Making Debt Relief More of a Relief
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Last year, the Southern African country’s external debt was reduced from about seven billion dollars to some 500 million dollars, this in terms of a decision by the Group of Eight (G8) to forgive debts owed by 40 of the poorest countries to — amongst others — the World Bank. (The G8 comprises the world’s leading industrial democracies: Canada, France, Germany, Italy, Japan, Russia, the United Kingdom and the United States.) As Mwanawasa embarks on his final term as president, can anything be done to ensure that the person in the street sees the benefits of debt relief more clearly? “The savings we are making should be visible,” says Fred Mutesa, a development studies lecturer at the University of Zambia. “There is widespread understanding that the resources should be ploughed back into the social sectors, but we still see graduating teachers not posted and staffing problems in the health sector.” These views are echoed by his colleague at the University of Zambia, Francis Chigunta, who also lectures in development studies. “Debt relief gives us a breathing space,” he says, noting that government should take advantage of this to invest in social development. “Unfortunately, we have misplaced priorities,” Chigunta adds. He claims that while some improvement in public finance management has taken place under Mwanawasa, there is still a lot of wastage — and that it is this waste which makes it difficult to improve the socio-economic situation in Zambia. Observes Mutesa, “We must mop up wastage and plug leakages to unauthorised expenditure. We need to set priorities and put more money into education, health, agriculture and infrastructure.” The two lecturers also expressed concern that a revival of the key copper mining industry was not translating into better living conditions for Zambians. Privatisation of copper mines has relieved the government of covering substantial losses generated by the industry, and improved the chances for copper mining to return to profitability and spur economic growth. Copper output has increased steadily since 2004, due to higher copper prices and the opening of new mines. Mutesa believes government should renegotiate agreements it signed with mine owners to increase the royalties it receives from copper mining companies. According to Chigunta, raising royalties by a few percentage points would earn Zambia some 840,000 dollars in just six months, money that could be used to invest in social development. “So the president must set his priorities right,” he notes. “He should…revisit the contracts with the mining companies.” For Muyatwa Sitali of the debt and trade team at the Jesuit Centre for Theological Reflection (JCTR), tax cuts would also go some way to alleviating the plight of poor Zambians. According to the 2005 Human Development Report, produced by the United Nations Development Programme, almost two-thirds of Zambians live on less than a dollar a day. (The JCTR is a Catholic public policy think tank that focuses on debt relief and other economic issues.) Sitali cautions against government repeating the mistakes of the past, by falling into high levels of external debt once again — and he called for wider participation in the loan process: “To the extent that this is done, we would expect loans borrowed with the people’s consent to be managed in a prudent manner, accountable, transparent and responding to people’s needs.” While Finance and National Planning Minister Ng’andu Magande was reluctant to comment on these issues, he admitted that concerns highlighted during the recent election campaign were too serious to be ignored. “The issues that were raised are cardinal, and we want to sit as cabinet to discuss the way forward,” Magande said. “We have the fifth national development plan which civil servants were finalising…What we heard from people while we were campaigning will be incorporated in the plan. This is what is on the table and this is what the people want,” he added. “At least by the end of this month or early November, we will have out act together and have a coherent response.” |