ECONOMIST Trevor Simumba says any debt which the UPND government acquires, especially in its first year, should be targeted at the economic sector, rather than the social sector.
And Simumba says the 2022 budget should focus on bringing fiscal stability into the economy.
Meanwhile, Simumba says there was need for a management change at Zesco in order for the utility company to work prudently.
Commenting on the loan which government got from the World Bank for building schools in an interview, Simumba said he would have preferred if any borrowing was targeted at the economic sector.
“In terms of the debt that the UPND has acquired on the construction of schools again, I would have preferred that any debt that the government acquires especially in the first year should be targeted towards the economic sector rather than social sector. Yes, there would be a benefit in terms of construction of schools but it is a long-term benefit. The only advantage is that this loan is coming from the World Bank which means it is a concession loan, so the interest rate is not so high. So really, we need to move away from borrowing for things like schools and begin to use our actual resources that we generate in the economy,” he said.
“We should be borrowing for economic projects, projects that have a return on investment so that we are able to incentivise the economy, but more importantly we get a return on that investment. So, for me I would like to see a change in that. But I suspect because it is coming now, this is a loan that was negotiated by the previous government and the government is basically taking over. But I think this needs to be made clear by the Minister of Finance, when exactly the procurement of this loan was started and who started it, what they are hoping to achieve from this loan. So, it will benefit the country but it is a long-term benefit, it is not a short-term benefit. Right now, what this country needs is some fixes that can get the country and the economy back on a level where it is generating growth.”
And Simumba urged UPND not to feel pressured into introducing free education in the upcoming budget.
“Concerning delivering of free education in the upcoming budget in a phased manner, quite honestly, I would have expected the government to wait. The first thing they should have done in this budget if they are serious with helping the less privileged would be to start with those that receive social cash transfer, increase the level of social cash transfer and ensure that if any of the children that are vulnerable are not going to school because of school fees, remove school fees for that group of children as a starting point in the first budget,” he said.
“Quite honestly, this budget should focus on getting the country back into some fiscal stability especially when it comes to the public debt. In terms of government spending, we need to realign spending of this budget away from defence and security, away from FSIP. We need to restructure how we finance FISP. We need to ensure that budget execution, in particular when it comes to the social and economic sector is closer to 100 percent than it is currently, where allocation is made but in terms of actual execution of the budget, we don’t see money physically getting where it is supposed to get to.”
Meanwhile, commenting on Energy Minister Peter Kapala’s revelation that Zesco’s debt was currently $3.5 billion, Simumba said it was not a surprise.
“The issue of the Zesco’s loan, it is not a surprise for us who have been monitoring government borrowing and government guarantees. Much of this debt is related to the Kafue Lower Gorge, which is costed at approximately $2.1 billion. The original costing was $800 million but when the PF came into office, they redid the feasibility study and suddenly this project went to $2.1 billion. So, the $3.5 billion is made up mainly by that. The rest of it is other loans that Zesco obtained and the government has guaranteed,” he said.
“The people of Zambia must understand that this $3.5 billion that Zesco has is sovereignty guaranteed by the government of Zambia. So, whatever the case is, we have to pay this money. This is a lesson for us as Zambians, that we should learn to keep our governments accountable. We should not just sit there and just bootlick and praise.”
He said there was need for management change at the power utility company.
“This is a problem and unfortunately, for me, I think the Minister of Energy has not moved quickly enough, because he should have immediately removed the senior management and begin to analyse what the issues are. I don’t think we even have a new Permanent Secretary at the Ministry of Energy. So, I really don’t understand what this government is doing and how it is going about it because these are issues that affect the economy in a practical way. Not the way we are doing things haphazardly,” said Simumba.
“At the end of the day, my question is this, that statement has been issued to Parliament, so what next? What is the solution? All we hear from UPND Ministers is complaints, we need solutions! We can’t continue like this, load shedding has increased all over Zambia. We need a new team at Zesco, so the Minister of Energy needs to get down to work. Surely you cannot maintain the same people that created a problem and expect those people to solve the problem. We need to see real action.”