March 2019

Issue 9

Buckle up for National Airline!

The Urgency of Urban What Does African Jobs in the Gulf: Public Transport Reforms Continental Free Trade Opportunity or Adversity? Integration Mean for p5 Zambia? p6 p7

1 Contents

Buckle up for National Air line 4 The Urgency of Urban Public Transport Reforms 5 What Does African Continental Free Trade Integration 6 Mean for Zambia? Jobs in the Gulf: Opportunity or Adversity? 7 Evidence in Pursuit Of IMF Deal – ZIPAR 8 ZIPAR lauds Ministerial statement on 2019 budget 9 execution Goods and Services Tax in the Shadow of VAT 10 Trump’s Beggar-thy-neighbour Trade Policy 11 A Fleeting Lifeline from China: What FOCAC 2018 12 Entails for Zambia Child stunting high in the wealthiest households 13 China-Zambia Relations in Development Cooperation 14 Institutional Preparedness for Urban Public Transport 15 Reforms in Zambia ILO commissions ZIPAR to conduct Future of Work 16 Study ZIPAR’s Dr. Pamela Nakamba Country Winner of CEO 17 Global’s Most Influential Women ZIPAR at the 2nd International Forum on Belt and 18 Road and Global Governance Summit ZIPAR at the SADC-ILO Joint Sector Meeting 18 ZIPAR participates in Seminar on National Ethnic 19 Policy and Management for Zambia ZIPAR at the Wilton Park’s 12th Annual Conference 19 ZIPAR participates in the USA International Visitors 20 Leadership Programme Editorial Team ZIPAR at the On Think Tanks Hub Geneva 20 Executive Editor - Dr. Pamela Nakamba-Kabaso PARLIAMENTARY SUBMISSIONS 21 Managing Editor - Euphrasia Mapulanga-Ilunga Photo focus 24 Associate Editor - Shebo Nalishebo ZIPAR’s 2019 Research and Studies 26 Associate Editor - Zali Chikuba

Associate Editor - Mwanda Phiri 2 Message from the EXECUTIVE DIRECTOR elcome to Issue 9 ZIPAR Quarterly. This edition brings to you very interesting articles on a number of topics that have dominated the policy discourse in the Wpast few months. Our cover story is on the widely debated re-establishment of a national airline. The former national airline graced the skies for the last time more than two decades ago before it was grounded due to various reasons among them financial mismanagement. The news of re-instating the national airline has been received with mixed feelings ranging from renewed hope to outright scepticism by stakeholders. Those who are hopeful believe a national airline is key to unlocking the potential of a number of sectors such as tourism. The sceptics have questioned the value of owning a national airline when most airlines in the Sub Saharan Africa are loss making and a burden to their treasury. Notwithstanding these mixed feelings, a national airline, Zambia Airways (2014) Ltd is taking off again. Thus, our lead article titled; “Buckle up for the National Air- line” endeavours to provide some recommendations on what the airline should consider if wanting to stay afloat this time around.

In addition to the national airline story, another interesting piece to read is on the Ur- gency of Urban Public Transport Reforms in Zambia. Many individuals are shunning the public transport system because it is ineffective and have poor service quality. The Gov- ernment is committed to correct the situation and has revised the transport policy and I am delighted to state that ZIPAR was actively involved in its development. As the policy received Cabinet approval and is earmarked for an official launch, our article outlines policy recommendations that the Government should consider to facilitate institutional preparedness for the reforms.

Well, as indicated earlier, this edition is loaded with several other topical issues ranging from what the African Continental Free Trade Integration entails for Zambia, Jobs in the Gulf and China-Zambia Relations in development cooperation. These and many more stories are a must read!

3 Buckle Up for the National Airline!

Malindi Chatora

fter 24 years of ab- The Government has valid interference has been cited formance of airlines in SSA is sence, the national air- reasons for championing the as one of the major imped- concerning, many stake- Aline is scheduled to re- re-launch of the national air- iments to SAA’s strategic holders are more anxious turn to the skies in the third line. If successfully operated, direction, as the government about the ability of the Board quarter of 2019, at an initial the Zambia Airways could remains the company’s larg- and Management of Zambia cost of US$ 30 million. The create at least 500 direct and est shareholder. Airways to run the airline as re-launch of the national air- indirect jobs, with prospects an autonomous business. line, which was scheduled to for additional employment Similarly, Malawi Airlines, Government interference and coincide with Zambia’s 2018 as the airline expands. In which has also partnered politically motivated appoint- Independence Day commem- addition, GRZ envisages with EAL, is yet to break-even ments reportedly put a seri- orations, has been postponed that the airline will contrib- after 4 years of operations. ous drag on the performance twice and is now expected ute to increased air traffic This is at odds with projec- of the pre-1994 Zambia Air- in the third-quarter of 2019. flows within and around tions in the business model ways and contributed to its Unlike its predecessor which the country that will in turn floated during the tender downfall. The SAA experience was wholly owned by the increase tourist arrivals, hotel process, which indicated the is another recent example Government of the Republic and restaurant revenues, airline would break-even by of the pitfalls of government of Zambia (GRZ), Zambia conference fees and overall the second year. The Board interference in the running of Airways (2014) Limited will business activity for tour and Management of Zambia a national airline. be operationalised through operators. By creating direct Airways will do well to care- a joint venture between GRZ and indirect linkages to fully examine the experiences Since the Government has and Ethiopian Airlines Limited other economic sectors, GRZ of Malawi Airlines to identify already committed to re-es- (EAL), sub-Saharan Africa’s expects that the national air- the reasons behind the air- tablishing Zambia Airways, (SSA) only profitable airline. line will contribute to overall line’s delay in breaking-even. the airline should look to its GRZ will control 55 percent economic growth. Further, the strategic partner for some in- stake through the Industrial country’s strategic centrality While Zambia Airways will spiration. Although established Development Corporation in the region where it is sur- require an initial investment through a joint venture with (IDC), while EAL will control rounded by eight countries of US$30 million, the Ministry Trans World Airlines, EAL is the rest. will provide the airline strate- of Transport and Communi- now wholly owned by the Ethi- gic connectivity to the region cation’s Permanent Secretary opian Government. The airline and the world at large. revealed that close to US$48 owes much of its success to million will be required for its business and management Notwithstanding these operations in the first year. model which ensures that it GRZ-anticipated ‘wins’, the So far, EAL has committed operates completely autono- re-instating of the national US$13.5 million towards air- mous from government influ- airline has been received craft leasing and GRZ US$11.5 ence. The airline operates like with scepticism. Stakeholders million to cover operating a private company and strictly have questioned the value costs for four months. This ties personnel emoluments of owning a national airline leaves a deficit of nearly to company performance and other than national pride, US$23 million which the profits. when most airlines in SSA airline envisages will be cov- including Southern Africa’s ered by revenue from ticket Zambia Airways if success- largest airline – South African sales. However, with growth fully operated has potential Airways (SAA) – are struggling projected to be slower in the to transform many sectors and rely on government bail- domestic (4%) and global of the economy including outs. For example, the South (3.5%) economy, demand for tourism and contribute African government has air travel may not be suffi- to employment creation. spent close to US$2 billion cient to generate substan- However, these benefits can on SAA in the last five years. tial revenue. Therefore any only accrue if the Govern- Despite this support, SAA has shortfall will most likely have ment fervently holds on to its continued to make losses to be covered by IDC. promise to allow the airline and declared bankruptcy in to run as a commercially September 2018. Political While the general poor per- viable business.

4 The Urgency of Urban Public Transport Reforms in principle, have better understanding of public transports needs of their jurisdictions. Nonetheless, although the proposal to decentralise management of urban public transport to councils is commendable, the councils may still need to be adequately resourced for them to fulfil this mandate and other related responsibilities. By John Mututwa and Research by the World Bank in 2002 showed that local authorities were often cash- strapped and institutionally ill-prepared for such new functions as managing certain Around the world, urban aforementioned problems, services. public transport systems Zambia is also urbanising Secondly, enhanced include buses, cable cars, rapidly at a rate of 4.3 percent coordination among trams and light trains etc., annually. The country’s urban institutions with a mandate operating on fixed schedules, population is projected to in public transport will be routes and fares. In Zambia, reach 11 million people vital. This is because the like in many developing by 2030. The rise in urban responsibility of managing countries, public transport is population will translate public transport in Zambia mainly road based, dominated into increased demand for is diffused across a number by intra-city minibuses. Usage transportation services, Malindi Chatora of institutions – MTC, Road of high occupancy vehicles including public transport. Transport and Safety Agency, or big buses for urban public In addition, as cities like Road Development Agency, transport in Zambia became Lusaka, Ndola and Kitwe local authorities and Zambia n 2017, the Government rare following policy reforms grow and their inhabitants Police – with overlapping Ithrough the Ministry of that suspended import duty become richer, the number mandates, with risks of Transport and Communications on buses, resulting in an of private motor vehicles, causing confusion and (MTC) announced its influx of relatively cheaper per 1,000 inhabitants will inertia for change. The lead intentions to reform the public minibuses. This followed the continue to grow and soon institution should be clear to transport sector. In part, the privatisation and subsequent reach unsustainable levels, all as should be the roles that announcement was made liquidation of the loss-making, causing increased road each party is expected to play. against the backdrop of urban state-owned, United Bus traffic congestion and air The lead institution can help public transport problems Company of Zambia in 1995 as pollution. Thus, the necessity streamline responsibilities and such as poor service quality, part of the general economic for efficient urban transport reduce overlaps of mandates inefficient route configuration reforms of the 1990s. networks and a well-regulated by acting as a secretariat to public transport system, and unaffordable passenger The removal of import duty all institutions with a public accessible to all – rich or fares characterizing service on minibuses soon led to the transport mandate. provision in most urban poor – cannot be overstated increase in overall supply of Lastly, MTC will do well to centres in Zambia. These for these cities to remain public transports services. widely consult current public problems have caused many functional. However, service quality begun transport providers e.g. commuters to shun public to decline as the market Towards ensuring successful minibus owners, on their transport and resort to walking became more and more reforms, major changes in possible integration and and cycling, and private motor deregulated. Now, over two the regulatory framework participation into the new vehicles for those that can decades after the reforms, are likely to be inevitable. system. Wider consultations afford. research shows that Zambia’s Firstly, public transport are essential to establish a urban public transport system provision and regulation sense of ownership among is unsatisfactory and does will have to be devolved to current stakeholders and thus not meet the international councils as recommended to garner their support for the standards of convenience, in the new draft National reforms. reliability and affordability for Transport Policy and the wider commuters. Decentralization Policy. This As we await the launch of the is because councils, unlike draft National Transport Policy, Reforms to introduce managed central government authorities ZIPAR will continue to engage bus services and switch to or agencies that share some stakeholders in order to gain higher occupancy vehicles of the critical public transport more understanding on the announced by the Government functions, have more spatially right institutional set-up for are not only important but widespread structures and the delivery of public transport also urgent. Apart from the services in Zambia.

5 industrialisation, Zambia also What Does African Continental Free Trade needs to address challenges related to infrastructure and logistics which will make it Integration Mean for Zambia? easy for business persons Zambia is a member of not involve duties or taxes. to transport their products COMESA, SADC and Tripartite The Agreement will also work from the rural to urban areas. FTAs. An FTA is a trading area towards addressing challenges In fact, the development of where customs duties and related to NTBs. infrastructure should be a quotas have been eliminated concerted effort at continental From an economic perspective, on goods and/or services from level where we need to see the AfCFTA will offer one country entering another. the acceleration of the trans- opportunities for Zambia to Despite belonging to the three Africa highway initiative, a penetrate markets outside the FTAs, Zambia’s participation in road network connecting major COMESA/SADC bloc. According intra-Africa trade leaves much cities in Africa with the aim of to International Trade Center to be desired. The country’s facilitating trade. Statistics, the COMESA/SADC current export pattern is in bloc currently accounts for In addition to opportunities Mulima Mubanga and raw and refined copper, a about 99 percent of Zambia’s for the export of Zambia’s commodity that is not on intra-Africa trade while products to new markets, demand in Africa accounting countries outside this bloc the AfCFTA will allow for for 75 percent of exports. account for the remaining 1 importation of consumables Under the AfCFTA Agreement, percent. In particular, Central and inputs for industry from Member States will commit to and West Africa as well as countries outside COMESA/ progressively remove tariffs parts of North Africa present SADC into Zambia. Importation on 90 percent of goods from an opportunity for Zambia to of products will be beneficial all African countries with export products once tariffs to consumers in Zambia whom they do not yet have are eliminated under the as it will lead to increased pre-existing FTAs. This will AfCFTA. competition resulting in better make it easier for businesses quality products at a lower In order for Zambia to to trade within the continent price for end consumers. This Shimukunku Manchishi meaningfully benefit from and benefit from an envisaged will also provide consumers the AfCFTA and access these wider market of 1.2 billion with a greater variety of markets, the country needs people. goods, as they will gain access to accelerate industrialisation to products from different In recent years, the services and diversification agendas he African Union (AU) countries. sector has become a key in line with the Seventh is keen to accelerate contributor to the GDP of National Development Plan. For producers, this will regional economic, T various African countries, Sectors such as agriculture facilitate cheaper importation political and social integration Zambia inclusive. The and manufacturing are key of inputs in the production through the establishment of Agreement also seeks to see in this regard as they will process and also spur an African Continental Free more member States open up position Zambia to realise innovation owing to entry Trade Area (AfCFTA) aimed their services sectors giving greater benefits. At present, of competition. Therefore, at substantially removing opportunity to providers of the bulk of Zambia’s exports the Government needs to all restrictions to trade and these services to trade within are raw mineral or agricultural accelerate the industrialisation investment on the African the continent. In the initial products. These products agenda and also improve the continent. Zambia signed phase of the negotiations, five are similar to products business environment in order the AfCFTA agreement on 10th priority sectors considered exported by other countries to make local firms more February 2019 almost a year among the most dynamic and within the continent. This competitive and ready for the after the March 2018 launch fastest growing sectors in lack of complementarity ensuing competition from the of the trade agreement at an Africa have been identified to and differentiation of export AfCFTA. extraordinary summit of the be liberalised. The sectors are products explains, to a large AU held in Kigali, Rwanda. Free trade offers great benefits extent, the low levels of intra- business services, financial, for Zambia to diversify and Africa trade. A move towards transport, tourism and grow the economy, creating value addition through telecommunications. jobs and raising incomes. industrialisation will ensure While market access However, to realize the that Zambia’s exports are opportunities are being potential gains, we have to diversified thereby creating created, non-tariff barriers go beyond simply signing an opportunity for export of (NTBs) have been identified and eventually ratifying value-added products to other as a major impediment to agreements such as the AfCFTA African countries. intra-Africa trade. NTBs are to implementing them and restrictions to trade that do Beyond diversification and promoting growth sectors.

6 Jobs in the Gulf: Opportunity or Adversity? However, the general public Another important issue in some cases banned has expressed concerns based concerning migrant workers recruitment of their citizens on international reports of the is the level of their skills to the Gulf entirely owing to abuses that workers in the and qualifications. Migration these concerns. Gulf suffer. Some members of can result in the absorption the public have also expressed of skills, knowledge and A survey of Tanzanian migrants concerns about the low skill technology that could be conducted in 2017 also revealed requirement of the jobs on transferred back to migrants’ further concerns about working offer while others think that home countries when they in the Gulf region. Most women the Government should focus return there. This can have described humiliating treatment, on creating employment at considerable positive impacts including physical and sexual home instead of sending on productivity and economic abuse from male members young Zambians abroad. growth. However, this is of the household with some Felix Mwenge and Nonetheless, the Minister of relatively more feasible if women being raped in some Finance maintains that the migrant workers are skilled cases. Gulf presents an opportunity and well qualified and return for the Government to create home while still in their Based on the above, it is clear employment for Zambians who productive years. that there are some cases can go and make an honest of abuse in the Gulf region. living. The benefits of labour Although allowing people to go migration notwithstanding, there may partly address high Strange as it may seem, the 1,000 jobs advertised in unemployment in Zambia and the announcement by the the Gulf region are peculiar result in additional benefits at Minister of Finance represents because of the internationally the micro and macro levels as one of the responses of reported abuse of migrant outlined, the costs are likely many developing countries workers in that region. The to far outweigh the perceived to the problem of rising Human Rights Watch, Amnesty benefits, particularly from Tamara Billima unemployment. As the work International and the BBC have a human rights and human force grows at rates faster separately pointed out various dignity perspective. It would than employment, migration abuses that migrant workers therefore not be in the best is a common option especially in that region are subjected interest of Zambian citizens for young people. Today, to. Some of the abuses include who may be sent there. there are about 150 million unpaid wages, confinement migrants working in countries to houses, and abnormal In conclusion, there is no across the globe far from working hours reported to be problem with Zambians their homes. Worker migration as long as 21 hours in some working abroad. However, the is therefore not a new cases. Some workers have also Government should ensure phenomenon. complained about physical or that Zambian citizens go to sexual assault by employers. areas that respect labour laws Working abroad tends to be and promote decent work beneficial financially and is According to the Human Rights and workers’ rights; from the among the reasons individuals Watch, the Gulf region also existing evidence, the Gulf decide to migrate. Often, the employs a system known as region does this selectively. It Miselo Bwalya wages of migrants tend to be the ‘kafala’ system which is also important to strengthen significantly higher abroad ties migrant workers to their the implementation of existing than in their home countries. employers indefinitely. This strategies to create decent he Government’s recent This leads to considerable system implies that migrant jobs as a country even as we announcement to welfare improvements for their workers cannot leave their consider opportunities outside Tfacilitate the recruitment families through remittances. employers without facing the country. Equally, the of 1,000 Zambians to work Globally, migrant remittances punishment for “absconding,” economy will derive relatively in the United Arab Emirates have generally helped to including fines, prison, and more economic benefits if (UAE) and Kuwait has been improve the standards of deportation. Furthermore, the Government fosters more received with mixed feelings. living of their families at unlike in other parts of the migration of skilled and The jobs, which are targeting home. Some of the benefits World, the UAE’s labour law qualified workers than of low maids, drivers, waiters and also accrue to the rest of excludes domestic workers. skilled ones. Thus, in addition waitresses, appear relatively the economy. Assuming a This means workers in this to implementing job creation lucrative as workers are strong culture of support category face legal and strategies, the Government expected to receive up to by migrants towards their practical obstacles to labour should also accelerate skills K13,000 a month, 14 times families at home, remittances related conflict resolution. development for Zambia to the stipulated minimum are important financial capital Countries in Asia such as have a large pool of skilled wage for maids in Zambia. flows that tend to be relatively Indonesia, the Philippines, Zambians who can compete stable and less volatile. India, and Sri Lanka have for jobs globally.

7 Evidence in Pursuit Of IMF Deal – ZIPAR In determining the that the Ministry of Finance mechanism and as a signal significance of an IMF- will bolster preparations to international agencies supported programme, it for the IMF Article IV (Moody’s, Standard & is essential to understand Consultations slated for the Poor’s and Fitch) that the that although Zambia has first quarter of 2019. country is improving its not defaulted on any of its creditworthiness. debt service obligations, the If Zambia ultimately The quick evidence country is currently under succeeds in clinching an presented thus far considerable duress from IMF deal, how should the underscores that ultimately the weight of a heavy debt country plan to harness and professionalism, objectivity overhang. But does the leverage the support? and a culture of evidence- evidence corroborate this Well, for starters, the sizable based, not legally regulated, claim? financing could be used to By Pamela Nakamba-Kabaso commentary will be cardinal Well, in 2018, the fiscal partially offset the country’s for fostering a well-informed authorities planned to spend external debt service dues and policy-relevant IMF K4.2 billion as external debt in the short-term. External programme debate. interest payments. Because debt service is a Balance In this regard, firstly, of the huge external debt of Payments item, implying institutions with convening and the resultant increase that Zambia should be capabilities would do well to in debt service obligations, eligible for IMF-financed offer themselves as inclusive they ended up spending debt service relief. Debt platforms for bringing K6.2 billion. This was 49 service relief would help structure to the on-going percent or K2.0 billion over- immensely to sustain critical IMF debate and for fostering budget. Conversely, over the social and infrastructure professionalism, evidence same period, three socially spending. focus and objectivity. oriented programmes – Secondly, as principal Fostering a well-organized, Social Benefits (pensions, amounts on external loans inclusive debate that builds social cash transfer and so fall due, Zambia could professional consensus Caesar Cheelo on), Strategic Food Reserve, use IMF standby facility would do much more for and Water and Sanitation financing to amortize as consistent policy and public – experienced a combined much of the external debt literacy messaging. 66 percent (or K2.0 billion) as possible, replacing the t appears that fueling budget cut. relatively more expensive Secondly, the importance the on-going debate of objective professional Essentially, to avoid the commercial loans with about how relevant an commentary based on I onerous consequences of cheaper IMF debt financing. International Monetary concrete, traceable and external debt service default, Zambia could pursue a Fund (IMF)-supported verifiable evidence cannot among other things, Zambia standby facility as a viable programme is for Zambia is be overemphasized. The opted to further marginalize option for refinancing the a big Zambian resolution for evidence, whether drawn its poor and vulnerable Eurobonds when they fall 2019. Given the divergent from one’s own research or people, and to compromise due. views, mixed messages and from research conducted its food security position. spates of misinformation From the foregoing, Zambia by other reputable parties, The socio-economic distress surrounding the topic, should fervently pursue a must be integral to all from the debt overhang is it seems only fitting for funded IMF programme. The commentary. The current abundantly evident. In fact, ZIPAR to keep contributing authorities are on the right proliferation of off-the-cuff many would argue that the to the debate. Based on track and should not limit expert opinions must be debt-related stress signifies several studies since their pursuits to technical corrected through insistence an emergent silent social 2016, we have frequently support alone. on well-grounded, evidence- crisis. reiterated that IMF support Of course, technical based commentary. Reliance is critical for Zambia, both Clearly, we should not wait assistance is important on evidence will reduce for the cheaper sizable for a full blown debt crisis too. However, it is well the risk of sending mixed, financing it promises and to manifest itself through documented that IMF erroneous and misleading the customized technical defaults on debt service technical support tends signals to policy-makers and support that comes with obligations before seeking to be more potent when the general public. the money. debt relief. The authorities underpinned by a funded Ultimately, our view is that must, as they have intimated economic programme than by pursuing an IMF financial in the recent past, act when the assistance comes support programme, the now and act decisively in without IMF money on the Zambian authorities are securing IMF financing. They table. Zambia needs potent doing the right thing. The should hold fast the recent technical support, both as evidence bears them out and Ministerial pronouncement an external accountability so they must ardently stick to their pursuit.

8 ZIPAR lauds Ministerial statement on 2019 budget execution and warns of imminent economic challenges in 2019

crucial in the context of Secondly is the credibility risk that Zambia has delayed its the ministerial statement, should Zambia fail for a third inevitable fiscal adjustment namely: the pressures of a year in a roll to convince the means that the adjustments, mounting debt overhang; and IMF that its fiscal plans are once applied, will be that the credibility risk of another credible enough to warrant the much more painful to sustain. failed attempt to woo the IMF. Fund’s support. The ministerial Non-statutory budget items statement is clear in directing such as infrastructure projects, Firstly, Zambia’s public debt “the Ministry of Finance to which have hereto enjoyed has grown tremendously, implement a well-structured protected public spending, increasing from 18.9 percent engagement strategy and may come to a crashing halt. of GDP in 2010 to 53.9 percent clean up all the required data Staying the course of the in June 2018 according to sets in preparation for Article negotiations will take stamina the Ministry of Finance. The By Caesar Cheelo IV Consultations” slated for or what the Americas call mounting debt is underpinned the first quarter of 2019. “true grit” on the part of the by a persistent weakening he Ministry of Finance authorities. Trecently issued a of the overall fiscal balance, A few things are worth Ministerial statement (http:// with a deepening deficit from clarifying regarding A successful negotiation will www.mof.gov.zm/?p=5943) 2.4 percent of GDP in 2010 engagements with the IMF. ultimately mean an IMF- instructing ministry officials to to about 7.4 percent in 2018. For starters, the forthcoming supported programme, with prepare for the International The IMF projects that this will Article IV Consultations are a sizeable and relatively cheaper Monetary Fund (IMF) and to deepen further to 10.6 percent routine monitoring function (standby) financing that could improve their execution of the by the time the first Eurobond of the IMF. They will focus on be used to offset the external 2019 National Budget. ZIPAR falls due in 2022. discussing recent economic debt principal payments developments and prospects on the Eurobonds as they welcomes this statement. The most significant for Zambia. This does not fall due. A Fund-supported We laud the Minister for underlying problem of the imply an actual negotiation programme will also win putting her directives to the large debt overhang is that towards an IMF-supported over international investor ministry on record in the it now imposes a heavy debt programme. The most that the confidence, possibly swaying public domain. This gives the service burden. In December Zambian authorities can do is the adverse sentiments general public the opportunity 2018, the Ministry of Finance to propose milestones and a against Zambia’s domestic to scrutinize the ministry’s released a total of K4.3 billion timetable for the negotiations and international bonds and progress in implementing under that year’s budget. as a way to re-introduce the improve their performance. the budget, encouraging Of this, a staggering K1.5 negotiation motion. This will Finally, this may attract new important transparency and billion (or 35 percent) went to entail addressing the IMF’s foreign direct investments and accountability tenets. Inter external and domestic debt concerns, which caused donor aid to Zambia. alia, the statement calls for service, dwarfing the K1.1 it to walk away from the professionalism, integrity, billion (26 percent) released Conversely, a failed negotiating table back in innovation, and diligence in to various Government negotiation will further erode August 2017. Back then the budget execution. If followed programmes, projects and Zambia’s already weakened authorities unveiled ambitious through, these elements will public service delivery in international credibility and borrowing plans when they be decisive for restoring fiscal that month. The debt service economic reputation. This should have been planning discipline and fostering overall amount was even greater than will imply a deterioration of fiscal policy restraint. The budget credibility. the K1.3 billion (30 percent) the country’s prospects to IMF, then, believed that the released for the wage bill. securing favourable terms However, Zambia is likely to borrowing plans threatened With the debt service burden and conditions under any face strong headwinds and Zambia’s debt sustainability. dominating the fiscal profile, debt refinancing negotiations. choppy waters in 2019. The Now, the authorities have less the deceleration of public Securing IMF support in 2019 fiscal authorities will therefore than three months to clean debt accumulation and the could be a make or break need to up their game in up their act and get ready to dismantling of arrears, which affair for Zambia. order to navigate the economy reactivate the negotiations. the ministerial statement through the imminent We send good tidings to the has emphasized, will be Once the engagement challenges. Among the many ministry, and wish them great imperative for reducing the resumes in earnest, the potential threats in 2019, we skill and tenacity in navigating stresses from the overhang. negotiations are likely to be believe two are particularly the choppy waters ahead in quite challenging. The fact 2019.

9 Goods and Services Tax in the Shadow of VAT

No clear-cut description consumption sales at each through refunds. Failure to has been given of what level and not on goods to be address this ‘tax on tax effect’ form GST will take, neither used in production. can result in sellers passing has a departure from the on the tax cost accrued, to Thus, GST can be considered VAT targeted amount been consumers. This may lead to less complex for Government’s announced. Surprisingly, the economy-wide inflationary revenue collection. Herein lies reintroduction of GST has pressures and jeopardise the the attraction: with only a happened at a point when VAT macroeconomic objective of single collection point, at retail is out-performing other taxes keeping inflation within 6 to 8 stage, all tax collected is non- and is currently the biggest percent. refundable, settling the refund source of revenue for the challenge. Moreover, VAT and Additionally, price increases Government. The authorities’ By Florence Banda-Muleya GST can supposedly yield will impact industry’s costs of withdrawal of VAT stems from and equal amounts of revenue for production, and in turn result the fact that the tax-type has the Government. into slower economic activity not been without challenges. (maybe below the 4 percent Until 2016, Zambia’s VAT Though resolving the refund growth target) hence lower history was poor with the tax issue, GST suffers other revenues. Mitigating cascading recording negative intakes in setbacks that may end will require a lower GST rate, certain years. up reducing revenues. We combined with use of resale highlight these key issues Tables only turned with the and exemption certificates. worth the Government’s introduction of various VAT consideration in GST design. Finally, transition to GST poses administrative strategies challenges. The Government in 2017, including the First, by disposition, GST will face system changes, appointment of withholding does not have the sort of will need to train staff and agents, the introduction of self-enforcing mechanism agents and confront other Mbewe Kalikeka electronic fiscal devices and exhibited in VAT, where administrative costs in a short the establishment of pre- purchasers help enforce VAT as time period. Malaysia, which refund audit requirements. they insist on correct invoices switched to Sales Tax on 1st VAT collections rose from 3.7 from suppliers to claim input of September 2018, estimated s dust settles from percent of GDP in 2016 to VAT. Thus, compliance levels these requirements to cost the bombshell of 5.8 percent in 2017, and by under GST are fragile. With US$6 billion, about 2 percent reintroducing Sales mid-year 2018, about three taxes collected only at final A of GDP in lost revenue. With Tax now known as Goods quarters of the annual VAT point, the Government remains fiscal consolidation steering up and Services Tax (GST) in the target was collected. at the mercy of retailers who through perceived increased 2019 Budget, the scale of its are responsible for remitting However, this VAT performance revenue mobilisation, implementation challenge the tax collected from the was not a true reflection of the Government needs to becomes clearer. Brought to consumer to the authorities. collections, as the pre-refund create a provision for more light by increased debate over audits led to backlogs in Retailers may not remit the implementation time and lost the pros and cons of GST, the VAT repayments. Indeed, the full amount of the tax since tax revenue. Government’s selling point of Zambia Revenue Authority there is no third party to simplicity of administration So, while GST presents an (ZRA) has lamented that confirm with, or may choose is certainly not convincing opportunity, it also poses they have been struggling to not charge the tax entirely enough. Our view leans risks to revenue which with VAT refunds, requiring because of its tediousness, towards making VAT more must be mitigated. Ministry an approximate K800 million or in a bid to boost their efficient, however, the policy of Finance and ZRA in every month. sales. Withholding agents and decision for GST was taken. collaboration with ZIPAR and fiscal devices can remedy this Thus this article serves to The GST resolves the VAT other stakeholders will have evasion, but will require more visualise how best GST can be refund challenge, because to think through the design enforcement vigour. implemented in Zambia. while VAT is charged at all of compliance systems, how levels of production with Second, GST can lead to to reduce the cascading effect resellers paying tax to the cascading or the “tax on tax” through resale and exemption vendor and reclaiming VAT effect, stemming from the tax certificates, consider what tax paid on business inputs, GST burden falling on production can be applied sustainably is applicable to only final inputs, which VAT avoids for services and review the transition period.

10 Trump’s Beggar-thy-neighbour Trade Policy

of goods to China namely will rise and jobs will be has a bearing on China’s soybeans, beef, whiskey and lost as a result of free trade. demand for copper and off-road vehicles. However, in international consequently, Zambia’s trade, free trade is generally balance of payments and Interestingly, the spat over recognised as the gold economic performance more aluminium and steel is not standard that maximizes generally. This effect is the genesis of the trade consumer welfare. And while channelled through the trade dispute between the US and some industries that open war’s effect on international China. The two countries up to trade are affected by market sentiments, have had a long-running the increased competition investment decisions and economic competition with and may be forced to lay off overall, China’s economic one another over control some workers, the underlying performance. Being the of the world order. In assumption is that these world’s largest consumer recent years, tensions have Mwanda Phiri and ‘laid-off workers’, will of copper, such negative escalated due to America’s quickly adjust their skills and developments discourage growing trade deficit with obtain employment in other investments and this China which it accuses of sectors. However, this seldom dampens China’s demand artificially undervaluing its happens that quickly if at for industrial metals such as currency so that Chinese all for some countries. Free copper and consequently, exports become cheaper and trade thus generates losers copper prices. And a fall in hence more competitive. and winners. copper prices is detrimental Conflicts relating to for Zambia whose major Intellectual Property (IP) Which brings us back to export commodity is copper. such as inventions, literary Trump’s contention with and artistic works and imports. Although Trump’s The trade war thus serves designs also lie at the root approach is less than as a reminder to policy- of the trade war between the desirable, the argument makers. Certainly, free trade two countries. The US has may have some validity. provides wider consumer Shimukunku Manchishi constantly accused China of Free trade tends to displace choices and lower prices, IP theft, forced technology a country’s production and access to cheaper inputs transfer and cyberhacking employment when the for production, innovation n what was seen to be for commercial gain. The country in question opens and improved efficiency part of his many usual US Commerce Department up to fierce competition from and technology gains, Icontroversies, in November estimates that the country other countries. However, the competitiveness, and 2018, President Donald Trump loses US$600 billion annually problem with Trump’s beggar- economic growth. But, it stirred the pot with a beggar- to IP theft and China is the thy-neighbour move is that it also comes with adjustment thy-neighbour policy against biggest culprit. Even before triggers a series of tit-for-tat costs which should not be China that finally ignited Trump, the US threatened measures which eventually ignored so easily. Therefore, what analysts had predicted to impose tariffs on China result in stalemate. Neither policy-makers need to give would result in a new trade following IP violation during country benefits and in the greater attention to trade war with China. That is, the Bush and Clinton process, bystanders are also redistributive policies that the US President sought administrations. adversely affected. aim to compensate workers to fix America’s economic temporarily losing their jobs While known for his For instance, most US problems, namely the loss due to free trade. This will unpopular statements, one imports from China are of manufacturing jobs in ensure a fairer and more cannot help but ponder manufactured by US firms steel industries, at the equitable redistribution Trump’s rationale for the in China while other imports expense of China and other of the benefits from free protectionist measure and are intermediate inputs in countries exporting steel trade and minimize tariff associate it to the social the manufacturing process. and aluminium to the US. By escalation. divides on free trade. On Hence, tariffs hurt America’s invoking Section 232 of the the one hand economists commercial interests. When Trade Expansion Act of 1962, unanimously advocate for President George W. Bush the President essentially free trade while the majority imposed similar tariffs on acquired carte blanche to of the public on the other selected steel products take protectionist measures hand, are anti-free trade. in 2002, imported steel against imports that In 2002, scholars Mayda became more expensive to threatened to impair the US and Rodrik found that more the detriment of American national security. He imposed than half of over 20,000 companies that use steel a 25 percent and 10 percent individuals surveyed in 23 to produce cars, trucks, tariff respectively, on imports countries were in favour of buildings, highways, home of steel and aluminium from trade restrictions. appliances and many other China, a move that was not goods in the US. taken lying down by China. And why is this so? These China retaliated in kind with perceptions are premised on Further, the trade war its own tariffs on US exports fears that wage inequality between China and the US

11 A Fleeting Lifeline from China: What FOCAC 2018 Entails for Zambia

Reports pursuant to the interest payment obligations. (FDI) into Africa tops the list Forum on China-Africa The US$20 billion credit line is as the best financial support Cooperation (FOCAC) held the largest pot under FOCAC option under FOCAC 2018. in Beijing in September 2018 2018. However, Zambia If Zambia can improve its are that President Xi pledged: should avoid this pot like the business environment and U$15 billion (25 percent of plague! By definition, a credit reclaim a spot as one of the total pledged support) line is a non-concessional, African’s most attractive in grants, and concessional commercial lending option. FDI destinations, it could and interest-free loans; US$20 Zambia simply cannot afford benefit considerably from billion (33 percent) in credit any more non-concessional the proceeds of this pot. The line financing; US$10 billion borrowing now and over financing will be indirectly (17 percent) in development By Pamela Nakamba-Kabaso the next three to five years. available for private Zambia financing; U$5 billion (8 Thus, tempting as the option businesses that are worthwhile percent) in funds to buy might be (considering that for China and for joint imports from the continent; commercial loans are usually public-private partnerships. and US$10 billion (17 percent) the easiest to access) Zambia However, it will be outside the pledged on behalf of Chinese must stay away from this pot. control and influence of the companies who will be fiscal authorities, thus being encouraged to invest in The development financing insulated from risks of fiscal African countries. option (US$10 billion) would slippage and misappropriation. typically be quite attractive So what does all this mean, Moreover, if well-targeted for Zambia. However, especially for Zambia, a to Greenfield projects (as drawing lessons from the heavily indebted poor opposed to mergers and country’s failure to account African country? Based on an acquisitions), the FDI will for the utilization of the debt Caesar Cheelo assessment of each of the five protect itself from possible proceeds from the three components of FOCAC 2018, nationalisation sentiments in Eurobonds, totaling US$3.0 the following is noteworthy: the future. That is, the risk that billion, Zambia must come someone down the road will n September 2018, Chinese Above all else, given Zambia’s to terms with the fact that claim that China took over President Xi Jinping made current circumstances, when we are not prudent in using strategic assets of national an impressive and generous presented with any financing development financing interest, which should be I option, yes even FOCAC, our offer of US$60 billion in resources. This development nationalised, will be averted. financial support to African first instinct should be: “we financing option is yet Thus in closing, our view is countries over the next already owe too much; let another poison chalice, which that Zambia should focus three years. Since then the us not borrow more!” To the Zambia should avoid. on attracting FDI, attracting African continent cannot stop extent possible, we should The U$5 billion earmarked China to import from the talking about China. Some avoid borrowing more until for Chinese entities to buy country, and to a much lesser observers are keen for Africa we have a handle on the imports from the continent (and more calculated) extent, to benefit from the funding current debt challenges. is welcome, but now puts accessing grants, concessional galore. Others are worried However, realistically speaking, pressure on countries like loans and interest-free loans. that the financial bonanza is some amount of borrowing Zambia to restructure their These options should be actually a spring-trap set to will be inevitable despite our economies quickly and pursued in that order of ensnare African states into dire fiscal and debt situation. establish value-added export priority under FOCAC 2018. inadvertently giving up their Given this inevitability, the lines. If, for instance, Zambia The country should stay clear sovereignty. US$15 billion pot of funds for remains dependent on of the development financing On that note, it might be a grants, interest-free loans and the export of the primary option and especially credit good idea to understand concessional loans should commodity exports like line option. Of course, all five what this US$60 billion probably be at the front and copper, the benefits from the financing options are quite financial support really entails centre of any “borrow-from- import purchases pot will be fleeting for Zambia currently, for Africa and Zambia, lest China” plan. These funds meager. given the prevailing economic would impose the least the continent’s borrowing Finally, the US$10 billion situation. In particular, the huge amount of additional debt enthusiasts go laughing all the that President Xi pledged on debt overhang should impose service burden to Zambia way to the nearest Chinese behalf of Chinese companies natural borrowing constrains since they entail relatively low bank to borrow some more. as foreign direct investment over the medium term.

12 services provided for under- five care between private Child stunting high in the and public health facilities. Public health facilities provide a wealth of information to wealthiest households expecting and lactating mothers ranging from nutrition in pregnancy to information of stunting cases are among children which consequently on a starter pack for expecting the wealthiest households affects school performance mothers. in the top 20 percent of and reduced intellectual wealth brackets. While it achievement. This may The Government has is lower than the stunting result in reduced economic also embarked on several incidence of children in the productivity and earnings later nutritional programmes poorest households at 47 in adulthood. targeted at expectant mothers percent, it is nevertheless and infants such as the 1st high considering malnutrition Worryingly, stunting 1000 Most Critical Days is highly correlated to developed during the first Programme, Management poverty. This finding, which is two years of life is generally of Severe Acute Nutrition counterintuitive, has important irreversible. After the age of and Maternal, Adolescent, implications for policies two, stunted children who Infant and Young Children experience rapid weight gain By Tamara Billima, that are aimed at ending programme which extends malnutrition in Zambia. It also have an increased risk of beyond the expecting mothers also implies that whereas past obesity later in life which may and infants. All these efforts interventions to end child increase the chances of heart are made through public malnutrition have mainly disease, hypertension, diabetes health facilities. focused on the poor, they and stroke. This reality raises In conclusion, more attention now have to include wealthier concerns about the high rates must be given towards the populations. of stunting that Zambia has. feeding of children under Malnutrition results from Wealthiest households are the age of five in wealthier insufficient or excessive intake assumed to afford appropriate households as anecdotal of nutrients. Undernutrition and adequate nutrition evidence suggests that this is the insufficient intake of for their children and have is currently left to care givers nutrients results in stunting, access to what can be seen who might not be very wasting and underweight. as the ‘best’ health care in knowledgeable on nutrition. On the other hand, over- the country through private Further, the poor attitude Felix Mwenge and nutrition which is excessive health providers. To have towards under-five clinics intake of nutrients results in children from wealthier and obtaining information on obesity. Globally, malnutrition households equally suffering nutrition from health facilities is responsible for 35 percent from undernutrition as poor among wealthier households of deaths among children households, is of great concern has contributed to the under the age of five. In terms and needs to be understood prevalence of stunting. of economic consequences, it clearly. Despite several interventions represents losses of 11 percent However, very little is known from the Government and of gross domestic product from literature about stunting Cooperating Partners, stunting (GDP) every year in Africa and in wealthier households has remained relatively Asia according to the 2016 making it difficult to point out unchanged since 1992. Global Nutrition Report. In the causes. Notwithstanding, Concerted efforts must be Zambia, the National Food the general causes of stunting made by both the Government and Nutrition Commission could be inappropriate infant and households to reduce cites malnutrition as a major feeding and care practices, child stunting. Targeting of public health problem that poor sanitation, inadequate interventions should include Miselo Bwalya contributes to a significant breastfeeding in the first wealthier households and not number of deaths among 6 months of a child’s life, only poor households. There children under five. hen we think about generational stunting and is also need to strengthen the malnutrition, we tend Zambia’s biggest malnutrition inadequate under-five health provision and coordination of to associate it only concern for many years now services especially in the under-five services, especially W private sector. with the poor. This is because has been stunting which is those on nutrition between globally, the poor suffer from classified as low height-for-age. The focus on poor households private and public providers. higher rates of malnutrition At 40 percent of all under-five in addressing undernutrition Further, the World Bank than the non-poor. However, children, Zambia’s stunting could imply that public health recommends providing health evidence shows that in rate is categorised among the facilities tend to emphasize and nutrition education and Zambia, wealthier households highest globally and implies more on nutrition and under- micronutrient fortification and are currently facing a high risk that 2 in every 5 children five care compared to private supplementation as a shorter of malnutrition. The 2013-14 under the age of five is too health facilities. Anecdotal route to better nutrition. This Zambia Demographic and short for their age. The effects evidence shows a stark must be promoted in both Health Survey (ZDHS) shows of stunting last a lifetime as it difference between the type of private and public health that as high as 28 percent delays mental development in facilities.

13 China-Zambia Relations in Development Cooperation “Towards Concluding Some Unfinished Business”

n Zambia, the conversation around IChina-Zambia relations has increasingly dominated debates at different levels in the recent past. Clearly, there is some unfinished business that needs to be dealt with and hopefully concluded. On 6 December 2018, ZIPAR hosted a policy seminar on China-Zambia relations in Panelists at the Zambia-China Relations policy seminar on 6 December 2018. From Left-Right: development cooperation Michael Nyirenda, president ZACCI, Caesar Cheelo ZIPAR Senior Research Fellow, Meng Zhiguo, at the Taj Hotel in Lusaka. Planning and Investment Promotion Manager-ZCCZ and Chen Si, Commercial Manager Sinohydro. To ZIPAR, the topic is not new as the Institute has been carrying out into that dynamic. It also misunderstandings about a youthful population. analysis on the subject, considered the social and the presence of Chinese In cognisance of its the key one being a study cultural aspects of the investments and debt aging population, China conducted in 2016 titled: relationship between the in Zambia. Information adopted a Science, “Trade Developments and two countries. On the last guidelines in both English Technology, Talent and Impacts of China-Zambia point, it confronted some and Chinese on how to do Education Reform and Relations”. Based on the of the positive and negative joint ventures, co-access Development (STTERD) study, ZIPAR convened aspects of the sometimes, FOCAC 2018 US$10 billion Plan (2006-2020). This plan a policy seminar which similar and other times, earmarked for Chinese is focused on Science, attracted 82 participants disparate business cultures, company investments in Technology, Engineering from the Zambia Chamber behaviours and practices Africa should be made and Mathematics (STEMs). of Commerce and Industry of Chinese and Zambian available”, were other By 2015, China had trained (ZACCI) and the Association private sector players policy recommendations. 154 million STEM skilled persons (more than 10 of Chinese Corporations in operating in Zambia. In addition, ZIPAR proposed times Zambia’s entire 2015 Zambia (ACCZ). The seminar provided that China and Africa population). The seminar aimed to policy suggestions among should establish a common inform and enhance the them; the need for China platform such as a Sino- Given the projected debate and understanding and Zambia to establish Africa stock exchange demographic transition, about China-Zambia a common local content through which investment ZIPAR advised African relations as well as begin policy in line with Zambia’s vehicles, companies and countries, Zambia included, to shape the narrative on industrial policy that would project operators can be to plan for deep-rooted this topic that promotes enhance the capacity of listed, and equity options reforms in education, skills mutual benefits on both local firms to participate in offered to allow mutual development and talent sides. The policy brief opportunities created by investments. discovery. “They should undertake comprehensive, presented at the seminar Chinese firms. Mechanisms Learning from China, systematic and time-bound explored China-Zambia for ensuring the African countries and reviews of their education, relations in the context of implementation, monitoring Zambia in particular were skills development and China’s global presence, and evaluation of the policy encouraged to invest talent development sub- taking a closer look at were also suggested. in science, technology, sectors and systems, developments in trade and “China and Zambia should innovation investments benchmarked against investment. establish robust public and reforms. China faces leading world economies information sharing an aging population It examined China’s plans like China”. for Africa and the world, systems, to dispel while Zambia and Africa and how Zambia fitted misconceptions and are projected to have

14 Institutional Preparedness for Urban Public Transport Reforms in Zambia ZIPAR convenes policy seminar for Government and private sector

introduction of higher occupancy vehicles, the institution of a common ticketing system for passengers and the rearrangement of bus routes. Earlier in 2013, ZIPAR had conducted a study titled; “Trip Modelling and Cost Analysis for Urban Public Transport Systems for the City of Lusaka”, which described the public transport system in From Left to Right: John Chiluwe, Director Transport Ministry of Transport and Communications, Lusaka as being ineffective, Maambo Chilobya, Statistician-Ministry of Commerce and Industry and Sydney Mbewe, CEO, Bus and having poor service and Taxi Drivers Association of Zambia during the Public Transport Reforms Policy Seminar on 4th December 2018. quality, an inefficient route configuration and unaffordable passenger IPAR on 4 December which the reforms can examined the readiness fares which resulted in 2018 convened a be delivered in a manner of institutions in Zambia most individuals shunning Zprivate policy seminar that minimises possible for urban public transport the system. dubbed the “Institutional losses to all players and reforms. Preparedness for Urban also considers the current The seminar attracted The study recommended Public Transport Reforms fiscal environment. The 19 participants from key remedial measures to in Zambia” at the Taj presentation made during Government ministries and improve public transport Pamodzi Hotel in Lusaka. the seminar was based agencies and private sector. including the enhancement The seminar was held in on a ZIPAR study that of bus regulations, the anticipation of the revised transport policy which received Cabinet approval and was earmarked for an official launch. The policy, in which ZIPAR was actively involved in its development, elevates the public transport agenda by focusing on improving its administration down to the local level. ZIPAR thus found it an opportune time to begin preparations for the reforms considering the amount of information that is already available and the political will that has been exhibited in the recent past. From Left to Right: ZIPAR’s Executive Director Dr. Pamela Nakamba-Kabaso, Fanizani Phiri, Asst. The policy seminar aimed Director-Ministry of Local Government and Anthony Chewe, Principal Licensing Officer- Road Traffic to contribute to the process and Safety Agency following proceedings during the Public Transport Reforms Policy Seminar on by identifying means by 4th December 2018.

15 ILO commissions ZIPAR to conduct Future of Work Study

December, 2018 in 6 towns namely Lusaka, Kitwe, Ndola, Solwezi, Livingstone and Choma. ZIPAR’s scope of work included review of literature on employment and labour relevant to Zambia and the southern African region. The Institute also held consultations with a wide range of stakeholders including Government ministries and agencies, universities and colleges, technological solution companies and Technical, Education, Vocational and Entrepreneurship Training ZIPAR’s Felix Mwenge, Research Fellow presenting findings of the Future of Work Diagnostic Study institutions. Others were during a validation meeting at ILO Zambia Office on 6th February 2019. mine owners, mining communities, businesses, farmers, traditional leaders, LO recently commissioned advancement in technology, constituents to effectively and NGOs. ZIPAR to carry out a study digitization, globalization, address Zambia’s future The study focused on the on the Future of Work climate change and dynamics in the world of I four ILO thematic centenary (FOW) in Zambia. The FOW changes in employment work. conversations namely: Initiative was launched by relationships. This study The study commenced in work and society; decent the ILO Director-General generates relevant September 2018 and data jobs for all; organization of at the 104th Session of information to support collection was carried out work and production; and the International Labour meaningful dialogue to between November and governance of work. Conference (ILC) held in position the ILO and it Geneva in June 2015. The FOW initiative seeks to have a better understanding of the drivers of change in the world of work and the implications for governments, workers and employers. It also aims to provide a constructive forum for the exchange of ideas and information among key stakeholders in the formulation of policies and new approaches. The objective of the study is to inform national dialogue on the FOW in Zambia. The study will help deepen the understanding of the impact of transformational drivers on the world of work in Zambia including Stakeholders listening to the presentation on findings of the Future of Work Diagnostic Study by Felix Mwenge, Research Fellow-ZIPAR during a validation meeting on 6th February 2019.

16 ZIPAR’s Dr. Pamela Nakamba Country Winner of CEO Global’s Most Influential Women

IPAR congratulates its Executive Director, Dr. Pamela Nakamba Zfor her achievement as the country winner in the Business and Professional Service category of CEO Global’s Most Influential Women in Business and Government, 2018/19 SADC North Awards. Her leadership is simply professional, transformative and inspiring.

Courtesy Call to the Chinese Ambassador n 22 January 2019, ZIPAR Executive ODirector, Dr. Pamela Nakamba accompanied by researchers from ZIPAR met His Excellency Mr. Li Jie, Ambassador of the People’s Republic of China to Zambia. The meeting was held at the Embassy and focused on how to strengthen objective research on China-Zambia relations and how to enhance cooperation between ZIPAR and the Embassy.

ZIPAR’s Executive Director Dr. Pamela Nakamba-Kabaso (3rd from left) accompanied by Researchers posing for a picture with His Excellency Mr. Li Jie, Ambassador of the People’s Republic of China to Zambia after a meeting on 22nd January 2019.

17 ZIPAR at International Meetings ZIPAR at the 2nd International Forum on Belt and Road and Global Governance Summit IPAR participated in the 2nd a number of countries and key note countries, including former politicians, International Forum on the Belt speeches from renowned speakers Government leaders, diplomats, Zand Road and Global Governance including the former president of the representatives of international Summit on 14th October 2018 in African Development Bank, Donald organizations, and business Shanghai, China. Ms. Nakubyana Kaberuka. associations. Mungomba - Research Fellow was The delegation also took part in the The delegation comprised of 14 part of a joint delegation of scholars 2018 Silk Road Business Leaders’ participants from South America, Asia, and think tanks from countries along Summit held at the Zhangjiajie Africa and Europe who also attended the Belt and Road routes invited by Country Garden Phoenix Hotel on 16th several meetings with various the China Centre for Contemporary October 2018. The Summit attracted companies and entities that are World Studies (CCCWS) on a visit from more than 400 participants from 80 working towards supporting the BRI. 12th to 20th October, 2018. The purpose of the visit was to enhance the exchanges and cooperation in the area of the Belt and Road Initiative (BRI) between think tanks of China and of related countries. The tour was organized by the Silk Road Think Tank Association (SRTA). During the visit, the delegation took part in the 2nd International Forum under the theme; “BRI and Global Governance: New Practices, New Ms. Nakubyana Mungomba, ZIPAR Research Fellow (2nd from right) in a group photo Ideas” held at Fudan University. The with other delegates to the 2nd International Forum on Belt and Road and Global Gov- Forum featured presentations from ernance Summit in October 2018, Shanghai, China. ZIPAR at the SADC-ILO Joint Sector Meeting

IPAR represented by Senior coherence and harmonised action on Frameworks in SADC” at the Labour and Research Fellow Caesar Cheelo employment and productivity across Employment and Social Partners: Senior Zparticipated in the SADC-ILO monetary, fiscal, exchange rate, trade, Officials Meeting NIPAM in Windhoek Workshop on Job-Rich Growth for investment, sectoral, and labour Namibia from 4-6 March 2019. Poverty Eradication: Policy Coherence to market policy making. This would in Based on this and another presentation Maximize Decent Employment Creation turn provide clear policy guidance to by ILO, the Senior Officials (Permanent and Productivity Growth held from 26th SADC Members on how to promote Secretary level) and Social Partners to 28th November 2018 at Hilton Hotel streamlined and coordinated pro- are recommending for the approval of in Windhoek, Namibia. Cheelo made a employment policy responses across the (higher level) Council of Ministers presentation on lessons from Zambia line ministries in their efforts to of Labour and Employment and Social on using Macroeconomic policies for promote decent jobs and increased Partners to direct the SADC Secretariat economic restructuring. productivity for all and in particular youth and women. to develop a draft comprehensive Senior officials from SADC Ministries of SADC Employment and Labour Policy Labour, Finance/Economic Development, SADC and ILO were impressed with Framework. The framework should National Planning, Trade and Industry, the presentation by the ZIPAR Senior among other things, take into account, as well as Employers and Workers Research Fellow and they extended alignment with macroeconomic Organizations participated in the another invitation to Cheelo to make frameworks in SADC, and support the workshop. The meeting aimed to a presentation titled; “Case for Pro- resolution of impediments to growth create consensus on how to achieve Employment Macroeconomic Policy and job creation.

18 ZIPAR participates in Seminar on National Ethnic Policy and Management for Zambia

ZIPAR Research Fellow Zali Chikuba (2nd from left) in a group photo with other delegates to the seminar on National Ethnic Policy in Changsha, China, September 2018.

he ZIPAR Research Fellow in Republic of China (PRC), the current Zambia Government by the Research Transport and Infrastructure situation and perspectives of national Fellow was the need to put in place TDevelopment, Zali Chikuba policies and practices of China. specific legislation and policies that was part of a 14 member Zambian The Seminar was conducted using discourage ethnic segregation and delegation which attended a seminar a combination of theory and study promotes shared prosperity of all on National Ethnic Policy in Changsha, tours. ethnic groups. China from August 29 to September The meeting among other things Government was also advised to 18, 2018. enhanced the Research Fellow’s develop engagement policies and The seminar was sponsored by knowledge on how ethnic diversity strategies in order optimise its the Chinese Government and it can be used to transform a nation benefits from the Chinese economic aimed to equip participants with into a rapidly growing economy. Part diplomacy. an understanding of the Peoples’ of the key recommendations to the ZIPAR at the Wilton Park’s 12th Annual Conference

ZIPAR’s Research Fellow for meeting aimed to explore the future ZIPAR’s Mungomba made a macroeconomics, Nakubyana of global challenges ranging from presentation on Development Mungomba, participated in the 12th security and conflict to trade and Assistance. The presentation addressed annual meeting in Wilton Park’s governance. The rise of China and the following questions: Which state International Futures series held from other emerging powers which are and non-state actors will be involved? 13-15 February 2019 in West Sussex, among the drivers of change in the Who will be the funders of global United Kingdom. international system was deliberated. development? How does this play out? The meeting observed that while the What will the needs be? Is there a role The theme of the meeting was need for collaborative solutions is for the Belt and Road Initiative (BRI) “Managing future global challenges: compelling; the obstacles to achieving and development? the role of emerging powers.” The them can appear formidable.

19 ZIPAR participates in the USA International Visitors

Leadership Programme explore the role of citizens, levels of government including traditional and new media, non-state actors; active academia, and civil society participation by citizens and in fostering transparency and local communities in decision accountability in Government. making. Further, the meetings aimed to Dr. Nakamba observed that highlight the mechanisms that following the above stated enable citizens to foster good tenets was very important in governance, ethical standards fostering transparency and and accountability at the local, ethics in government in order state and federal levels. Lastly, to achieve efficient service the meetings also aimed to delivery, effective and efficient analyse grassroots actions utilization of resources. that have resulted in honest, Adhering to the principles transparent, and fair practices would also facilitate a peaceful in Government. and enabling environment for growth and development. The ZIPAR Executive Director highlighted three key lessons A total number of 18 ZIPAR’s Executive Director Dr. Pamela Nakamba-Kabaso receiving from the programme. These participants who participated a certificate of participation in the IVLP from an Official of the were independence and in IVLP programme were drawn Public Affairs Office at the US Embassy in Lusaka on 28th February objectivity of institutions; from 16 African, Anglo-phone 2019 strong accountability at all and Franco-phone countries.

he ZIPAR Executive Michigan; Chicago, Illinois; and Director, Dr. Pamela Miami, Florida. Nakamba participated T The IVLP is a programme in the International Visitors Leadership Programme (IVLP) sponsored by the U.S. on Transparency and Ethics in Department of State. The Government in the USA from objectives of the meetings 15th October to 2nd November were to examine the 2018. The programme was decentralized and self- held in various cities in five regulating nature of the States namely Washington, DC; U.S. federalism and how it ZIPAR’s Executive Director Dr. Pamela Nakamba-Kabaso Sacramento and San Francisco, promotes transparency and moderating a session at the Northwestern University, Illinois California; Kamalazoo, ethics in Government; and to when participants met students under the programme of African Studies. ZIPAR at the On Think Tanks Hub Geneva

IPAR Executive Director Dr. Pamela Nakamba participated in a conference organised by the ZOn Think Tanks (OTT) and foraus-Swiss Forum on foreign policy in Geneva from 4-7 February 2019. The OTT Conference was an opportunity to explore a range of issues of great interest to think tanks and the broader evidence informed policy field. The main theme for the 2019 Conference was “Public Engagement”. During the conference, Dr. Nakamba in the company of Ana Patricia Munoz of Grupo Faro, Gurucharan Gollerkeri of PAC India and Scarlet Varga of Bruegel convened a session titled; Looking on the bright side of life: are think tanks really facing a perfect storm? In this session, representatives from Latin America, Africa, Asia and Europe reflected on the biggest challenges and opportunities facing think tanks in the regions over the next five years. Together, they co- ZIPAR’s Executive Director Dr. Pamela Nakamba-Kabaso in a discussion developed a full picture of what think tanks can expect on the future of think tanks in Africa during a break away session at going forward and some practical responses to a rapidly the On Think Tanks Hub Geneva. changing context.

20 PARLIAMENTARY SUBMISSIONS ZIPAR appeared before five Parliamentary Committees between 10th October 2018 and 1st February 2019 as follows: Zambia’s Preparedness to Re-establish a National Airline

ZIPAR on 21st January 2019 appeared before the ZIPAR Research Fellow, Malindi Chatora (in Parliamentary Committee red jacket) accompanied by other Researchers on Transport, Works presenting on Zambia’s preparedness to re-establish A Member of the Parliamentary Committee on Transport, and Supply to submit a National Airline to the Parliamentary Committee Works and Supply posing a question to ZIPAR’s Research on Transport, Works and Supply on 21st January Fellow, Ms. Malindi Chatora during the presentation. a memorandum on 2019. “Zambia’s preparedness to Re-establish a National economy. Therefore, the airline. expertise in servicing local Airline”. Some of the Government was advised routes, as opposed to key messages from the to focus on restoring In the advent of more competing against them. presentation were that macroeconomic stability favourable economic This will save the existing the current economic by bringing debt within and fiscal conditions for jobs in the private airlines environment was not the sustainable levels and launching the airline, ZIPAR and mitigate instances right time to re-establish ensuring exchange rate advised Government to where the national airline the national airline given stability before re- seriously consider honing would have to look beyond the high debt levels and establishing the national the existing private airlines Zambian nationals to fill subdued growth in the that have already amassed critical positions. The Effects of Trade Balance Deficit and High Debt Stock on the Budget Performance in Zambia

IPAR appeared before to move from external to the Budget Committee domestic borrowing in its Zand presented a paper debt management strategy on the “Effects of Trade and to reduce the threat Balance Deficit and High of exchange rate risks, this Debt Stock on the Budget also crowds out credit to Performance in Zambia” on the private sector, further 31st January 2019. reducing economic activity and growth. Some of the key messages in the paper indicated that ZIPAR made policy sug- both the trade balance and gestions that included debt have consequences the need to implement ZIPAR Research Fellow Nakubyana Mungomba (middle) presenting a a robust diversification for budget performance. paper on the Effects of Trade Balance Deficit and High Debt Stock on For the trade balance, the the Budget Performance in Zambia to the Budget Committee on 31st agenda aligned to the Na- persistent trade deficit January 2019. tional Industrial Policy (NIP) that has existed since 2013 (2018) to enhance sectoral Zambia’s ability to meet social sector spending has resulted in a reduced linkages and promote di- interest payments on exter- and the use of goods and ability to earn foreign versification of production. nal debt. services. These are aspects exchange to meet the cost This will move the economy that directly affect not only of imports, which directly towards diversifying away On debt, as servicing obli- budget performance, but impacts on the country’s from copper dependency gations increase, it crowds also the functioning of the stock of foreign reserves. and reduce exposure to out spending in other areas Government. Moreover, as This also in turn affects external shocks. of the budget, including the Government attempts

21 Analysis of the 2019 National Budget he oral presentation was made on 10th TOctober 2018 to the Expanded Parliamentary Committee on Budget. Some of the key messages from ZIPAR’s submission were that fiscal restraint or austerity had become a resounding necessity for Zambia. The presentation pointed out that debt payments will be a dominant area of spending in 2019. External and domestic debt payments will together increase ZIPAR Executive Director Dr. Pamela Nakamba-Kabaso accompanied by Researchers presenting the analysis of the 2019 National Budget to the Expanded Parliamentary Committee on Budget on 10th October 2018 by K9.3 billion in 2019, representing an increase is brought back to moderate of 66%. to 7.9%. Interest payments the cost of debt servicing. alone will take up 4.7% of risk of debt distress. The As a percentage of GDP, GDP, almost one percentage ZIPAR reiterated several think tank also recommended debt payments are point higher than in 2018. measures that needed to that Government cancels projected to increase by The depreciation of the be undertaken including; some of the contracted loans as much as 3.2 percentage kwacha against the US indefinite postponement that were not yet disbursed points from 4.7% in 2018 Dollar will further increase of the contraction of all to reduce the debt service pipeline debt until the debt costs.

The Teaching of Computer Studies in Zambia; and A review of the Quality of Higher Education in Zambia disadvantaged in the teaching of computer studies. On higher education, one of the issues noted was the apparent confusion on the mandates of the various regulators in the sector such as the incidence between the Health Professions Council (HPCZ) of Zambia and the Higher Education Authority. The HPCZ ordered the Copperbelt University to discontinue two programmes at the Miselo Bwalya ZIPAR Associate Researcher (in checked tie) responding to a question during a presentation on Teaching of Computer Studies in Zambia; and A review of the Quality of Higher school of medicine citing failure to Education in Zambia to the Parliamentary Committee on Education, Science and Technology on 1st meet set standards such as inadequate February 2019. number of lecturers, gross over- enrolment of students and engaging IPAR appeared before the Parliamentary Committee on Education, Science unregistered and unlicensed lectures and Technology on 1st February 2019 to present a paper titled: The Teaching among others. The HEA overturned the Zof Computer Studies in Zambia; and A review of the Quality of Higher decision by the HPCZ and the case was Education in Zambia. referred to the Attorney General for One of the key challenges highlighted in the ZIPAR paper on teaching of adjudication. computer studies was limited ICT infrastructure in schools. Learners share One of the recommendations from computers with many other students reducing the quality of teaching and ZIPAR was that the legal framework on in some cases computers were not available. ZIPAR recommended that the higher education should be reviewed Government should provide infrastructure and teaching equipment for ICT in to ensure that there are no overlaps all Zambians schools. The teaching of computer studies must be complimented and duplication in the functions of the with essential services such as reliable electricity. ZIPAR also observed that regulators. public schools in rural area that are off the electricity grid are immediately

22 translate into reduced MRT Maximising Revenue Collections from Mining income for the Government. Some of ZIPAR’s Activities in Zambia recommendations were that Government must allow for negotiation and give explanations for their reasoning, especially that it was also not very clear in which other countries the non-deductibility of MRT is implemented. In order to effectively address the issue of MRT rate setting, Dr. Bernard Tembo, ZIPAR Research Fellow (in grey jacket) making a presentation titled Maximising Revenue ZIPAR advised the importance of Collections from Mining Activities in Zambia to the Budget Committee on 31st January 2019. conducting a study and wide stakeholder consultations as IPAR made a presentation Government has also proposed allowed to deduct the cost of is being done with the Energy titled “Maximising changes to the export duty for the royalty from their taxable Cost of Service Study. This Revenue Collections from gemstones and manganese, gold income. This is contentious and Z study could be spearheaded Mining Activities in Zambia” and other precious metals from was one of the key reasons by a Committee made up of to the Budget Committee on 10% to 15%. why the Windfall tax was hotly different stakeholders, from the 31st January 2019. In the 2019 contested as well. In terms of the MRT for copper, Government, mining companies, national budget, the Government the Government has introduced While the proposed changes communities, researchers and proposed changes to the mining two additional tier rates (from in the MRT and general mining academia, the general public fiscal regime. These changes the current three tiers) and taxation regime imply increased and others. Such an approach have been necessitated because also increased the existing income for the Government, has proved effective in Australia. of a widely held view that the rates across the tiers by 1.5 they also translate into loss of By following a process as mining sector has not been percentage points. income for the mining sector. described above, a clear and contributing its fair share to Besides the changes in the Depending on the extent of predictable framework of how Government revenue. structure and rates of the MRT, these income losses, the first the MRT rates are determined Notable changes have been for all categories of minerals, instinct of the mines would would be designed and proposed to the structure the MRT will now be a non- be to reduce production, and development. Not only would of the Mineral Royalty Tax deductible levy for income tax this would negatively affecting this promote transparency in (MRT), particularly for Copper. purposes. Non deductibility of production outputs from the the determination process, but Apart from the changes in the levy implies that mining mining firms. Reduced output also result in buy-in from all the structure of MRT, the companies will now not be from the mines would in turn stakeholders. China-Zambia Relations Vis-a- Vis Trade and Investments

IPAR appeared before the of Chinese workers is not as Parliamentary Committee on high as widely claimed and ZNational Economy, Trade and therefore not a major threat to Labour Matters on 31st January Zambia’s working class. However, 2019 to present on “China-Zambia a particular challenge with Relations Vis-a- Vis Trade and understanding Chinese migration Investments”. is that developing an accurate ZIPAR’s presentation examined estimate of Chinese population in the subject of Chinese migration Zambia remains a challenge due ZIPAR Research Fellow, Mwanda Phiri presenting on China-Zambia to unreliable statistics and high into Zambia and Zambia’s debt Relations Vis-a- Vis Trade and Investments to the Parliamentary number of temporary migrants. contraction from China. Committee on National Economy, Trade and Labour Matters on 31st On migration, the main question Notwithstanding the seemingly January 2019. Looking on is Caesar Cheelo ZIPAR Senior Research Fellow. addressed was whether or not low number of Chinese migrants, whose economic viability is not well vetted and thus could present future the current migration of Chinese a major concern is that large repayment challenges. workers into Zambia was a serious Chinese companies seem to threat to the country’s working have a bias toward Chinese One of the challenges cited by ZIPAR was lack of transparency regarding class. One key revelation was that workers on account of language, debt contracted from China and the lack of regard for the state of the officially documented number cultural differences and limited governance or institutions which could lead to financial misappropriation, of Chinese migrants and workers skills by Zambian workers. The corruption, slippage and wastefulness. However, the think tank observed in Zambia constituted only a small preference for Chinese labour that China could potentially be a good creditor for Zambia as long as share of Zambia’s population and while justified in some instances the many risks associated with the debt can be managed with the right labour force, estimated at less marginalises Zambian workers governance systems, strong institutions and transparency. than 1%. and precludes them from holding higher positions which are more As a share of Zambia’s total rewarding. population and labour force in 2017, the stock of Chinese On Zambia’s debt contraction from migrants is very negligible at China, ZIPAR noted that China is 0.01% and 0.03% respectively. increasingly being perceived as a Zambia’s documented migrants predator and a threat to Zambia’s are largely from Congo DR, debt sustainability owing to the Zimbabwe, Malawi, Tanzania, unique and complex configuration Rwanda and India. of its debt. China’s debt is largely project-specific comprising of Members of the Parliamentary Committee on National Economy, Trade Thus one may be inclined large infrastructure projects such and Labour Matters listening to the presentation on China-Zambia to conclude that contrary to as airports, roads and buildings Relations Vis-a- Vis Trade and Investments public sentiments, the number

23 PHOTO FOCUS ZIPAR co-hosted a Goods and Services Tax (GST) Consultative Workshop in partnership with the Ministry of Commerce, Trade and Industry (MCTI) and the Ministry of Finance (MOF) targeted at the private sector. Delegates were drawn from member organisations of the Zambia Association of Manufacturers (ZAM) and Zambia Chamber of Commerce and Industry (ZACCI). The workshop aimed to get input into what goods and services should be exempt from paying the GST formerly known as Sales Tax.

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25 ZIPAR’s 2019 Research and Studies The study will analyse the institutional framework that was set Macro-economic Policy Unit up to implement the Youth Development Fund (YDF) and the role a) Using Indexes to Assess Elements of Financial Soundness & it played in shaping the Fund and the final outcomes of the pro- Investor Perception in Zambia gram. Given that the institutional framework was at the bedrock of the running of the YDF program, a detailed analysis of how it The study will comprise the undertaking of two exercises to worked would provide important insights for designing of future construct and assess a Financial Conditions Index (FCI) and youth empowerment programs. an Investor Perceptions Index (IPI) and set the groundwork or foundation of the construction of the Banking Services Cost and c) Factors influencing the success of the Youth Development Quality (BSCQ) Index, and a Commercial Banking Infrastructure Funded Enterprises in Zambia Density (CBID) Index. The study will be implemented in collabo- In 2014, the Government allocated a total of K16 million to the ration with the Bank of Zambia. Youth Development Fund (YDF). The objective of the fund was b) China-Zambia Relations Revisited to help reduce youth unemployment. This amount represents a 63% real growth of the fund within just 3 years of its existence. In 2016, ZIPAR undertook a study on China-Africa Trade Devel- Over the same period the number of youth beneficiaries nearly opments and Impacts: Case of Zambia-China Relations. As a doubled, from 265 to 519. Although the YDF has continued to follow-up, the 2019 study on China-Zambia relations will broadly increase in terms of both resources and number of beneficiaries, assess how Zambia is preparing itself to take advantage of op- it has not created enough jobs to meet the objective. An evalu- portunities and mitigate threats associated with the arise of Chi- ation of its impact shows that only 742 jobs were created over a nese interests in the country. It will assess Zambia and China’s period of 4 years and the YDF did not significantly improve the offensive and defensive economic, political and legal interests. It welfare of its beneficiaries. In view of the foregoing, the study will use political economy and institutional economics analysis, will analyse factors that influenced successful youth businesses focusing on the period 2010-2018. as well as failures in order to inform policy. c) Ever Changing Times: Zambia’s Growth Story, told through d) Explaining the high levels of Child Stunting among Wealthy an Extension of the Macro-economic Performance Assessment Households in Zambia Framework (MPAF) Child malnutrition is one of the critical challenges that Zambia Since 2015, Zambia has continued to experience persistent, and currently faces. The common measures of child malnutrition in many cases worsening, Macroeconomic and external sector include stunting, underweight, wasting and obesity. The highest conditions. The 2018 rapid assessment policy brief entitled rate in Zambia of the child malnutrition indicators is stunting ‘A Sobering Macro-economic Outlook’ revealed that Zambia’s and will be the focus of this study. The study will investigate the growth prospects will weaken and push the country back to low underlying causes of stunting especially among the wealthiest income status by 2022 should the economic conditions prevail- households and provide policy recommendations on how to ing between 2014 and 2017 persist. Understanding the long-term address the problem. drivers of Zambia’s growth is therefore imperative. As such, in 2019, the MPAF will incorporate three key sub-activities namely; e) Scoping Analysis of the Labour Market Information System in Building internal skills in DSGE modelling through in-house and Zambia external trainings; Continuing to build and stable the MPAF data- Labour markets thrive on strong and up to date information base and; Undertaking an econometric analysis of the long-term systems. A strong and up to date labour market information determinants of growth of Zambia, using authentic international system is useful not only for tracking job growth but also for time-series data for the period 1964-2018. mapping where jobs are and the sectors that are contributing to d) Evaluating the Economic Stabilization and Growth Programme job growth. Relevant information is key to giving an accurate de- (ESGP) 2017-2019 piction of the labour market as it benefits both the job seekers and the employers and ultimately leads to good decision mak- Following Zambia’s experience of an economic mini-crisis in ing. Unfortunately Zambia still lacks a strong and robust labour 2015, in September 2017, the authorities launched the ESGP market information system. The aim of this study is to under- 2017-2019 (or Zambia Plus). The ESGP was expected to be imple- take a scoping analysis of the existing labour market information mented over 2017-2018; although strictly speaking, the pro- system, its attributes, gaps, weaknesses and opportunities. gramme could only apply to 2018 and 2019 since it was launched The study will also provide the kind of information that can be towards the end of 2017. Zambia Plus was premised on the idea obtained from the current system and assess its appropriateness of “Restoring Fiscal Fitness for Sustained Inclusive Growth and and relevance. Development” and was meant to serve as the Medium Term Expenditure Framework (MTEF) for the period 2017-2019. Key Public Finance Unit questions, therefore, are: how well did Zambia do in terms of a) Towards 2022: Refinancing Zambia’s debt implementing the ESGP in 2018? What were the “game chang- ers” and “missed opportunities” in the implementation of the Zambia’s public debt continues to be topical. As the country gets Programme? The ESGP evaluation will involve systematic policy closer to repaying its first Eurobond principal in 2022, a redemp- content and programme analyses, to answer these questions. tion strategy is in the pipeline. Therefore, there is scope for ZIPAR to input into the Eurobond Redemption Strategy centred Human Development Unit on refinancing the debt that the Government is putting in place. a) Multi-dimensional Poverty Measurement What exactly should the strategy look like? What types of debts should be obtained to minimise the risks? Should the interest The project aims at exploring the 2015 LCMS to use it to measure rate be refinanced? If yes, what kind of compounding effects poverty and inequality using multi-dimensional approaches. would be faced? These are the some of the critical questions The work is significant as it provides a robust way of measuring that beg answers that ZIPAR will endeavour to provide. More- national development from a broader perspective other than over, it will be imperative to understand the legal and regulatory monetary. gaps amongst other, that led to Zambia current debt levels as b) Analysis of the Institutional Framework of the Youth Develop- well as to take a forward looking position by analysing what ment Fund in Zambia debt position Zambia would find itself in if it continued on the

26 current debt trajectory. women, Civil Society Organisations (CSOs) and Non-Governmen- tal Organisations (NGOs) among others and consequently, guide b) Mid-year Budget Reviews and analysis of the 2020 National Zambia’s position during the AfCFTA negotiations. The study Budget will focus on in-depth stakeholder engagement with relevant In order to improve and track fiscal policy formulation, manage- stakeholders, businesses and Government departments involved ment and the general fiscal health of the economy, ZIPAR com- in trade related aspects; including behind the border issues such menced quarterly budget performance reviews. In 2019, instead as competition, investment and intellectual property rights. of quarterly reviews, ZIPAR will undertake half-yearly reviews Transport and Infrastructure Development (second half 2018 - first quarter, first half-2019 –third quarter), Unit as well as the analysis of the 2020 Budget Speech in the fourth quarter of 2019. a) Situation Analysis of the Aviation Industry c) State of Fiscal Decentralisation – Part II: to be commissioned This study was requested by the Ministry of Transport and by UNICEF Communications (MTC) to ZIPAR to conduct a Situation Analysis of the Aviation Industry. This study is purposed to feed into the UNICEF wishes to support a follow up study on fiscal decen- formulation of the nation’s Aviation Strategy as proposed in the tralisation in 2019. This is based on the preliminary outcome of National Transport Policy for 2018, in which the Government the 2018 fiscal decentralisation study which identifies a major intends to turn Zambia into a regional hub of air transportation weakness on the part of Central Government in implementing by 2026. the decentralisation programme. b) Feasibility Study and Proposed Solutions for Decongestion of d) MicroZAMOD for 2019: to be commissioned by UNUWIDER Traffic in Lusaka City ZIPAR will update the 2017 MicroZAMOD model to 2019. Addi- The levels of traffic congestion in Lusaka city have become a tionally, stakeholder engagements including trainings will be major concern not only for the Government but all road users. undertaken. Not only does traffic congestion increase travel time and hence Trade and Investment Unit reduces time spent working, it also increases the amount of fuel used by vehicles as well as the wear and tear on vehicles and a) Commercial Banks’ Performance: A financial ratio and Compe- roads. Responding to these concerns, the Government launched tition analysis the Lusaka Decongestion Project (LDP) which aims to decongest For business firms that are envisaged to drive economic growth the city by building and expanding roads, fly-over bridges and and employment creation, access to financial services, particu- overpasses. However, reducing traffic congestion requires much larly loans, is indispensable to their growth. Given the seemingly more than just increasing road capacity. Thus Government has unjustified prices of financial products and services, this study continued to search for additional solutions to traffic congestion seeks to analyse the degree of market competition in Zambia’s and has awarded a contract to the joint venture between ROM banking sector and infer how the market concentration of diver- Transportation Engineering Limited and ZIPAR to undertake a fea- sification potentially impacts consumer welfare. The competition sibility study of possible solutions for reducing traffic congestion analysis will provide a starting point towards understanding in Lusaka City. what could be some of the underlying factors that contribute Emerging Themes Unit towards the high prices of products and services charged by commercial banks. Other important factors that will be consid- (a) Street Vending and public health ered will include financial performance of commercial banks in Public health has constituted a strong concern in Zambia’s ef- order to understand whether or not the profit margins generated forts to eliminate street vending. For example, street vending of by commercial banks are justified. fruit, vegetables and other foodstuffs is identified as a risk factor b) A Diagnostic Analysis of Zambia’s Industrial Revolution for the transmission of diseases such as cholera. But street vending continues to thrive and is ubiquitous in Zambia. The This study has been motivated by the need to enhance the study is critical given the continued reliance of many urbanites quality of industrial policies following the EQuIP methodological on street vending. framework developed by the United Nations Industrial Devel- opment Organization (UNIDO), and the German Development (b) Characterisation of households in Zambia: water supply and Cooperation (GDC) through GIZ. The EQuIP framework aims to sanitary conditions support the development of effective industrial policies in devel- Considering that one of the potential impacts of climate change oping countries for inclusive and sustainable industrial develop- (in Zambia) is reduction in water supply, this study will seek to ment. Industrialisation remains the widely recognised stepping understand the current water supply and sanitary conditions in stone for economic growth that comes with strong employment Zambia’s residential sector. Thus, creating a baseline from which creation, poverty reduction and economic development multi- to analyse how the economy would be impacted by climate plier effects. However, to industrialise, Zambia needs a strategic change via its impact on labour (in the residential sector). This and effective industrial strategy that can drive this process. The study will analyse primary statistics from CSO’s Living Condition first stepping stone to designing such a strategy requires an Monitoring Survey (LCMS) datasets. industrial diagnostics that provides critical information on the characteristics of Zambia’s industrial landscape. (c) Development and implementation of economic models c) Africa Continental Free Trade Area (AfCFTA) Rapid Impact The Unit will spearhead development of economic models, a Assessment Phase II – Stakeholder Engagement multi-unit and multi-year effort. Of immediate importance is the completion of the SAM and Employment Projection model, which African leaders launched the African Continental Free Trade Area feeds into an output of the Human Development Unit. The other (AfCFTA) on 21st March 2018 in Kigali, Rwanda. Zambia recently models of interest are the Input-Output, CGE and DSGE models. It signed the AfCFTA. The aim of the AfCFTA is to create a single is envisaged that the CGE will be ready for use for the 2020 Bud- continental market for goods and services with free movement get analysis. All these models will be developed using a platform of businesses and investments which will culminate in the (software) that is readily accessible, this will make it easier to establishment of the Continental Free Trade and the African Cus- use and maintain them. toms Union. The objective of Phase II of the AfCFTA impact as- sessment is to facilitate public dialogue on the expectations and envisaged opinions on the AfCFTA from industry players, youth,

27 Zambia Institute for Policy Analysis and Research (ZIPAR) P.O. Box 50782, Lusaka, Zambia CSO Annex Building Corner of John Mbita and Nationalist Road, Lusaka

Tel: +260 211 252559 Fax: +260 211 252566

Email: [email protected] Website: www.zipar.org.zm

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“Working towards the formulation of sound public policies”.

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