FORMER Bank of Zambia (BoZ) governor Dr Caleb Fundanga says he hopes the UPND government will be transparent when acquiring loans.
And Dr Fundanga has discouraged government from borrowing from the Chinese because their loans are shrouded in secrecy.
Meanwhile, Dr Fundanga says he does not see anything strange about government’s decision to acquire a loan from the World Bank for building schools.
In an interview, Dr Fundanga said government should utilise the existing laws and ensure that any debt acquisition went through parliamentary scrutiny.
He also advised the new administration to be “choosy” with the type of help it got, in apparent reference to the defence houses which were built by the Chinese.
“Going forward I hope that we can have transparency. It is good that China can help us but let us be choosy, not getting help even when you can build your own houses. All of us live in houses built by Zambians. The debt which has been contracted for the construction of these houses alone is quite significant. In the US, there is a referendum, if the state government wants to borrow some money, they will actually do a referendum on whether they should borrow the money or not. And if they want to borrow, they should explain where the financing for repayment will come from. There is that level of transparency in some of these developed countries,” Dr Fundanga said.
“There is a provision in our current financial regulation that Parliament must approve all sorts of borrowing, I don’t think many of these borrowing have gone through parliamentary scrutiny. We have a new government, our hope is that they can utilize the existing laws to ensure that the scrutiny now takes place which was not being done before, that will be good for the country.”
Dr Fundanga said Zambians were capable of constructing houses on their own.
“It can be argued that the West has reduced lending now. Perhaps that is what leads to this concentration but whatever the reason, they are not very good. And one of the key critiques is that they don’t question why you want the money; you can see it from the loans, we have got to build these defence and security housing. The question that a lot of people are asking is that shouldn’t we have built these houses ourselves? We produce cement. There are a lot of construction companies. I was shocked to find out that even the national service has got the share of these houses from the Chinese when they can build houses for themselves, that is a major weakness. And some of the houses are prefabricated which is a shame really because we could build stronger houses with our cement blocks and this can be done by Zambians. This is what creates jobs,” he said.
And Dr Fundanga said the Chinese debt brought about uncertainty in the event that the country defaults.
“The question of transparency has been one of the key issues that observers of the growth in the national debt have commented on. That Chinese debt is not publicly discussed, it is done behind closed doors. And some of the time, it also involves expenditure which probably, normally is not so much development. It is a very controversial issue. We have certainly borrowed quite a lot from that side. This is mainly because the Chinese don’t have conditionalities which means that as long as you want the money, you will probably get it. We have seen the things we now have, there are cameras all over the road, one would say we have this to control crimes but where countries have done this, they do it judiciously to go into those places where crime is likely to happen, not in some roads where there isn’t any possibility that you will find crime,” he said.
“There must be a closer examination of where these are going to be and if they are necessary. The current levels of borrowing from China far exceeds the debt we had before the debt cancellation, just from China alone. It indicates a high level of generosity by the Chinese but at the same time it brings uncertainty because you don’t know what might happen in case of default. In terms of risk management, one of the things we must do is to reduce the exposure to one form of risk.”
Meanwhile, Dr Fundanga said he did not see anything strange in government’s decision to acquire a loan for building schools.
“World Bank has been financing education in this country since independence. Many of the schools that we have are as a result of that assistance. And what I am seeing is that we have got this financing to build schools in three provinces that did not benefit from the earlier loan for education. I think there is nothing wrong in supporting the education sector. Particularly this is key for human resource development. And the World Bank financing is a cheaper form of financing. I think I would have been worried if they said they had got from the Eurobond to finance the building of schools. But from the World Bank, it is in the interest of developing equitable development in all the provinces. This kind of loan will probably continue for as long as we want to have some positive development in the country. I did not see anything strange in it,” he said.
And commenting on the appointment of Dr Denny Kalyalya as Bank of Zambia governor, Dr Fundanga described the appointment as justice done to a person who was unfairly treated by the previous government.
“Dr Kalyalya has been well prepared for the job. When he was abruptly removed, most of us said this was unfair treatment of a professional. He is very knowledgeable about what is required. And so it is a welcome return. I don’t see why you can just dismiss a very highly qualified person without giving reasons. When he was brought back, I considered it as justice being done to somebody who was unfairly treated by the previous government. I am [happy] that he is back and he can continue to help the country to move on the right path,” he said.
“One of the things we Africans must learn is to respect our own professions. Our friends in these developed countries have a lot of respect for experts and they don’t harass them around. We are lucky that we have a government that has recognized his potential. And please let us listen to the advice of people like him. Not to look at them like enemies of the State. There are many other professionals around in various fields like mining and medical that can come and help our country to recover, let us use them.”
Meanwhile, Dr Fundanga said the aspirations of the UPND government would be reflected in the future budget and not the forthcoming one.
“I would not expect that next year’s budget will fully reflect the aspirations of the New Dawn government. I am sure there are certain things you cannot change in a short period of time but there are certain things which can be done when you see that there is wastage, you can make a few changes. But the budget that might start reflecting the aspirations of creating new jobs is the future budget, maybe the follow up to the first budget will be a truly UPND budget. And that should show a drastic departure from the previous past, even the way it is financed should reflect that. I wouldn’t expect that by magic the government can start everything that they promised. But we expect more changes in the future budget,” said Dr Fundanga.