Lusaka, August 02, 2019
Given that the Constitution (Amendment) Bill is to be tabled before parliament, CUTS held a media briefing on Friday 2 August on ‘The Effect of the Constitution of Zambia (Amendment) Bill No. 10 of 2019 on Public Financial Management and Debt Management’.
One of the major components of the proposed amendment is a revision to Zambia’s systems of financial accountability. With current debt statistics at USD10.23 billion external debt and K60.3 billion, CUTS sought to understand the implications of the proposed revisions on the country’s debt contraction and public financial management. Following an analysis, the provisions that would impact Zambia’s debt management are as follows: Section 13 of the Constitution of Zambia (Amendment) Bill seeks to delete paragraphs (d) and (e) of Article 63 (2) the Constitution of Zambia Act No. 2 of 2016 which seeks remove National Assembly’s ability to approve public debt before it is contracted and approved; and international agreements and treaties before these are acceded to or ratified is removed. This proposed provision weakens the system of checks and balances and restricts transparency in the contraction of debt. At present, in addition to providing oversight, the process of submitting agreements to National Assembly allows public scrutiny through National Assembly’s consultative meetings with stakeholders. The proposed amendments would therefore mean agreements are secret and confidential and therefore not available for public scrutiny.
Section 26 of the Constitution (Amendment) Bill proposes to amend Article 92 (b) by making the President responsible for negotiating, ratifying, acceding or withdrawing from international agreements. This means that National Assembly will have no say or oversight over agreements that would potentially bind the Zambian people to debt. This provision, by removing the requirement of National Assembly approval, implies that National Assembly will have no oversight over debt contraction particularly foreign debt.
Section 36 of the Constitution (Amendment) Bill seeks to provide for the revising the system of debt contracting by giving Cabinet the authority to approve loans contracted by the State as well as guarantees on loans contracted by state institutions. The quorum for a Cabinet decision is the President plus one minister or Vice-President. This means that in effect the proposed amendments allow the President with one other member of Cabinet to approve loans or guarantees contracted by the State or State Institutions.
The proposed amendments make the approval of public debt a function of Cabinet and not only breach the principle of separation of powers but also removes any transparency and public accountability over the contraction of public loans and debt. When considered with the other proposed amendments relating finance management, the amendments mean that the Executive will be free to borrow and use public finance in a manner that is not transparent and will not be held accountable because of the weakened systems and public accountability institutions.
Further to the above analysis, CUTS undertook a nationally representative survey of Zambian adults between the 5th and the 28th of July 2019 to get the general public’s perceptions on loan transparency and debt oversight. A sample size of 2043 people were interviewed who were representative of location, age, gender, education, urban and rural areas in Zambia. In all ten provinces, 63% of the respondents were of the view that the government is not transparent about details of its borrowing as opposed to 24% who thought the government was transparent.
The survey also sought to find out whether the lack of transparency was a concern to citizens as the government is not required to reveal details of its borrowing. 69% of respondents were concerned that there was lack of transparency about details of the government’s borrowing whereas 28% were not concerned.
The survey further went on to find out from Zambians whether parliament should approve of all loans that he government contracts and of the total, 58% of the respondents indicated that there is indeed need for parliament to
approve all loans.
According to these findings, the majority of Zambians feel that the Government is not transparent with its borrowing, cost of repayments and what it plans to do with the borrowed funds. Additionally, the majority of Zambians are of the view that there should be Nationally Assembly oversight of debt contraction. The proposed amendments to the constitution regarding removing National Assembly oversight of debt contraction are therefore contrary to views of the citizens on the ground.
The need for strong systems to monitor debt contraction and the need for parliamentary oversight in Zambia is reflected in reports from both the Government as well as international organizations such as the World Bank and the International Monetary Fund. In the 2017 National Debt Strategy, the Ministry of Finance recommended that Parliament’s oversight over debt contraction be strengthened by enhancing the legal and institutional framework. Proceeding with these proposed amendments removes public accountability and transparency and could have negative implications on our country’s already growing debt burden.
By Chenai Mukumba, Centre Coordinator and Kangwa Muyunda, Programme Officer
For further information please contact: The Centre Coordinator, Consumer Unity and Trust Society (CUTS), at Plot 406 Kudu Road, Kabulonga, Lusaka (firstname.lastname@example.org or 097 8055 293).
The Consumer Unity and Trust Society (CUTS) International, Lusaka was established in 2000 to function as a centre for action (policy) research, advocacy and networking on issues of trade and development, competition policy, investment regulation and consumer protection. The mission of the centre is to function as a resource, co-ordination, as well as networking centre, to promote South-South cooperation on trade and development by involving state and non-state actors (NSAs).
CUTS implements four different strategies in its work: Research, Policy advocacy, Capacity-building and Networking.