On Wednesday 17th October 2018, the President of the Republic of Zambia, His Excellency Mr. Edgar Chagwa Lungu held engagements with The Vice President of the World Bank Dr. Hafez Ghanem, Luapula Expo Investors and key Government officials on fundamental issues pertaining to the country. Below is our analysis on various key aspects of the economy that constituted part of the deliberations.
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In August 2018, the Ministry of Finance released the 2019- 2021 Green Paper ‘Medium Term Expenditure Framework’ which highlights Government’s policy direction over the medium term. The Green Paper is the cornerstone for actualising the plans that are laid out in the Seventh National Development Plan (7NDP) and proposes guidelines for the preparation of the national budgets.
The Green paper projects the 2019 Budget at K75.2 Billion which is 25 % of GDP, this is a significant increase from the 2018 Budget which stood at K71.6 Billion.
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The agriculture sector is the fourth largest contributor to GDP (8.7 percent) and the largest contributor to employment. The sector is critical for achieving diversification, economic growth and poverty reduction in Zambia. One major component of the agriculture sector is the e-voucher programme, which was allocated K1,785,000,000 in the national budget (Farmer Input Support Programme – FISP budget line). The e-voucher system has had its challenges and with the intervention of the Smart Zambia, there could be light at the end of the tunnel.
Zambia has just been commemorating Farmer’s Day, which is of great importance to the agriculture sector and economy at large. We take stock of the gains made in promoting diversification of the economy. Agriculture has clearly emerged as the Government’s torch bearer and sector of choice to push Zambia’s economic diversification programme for obvious reasons and the 2018 Budget bears proof of this. It links well with the 7NDP whose aspirations are centred on a diversified and export-oriented agriculture sector.
In the 2017 Budget Address, Government made strong commitments to promote diversification and wealth creation in many sectors of the economy. This included the promotion of value addition in the forestry sector with a proposal to introduce specific rates on the export of unprocessed and semi-processed timber products at the rate of K10 per kg and K5 per kg respectively. Other measures included support to economic diversification and promoting capital investment by increasing the capital allowance for plant, equipment and machinery used in farming and agro-processing to 100 percent from 50 percent.
On 19th July 2018, the Minister of Finance,Honourable Margaret D. Mwanakatwe, MP, provided the midyear economic brief to update the nation on the following subject matters:
- Recent Economic Development
- Policy and Structural Reforms Measures
- Implications of Austerity Measures
- IMF Programme
RECENT ECONOMIC DEVELOPMENT
The Minister indicated that projected annual economic growth of above 4 percent remained feasible because of the increased economic activities in the country. The growth was going to be in the range of 4-5 percent in the medium term and was driven by mining, tourism and construction which had been supported by stable power supply and stable global developments. The downside risks to the projected economic growth included among others volatility in copper prices, high lending rates and adverse weather conditions. On Government expenditure (including amortization) for the first half of 2018, the Minister stated that expenditure amounted to K39.6 billion, against the budgeted K34.19 billion. The major components which were above target were interest payments by 43.2 percent and capital expenditure by 65 percent.
The role of Think-Tanks in society is to engage in the battle of ideas by providing research-based advocacy and evidence-based commentary on pertinent public affairs. Think Tanks play a vital role in the development of the economy at both local and national levels. The role further extends to compliment Government in making informed policy decisions through public policy research and analysis while at the same time aid the public to understand government policy decisions. In view of the increasing influence of Think-Tanks worldwide, there is need for our networks to be established among several like-minded institutions to promote a shared approach to development.
The past 3- 5 years have seen a robust and vibrant approach to improved social protection as a tool for better welfare of various members of the Zambian population. The Government of the Republic of Zambia has recognised, reaffirmed and practically committed to uplifting the welfare of the vulnerable in society through the implementation and improvement of various social protection interventions as part of their efforts to lift people out of the vicious poverty cycle and ensure that individuals lead decent livelihoods with dignity, the Government has adopted inclusive and sustainable social protection intervention practices.