PRESS STATEMENT
NEED FOR A "DEBT MECHANISM"
One of the key recommendations from our research on the debt situation in Zambia is that government must establish a debt mechanism to assure that any resources realised from debt cancellation will be effectively channelled towards poverty eradication.
This strong and clear call comes at an opportune time such as now when the public is dismayed by reports of mismanagement of public resources by some named government officials. A number of recent Auditor General's reports point sharply to this sad fact of mismanagement.
In December of last year, Zambia qualified for debt relief under the Highly Indebted Poor Countries (HIPC) Initiative. This process may result in some cash savings. In his national Budget Address for 2001, the Minister of Finance and Economic Development, Doctor Katele Kalumba, indicated that debt relief savings would be used for poverty reduction purposes. But the fact is that there still is no clearly stipulated mechanism that government will use to track this particular arrangement. The Zambian public does not know how much debt reduction has actually been given nor has much cash has been realised to date. Furthermore, we do not know how this unknown cash outlay will be spent, according to what priorities, and how these priorities have been determined.
To be honest, we fear that our government prefers to be more accountable to creditor nations than it is to its own people. For example, at the request of the International Financial Institutions, government was compelled to commission an audit of cobalt sales. But we wonder if government would have been willing to implement this important and necessary investigation if this call only came from us, ordinary Zambian citizens?
What we are asking for, therefore, is that accountability to the citizens of Zambia must come before accountability to foreign donors or creditors.
We wish to state here that our call as Jubilee-Zambia for total debt cancellation is equally a call for prudent economic management of public resources. Such prudent management must touch upon loan procedures, debt relief arrangements, tax revenue administration, and so on. However there can not be prudent resource management if there are no proper and accountable channels for allocating resources. Zambia is a democratic nation and thus central to this political dispensation is broad participation of people in decision-making, a fact that requires full and accurate information dissemination.
On this basis, we of Jubilee-Zambia have urged government to adopt a participatory and transparent mechanism that assures any resources freed up through debt relief go toward poverty reduction. Toward this end, we have for over a year been proposing the adoption of a “Debt Mechanism.” In this proposal, we suggest that:
Government should set up a "Poverty Social Fund" to be recipient of all debt relief savings and any donor funding specifically earmarked for poverty eradication. This Fund should not come as a substitute to already existing government allocations to the social sectors but should be complementary. That is, it will provide additional funds for poverty reduction activities.
Government should appoint a broad-based steering committee to oversee this Fund. This managing committee will include representatives from government ministries, Parliament and civil society, while donors will be represented as observers. The purpose of the committee is to ensure that funds from debt relief will be directly, openly and accountably spent on poverty eradication programmes.
From discussion over the past several months, we already know that not everyone agrees with our proposal for this Debt Mechanism, either within government or in circles of the international creditors. Indeed, we acknowledge that there are many other administrative issues that need to be refined if the proposal is to become a reality and to be effectively implemented. But we strongly feel that our document is a good basis for discussions on involvement of people in very important government processes that will safeguard the nation against rampant mismanagement of government resources and also prioritise poverty as the main focus for government programmes.
There are some who say that such an approach is unrealistic and unworkable. But we call their attention to the fact that a similar mechanism has been set up and working very successfully in Uganda for several years. If it can occur in Uganda, why not in Zambia?
There are others who argue that Zambia does not need such an approach because the ordinary channels now in place are sufficient. But certainly a simple reading of recent reports from the Auditor General discredits relying only on the status quo!
In conclusion, therefore, Jubilee-Zambia calls upon government to set up a “Debt Mechanism.” Specifically, we ask the Minister of Finance and Economic Development and also the international community of creditors to tell us their opinion of this proposal and offer alternatives to it if they do not approve of it.
Let the public discussion move us toward empowering people by involving them in debates and decisions about resource allocation that effectively addresses the challenge of poverty eradication.
I thank you!
Chrispin
Mphuka
Co-ordinator, Jubilee-Zambia
Hosted by JCTR
P.O. Box 37774 10101 Lusaka