The government in the last 10 years signed road contracts valued at K127 billion without a clear foresight on how these commitments would be liquidated, Parliament has heard.

Meanwhile, as at 30th June, 2021, arrears payable to contractors and consultants accumulated to K9.68 billion.

Delivering a ministerial statement on the debt status of the road sector, Finance Minister Dr. Situmbeko Musokotwane revealed that the government further obtained expensive loans from NAPSA and NATSAVE valued at K4.2 billion as a way of raising funds, but these initiatives did not clear all the arrears to the huge over-commitment.

Dr. Musokotwane says the total arrears plus the loans brings the total to K14.7 billion dollars as of 30th June 2021.

He says this approach is unsustainable and that his Ministry directed the National Road Fund Agency in consultation with other road sector agencies to develop a ten-year debt service sustainability plan which will outline how the government will implement road infrastructure in a more sustainable manner.

Dr. Musokotwane said if approved by Cabinet, the debt sustainability plan will ensure that government does not incur debt unnecessarily without any viable repayment plan beginning in the year 2022.

Below is the full statement

MINISTERIAL STATEMENT ON THE ROAD SECTOR DEBT STATUS AS AT 30 JUNE 2021

1. Madam Speaker, I wish to thank you for giving me this opportunity to brief the House on the Debt status of the Road Sector. I wish to start by giving a composition highlighting the five main key players in the road sector.

2. Madam Speaker, the five main players are as follows:

1) National Road Fund Agency (NRFA) falling under the Ministry of Finance and National Planning;

2) Road Development Agency (RDA) falling under the Ministry of Housing Infrastructure and Urban Development;

3) Road Transport and Safety Agency (RTSA) falling under Ministry of Transport and Logistics; and,

4) Ministry of Local Government and Rural Development (MLGRD); and,

5) National Council for Construction (NCC) under the Ministry of Housing Infrastructure and Urban Development.

3. Madam Speaker, the Road Development Agency is responsible for the procurement and implementation of road works in the country.

In collaboration with the Ministry of Housing Infrastructure and Urban Development, the Road Development Agency (RDA) signs contracts with various contractors for major road works mainly on trunk, main and district roads including bridges.

The Ministry of Local Government and Rural Development is responsible for feeder and urban roads in the country.

The National Road Fund Agency (NRFA) is responsible for funding of the road works.

4. Madam Speaker, funding to the road sector in Zambia is derived from both local and external sources.

The local funding source includes fuel levy, inland and port of entry tolls, road license fees, registration and examination fees, weighbridge fines. The external funding is derived from loans and grants from co-operating partners such as the World Bank, African Development Bank, #European Union, funds from contractors financing initiatives and public private partnerships.

5. Madam Speaker, during the last ten (10) years, Government signed road contracts valued at K127 billion without a clear foresight on how these commitments would be liquidated.

As at 30 June, 2021 arrears payable to contractors and consultants accumulated to K9.68 billion.

Further, Government obtained loans from NAPSA and NATSAVE valued at K4.2 Billion as a way of raising funds, but these initiatives did not clear all arrears due to the huge over committment.

6. Madam Speaker, the breakdown of all the contract commitments, debt arrears, and loans as at 30 June, 2021 is as follows:

CONTRACT COMMITMENTS

1) Road Development Agency (RDA) has 690 running contracts valued at K111.46 Billion.

2) Ministry of Local Government and Rural Development (MLGRD) has 315 contracts valued at K16.15 Billion.

3) The contract commitments is therefore 1,005 contracts and valued at K127.61 Billion.

A total of K 9.68 Billion is also owed to contractors as debt arrears.

7. Madam Speaker, the following are the commercial loans obtained by (NRFA) totaling to about K5.06 Billion:

1) NAPSA loan, K 3.8 Billion;

2) First NATSAVE loan, K260 Million;

3) Second NATSAVE loan, K500 Million; and,

4) INDO-ZAMBIA loan: K500 Million.

Further, Madam Speaker, the total of arrears plus loans as at 30th June, 2021 is K14.7 billion.

8. Madam Speaker, it is clear that this approach is unsustainable and obviously requires serious adjustments. My Ministry has therefore directed the National Road Fund Agency in consultation with other road sector agencies, to develop a ten (10) year Debt Service Sustainability Plan (DSSP) which will outline how Government will implement road infrastructure in a more sustainable manner going forward.

This ten (10) year plan will:

1) Prioritise payments of all debt arrears due to routine maintenance, small and medium contractors and thereafter ensure timely monthly payments to all routine maintenance contractors.

2) propose the refinancing mechanism of the costly NAPSA and NATSAVE I loans within the next six (6) months, which will result in significant savings when all loans are fully repaid within five (5) years.

3) prioritise the planning and provide adequate funding towards implementation of periodic maintenance and rehabilitation road works, before considering the costly upgrading over the ten (10) year period.

4) Prioritise the annual planning and provide adequate funding for implementation of 80% complete upgrading road projects for completion within the first two years of the ten (10) year period.

5) Propose to the implementing agencies, RDA and MLGRD, immediate termination of the dormant road contracts, to stop the intangible costs, such as interest claims on delayed payment of interim payment certificates (IPCS). The termination costs will be part of the debt arrears in the DSSP.

9. Madam Speaker, the 10 year debt service sustainability plan will in addition propose an overall suspension for the debt arrears, in terms of:

1) The proportion redeemable through the road sector ten (10) year annual work plan;

2) The proportion likely to be suspended now and to be redeemed during the second five (5) years, thus after all the five year loans above have been fully redeemed;

3) The proportion which could be negotiated at sovereign level; and,

4) The proportion which could be a candidate of the medium to long term bonds till adequate funding is available to redeem fully the arrears.

10. Madam Speaker, the Debt Service Sustainability Plan, if approved by Cabinet, will ensure government does not incur debt unnecessarily without any viable repayment plan beginning the year 2022.

My Ministry will table the debt service sustainability plan for cabinet approval before 31st December, 2021.

11. Madam Speaker, The Public Private Partnership (PPP) Unit under the Ministry of Finance and National Planning has been directed to immediately engage RDA and NRFA to identify potential road projects across the country that could be financed and implemented under the PPP arrangement.

This is expected to create relief on the Treasury going forward.

12. Madam speaker lastly but not least, the National Road Fund Agency in collaboration with RDA and MLGRD has been guided to develop a transparent, effective and fair payment mechanism for the period October 2021 to December 2021, in line with the National Road Fund Act Number 13 of 2002.

Going forward, with this system in place, I do not expect contractors owed to lobby for payments as this is breeding ground for corruption which the new dawn Government shall not tolerate at all costs.

I THANK YOU, MADAM SPEAKER

Delivered by:

Dr. Situmbeko Musokotwane, MP
Minister of Finance and National Planning.

Information and Media Minister Chushi Kasanda has called on Zambia National Broadcasting Corporation (ZNBC) management to utilise the pieces of land it has by partnering with business entities in setting up business ventures that will generate more revenue for the corporation.

She says the institution has massive land that can be used through Public Private Partnerships (PPP).

The Minister noted that this would address some of the operational challenges that the institution is facing.

“You have sufficient land which can help to generate revenue if you take advantage of it,” she said.

She said this today during the conducted tour of the 125 hectares piece of land for ZNBC in Shorthorn area in Chilanga District and 32 hectares piece of land for ZNBC in Bauleni area of Lusaka.

The Minister was accompanied by Lusaka Central Member of Parliament who is also Justice Minister Mulambo Haimbe and Chilanga Member of Parliament Sipho Hlazo.
The two pieces of land for ZNBC are located in the constituencies of the two Members of Parliament.

Chilanga Member of Parliament Sipho Hlazo agreed with Hon. Kasanda that the ZNBC land in Shorthorn area is underutilized.

He urged ZNBC to come up with innovative ways of making the land more productive.

Lusaka Central Member of Parliament Mulambo Haimbe said the land at Twin Palm transmitters has a potential to be used for various projects for the benefit of the residents.
“This is an exciting sight because it will benefit Lusaka Central residents and ZNBC if they work together,” he said.

Zambia National Broadcasting Corporation (ZNBC) Director General Malolela Lusambo said the corporation is eager to partner with investors to develop the said pieces of land.

President Hakainde Hichilema says Zambia is not a landlocked country, but a land-linked state, and that Zambians must see this as an opportunity for enhancing trade.

The President adds that Zambia should instead see itself as strategically located and turn itself into a hub of production, value addition, and food distribution.

The Head of State indicated that the country has a huge market from neighboring countries like the Democratic Republic of Congo (DRC) and Angola.

President Hichilema said this in Lusaka today when he met United Bank of Africa Chairman, Tony Elumelu and his delegation at State House.

Mr. Hichilema said Zambia should actualize the vision of taking food into the DRC and Angola for trade.

And the Head of State stated that the Foreign Direct Investment (FDI) must not just be centered on Europe, Asia and America but that it must prioritise African investments.

Mr. Hichilema added that the definition of FDI’s should be translated into job creation and business opportunities for Africa and its people.

The President further said he would like to see the Zambian youths taking advantage of the Tony Elumelu Foundation to benefit from the empowerment programmes offered.

Mr. Hichilema stated that he would also want to see the involvement of the Ministry of Small and Medium Enterprises with the foundation to promote entrepreneurship and skills development especially among the Zambian young entrepreneurs.

Meanwhile, the UBA Chairman, said his foundation would like to support small ambitious entrepreneurs who are energetic with enabling opportunity and mentoring them so they can realise their potential.

Mr. Elumelu, stressed that his foundation is ready to support the President’s economic aspirations for the country.

First Lady Mutinta Hichilema says she knows and understands the challenges that inmates in prisons go through.

The First Lady said Lusaka Central Correctional Facility holds fond memories as it is the place where the Husband President Hakainde Hichilema was incarcerated.

She said this yesterday when she visited and donated assorted items to Lusaka Central Female Correctional Centre.

Mrs Hichilema reminded the inmates that society still cares about them hence should not feel discouraged.

She encouraged them to be prayerful as God always answers prayers saying they should not relent as they will reunite with their families.

“Please do not stop praying. Pray every day just like I did. I used to pray every day for my husband to be released. God is going to answer your prayers and will not abandon you,” she said.

The First Lady assured the Correctional Service Management that she will soon visit the male inmates once funds are available.

And Zambia Correctional Service Leopards Ladies Club Chairlady Beenzu Chilukutu said most of the infrastructure for the detention of women and children are nonexistent and are improvised structure.

Mrs Chilukutu stated that most of the prisons were built in the colonial era and had no provision for the accommodation of female inmates and circumstantial children.

She further appealed to the First Lady that consider lobbying for donors to construct dedicated facilities for female and circumstantial children.

She assured the First Lady that the ZCS leopards ladies club will support her cause.

“It is indeed a great honour that you are with us today and that you have chosen to visit women who are incarcerated as one of the first women groups. As the Chairperson of the Correctional Service Leopards Ladies Club, I am so excited that you are here and hope that you will enjoy your time with us and I also hope that you will be able to see for yourself what the female inmates are lacking and the problems they are going through,” she said.

Mrs Chilukutu said she is humbled by the First Lady’s gesture of donating assorted materials to these less privileged people in society.

Meanwhile, Lusaka Central Female Correctional Centre Officer In-charge Kasapo Siame said the institution was designed with a holding capacity of 76 inmates however, it currently has a population of 105.

Mrs Siame said there are currently two pregnant women and seven circumstantial children.

She explained that there are five inmates who acquired certificates in food production and mechanics at Chreso University, one inmate sat for grade nine external examinations and results have not yet been collected and two are currently writing their grade seven (7) exams.

The Officer In Charge disclosed that the facility did not experience any covid-19 related death on both officers and inmates.

“Madam first lady, following the covid-19 pandemic 72 out of 105 inmates are vaccinated. 22 officers out of 58 are also vaccinated, giving a vaccination rate of 68.6%,” she said.

She highlighted the challenges that the facility faces such as lack of a utility vehicle, electric pots and refrigerators.

She further thanked the First Lady for the kind gesture of donating assorted items to the inmates.