Inside Zambia’s 2013 Budget

By Nawa Mutumweno – The Zambian government plans to spend a total of KR32.2 billion in 2013 on the provision of various goods and services such as education, health, water, electricity and roads, according to this year’s Budget presented to the National Assembly by Finance minister Alexander Chikwanda in October last year.

Allocation of the Budget is follows: General Public Services (25.5%); Defence (6.3%); Public Order and Safety (4.2%); Economic Affairs (27.6%); Environmental Protection (0.2%); Housing and Community Amenities (3.8%); Health (11.3%); Recreation, Culture & Religion (0.8%); Education (17.5%) and Social Protection (2.8%).

ECONOMIC AFFAIRS

Agriculture

KR500 million is planned to be spent on this important sector. The Farmer Input Support Programme (FISP) has been reformed to give the small-scale farmer flexibility in terms of what crops to grow or animals to rear.

This is being done by the introduction of an e-voucher system and extending the subsidy to include other crops such as soya beans, cotton, sunflower and rice. With the e-voucher system, a farmer will receive a coupon with a specific money value within which he/she can decide the inputs to buy. This gives a farmer the freedom to choose what crop to plant (or animal to rear) as opposed to getting a pre-determined package of seed and fertilizer.

To maintain the strategic food reserve, Government will, through the Food Reserve Agency (FRA), spend KR300 million to buy crops grown in the 2012/13 rainy season. Private traders are being encouraged to participate in buying the rest of the crop

Energy

To improve electricity generation, transmission and distribution, the Government will spend a total of KR1.4 billion, encompassing the expansion of existing and construction of new power stations, including mini-hydro, as well as increased electrification of rural areas.

Manufacturing

In addition to the tax incentives granted to this sector (with removal of duty on certain manufacturing inputs), the Government intends to spend KR52 million to develop the Multi-Facility Economic Zones (MFEZs).Once fully operational, the MFEZs are expected to boost the manufacturing sector, thus creating more jobs.

Road Infrastructure

KR3.4 billion will be spent on the construction and completion of various road projects throughout the country. This includes roads identified in the Link Zambia 8 000 programmwe which is expected to open up new and shorter routes across the country in order to ease movement of people, goods and services.

Additionally, 2 000 km of township roads will be paved using labour-intensive techniques in order to improve the state of the existing roads and also create jobs.

Railway Infrastructure

The Government has provided KR642.6 million to begin the rehabilitation of the railway network. The aim is to reduce the wear and tear on the roads by providing alternative means of transport, especially for heavy goods.

Micro-lending

The Government has provided KR54.0 million for micro, small and medium entrepreneurs to access loans through the Citizens Economic Empowerment Commission (CEEC). This initiative will assist businesses that have been unable to access the much-needed capital at affordable interest rates to develop their respective businesses.

Tourism

In order to promote and market tourism, with particular focus on the 2013 United Nations World Tourism Organisation (UNWTO) conference to be co-hosted with Zimbabwe, the Government will spend KR32.3 million.

EDUCATION

KR5.6 billion will be spent on providing quality education and training to children and youths. The money will be spent on the following:-

Education Infrastructure: Government will spend KR393.3 million for the development of secondary school infrastructure in order to increase the number of secondary school places. KR475.1 million will be spent on universities, colleges and trades training institutes in order to make the youths more skilful to meet the needs of the nation.

Youth Skills Empowerment: Youths are the future of the nation. Therefore, in addition to the allocation to the education sector, KR50 million will be spent on providing vocational skills to the youth. To this end, Technical Education, Vocational and Entrepreneurship Training TEVET) institutions will be constructed and rehabilitated to increase opportunities for youth skills development.

HEALTH

To promote the health of the nation, Government will spend KR3.6 billion, with the bulk of the money  being utilised to pay medical personnel and the following key items:-

Drugs and Medical Supply: To ensure constant availability of drugs and medical supplies for hospitals, health posts and clinics, the Government will spend a total of KR594.1 million.

Health Infrastructure: In view of the increased number of cases requiring specialised treatment, the Government will spend a total of KR204 million on the upgrading of infrastructure and equipment at the University Teaching Hospital and central hospitals in Kitwe, Livingstone and Ndola.

A further KR186.1 million will be spent on building and rehabilitating other hospitals and clinics across the country. In addition, KR110.9 million will be spent on buying of medical equipment such as malaria testing kits, cold chain equipment and X-ray machines.

GENERAL PUBLIC SERVICES

The Government will spend KR8.4 billion on running Government operations to facilitate service delivery of which the notable expenditures are:-

Decentralisation Policy: In order to support Councils in service delivery, the Government will provide them with the following:-

• KR326.1 million as capital grants out of which KR195 million shall be in form of the Constituency Development Fund (CDF)
• KR367.5 million as operational grants out of which KR220 million will assist in the Councils operational costs while KR120 million will go towards dismantling debts

Infrastructure in newly-created districts and provincial capitals: Following the creation of a new province and new districts, the Government will spend KR204 million for the construction of Government infrastructure. These will include but will not be limited to civic centres and provincial district administrative offices.

Court Cases: KR200 million has been provided for court cases ruled against Government.

PUBLIC ORDER & SAFETY

KR1.3 billion will be spent on internal security with key expenditure being:–

Fight against Corruption: Corruption limits national development and it is the duty of every citizen to vigorously fight against this scourge. As a commitment to this fight, Government will spend KR100 million on the Anti-Corruption Commission and Drug Enforcement Commission.

Zambia Police Service: In order to enhance public safety, KR30 million will be spent on modernising the Zambia Police Service, in addition to the normal budget for the unit.

Infrastructure: In order to increase access to justice and decongest prisons, KR76.3 million has been allocated primarily for the construction of court buildings and prisons. The focus of the Government is to effectively reform prisoners for a better tomorrow for all.

HOUSING & COMMUNITY AMENITIES

KR1 billion will be invested in this area with key expenditure going to:-

• Water Supply & Sanitation: In order to enhance access to safe water and good sanitation, KR783.8 million will be spent.
• Under the National Rural Water Supply and Sanitation Programme (NRWSSP), over 2 500 boreholes will be drilled countrywide
• Housing: The Government will further facilitate the construction of low-cost housing and institutional houses.

SOCIAL PROTECTION

KR892.2 million will be spent on social protection programmes as follows:-

• Pension: KR616.9 million is allocated for pensioners
• Social Welfare:  KR 83.1 million will be spent on safety net programmes (Public Welfare Assistance Scheme and social cash transfers) that focus on assisting disadvantaged and vulnerable groups

USE OF THE EUROBOND MONIES

In 2012, Zambia raised $750 million (KR3.8 billion) on the international capital market which will be spent infrastructure projects that promote growth as follows:-

Transport (road and rail) – $430 million, 57.3%; Energy  ($255  million), 34.0%; Human Capital and Access to Finance ($49 million), which translates into Rehabilitation of Central Hospitals – $29 million and Access to Finance for SMEs (Development Bank of Zambia ($20 million), 6.5%; Fees &Transaction Costs -$1.4 million, 0.2% ; and Discount Premium – $14 600 000), 1.9%, which amounts to $750 million.

Indeed a progressive budget that seeks to make life better for Zambians has been delivered. What remains to be seen is stringent and prudent management of released resources to various programmes.

Table 2

Government expects to raise the KR32.2 billion as follows:-

Tax Type                                                Amount (KR)                         % of Total Revenue

Income Tax                                                             12,809,440,000                           39.80

Value Added Tax                                                     6,016,420,000                            18.70

Customs & Excise                                                    4,710,030,000                            14.60

Non-Tax                                                                    1,210,000,000                               3.80

Total Foreign Grants and Loans                           5,602,840,000                              17.40

Domestic Borrowing                                              1,863,440,000                                5.80

Total                                                                        32,212,170,000                              100.00

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