YOU cannot borrow yourself out of poverty; that’s an impossibility, it is like digging one hole to fill the other, says economist Professor Oliver Sasaa.
During a Zambia Institute of Chartered Accountants budget dinner at Hotel Intercontinental in Lusaka on Friday night, Prof Sasaa noted that there were challenges that the government was trying to correct.
He said the ZRA had done a grand job but still needed assistance.
“We are also seeing a possibility of a current account deficit of about 6.8 per cent at the end of this year,” Prof Sasaa said.
“These are the issues that caught my attention. It’s really about ‘you must cut your dress according to your cloth. You cannot borrow yourself out of poverty, that’s an impossibility, it’s like digging one hole to fill the other.”
He said from his standpoint, much of the budget deficit was driven not by the Ministry of Finance and the budgets they present and approve but by those in ministries that are spending money.
“And sometimes we dare mention this, some of the extra budgetary expenditure excesses come from State House, so he [Mutati] needs support,” Prof Saasa said.
“You cannot grow the economy, not only in terms of generating resources but to feed into the programmes that you have set for yourself to do…if you don’t have capacity to manage your expenditure – fiscal discipline. Much of the messages that I am hearing from the honourable minister, this is his second year presenting a budget, he has been talking about fiscal discipline and that is so important, in my view.”
He expressed happiness with innovative instruments and changes of legislation for increasing revenue collection, noting that in Zambia, nearly everyone was a tax evader.
“I heard him talking about removing duty on point of sale machines. I said probably the honourable minister forgot one thing; what I discovered on our market, especially in the retail business, it’s not so much the price of the point of sale machines but that those that own shops, especially a certain type of those that own shops, do not want point of sale machines,” Prof Saasa said.
“So why can’t we have as part and parcel of tax broadening, beyond a certain threshold in terms of turnover, point of sale machines should be mandatory? For me I will tell you one thing I have discovered when I go out there and I try to negotiate for a discount. The owner of the shop will ask me: ‘do you want a tax invoice?’ I will not tell you how I go about it.”
He called for real diversification of the Zambian economy, away from copper, which he said was a wasting asset. Prof Saasa noted that diversification was what Mutati’s budget’s target for next year.
“You cannot grow the Zambian economy if you continue depending on, not only as the source of revenue but also as source of export receipts, on copper alone,” he said.
Prof Saasa expressed happiness that Mutati talked about agriculture and tourism in the government’s diversification agenda.
He, however, noted that almost all missed the definition of diversification, often using the right language as to what ought to be done but failing to properly operationalise our policies.
“Most of the time we do the wrong things. Agriculture for example, that is one of the flagships that the honourable minister raised. Why is it that in a country that must be able, looking at the capacity we have, we should be able to produce 10, 15 million metric tonnes? When we produce two million tonnes, we pat ourselves on the back and say it’s a bumper harvest. How can it be bumper in a country where literally anything can grow?” Prof Saasa queried.
“This is a country where you can grow a broomstick and it will grow. Where have you gone wrong? If you look at the period between 2003 to 2016, on average, the budget that goes to agriculture, 79 per cent of that budget to agriculture, was going to FRA, which is the purchasing of maize and Farmer Input Support Programme because in Zambia we believe, for a very long time, now we have a new minister who speaks perhaps a different language, that agriculture is maize, and that agriculture is crop.”
He noted that the subsidy extended to the sector was focused on maize only.
“When we hear about the agriculture season, when we start distributing fertilisers, we are actually targeting the planting of maize as if that’s the only thing. So even though the specialists will tell us that the agriculture performed in this country…there are certain crops that are best suited in other countries but we are forcing people, including in the sand in Western Province…and then you get surprised why we are not reaching the targets,”
Prof Saasa said.
He said wrong things were still being done in the sector.
“We would like to see more investment in irrigation. Why is that we complain about too much rain and we allow the water to go to the Indian Ocean, we don’t know how to quarantine it so that we can use it? Why is it that people are who cultivating long the banks of Kariba Dam are complaining about drought? Because you can’t simply buy a genset or a generator, a water pump. Because we believe that water for agriculture must come from the clouds, from heaven. Sometimes we even go to church to pray for rains. What we need are brains not rains,” Prof Saasa said.
He also called for operationalization of the diversification approaches. Prof Saasa said often, tourism in Zambia was more centered around the Victoria falls. He said the country had failed to take advantage of what God had given it.
“Copper is a wasting asset. You can have one elephant being seen by four hundred tourists and collecting so much fees. All you need is know how to take those tourists to where that elephant is,” said Prof Sasaa while calling on the government to ease entry of investors into the tourism sector.
And Mutati advised spending agencies to consult their means and not their wishes in whatever they wanted to do.
“You can’t live beyond your capabilities,” said Mutati.