The Economic scene with Dr Richard Mbewe –

Felix Mutati – our Finance Minister presented the national budget for 2018 on Friday, September 29 2017.
There is a saying in the financial circles that the national budget is a set of thousands of wishes that have to be satisfied by meager resources from the very people who are sending those wishes.
Due to the size of my column, I will limit myself to generalities as expressed in the budget.
Firstly, the budget is not focused and wants to address many issues because how can one in a year achieve five major goals: economic diversification, job creation, poverty reduction, vulnerability reduction and reducing development inequalities?
This is on a K71 billion or approximately just $6.9 billion?
Secondly, the Government has made a good move of making sure that people are paying taxes and efforts are being made to increase the tax base.
But then, the total level of taxation is generally on the increase as some products have had their tax levels increased. One would argue that that was done to protect the local industry.
But the local entities do not have the capacity to exploit this opportunity.
On the hand, if we are talking about cement, this is dominated by foreign multinationals!
Therefore, the tax system has gone into further complications without reducing the tax burden on the tax payer.
Thirdly, Government wants to finance this budget based on local resources, borrowing and grants from local resources.
This is a continuation of the unhealthy previous trend whereby Government expenditures was not financed by locally generated income (through taxation) but through local borrowing.
This means that the Government will continue competing with the entrepreneur and the household consumer for the meager resources in the banking system.
In light of the above, we welcome the information that based on Intermarket Bank, Development Bank of Zambia and other allied institutions;Zambia is in the process of setting up an indigenous local bank.
This has been long overdue.
It is time that we have a bank on the market that is geared to catering for the needs of the indigenous Zambians.
One of the proposals in the budget is to increase customs duty on imported electric geysers and stoves from 25 percent to 40 percent in order to save hydroelectricity.
We find this to be tantamount to hypocrisy and counterproductive.
Zambia’s electricity problems can only be solved by increasing power generation, both hydro and solar.
Secondly, why was it decided to increase the customs duty on these products, rather than reducing the duty of solar products like pumps, geysers, stoves, etc.?
To summarise it all, the budget contained the wishes and dreams of people and they were told that we are moving in the right track to prosperity.
How that prosperity is going to be achieved is the issue. Minister Mutati showed as some of the ways.
We must find other effective ways to support him in this task.