show for it after five years from now, in 2021, what are you going to show? All of us have to point at something, which has been done at that level. Indeed, it’s very important that we take stock of our spending in these institutions. These institutions, Madam Speaker, are very important because they host a number of responsibilities. Whatever you may think of, it’s the responsibility of the council. These are enormous responsibilities that the councils have and in order for them to undertake these responsibilities, they require people who have specialized skills,” said Kabanda.