That's the way the money goes...

Last week saw the 2013 Zambian Budget presented to the National Assembly by the Finance Minister, Alexander Chikwanda.

 

Main Highlights:

GDP Growth Rate

2012: 7.1%

2013: 6.0% The Chinese economic slow-down and the fall in price of copper together with borrowing and fiscal deficit are said to be responsible for the failure to meet this year’s target,

2014: 7.0% (Proposed)

 

Jobs
200 000 ‘decent’ jobs.  That means permanent and reasonably paid employment. This year 60 000 jobs were created, some permanent but unfortunately many were just temporary ones in construction.

 

Inflation
It is running at 7% per year and the target is to bring it to 6.5% in 2014

 

Borrowing
$2bn to be borrowed. $1bn to be used to service existing debt.

 

Domestic Tax Raising
This will amount to 20% of GDP. 55% of this will go on public sector wages. A 2 year wage and recruiting freeze in public sector is envisaged. Borrowing is set at 2.5% of GDP and the deficit is expected to be no more than 6.6%.

The Government will raise the tax on cellphone airtime to 15% and tax financial transactions into, within and out of Zambia at 0.2% of their value. One of the latest improvements and innovations in Zambia has been the ability to transfer money at reasonable rates to other areas of the country using your cellphone, instead of relying on town-based banks and Western Union-type Companies.

Plastic carrier bags will now also carry duty. Carelessly discarded supermarket plastic bags are a blight on the landscape and a danger to cattle and livestock. Beer will carry 60% duty and winnings from forms of gambling will be taxed at 20%

The duty on crude oil has been removed. It will be interesting to see what effect this has at the pump. The fuel supply chain in Zambia is a powerful vested interest.

10% duty has been put on base and semi-processed metals to try and stimulate home industries to add value before export or release on the home market. The zinc roofing sheets we bought for Magumwi now cost us K5 more per sheet.

Some follow up to last year’s revelations of the tax avoidance or tax reduction schemes carried out by some multi-national companies is evident in a 15% withholding tax being laid on profits distributed by branches of foreign firms.

 

Total Expenditure

K42bn - US$8bn

K30bn is to be raised domestically

K2bn will come through partners

K10bn is to be found through foreign and domestic borrowing

 

Areas of Expenditure
56% will go on infrastructure; some of this to new district and provincial centres.

17.5% will go to education towards the building of 53 Secondary Schools, 150 Primary School Classroom blocks and 3 Teacher Training Colleges

11.3% will be spent on Health including 650 Health Posts

7% is allocated to Agriculture mostly for diversification purposes. Silos, diptanks and irrigation were other areas mentioned.

 

PAYE Threshold

This has been raised from K2200 to K3000(US$600). The rates of Income Tax remain the same at 25%, 30% and 35% respectively.

 

Monthly Income 2013	Rate	Monthly Income 2014	Rate
0-K2 200.00	0%	0-K3000.00	0%
K2200.01-K3000.00	25%	K3000.01-K3800.00	25%
K3000.01-K5900.00	30%	K3800.01-K5900.00	30%
> K5900.00	35%	>K5900.00	35%

 

 

 

THE UNEQUAL STRUGGLE TO LIVE

The Zambia 2010 Living Conditions Monitoring Survey Report is now published and available. It makes interesting reading, though it runs to 304 pages. However, an electronic version can be easily downloaded through the Zambian Economist site:
http:/www.zambian-economist.com

The 2010 ZLCMS followed on from the 2006 ZLCMS, both looked at community needs and the impact of programmes designed to promote social, economic and community development in the community. They collected data on the sort of social and economic development people would like to see in their community.

There were 14 categories and participants could choose 4. They also enquired about any recent changes in the last year and the extent to which they were an improvement. Having the two reports meant that comparisons and changes over time could be examined too. The table below contains the 2010 % figures listing people's choice of projects.

DEVELOPMENT	Rural	Urban	Zambia
Health	47.0	27.1	39.9
Food and other Consumer Goods	42.0	34.4	39.3
Water Supply	41.8	24.0	35.4
Education	34.1	24.5	30.7
Agricultural	33.5	7.3	24.1
Roads	22.6	24.3	23.2
Employment	5.2	18.9	10.1
Police/Security	9.2	8.3	8.9
Sanitation	4.2	17.3	8.9
Hammer mills	12.4	2.3	8.8
Credit	6.6	8.5	7.3
Housing	3.6	6.5	4.6
Transport	4.3	2.5	3.6
Not stated	2.7	9.8	5.3

 

Number of households: 16 000 000 (Rural) 891 000 (Urban) 2 491 000 (All Zambia) 176 000 (Western Province)

We see 40% of all Zambian households overall wanted health services provided in their community; this was the first choice in rural areas, but not in urban areas where people most wanted food and other consumer goods. Unsurprisingly, the number of households listing water supply, education, agricultural and hammer mills is higher in rural than urban areas, while households wanting employment and sanitation is higher in urban than rural areas. This was also the case in 2006.

Over time there have been interesting drops in percentages such as urban households wanting employment (33% in 2006 compared to 19% in 2010). This suggests that the urban economy is creating jobs. This is to be expected if the reported annual growth rate of 6-7% is to be believed. Health services, food and consumer goods and water supply came in first second and third for both years, however, the number of households preferring these fell from 48% in 2006 to 39% in 2010. The proportion stating that they would like a water supply fell from 43% in 2006 to 35% in 2010, with the rural and urban proportions falling by similar levels.

 

The desire for better roads increased from 17% in 2006 to 24% in 2010.

In 2010, around 50% of households overall indicated that they would like to see roads improved in their communities; though this proportion has dropped from 59% in 2006, although it was the top project to be improved in 2006.

Almost 30% of households in 2010 indicated that they would like health and education facilities to be improved in their communities; in rural areas, 37% wanted an improvement in education facilities and 31% with health facilities, whilst n urban households the desire for health facilities was substantially higher than education facilities, 27% and 16% respectively. Urban households also generally preferred improved sanitation and police/security, whilst rural people opted for agriculture and hammer-mills. There were similar trends in 2006.

Both the 2010 and 2006 LCMS considered a period of 12 months prior to the survey when asking whether projects or changes had taken place in the community. In both 2010 and 2006, most households said the greatest changes were in the field of communication with the coming of cellphone networks. More urban than rural households were affected and over all the percentage dropped from 49-36%. This was also the trend for improved radio and TV reception.

Transport services were ranked 6th in both years, with twice as many urban than rural respondents listing this.

Police services ranked 9th in both years, again urban households listed this project roughly three times more frequently than the rural population.

School rehabilitation moved from 26% in 2006 to 15% of households in 2010; in 2006, the rural proportion was 30% with the difference between the two areas narrowing. The only projects for which importance scores increased notably over time were ‘building of new school’ and ‘rehabilitation of an existing school’.

To summarise, the most important and greatest impact projects were cell phone, radio reception, health services, transport, hammermill and new schools. Other areas where there were falls in importance and noted improvements were found in sanitation, piped water and vet services

We have from time to time kept an eye on the food basket so it is good from this report to have a chance to monitor it over time.

 

FOOD BASKET FOR A FAMILY OF SIX 2004-2010 in Unrebased Kwacha

ITEMS	Quantity	UP 2004	Cost2004	UP 2006	Cost2006	UP2010	Cost2010
Cooking Oil	2.5l	19 628	19 628	17 653	17 653	28 698	28 698
Beans	2 kg	4760	9520	6041	12082	8746	17492
Dry Fish	1 kg	21856	21856	22317	22317	30522	30522
Kapenta	2kg	30062	60124	30336	60672	49225	98450
Milk	2l	2005	8020	2186	8744	3298	13192
Onion	4kg	3040	12160	3864	15456	4765	19060
Groundnuts	3kg	5425	16275	5743	17229	7705	23115
Salt	1kg	1880	1880	2424	2424	4516	4516
Tomatoes	4kg	1846	7384	2253	9012	3073	12292
Roller Meal	25kg x 3.6	25220	90792	26288	94637	47736	171850
Vegetables	7.5kg	1437	10777	2070	15525	2185	16388

 

Total Cost: K258 416 (2004)                        K275 751 (2006)                   K435 574 (2010)

Poverty Line: K57 172 (2004)          K61007 (2006)                      K96 356 (2008)

(Adult Equivalent)

 

The report dealt with a number of different areas using statistics gathered from 2010 census. It covered a wide range of topics, including demographics, migration, health education, economic activities, household assets, income and expenditure, poverty analysis and coping strategies, housing, child health and nutrition and ending with community development.

It was also useful to be able to take a few snap-shots of Western Province from the tables and see where we stand in the league table in comparison with the rest of Zambia.

 

2010

Toilets: No facilities (% of Households)

Western Province                              Zambia

53.4%                                                  12.6%

 

Fuel Use:

Firewood                     87                                    57                   

Charcoal                      7.0                                   27

Electricity                    2.5                                   16

 

Light Energy:

Paraffin                       30                                      42

Electricity                    3.5                                    19

Candles                       22                                      22

Diesel                          4.6                                     8.0

Fire                              31                                     7.5

Torch                           0.6                                    0.2

Solar                            0.8                                    1.0

Other                           1.5                                    1.5

None                           5.0                                    1.0

 

Electric Connection:

Yes                              4.0                                     22

No                               94                                      77

 

Access to treated drinking water:

Yes                              6.0                                    32

No                               94                                      68

 

Living in traditional daub, wattle, mud and thatched hut:

75                                                                                              38

 

Living in an improved dwelling - (zinc roofed ‘flat’):

15                                                                                              23    

 

Meals per day:

One:                            5.0                                        4.0

Two:                            62                                         46

Three:                          33                                         47       

 

% of Household Expenditure on Food and Non-food items:

Food items                  58                                           42

Non food items           42                                           58

 

Monthly Household Expenditure:

Total                            K482                                         K970

Food                            K278                                         K470

Non-Food                   K202                                          K486

Per Capita                   K121                                          K226   `

 

In reading this report and seeing all these figures you realize that these are millions of individual people's life stories. This awful poverty is not God's fault for he has provided us with all the earth's resources, nor is it the fault of the poor since most are born in to it.  Nor can it just be put down to greed, indifference, incompetence, corruption or a legacy from colonialism, though all have had a share in creating it. This is not just an economic and political matter it is a moral one. How long are these  gross inequalities going to be allowed to continue? These statistics bring to light widespread social injustice that ignores hunger and stunted children, the alienation of the poor and the indignity of impoverished lives.

 

In 2 Corinthians 8 Paul gives some practical advice on the matter:

Our desire is not that others might be relieved while you are hard-pressed but that there might be equality. At the present time your plenty will supply what they need so that in turn their plenty will supply what you need. Then there will be equality, as it is written: 'They who gathered much did not have too much, and they who gathered little did not have too little.'