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.