1. CASE CLINIC: ZAMBIA AND DEBT OVERSIGHT HON VINCENT MWALE, MP

2. INTRODUCTION  Debt has serious implication on poverty and sustainable development of the country as it takes away the country’s resources to debt servicing rather than on social service provision, infrastructure and developmental activities.  The causes of Africa’s debt crisis are varied and complex. A lot of emphasis has been put on external factors to the negation or belittling of internal factors.

3. INTRODUCTION (cont’d)  Notwithstanding the external factors, it is clear that the causes of the debt crisis in many African countries are also attributable to poor borrowing, debt policy and debt management factors.

4. ZAMBIA AND DEBT The burden of external debt on Zambia is extremely high. The amount borrowed (the principal), and the interest on debt to be repaid is a significant barrier to economic growth and development.

5. When compared with the level of exports the true impact of the debt becomes more apparent. Issues of debt are therefore always public matters that affect Zambians. As soon as a loan is contracted, it becomes a public resource and as such it becomes of public interest as repayment of loans uses public resources derived from taxes.

6. Economic Background to the Debt Situation in Zambia At independence in 1964, Zambia was one of the most prosperous nations in Africa. In the first ten years after independence, the nation experienced growth averaging 2.4 percent a year, significantly lower than population growth, thereby leading to declining per capita incomes. Starting in 1975, Zambia faced falling copper prices and turmoil in neighbouring countries. By the early 1980s, however, it was becoming clear that the Mulungushi economic reforms had failed.

7. In the period between 1983 and 1985 the government attempted an IMF/World Bank Structural Adjustment Programme (SAP) that had stringent conditions attached. This was abandoned in May, 1987. In 2005, Zambia reached its HIPC completion point which saw a cancellation of its debt reducing from US$7.2 Billion to US$500 Million. It therefore became imperative that Zambia ensures that debts remained at a sustainable level.

8. CURRENT SCENARIO The current law allows the government to contract loans without consultation and without transparency. The Minister of Finance contracts debt based on CAP 366 of the Laws of Zambia which allows him to do so. Debt today stands at above US$ 4 Billion China influences the social, economic and political economy.

9. Talk about the mobile clinics or indeed, the hearses.  The issue of the K261 billion loan on mobile clinics from China had raised a lot of concern to organizations, political parties and the general Zambian public.  This arises from the fact that Zambia had continued to ignore the fact that it needs a more consultative, transparent and accountable debt contraction law.

10. LESSONS LEARNT IN THE CLINIC Except for Tanzania which had a similar situation with Zambia the following countries indicated that they all had a piece of legislation to control debt contraction;  Malawi  Botswana  South Sudan and  Uganda

11. The above named countries also indicated that Government borrowing has a threshold allowable like Botswana which allows about 25% of GDP In most of these countries named above, it was learned that Government is mandated to report all outstanding loans every financial year to Parliament hence availing an opportunity for scrutiny of future loans.

12. RECOMMENDATIONS The Freedom of Information Act must be put in place so that the Zambian public has the right to question and access information about all borrowing, trade and investment agreements, as well as aid flow from both new and old partners, before and after the agreements are signed.

13. The Zambian Government must ensure that legal provisions to guide debt management are in place, authorised by the Zambian Constitution, giving oversight and watchdog institutions such as Parliament, the Auditor-General and the Attorney-General clear mandatory authority over the borrowing process. Proposed Debt Management Bill in the Constitution Review to be considered.

14. Threshold must be there for both internal and external borrowing A piece of legislation to must be enacted on Debt Contraction

15. I look forward to learning more from the experiences of other countries. I Thank You