Quarterly Bulletin

The Jubilee campaign, which the Council of Churches in Zambia (CCZ) together with the Evangelical Fellowship of Zambia (EFZ) and the Zambia Episcopal Conference (ZEC) launched in 1998, has consistently called for the unconditional cancellation of debts owed by Zambia.

This was on the basis of the negative social-economic implications of high debt service on the Zambian economy and the development progress. We recall how our national priorities were unjustifiably skewed towards servicing debt rather than the people of Zambia. This was ethically wrong and it has challenged our consciences   that in a fast globalising world, the sweat of the poor in many third world countries should be the sweet for the rich countries.

For example, between     1990 and 2000, Zambia spent close to US$4.5 billion in debt service. This is three times more than what was spent on education, health and social security combined.

The unfairness of this international political and economic situation was made evident in the less human conditions that our people have continued to live in. Prominent leaders such as Julius Kambarange Mwalimu Nyerere even questioned that “should we starve our children in order to pay the debt?”

High Debt: A source of injustice

More and more, we have come to understand the injustices caused by a high and unsustainable debt. Most of our people have faced difficulties to access basic needs so as to live acceptable lives. The poor who are the majority in Zambia (numbering 6.8 million) continue to be with us.  Our social justice concerns continue to be driven by the need for a just society where national resources are equitably distributed among us.

As a united family, we rejoiced at the attainment of the HIPC completion point in April 2005. Most of us were happy to have finally completed a programme which had promised a robust exit from the debt problem. Both our leaders and the local populace were so relieved that finally the “belt” that had yoked us to imbalanced priorities characterised by huge debt service, high dependency on the international community,   reduced ownership of the development process and less concentration on national priorities was finally loosened.

Of course, we understand that this did not mean that there were more resources trickling into the Zambian economy. But we are aware that this provided space for reprioritisation of the national development agenda, more contributions into the social and economic sectors and greater economic independence especially from International Financial Institutions.

Two years after the attainment of HIPC, significant benefits of such a programme cannot yet be seen in people’s lives. Roads, schools and hospitals earmarked to benefit are still in dilapidated state or are already deteriorating because poor workmanship. Gross mismanagement of national resources or sheer embezzlement has characterised the delivery of services. For example, the 2005 Auditor General’s report released early this year, estimates that over 3 billion kwacha was not used according to HIPC guidelines by the Public Welfare Assistance Scheme of the Ministry of Community Development.

Challenges

We are aware that debt cancellation has its share of benefits. Considerable progress has been made in determining the direction for Zambia’s development   through the    Fifth National Development Plan and the Vision 2030. The last two budgets have also shown modest increases in social sector spending from 30 percent in 2006 to 36 percent in 2007. Zambia’s debt has been significantly reduced to US$1.5 billion at the end of 2006 from US$7.1 billion at the end of 2004.

However, debt write-offs are evidently not the ultimate solution for Zambia and this was not the ultimate goal for the Jubilee-Zambia campaign. We are aware that the environment that led to high unsustainable debt has not been re-looked at effectively. To date, the Zambian government can borrow up to K20 trillion (approximately US$5 billion) and K5 trillion (approx US$1 billion) annually through Statutory Instrument 53 of Parliament of 1998. The countries’ economic and human development outlook in 1998 was certainly not what it is today, yet Parliament has not revisited this statutory instrument.

The country’s debt portfolio is still in great peril as the decision to reach the K20 trillion ceiling authorised by the 1998 decree can solely and constitutionally, be made by the Minister of Finance. The authority to discuss the conditions and terms of each loan are the preserve of the Minister of Finance.

Our parliamentarians continue to be marginalised in the process; their duty has been reduced to only discussing in part the macro-economic framework in which loans are governed rather than the governance of the loans themselves. Even with significant reduction of Zambia’s debt, the practice of borrowing without parliamentary oversight as well as without a proper basic needs assessment is highly prevalent.

We are also aware that the current desire by the Ministry of Finance to continue borrowing up to the K20 trillion agreed by Parliament in 1998 is not coherent with the Fifth National Development Plan (FNDP) which commits government to limiting external loans to on “average 1.0 per cent of GDP, or US$160 million per annum. This is inclusive of already existing loans to be disbursed over the plan period”. The FNDP further indicates that “new borrowing is expected to be in the region of US$50 to US$60 million per annum, mostly from the World Bank and Africa Development Bank.”

Zambia’s debt outlook is therefore fearful. For example, Zambia’s debt was said to be only US$502 million in July 2006; six months later in December 2006, it was at US$1.5 billion (2006 National Economic Report). While the Minister of Finance on a Jubilee-Zambia television programme in October 2007 said Zambia had not incurred any loans in 2007, you and I are aware that some loans from China have been repeatedly talked about and some were even signed this year. This gives us worries about the integrity of our data on debt and we think that our debt portfolio is at stake.

Zambia’s domestic debt has been steadily rising from K5,246  billion in 2004 to K8,821 billion at the end of 2006. This indicates a 68 per cent change in a space of two years during which relief on external debt has been 77 percent from US$7.1 billion in 2004 to US$1.5 billion at the end of 2006. In our view, this shows that there has been a shift of borrowing from concentration on the external market to borrowing heavily from the domestic market.

Call for Support

We are happy that the Jubilee movement in Zambia has not stopped to call for an urgent re-look at the governance of debt in Zambia. The current imperative is to ensure that there is enough appropriate legislation to govern debt. This clearly calls for legal, institutional and policy reforms. Adequate and appropriate governance structures require a strong and inclusive civil participation in both the contraction and management of loans.

We are happy that Jubilee-Zambia has designed two instruments which can offer comprehensive solutions to these challenges. In this gathering this evening, you will have a chance to contribute to the discussion of Comprehensive Debt Management Bill and the Debt Resources Monitoring Manual (DRMM) and to plan the steps to implement these two very important programmes.

I invite you to be part of the process and engage in this debate as well as in strengthening      the    calls     for prudent debt management in Zambia so that we can avoid a possible debt trap.

I end by repeating what the Jubilee movement has always emphasised: the challenge of debt is not primarily economic and political, but primarily moral and ethical. It is a challenge to the social justice fabric of a viable community. We are called to take an active and effective role in the Jubilee movement, now and in the future.

Reverend Suzanne Matale
Council of Churches in Zambia
Lusaka