Ordinary citizens’ Budget expectations

By STANSLOUS NGOSA
FINANCE Minister Situmbeko Musokotwane is today scheduled to announce the 2010 national Budget, three months before the implementation year.
This is the first budget the Government will present ahead of a new financial year.
The national expectations, however, are not as pronounced as in the previous budgets. The reason is not so much about the change in the Budget cycle although that also has some bearing.
The main reason is that many people, ordinary citizens and corporate entities, do not think the national Budget provides sufficient platform for everyone to succeed. They feel the Budget is about fiscal and monetary policy and its measures only.
Some ordinary people do not even know that the budget is about opportunities for business and household prosperity.
However, companies look for lower taxes, huge capital investments, business contracts, which can reactivate income flows and high consumption levels that have a direct effect on the goods and services they produce.
Workers equally look for a Budget that will increase disposable incomes.
Given the levels of poverty, the few working Zambians do not only have to pay taxes but will still have to meet the personal needs of their relatives who cannot afford school and medical fees.
Ordinary citizens, especially young people look to the Budget for the creation of jobs.
Unfortunately, for many years now, the national Budget, on account of its size and expenditure priorities, has not performed to the expectation of these categories of people.
Many are disillusioned when seemingly pro-investment, pro-worker and pro-poor budgets are announced but with little impact.
However, this article brings out what some ordinary people of Ndola and Luanshya think about the national Budget and some of their expectations.
Peggy Mwape, a small-scale farmer of Launshya’s Fisenge Cooperative said the chunk of the revenue is spent on administrative structures of Government such as emoluments.
She said it is very difficult to recapitalise any business undertaking when half of the revenue is spent on workers welfare.
President Rupiah Banda seemed to have supported her sentiments a few months ago when addressing a Press conference when nurses went on strike. He said the Government spends 50 per cent of its revenue on emoluments, a move which is not healthy for a developing country.
Mrs Mwape who is Fisenge area councillor said the national budgets were not forward looking either.
“They remain short-term instruments for immediate survival with low linkages to long-term national development plans,” Mrs Mwape said.
She said there is need for the Government to stick to expenditure priorities and allocating more money towards activities that have tangible returns.
Febby Katongo another emerging farmer from the same area, said there is need for the Government through the Budget to create a deliberate policy that will compel millers to sell animal feed to small-scale farmers at subsidised prices.
She said feed is slowly becoming expensive for small-scale farmers to access thus affecting the milk yields.
And the Zambia National Farmers Union (ZNFU) expects a zero rating of agricultural products for VAT in today’s Budget.
According to the submissions ZNFU made towards the 2010 Budget, agriculture recorded a turn around when all agricultural products were zero rated for VAT prior to 2004.
The farmers union observed that the measure would result in a significant reduction on the costs of production across for all farmers.
ZNFU noted that it would be critical that the 2010 Budget included measures that would demonstrate Government efforts to reduce expenditure in non-core activities.
The prevailing economic environment would require extraordinary measures by Government to preserve operations of the productive sector that includes the agricultural sector.
The farmers body said that countrywide usage of cell phones provided the Government with an opportunity for the informal sector to contribute towards Government revenue and that the Government should consider excise duty on cell phone talk time as a way of raising revenue.
“Based on the afore submissions, the farming community expects the 2010 Budget to be the turning point for the agricultural sector given its central contribution towards food security and employment for a majority of the rural poor population,” ZNFU said.
Bright Sianyinda a civil servant in the Ministry of Health in Ndola said the pressure to approve the Budget process has been managed through the new cycle, and Parliament is expected to seriously scrutinise the document.
He said for this to happen, members of Parliament should go back to their constituencies and capture people’s views on the Budget.
Lewis Phiri, a trader at Chifubu Market urged MPs and councillors to help the communities understand the budget so that they are part of the national planning system.
He said there was a gap between policy makers and the communities because their representatives were not seen.
“We can’t afford newspapers everyday, and the radio reception in our area is poor so where can we get the information on the budget planning?” he asked.
Mr Phiri said the Budget only affects and influences the big businesses since small-scale and some medium businesses are not part of the planning stage.
“It is like we belong to another country where we just have to watch what is happening,” he said.
He said there is need to embrace small-scale businesses in the planning stages of the Budget in some way.
Mr Phiri said it is difficult to belong to some associations because the leaders do not appreciate their members where they just champion their personal agendas in the name of the association.
Economics Association of Zambia (EAZ) executive director, Alexander Chileshe said the Government should focus resources on the economic and social sectors.
Mr Chileshe said most Budget resources currently were being used to support the large Government structure.
“Within the economic sector focus, infrastructure improvement such as roads, rail, airlines and energy must be a priority. The benefits of dealing with this are many, among them reducing the cost of doing business, especially that we are now moving towards enhancing regional trading blocks such as COMESA, SADC and the Eastern and Southern Africa Community.
“Social sector focus like education and health will help ensure that we reach our 2030 goal of a prosperous middle-income country. A country’s population is its greatest resource,” Mr Chileshe said.
He said there was need to place the broadening of the tax base issue into action saying the Zambia Revenue Authority (ZRA) currently had sufficient capacity to follow up the matter and work with other Government departments in some selected district councils.
“The PAYE rates are very high and as of now they are less than 400,000 people in formal employment contributing PAYE out of a possible workforce of five million people.
“This is less than 10 per cent of the population supporting the rest. If the tax base is broadened, it becomes easier to review tax rates. There are countries we can learn from,” Mr Chileshe said.
The farming community also expects the Government to outline measures to boost the livestock and fisheries industry and to improve the crop purchase exercise as well as to introduce tax incentives aimed at enhancing growth in the sector.
In tourism, eyes are set for the 2010 soccer World Cup to be held in South Africa (for the first time on African soil) and tour operators expect Government to provide incentives to the tourism industry to enable Zambia attract more tourists and achieve the target of attracting one million tourist arrivals.
As for the micro, small and medium enterprises (MSMEs), they are looking forward to various measures aimed at easing access to financing.
The Government is also expected to continue with the reform process and initiate more measures aimed at reducing further the cost of doing business in Zambia.
The MTEF and green paper document constitutes Government’s preliminary thoughts on the 2010 Budget as well as the 2010 to 2012 Medium Term Expenditure Framework (MTEF).
The 2010 -2012 green paper has been released as the world economy shows signs of emerging from the deepest global recession seen for over 70 years.
A key objective of Government over the next three years is to reposition the Zambian economy so as to take full advantage of the rebound in global economic activities and trade.
According to the green paper, Government’s overall expenditure policy for the period 2010 – 2012 is focused on positioning Zambia to take full advantage of the upturn in the global economy as the recession recedes.
This will be based on the prudent use of public resources to ensure the effective and efficient delivery of public services and development of vital socio economic infrastructure.
The Government’s strategy would be to constrain expenditure on non-priority programmes and directing resources towards programmes that improve service delivery and expedite sustained recovery in the domestic economy.
This will entail, among other things, allocating considerable resources to programmes that are aimed at boosting food production to ensure national and household food security, and the development of infrastructure in key sectors such as agriculture, water and sanitation, energy, road, education, health and public safety.
The document states that in 2010 the Government would continue to place strong emphasis on economic diversification through a number of measures aimed at stimulating growth in the non-mining sectors of the economy.
These sectors include agriculture, tourism, and manufacturing. It is expected that interventions that were undertaken in these sectors during 2009, such as the Nansanga Farm Bloc, Kasaba Bay, and multi-facility economic zones, would yield economic returns over the medium term, as investors move in and start business activities.
Furthermore, the Government would remain committed to safeguard the vital social services to the public. In this regard, the Government would continue with human resource recruitment and infrastructure development in the health, education, public safety and water supply, and sanitation sectors. The Government would also continue to improve both urban and rural infrastructure, particularly roads and water and sanitation.
According to the Zambia Association of Manufacturers (ZAM) 2010 Budget proposals, inputs or raw materials of final products that are allowed to enter the country free of duty should also enjoy duty free status.
ZAM observed in its detailed submissions that subjecting inputs or raw materials to duty when final products themselves were duty free only served to disadvantage and discourage local manufacturing.
The association urged the Government to reduce duty from 25 per cent to 10 per cent on the entire intermediary products used in the manufacturing sector.
ZAM expects zero rating VAT on products required for stock feed and soya beans and zero rating VAT on hammer mills and reducing the annual threshold from the current K200 million to K100 million among many other suggestions.
Ndola Collective Saw Millers Association committee member, Green Kaluba expects the Budget to increase the Citizen’s Economic Empowerment Fund (CEEC) to allow more people access the fund as the impact was slowly being felt.
He said increasing the funds would enable people like saw millers to obtain loans for the procurement of equipment to facilitate wood and timber value addition.
In the absence of increased funding, Mr Kaluba expects zero VAT on equipment for timber processing and value addition.
With all this in mind, business associations, the private sector, households and all other institutions will need to influence Parliament to adopting these estimates. Zambians are expecting more than just an endorsement of the Budget.
The members of Parliament have to ensure the Budget is aligned to national expectations.
[Times of Zambia]