Explain how debt money was used, demands ZFE
By Staff Reporter
ZAMBIA Federation of Employers (ZFE) executive director Harrington Chibanda has demanded for an explanation on how the acquired debt money was utilised.
During an Economics Association of Zambia (EAZ)-organised public discussion programme under the topic “Zambia’s debt situation: What’s the best way forward” at Hotel InterContinental in Lusaka last week, Chibanda asked Ministry of Finance permanent secretary in charge of economic management and finance Mukuli Chikuba to highlight some details on the debt usage.
In 2012, Zambia contracted US$750 million Euro bond and issued another in 2014 amounting to US$1 billion.
Later, the government yet again contracted US$1.25 billion Eurobond.
All these have attracted sharp criticism from various political and economic stakeholders, stressing to know how and where such funds are being utilised.
“How has the so-called debt we acquired been used? I want to believe that at the time of planning to borrow, there might have been a very good plan.
Some of us raised concerns that that kind of borrowing could lead us into a ditch that we may not come out of. But others argued and said that ‘if you are borrowing for consumption, it’s bad but if it’s for production it’s a good way to go.’ We all thought that was the reason behind the borrowing. Today we are in this situation. So, I would like to hear your comment in terms of how did we apply those resources that we borrowed?” Chibanda asked from the audience.
In response, Chikuba said: “On the use of borrowed debts, it’s a mouthful! I’m not sure if I will be able to expound here that this was with this loan. We did provide some reports to Parliament on some of them. It will be quite some mouthful for me to start itemizing”.
Asked by the public discussion’s moderator, economist Trevor Simumba, on whether he was able to give a commitment to provide the information on loans’ usage, at some stage, either on the Ministry of Finance Website or through the EAZ, Chikuba said: “Like I indicated, I think for the first loan the information can be obtained on the parliamentary Website. But we can provide that information.”
And Chibanda lamented that Zambia’s indebtedness had affected the performance of the country’s private sector.
“In 2017, the Ministry produced or passed or enacted the skills development Act when industry now is paying a 0.5 per cent of the payroll towards skills development. As at June this year, I had a meeting with Ministry of Higher Education and the sad story is that the Treasury has only released those funds to the Ministry of Higher Education as at June 2017 and yet ZRA (Zambia Revenue Authority) has been collecting that money. Can I hear a comment from you (Chikuba) on behalf of the private sector? Why should the government collect funds from the private sector for skills development and yet it’s not being released? asked Chibanda.
In response, Chikuba explained that the skills development levy was not used by government “as it were.”
“What happened is that the skills development levy was starting being collected but there were no guidelines on its use! And from the point of view of the Ministry of Finance…. So, that’s what prompted the withholding and they have now done what they needed to do and money has started being released for the skills development. But there was a problem within the Ministry on the usage,” explained Chikuba.