It seems one of the biggest mistakes that President Edgar Lungu has made, is the appointment of Felix Mutati as the Minister of Finance. We are sorry to say this, but much as we may love to hear him speak, he is just that – a sweet talker. To be frank, Mutati is to a greater extent, the most clueless Finance Minister. He is about all talk, talk, talk, but no results.
One year, we have anchored our economic policy on an IMF programme, which by the way his office denied in the first place. The PF government did not come on the open when they reached out for help from the IMF, they wanted to play it hash-hash. After it was eventually known to the public, Mutati started singing the IMF song, glorifying the move, sweet-talking his way into more debt while singing “we should not spend what we don’t have”. It’s over a year since these talks started, but the negotiations are nowhere. The IMF has even coined a term for its fruitless negotiations with Zambia “a saga”.
In the PF manifesto, it says the PF will develop its own social and economic policies, but what social and economic policies are there for the PF to point at today?
As a country, we have been operating with no economic policy. The economic program we had was anchored on IMF and since the IMF deal hasn’t been realised, we are stuck. We have no idea how we will finance the budget because we already have more kaloba than any other country in Sub-Saharan Africa.
We are going into year two now, that’s when we are hearing that Mutati has been told to go and redraw his plan. The guy still has the energy to sweet-talk us with; ‘no, government will borrow domestically to finance its budget’. When did the Zambian government ever succeed to borrow domestically and finance its entire budget?
It’s sad that during Alexander Chikwanda’s time, we thought we had hit rock bottom with borrowing. We thought he was the worst, but today in the face of what is obtaining in the country economically, shikulu ABC is looking like a hero.
Here is an opportunity granted by the PF for Mutati to sell himself as a potential leader of this country, here is a government portfolio to market himself with proper economic policies; what does he do? Removes investment incentives, tax holidays, at the most critical ‘hour’ when his President is talking about creating 1 million jobs.
Mutati knows too well that an investor doesn’t come here to play, or for charity. If Botswana is offering incentives; Zimbabwe is offering incentives; South Africa is offering incentives; Mozambique; even Congo, Uganda and Rwanda are offering incentives; why should an investor come to Zambia? What will make world millionaires come to Zambia to invest their money if the market is not attractive?
It’s simple logic that an investor wants to bring in his capital, get some tax holiday and take out some money while ‘his’ investment continues running. So what’s going to make him come to Zambia now than go to Botswana?
Look Mr Mutati, things are changing now in Zimbabwe. Why will investors come to Zambia when they can go to Zimbabwe where there is ready infrastructure and industries? Even the white Zimbabwean farmers are expressing a sigh of relief now that there is a new regime back in their country. They want to go back. So which investors will follow Zambia just because you are going to tell them that there is land, rain and the people are nice? An investor is here to make money sir, not friendships.
What Mutati should have done, if he was a serious Finance Minister, was not remove the tax holiday, but simply include local small scale businesses to be accessing some of those incentives. Mr Mutati and Mr Kingsley Chanda at ZRA can boast that they are meeting revenue collection targets, but the truth is that they are being punitive. They can collect massive taxes this year but next year not the same number of companies which are operating this year will be operating.
Tax doesn’t need to be punitive. This is the song that economist Chibamba Kanyama has been singing; “more people paying less taxes is more profitable than less people paying punitive taxes”. This is why people are coming up with all sorts of dubious means of avoiding tax.
The Competition and Consumer Protection Commission (CCPC) has just told the country that they have had to fine Lafarge, a foreign company for selling cement at an exorbitant price to Zambian citizens, while giving it away to foreign buyers at the cheaper price. Meanwhile, the cement is made right here is Zambia; and even among Zambians, this company was deciding who buys cement at what price, depending of where you live. When you listen to Mutati’s budget, the plan he has for growing the revenue base is to make civil servants who want to build their own houses pay more for cement through increased taxes.
We are sorry to say this Mr Mutati, but if you think staying is that position is boosting your chances for plot one, think again.