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K53.1bn 2016 budget unveiled



Finance Minister Alexander Chikwanda has presented a 53.1 billion Kwacha budget for 2016.


Mr ChikwandA says the amount which is 25.8 percent of the Gross Domestic Product-GDP will be financed by domestic revenue amount to 42.1 billion Kwacha and grants from co-operating partners to the tune of 5-hundred 50 million Kwacha.


He says the balance will be financed by 6 billion Kwacha external financing and domestic borrowing amounting to 1.75 billion Kwacha.


The economic targets for 2016 include economic growth rate of five percent, increase domestic revenue, limit domestic borrowing to 1.2 and reduce the budget deficit to 3.8 percent from six percent.


The government also seeks to maintain single digit inflation with an end year target rate of no more than 7.7 percent and maintain international reserves at no less than four months of import cover.


Some of the major allocations for the year 2016 include 727.9 million Kwacha for the 2016 tripartite elections while Farmers Input support programme for 2016 has been allocated one billion Kwacha.


The allocation for road infrastructure stands at 6.6 billion Kwacha, the ministry of education has been allocated 9.1 billion Kwacha and the Ministry of health has been allocated 4.4 billion Kwacha.


In the energy sector, the government has increased tax allowances aimed to encouraging the development of sustainable and alternative sources of energy .


Mr Chikwanda says government will increase the capital allowance for equipment used in the generation of electricity to 50 percent from 25 percent.


The period for carrying forward losses for businesses engaged in the generation of electricity using other sources of energy such as wind and solar has been increased.


The period for claiming Value Added Tax as an intending trader for electricity has also been increased to four from two years.


The government has also removed the five percent customs duty on pitch coke a material used in solar power panels while the 15 percent customs duty on petroleum coke has also been removed.


The measures are aimed at addressing the power deficit which has resulted in load shedding.


The Finance Minister said government is alive to the negative effects of the electricity deficit adding that it’s not only an inconvenience but an hindrance to production and incomes.


He said achieving cost reflective electricity tariffs will encourage speedy completion power projects which will give the country about 730 megawatts of power.

And the Citizen Economic Empowerment Commission -CEEC- is impressed with the 2016 national budget presented by the Finance Minister saying it provides a clear guide line to industrialization.


CEEC Director General Likando Mukumbuta says the incentives given to the manufacturing industry are critical for economic growth and job creation.


Mr Mukumbuta says the allocation to the commission will enhance its empowerment programs.


And Pensions and Insurance Authority Registrar Martin Libinga has welcomed the removal of Value Added Tax on Insurance which has been replaced with a levy at 3 percent of insurance premiums.


Mr. Libinga says this will see more people taking up insurance policies in the country.


Meanwhile Lusaka Business man Younus Essa says the incentives given to Zambian citizens to own land at a cheaper price compared to foreigners is a welcome move.


And Japanese Ambassador to Zambia Kiyoshi Koinuma says an effective budget is key in view of current economic challenges that Zambia is going through.


And Zambia Revenue Authority -ZRA- Commissioner General Berlin Msiska says the authority will swiftly move in to implement revenue measures and tax adjustments.

BELOW IS THE BUDGET SPEECH BY:Finance Minister Alexander Chikwanda

1. Mr. Speaker, I beg to move that
the House do now resolve into Committee of
Supply on the Estimates of Revenue and
Expenditure for the year 1st January, 2016 to
31st December, 2016, presented to the
National Assembly in October, 2015.
2. Sir, I am the bearer of a message
from His Excellency the President,
recommending favourable consideration of
the motion that I now lay on the Table.
3. Mr. Speaker, shortly after I
presented the 2015 Budget to this august
House, the nation lost the Republican
President, His Excellency, Mr. Michael
Chilufya Sata on 28th October, 2014. He was
a leader who tenaciously fought for the
wellbeing of all Zambians and will forever
hold a place of honour and distinction in the
hearts of our people. We will do well to
perpetuate his vision of making Zambia a
better place for all.
4. Sir, the loss of our President was a
devastating blow to us all, but, as a nation,
we showed our political maturity in the way
we responded to our loss. On 20th January,
2015 we peacefully elected a new President,
His Excellency, Mr. Edgar Chagwa Lungu,
who has fittingly taken over the mantle of
leadership and who, like his predecessor, is
also driven by a passionate commitment to
uplift the lives of all Zambians.
5. Mr. Speaker, the year 2015 has
been economically challenging. The
slowdown in the Eurozone and in the
Chinese economy has lowered the demand
for, and the price of copper. With copper
being the main source of our foreign
exchange earnings, the fall in price has put
pressure on the value of the Kwacha and
lowered our tax receipts from the mining
sector. Further, climate change has become a
reality and is affecting our day-to-day lives.
It affected the timing, distribution and
amounts of rainfall last season that adversely
affected our agricultural sector and
weakened our capacity to generate sufficient
electric power.
6. Sir, with the development of a
strong El Nino, a weather pattern which
generally results in lower rains in Southern
Africa, and continued economic
restructuring in China, these challenges are
expected to remain with us as we enter 2016.
Indeed, new challenges are anticipated, such
as higher interest rates on dollar
denominated loans as the United States
Federal Reserve Bank System ends its cheap
money programme known as quantitative
7. Mr. Speaker, I want to assure the
nation, through this august House, that the
Patriotic Front Government is fully
committed and resolved to meet these
challenges. Over the last four years, we have
built a firm foundation to sustain broad
based and inclusive growth, diversify and
deepen the resilience of our economy and
further entrench social justice so that all
Zambians, of every age and gender, and
from all parts of Zambia, benefit from the
nation’s development path.
8. Sir, Government remains grateful
to all citizens, institutions and organisations
who patriotically responded to the call to
submit proposals for the 2016 Budget. These
valuable contributions made it possible to
formulate the 2016 Budget in a manner that
balances the requirement to consolidate our
fiscal position with the need to sustain
economic progress and raise the living
standards of all Zambians.
9. Mr. Speaker, it is evident that the
expansionary fiscal stance of the past four
years will need to be moderated in the
current global economic environment. It is
in this context that the theme of the 2016
Budget is “Fiscal Consolidation to
Safeguard Our Past Achievements and
Secure a Prosperous Future for All”.
10. Sir, my address this afternoon is
in four parts. Part I gives an overview of the
global developments and their impact on the
domestic economy. Part II outlines
Government’s response to these
developments and sets out the
macroeconomic policies, targets, sectoral
objectives and strategies for 2016, aimed at
sustaining socio-economic progress while
ensuring that Government follows a fiscally
prudent path. The details of the 2016 Budget
are presented in Part III and finally, I
conclude my address in Part IV.
11. Mr. Speaker, I present the Budget
at a time when global economic growth is
sluggish, with output growing at an
estimated 3.1 percent in 2015 compared to
3.4 percent in 2014. In the United States of
America, the economy is expected to grow
by 2.6 percent this year, while the outlook in
the Eurozone remains weak at 1.5 percent.
In emerging market and developing
economies, growth of 4.0 percent is
expected. China’s growth is expected to slow
to around 6.8 percent this year, presenting a
major impediment to growth prospects for
commodity dependent economies including
Zambia, due to a significant decline in
commodity prices.
12. Sir, commodity prices in 2015
have registered the largest decline since the
economic and financial crisis of 2008.
Copper prices are estimated to have fallen
from an average of US $6,829 per metric
tonne in 2014 to US $5,160 per metric tonne
in 2015. This outturn poses serious
challenges to our growth prospects, with
some mining houses reconsidering the scale
of their operations and investments in light
of these adverse developments.
13. Mr. Speaker, given the adverse
global economic environment, Zambia’s
growth in 2015 is projected to be much
lower than the 7.0 percent that I announced
to this august House in October 2014. I now
project growth to be 4.6 percent. This is due
to weaker global economic activity,
especially in China and the Eurozone, which
has dampened demand for commodities and
lowered mining sector output. The poor
rains last season also led to an unfavourable
performance of the agriculture sector.
Further, electricity supply constraints in the
second half of this year, will affect output
across all sectors of the economy.
14. Sir, budget implementation in
2015 continues to face a number of
challenges. These include the fall in copper
prices, the depreciation of the Kwacha,
higher interest payments and the need to
clear arrears for fuel and crop purchases. It
is on account of these challenges that the
2015 Budget deficit is expected to widen to
6.9 percent of GDP from the projected 4.6
percent of GDP.
15. Mr. Speaker, the annual inflation
rate declined to 7.7 percent in September,
2015 from 7.9 percent in December, 2014.
The decline in inflation was mainly
attributed to non-food inflation, which fell to
7.3 percent in September, 2015 from 8.4
percent in December, 2014 largely on
account of a reduction in fuel pump prices
effected in January, 2015. However, food
inflation rose to 8.1 percent from 7.4 percent
over the same period.
16. Sir, tight monetary policy also
eased inflationary pressures in 2015.
However, the recent sharp depreciation in
the exchange rate and the electricity deficit
are exerting inflationary pressures that have
potential to raise inflation further above the
end-year target of 7.0 percent over the
remainder of the year. With continued
implementation of appropriate policies, I
remain confident that inflation will be
contained in single digits by end-2015.
17. Mr. Speaker, the foreign exchange
market has experienced considerable
pressure in 2015 with the Kwacha
depreciating against the major trading
currencies due to international and domestic
factors. International factors included the
general strengthening of the US dollar, low
copper prices and a noticeable reduction in
foreign portfolio investment inflows.
18. Sir, on the domestic front,
relatively low net supply of foreign
exchange on the market, uncertainty over the
performance of the mining sector and the
widening fiscal deficit contributed to the
weakening of the Kwacha. Further, the
reduction in electricity supply, has had a
negative impact on production and exports
which has also contributed to the adverse
performance of the Kwacha.
19. Mr. Speaker, to moderate the
impact of these factors the Bank of Zambia
sold foreign exchange to the market and
tightened monetary policy through an
upward adjustment in the statutory reserve
ratio and use of open market operations. In
the long term, stabilising the exchange rate
will require continued diversification of the
economy, building up of foreign exchange
reserves and commitment to fiscal
consolidation and macro-economic stability.
20. Sir, following the recovery in the
US economy, there are strong indications
that the Federal Reserve Bank may raise
interest rates. This has led to an outflow of
capital funds from the emerging market and
developing economies. Additionally, the fall
in copper prices has reduced Zambia’s
foreign exchange earnings to about US $3.6
billion in the first half of 2015 from US $5.0
billion over the same period in 2014.
21. Mr. Speaker, following a sharp
deterioration in the trade balance over the
first half of the year, the current account
deficit widened to US $386 million from US
$179 million recorded during the same
period in 2014. Merchandise export
earnings, at US $3.6 billion, were 28 percent
lower than the US $5 billion recorded during
the first half of 2014. This was as a result of
a decline in earnings from copper, cobalt
and gold, due to lower commodity prices
and demand on the international market.
22. Sir, there was also a reduction in
non-traditional exports to US $0.9 billion in
the first half of 2015 from US $1.1 billion
over the same period in 2014. This reduction
was largely on account of a reduction in
demand for the major export commodities
such as gemstones, electrical cables, cement,
sulphuric acid, and fresh fruits and
23. Mr. Speaker, the value of
imported goods at US $3.4 billion was 18.3
percent lower than the value registered
during the first half of 2014. This was driven
by a relatively weaker Kwacha and lower
demand for capital goods from the mining
24. Sir, as at end-September 2015,
Zambia’s gross international reserves stood
at US $3.6 billion compared to US $3.1
billion recorded at end-December 2014,
representing 4.4 months of import cover.
This improvement was partly on account of
inflows from the recently secured sovereign
25. Mr. Speaker, trading activity at
the Lusaka Stock Exchange declined in 2015
mainly due to the strengthening of the US
economy which has attracted portfolio
investments out of equity in developing and
emerging markets. Market capitalisation
declined by 2.7 percent as at end-September
2015 to K64.6 billion from K66.5 billion as
at end-December, 2014. Similarly, the All-
Share index declined by 5.9 percent to
5,800.2 from 6,160.7 as at end-December,
2014 due to a general fall in share prices.
26. Sir, Government remains
committed to the growth of the local bourse
to facilitate long term financing for private
sector investment. To attain this, the
Alternative Investment Market was launched
in April 2015 to cater for emerging
corporates that are yet to meet the listing
requirements on the main window.
27. Mr. Speaker, in order to increase
opportunities for Zambian citizens to
participate in economic development and to
comply with listing requirements on the
Lusaka Stock Exchange, Government
commenced the process of reducing its
shareholding in ZCCM-IH Plc. In this
regard, 15.8 million shares, representing
36.0 percent of the available shares have
since been sold to the National Pension
Scheme Authority. The process of
offloading the balance of the shares is ongoing.
28. Sir, credit to the private sector
increased by 20.9 percent to K27.2 billion as
at end-August 2015 from K22.5 billion as at
end-December, 2014. The bulk of the loans
were personal loans followed by credit
accessed by the agriculture, manufacturing
and wholesale and retail sectors. The growth
in domestic credit, however, was constrained
by tight monetary conditions necessitated by
the need to contain inflation. Access to
credit was also inhibited by the high interest
rates, which, though stable at around 20.5
percent, continue to be prohibitive.
29. Mr. Speaker, the performance of
the financial sector during the first nine
months of 2015 was satisfactory. Total
assets and earnings increased, the capital
adequacy position was strong while the
overall liquidity position remained fair. In
line with Government policy of financial
inclusion and improving financial
infrastructure, there was a significant
increase in the number of branch and agency
locations, Automated Teller Machines and
Points of Sale terminals in the country.
Consequently, the number of adult
Zambians with access to financial services
increased to 59 percent in 2015 from 36
percent in 2009.
30. Sir, the stock of Government’s
external debt as at end-August 2015 was
US $6.3 billion. This represents an increase
of 31.0 percent from US $4.8 billion as at
end-December 2014. The increase in the
external debt stock was mainly on
account of the US $1.25 billion Eurobond
that was issued in July, 2015 as part of
the financing required for the 2015 Budget.
31. Mr. Speaker, some of the projects
that have benefited from the proceeds of the
bond raised in 2015 include infrastructure
development in the transport, health,
education and agriculture sectors. Other
investments are in water supply and
sanitation infrastructure, the development of
infrastructure in newly created districts,
recapitalisation of state-owned enterprises
and the provision of support to small and
medium scale enterprises.
32. Sir, the total external debt service
for the first nine months of 2015 amounted
to US $225.4 million.
33. Mr. Speaker, preliminary data
indicates that Zambia’s domestic debt as at
end-September 2015 stood at K26.5 billion
compared to K23.5 billion as at end-
December 2014. This was mainly on
account of an increase in the stock of
Government securities.
34. Mr. Speaker, for over a decade the
Zambian economy has registered continuous
buoyant growth. Despite this feat,
unemployment and poverty have remained
unacceptably high and the participation of
Zambians in the economy has remained low.
Nonetheless, we remain determined to
continue on our positive growth trajectory
given our resource endowment coupled with
the resilient and entrepreneurial spirit of our
people. In this regard, the focus in 2016 will
be to implement programmes that will
enable Zambians to participate in various
economic activities.
35. Mr. Speaker, His Excellency the
President in his address to this august House
provided a vision of where this country must
be in the next 50 years. He implored us to
embrace a transformative and smart
approach in handling national matters in
order to deliver smart government
institutions and public services. This Budget
will therefore, lay the foundation towards
the attainment of a smart economy.
36. Sir, the 2016 macroeconomic
objectives will be to:
(a) achieve an annual real GDP
growth rate of 5.0 percent;
(b) increase domestic revenue
mobilisation to at least 20.4
percent of GDP from 18.1
percent of GDP projected in
(c) reduce the budget deficit to
3.8 percent of GDP from 6.9
percent of GDP projected in
2015 and limit domestic
borrowing to 1.2 percent of
(d) maintain single digit inflation
with an end-year target rate of
no more than 7.7 percent;
(e) accelerate the diversification
of the economy, particularly
towards tourism, energy,
agriculture and agro
(f) maintain international
reserves at no less than 4
months of import cover; and
(g) create employment
opportunities through
accelerated implementation of
programmes such as the
Industrialisation and Job
Creation Strategy and the
Youth Empowerment Action
Economic Sector Policies
37. Mr. Speaker, the performance of
the agriculture sector during the 2014/2015
farming season was unfavourable owing to
inadequate rainfall. This, once again,
highlighted the challenge of over-reliance on
rain-fed agriculture, which has been the
Achilles heel in our efforts to ensure
national food security. Given the reality of
global warming, Government will redouble
its efforts to expand the area under irrigation
in 2016 and beyond.
38. Sir, it is in this regard that
Government will expedite implementation
of activities under the Irrigation
Development Support Programme to bring a
further 5,000 hectares under irrigation in
2016. This will bring the total area under
irrigation to 22,500 hectares since 2011. The
areas to be covered include Lusitu in
Chirundu, Mwomboshi in Chisamba and
Musakashi in Mufulira. The increased
output from the expanded area under
irrigation will enhance national food
39. Mr. Speaker, agricultural
productivity has remained low not only due
to the vagaries of the weather, but also due
to over reliance on maize production, even
in areas where the conditions are clearly not
suitable for the crop. We must as a matter of
urgency promote the diversification of the
agricultural sector. As a demonstration of
Government’s commitment to
diversification, the electronic voucher
scheme will be implemented during the
2015/2016 agricultural season in thirteen
districts namely: Kalomo; Choma; Monze;
Mazabuka; Chikankata; Pemba; Chongwe;
Mumbwa; Chibombo; Kabwe; Kapiri-
Mposhi; Ndola; and Chisamba.
40. Sir, the electronic voucher scheme
will give farmers a wider choice of inputs,
including requirements for livestock and
fisheries such as veterinary drugs,
fingerlings and fish feed. Further, the
scheme will allow farmers to source their
inputs directly from agro-dealers thereby
reducing the role of Government in the
supply and distribution of inputs.
41. Mr. Speaker, as I will elaborate
later in my address, it is Government’s
vision that the co-operative movement plays
an increased and dynamic role in the
economic development of our nation. In this
context, Government anticipates that over
time an increasing proportion of grain and
agricultural marketing activity will be
undertaken by co-operatives.
42. Mr. Speaker, the establishment of
the Ministry of Livestock and Fisheries is a
demonstration of Government’s resolve to
diversify the agricultural sector. In this
regard, Government will endeavour to
stimulate growth in the livestock and
fisheries sub-sectors by providing the
necessary technical and financial support.
43. Sir, in order to boost productivity
in the livestock sub-sector, Government will
enhance the provision of extension services
and disease control measures. To this effect,
Government will intensify primary animal
health care and vaccination programmes
especially for cattle and chickens. Further,
Government will continue producing
vaccines to make these readily available to
farmers. As a way of ensuring that small
scale farmers have access to dipping
facilities, Government will continue to
construct and rehabilitate dip tanks across
the country.
44. Mr. Speaker, Government will
also continue with the construction and
rehabilitation of livestock extension service
centres and satellite insemination centres.
Further, Government will establish
additional breeding centres for goats and
sheep in an effort to increase supply to both
domestic and export markets.
45. Sir, to achieve self-sufficiency in
fish production by end-2018, Government
will, in 2016, continue with the
establishment of fish hatcheries in each
province and encourage the establishment of
private owned hatcheries. In addition, I
would like to urge citizens to set up fish
fingerling nurseries in each district while
Government will provide technical support
and set up a Fisheries Fund to provide credit
to small scale fish farmers. Further, fish cage
culture, especially for tilapia, will also be
promoted through the creation of aqua-parks
in Rufunsa, Kasempa, Mungwi and
Chipepo. The aqua-parks are intended to
provide market to local fish farmers by
linking them to commercial core ventures.
46. Mr. Speaker, Government is alive
to the negative effects of the electricity
deficit that the country is experiencing
which has resulted in load shedding. This is
not just an inconvenience but has real cost to
the economy in terms of loss of production
and, therefore, lower incomes.
47. Sir, we have undertaken a number
of measures to cushion the impact of the
power shortage in the short term, such as,
importation of emergency power. Although
this has mitigated the full effect of our
current situation, it comes at a cost to the
fiscus and is not sustainable.
48. Sir, the long term solution lies in
promoting private sector participation in the
generation of electricity. We have a number
of such projects in the pipeline such as the
300 megawatts coal-fired thermal plant in
Maamba which is near completion.
49. To encourage private sector
investment in electricity generation and
ensure that investors get a fair return on their
investments, electricity tariffs will continue
to be adjusted to make them cost reflective.
Achieving cost reflective electricity tariffs
will encourage speedy completion of private
sector pipeline projects such as the 150
megawatts Kalungwishi hydro power station
and in excess of 300 megawatts from other
thermal power projects that are in the offing.
50. Mr. Speaker, the Government has
also invested in a 120 megawatts hydro
power generation project at Itezhi-Tezhi and
it is expected to come on stream next year.
Other energy generating projects include the
upgrading of the following:
(a) Chishimba Falls mini-hydro
power plant from 6
megawatts to 14.8
(b) Musonda Falls mini-hydro
power plant from 5
megawatts to 10 megawatts;
(c) Lusiwasi mini-hydro power
plant from 12 megawatts to
101 megawatts.
51. Sir, once all these projects come
on stream, the energy sector will emerge as
one of the major sources of foreign
52. Mr. Speaker, Government’s
policy in the petroleum sub-sector will be to
continue with a cost reflective pricing
system and ensure a stable supply of fuel to
all parts of the country. This will be
achieved by promoting private sector
participation in the sub-sector.
53. Mr. Speaker, to promote tourism,
Government will continue to develop and
rehabilitate key infrastructure such as
access roads to tourist sites, airports and
cultural centres. Government has also made
significant progress towards the
establishment of a national airline which is
scheduled to start operating in 2016. This
development is expected to increase tourist
arrivals and facilitate their in-country
transportation to tourist sites.
54. Sir, Government will further
operationalise the Tourism and Hospitality
Act of 2015 so as to provide for the
sustainable development of the tourism
industry through effective tourism planning,
management and coordination.
55. Mr. Speaker, in line with
Government’s Industrialisation and Job
Creation Strategy, the growth of the
manufacturing sector remains critical in our
efforts to diversify the economy. In this
regard, Government will continue to address
the challenges faced by Micro, Small and
Medium Enterprises such as access to
finance, markets and technology, and the
development of entrepreneurial skills. These
interventions are expected to spur enterprise
growth and contribute to job creation.
56. Sir, other key interventions
include the Value Chain Cluster
Development Programme which is designed
to promote local value addition. Under this
programme, Government is currently
supporting more than 1,800 projects in
activities such as mango juice production
and processing of fish, rice, dairy, cotton,
honey and forestry products. These projects
are being implemented in 42 districts
countrywide thereby creating opportunities
for employment and income generation
especially for women and the youth. In the
medium term, Government will expand this
programme with a view to creating at least
100,000 Micro, Small and Medium
Enterprise jobs predominantly in rural
57. Sir, Government will continue to
provide targeted incentives in designated
areas such as Multi-Facility Economic
Zones to attract further investment and
create more jobs in the manufacturing
sector. In 2016, Government will further
recapitalise the Development Bank of
Zambia, National Savings and Credit Bank
and empowerment agencies to enable them
provide affordable financing to Micro, Small
and Medium Enterprises.
58. Mr. Speaker, to further support
the growth of our manufacturing enterprises,
the public procurement guidelines were
revised to support local manufacturers. In
this regard, from 1st September, 2015, it
became mandatory for all public sector
departments to procure locally manufactured
goods for all contracts which are valued at
K3 million or less.
59. Mr. Speaker, access to export
markets particularly for non-traditional
exports is essential to economic
diversification. Government will, therefore,
continue to promote strategic local industries
which have comparative advantage and
secure markets for Zambian products in the
region and beyond through trade blocks such
as the Tripartite and Continental Free Trade
60. Sir, to improve the
competitiveness of our manufactured
products, Government has restructured the
Zambia Bureau of Standards and the Zambia
Weights and Measures Agency to enable
them effectively monitor the quality of
domestically produced goods to meet
international standards.
61. Mr. Speaker, copper output for
2015 was projected at 808,000 metric
tonnes. However, by end-August, 2015
copper production stood at 441,584 metric
tonnes. With this performance, it is unlikely
that the target will be met. As I have already
alluded to, the major factors for this negative
performance are the low copper demand and
prices, coupled with electricity constraints.
62. Sir, these negative developments
in the mining sector threatened to cause job
losses to our people. The Government’s
response has been to actively engage mining
companies with a view to finding solutions
that will minimise job losses and keep the
mines operational.
63. Mr. Speaker, these developments
in the mining sector are a call for action. For
more than fifty years, the call for
diversification has been the talk of
successive Governments, but we have not
walked the talk. What is required is for the
country to take meaningful steps to diversify
away from copper mining and to further
exploit other minerals such as gemstones,
manganese, diamonds and gold. I wish to
urge the Industrial Development
Corporation to work with ZCCM-IH Plc to
exploit the opportunities of diversification
within the mining sector.
Transport Infrastructure Development
64. Mr. Speaker, my Government
remains committed to transforming Zambia
into a truly land-linked country. This
commitment is demonstrated through the
implementation of various road
infrastructure programmes across the
country under initiatives such as the Link
Zambia 8000, L400 in Lusaka, and the soon
to be launched C400 on the Copperbelt.
65. Sir, I am pleased to inform this
august House that our accelerated road
construction and rehabilitation programme
has created over 6,000 job opportunities for
our people. It has also led to a reduction in
vehicle maintenance costs and travel times
as well as created economic growth poles in
outlying areas of our country. I am sure we
have all seen the progress being made on
various road projects and the transformation
which our country is experiencing.
66. Mr. Speaker, Government is
exploring innovative ways to finance road
infrastructure development in a more
sustainable manner. In this regard, some
commercially viable road projects have been
identified and are earmarked to be financed
under the Public Private Partnership Model.
67. Sir, to enable our local contractors
participate in road infrastructure
development, Government has deliberately
reserved some road projects for citizenowned
companies with at least 50.1 percent
Zambian shareholding under the Link
Zambia 8000 programme.
Social Sector Policies
68. Mr. Speaker, in 2016 Government
will focus on completing the construction of
health facilities as well as on the
recruitment, retention and training of
frontline medical personnel.
69. Sir, to enhance health care service
delivery and ensure timely provision of
drugs and medical supplies, Government
will continue with the construction of
regional drug supply hubs. Further, the
decentralisation of drug storage and
distribution of essential medicines through
the utilisation of the established regional
hubs is expected to significantly improve the
distribution of drugs to health facilities
throughout the country.
70. Mr. Speaker, to achieve universal
health coverage, Government will continue
to undertake social protection reforms which
will include the establishment of the
National Social Health Insurance Scheme.
Education and Skills Development
71. Mr. Speaker, to increase access to
quality education, Government will focus on
completion of the various education
infrastructure currently under construction
which include early childhood, primary and
secondary facilities. Further, teacher
recruitment and retention at all levels will
continue in order to reduce the pupil-teacher
72. Sir, Government will also
continue to roll-out the revised education
curriculum in 2016 which focuses on,
among other things, inculcating information
and communication technology skills in
children at an early age. Further, the piloting
of the two tier education system, which
gives learners an option to pursue an
academic or vocational pathway, will be
scaled up in 2016. This follows the first pilot
of the system at secondary schools that are
located around Chipata, Nkumbi and Mansa
Trades Training Institutes.
73. Mr. Speaker, under the tertiary
sub-sector, Government will continue to
work on the construction of Lubwa,
Chalimbana and Palabana Universities. This
is in addition to the expansion of student
accommodation at the University of Zambia,
Copperbelt University, Mulungushi
University and Evelyn Hone College.
74. Sir, the Government will also
operationalise Robert Makasa University in
Muchinga Province and commence the
construction of King Lewanika University in
Western Province, Luapula University in
Luapula Province and the three university
colleges in Katete, Nalolo and Solwezi.
Water Supply and Sanitation
75. Mr. Speaker, in 2016,
Government plans to increase rural access to
clean and safe drinking water from the
current 67 percent to 69 percent and access
to sanitation from 44 percent to 47 percent.
This will be done through construction of
2,500 water points which will comprise
mainly boreholes equipped with hand
pumps, small piped water schemes and
rehabilitation of 700 dysfunctional water
points. Furthermore, with regards to rural
sanitation and hygiene, Government will
construct 500 institutional sanitation
facilities and continue to promote
community-led approaches to sanitation.
76. Sir, in urban and peri-urban areas,
Government will increase access to clean
and safe drinking water from the current 87
percent to 89 percent. Access to improved
sanitation will also be increased from 57
percent to 60 percent. This will be achieved
through the rehabilitation and construction
of water supply and sanitation infrastructure
in the various urban towns under the 11
water and sewerage utility companies.
77. Mr. Speaker, with regard to solid
waste management, Government will
procure solid waste equipment and construct
engineered landfills to better manage waste
and ensure a cleaner environment. In
addition, Government will promote more
research in sustainable solid waste
management initiatives such as recycling
and waste-to-energy innovations. The above
interventions will complement the Keep
Zambia Clean and Healthy Programme.
78. Sir, to strengthen the
implementation of the water supply and
sanitation programmes in the country,
Government will revise the Water Supply
and Sanitation Act No.28 of 1997.
Social Protection
79. Mr. Speaker, in my last Budget
address, I indicated that Government would
review its social safety net programmes to
rationalise coverage and maximise impact.
In this regard, the Social Cash Transfer
Programme, which has proved to be the
most effective tool in providing assistance to
vulnerable households, will be significantly
scaled up. In 2016, a total of 250,000
vulnerable beneficiaries will be targeted.
80. Sir, Government will continue
providing Public Welfare Assistance
Scheme support, which, among other things,
will provide vulnerable children with access
to education and skills training. A total of
50,000 beneficiaries will be targeted under
the scheme in 2016.
81. Mr. Speaker, the public service
pension system continues to face a number
of challenges such as low benefit levels,
institutional weaknesses, outdated
legislation, design inconsistencies and
financing gaps. Whilst this House
considered and passed some aspects of the
pension reforms, pertaining to the revision
of the retirement age, Government will bring
to this august House a Bill to actualise the
envisaged reforms.
82. Sir, a small elite of leaders have
overgenerous pension rights in a country
where millions still live in poverty. His
Excellency the President has taken the lead
in addressing this imbalance by directing
that revisions be made to the Former
Presidents’ Benefits Act to reduce his
benefits. This selflessness should be
emulated by all beneficiaries at appropriate
leadership levels and I urge them to support
the revisions that will have to be made if
public service pensions have to be put on a
sustainable and equitable footing.
Debt Policy
83. Mr. Speaker, Government is
committed to maintaining public debt within
sustainable levels. Government will,
therefore, significantly limit domestic
borrowing and focus on accessing external
financing with lower interest rates and
longer repayment periods. In addition,
Government will strengthen the project
appraisal processes so as to ensure that
borrowing is directed to projects with high
84. Sir, to ensure timely repayment of
the three Eurobonds issued in the
international capital markets, Government
has established a Sinking Fund for the
purpose of redeeming the bonds.
Fiscal Policy
85. Mr. Speaker, Government is alive
to the fact that, under the present economic
conditions the expansionary fiscal stance of
the recent past can no longer be sustained.
The Treasury will, therefore, act to
consolidate the fiscal position so that
Government expenditure is primarily
financed from domestic revenues. In this
regard, Government has drastically reduced
allocations for non-core recurrent allocations
by more than 50 percent and has taken
measures to enhance domestic revenue
mobilisation. Consequently, the fiscal deficit
in 2016 is projected to reduce to 3.8 percent
of GDP.
86. Sir, to create more room for
private sector credit, domestic borrowing by
Government will be limited to 1.2 percent of
GDP in 2016. In order to sustain investment
levels in essential socio-economic
infrastructure under this constrained fiscal
environment, Government will increasingly
engage the private sector in identifying and
appraising projects which are commercially
viable in order to attract private financing.
87. Mr. Speaker, to further strengthen
domestic tax administration, Government
will put in place measures that will require
VAT registered vendors to use electronic
fiscal cash registers that will be interfaced
with the TaxOnline System. This will allow
real time capture of transactions for VAT
compliance purposes and reduce underdeclarations.
88. Sir, with regard to trade taxes,
Government will accelerate the
implementation of an Electronic Cargo
Tracking System to ensure real time
monitoring of cargo movements transiting
through the country. This will mitigate
revenue leakages perpetrated through transit
Monetary and Financial Sector Policy
Financial Sector Outlook
89. Sir, the overall financial
performance and condition of the banking
sector in the second half of 2015 and in 2016
is expected to remain satisfactory. Capital
adequacy ratios are expected to remain
stable as the banking sector is sufficiently
well capitalised. However, earnings
performance may be affected due to the tight
liquidity conditions which has resulted in
higher cost of funds for banks.
90. Mr. Speaker, the Basel II
Framework, which is aimed at strengthening
the safety and soundness of the international
financial system, is expected to be fully
implemented by Bank of Zambia in early
2016. The Framework promotes the
adoption of strong risk management
practices and enhanced corporate
governance in the financial sector. When
fully implemented, it will greatly improve
the stability of the sector.
Inflation Outlook
91. Sir, while inflationary pressures
are likely to continue, the rate is expected to
remain in single digits in 2016. Upward
pressure is expected to come from the passthrough
effects of the depreciated exchange
rate as well as higher demand for grain in
the region. Further, the projected
unfavourable weather, due to the effects of
El Nino, is also likely to contribute to
upward pressure on food prices.
External Sector Outlook
92. Mr. Speaker, the gross
international reserves are projected at US
$3.2 billion by end–December 2015,
representing about 4 months of import
cover. It is expected that this level of import
cover will be maintained in 2016.
Monetary Policy
93. Sir, the Bank of Zambia will
continue to monitor global and domestic
developments and take appropriate measures
to maintain price and financial system
stability. Monetary and supervisory policy
formulation and implementation will remain
focused on supporting Government’s broad
economic objectives.
94. Sir, monetary policy will continue
to be implemented through market based
monetary tools, guided by an interest rate
targeting framework. In the foreign
exchange market, Bank of Zambia’s
interventions will be limited to smoothening
short-term volatility and building up
international reserves. The Bank of Zambia
will continue to engage stakeholders in order
to improve the operations of the foreign
exchange market and encourage the
development of hedging instruments.
95. Sir, the Government will continue
to enhance the development of both the
primary and secondary market for
Government paper. In the secondary market,
the aim will be to create a more liquid and
efficient domestic debt market that promotes
the efficient utilisation of financial resources
in the economy.
96. Mr. Speaker, Government is
cognisant of the negative impact that high
lending rates have on economic activity,
particularly on the growth of Micro, Small
and Medium Enterprises. To mitigate this
impact, Government will work towards
consolidating the fiscal position to
contribute towards the reduction in interest
rates, taking into account the need to
maintain financial sector stability.
Structural Reforms
97. Mr. Speaker, as I earlier alluded
to, the Patriotic Front Government has
embarked on steps to reinvigorate and
reposition the co-operative movement to be
an effective vehicle for national
development. In addition to the traditional
agriculture related co-operatives, cooperative
development across all business
sectors will be encouraged. In this regard,
Government has formulated a strategy to
enhance the capacity of co-operatives in all
districts, allowing them to grow their
incomes and create employment.
Public Financial Management
98. Mr. Speaker, prudent public
financial management is indispensable in the
prevailing economic environment. In this
regard, the Planning and Budgeting Bill
aimed at integrating planning and budgeting
will be presented to this House for
enactment. In addition, the Public Finance
Act is being reviewed to foster and improve
accountability and transparency in the
management of public resources.
99. Sir, as part of the Public Financial
Management reforms, implementation of the
pilot Output Based Budget (OBB) is now
underway. As Honourable Members may
recall, OBB is a results-oriented budgeting
process. It aims to align Budget allocations
more closely with national development
priorities and also provide this august House
with more relevant information for assessing
Government’s budget proposals and
performance. An evaluation of this pilot will
be undertaken in early 2016 and, on the
basis of the results; decisions will be taken
about how the pilot may be rolled out in
2017. In the meantime Output Based
Budgets have been prepared by the
Ministries of General Education and Higher
Education for 2016 and are presented in
Volume II of the 2016 Estimates of Revenue
and Expenditure.
100. Further, the roll-out of the
Integrated Financial Management
Information System to line Ministries,
Provinces and other Spending Agencies will
be completed in 2016 and will improve
financial accounting and reporting.
101. Sir, to enhance cash management,
Government has commenced the
operationalisation of the Treasury Single
Account. All payments by the Ministry of
Finance are now made through the Treasury
Single Account. It is envisaged that the full
roll-out of the Treasury Single Account will
be completed in 2016.
102. Mr. Speaker, to enhance
transparency in the mining sector,
development of the Mineral Output
Statistical Evaluation System for monitoring
of the country’s mineral value chain has
reached an advanced stage. The prototype
has been developed and the piloting of the
system is expected in the fourth quarter of
2015. The full roll-out and implementation
is targeted for June 2016 and Government
expects all mining companies to cooperate
with the implementation of the programme.
Development Planning
103. Mr. Speaker, the Revised Sixth
National Development Plan is coming to an
end in 2016. In this regard, Government has
commenced the process of preparing the
Seventh National Development Plan. In
addition to our national priorities, the Plan
will incorporate, among other issues,
international and regional initiatives such as
the Sustainable Development Goals and the
African Union’s Agenda 2063. I would like
to urge Members of this august House to
participate in the development of the Plan.
Fiscal Decentralisation
104. Mr. Speaker, in line with
Government’s policy of decentralisation,
funds for devolved functions will be
transferred directly to districts through the
Treasury Single Account. Full fiscal
decentralisation will be implemented once
capacity has been built in local councils.
105. Mr. Speaker, the Constituency
Development Fund was introduced twenty
years ago to facilitate a quick response by
Honourable Members, working through their
councils, to the development needs of local
communities. Unfortunately,
implementation of the Fund has not always
met this noble objective. Consequently,
Government is reviewing the modalities for
implementing the Fund. The aim will be to
enhance community participation in the
identification of projects, improve the
efficiency of project implementation and
raise their long-term impact. Once the Fund
has been reformed to make it more
transparent and effective in meeting the
development aspirations of local
communities, Government will once again
consider raising the allocation to the Fund.
Financial Sector Reforms
106. Mr. Speaker, during the
implementation of the Financial Sector
Development Plan which came to an end in
June 2015, a number of milestones were
achieved. These included the establishment
of the Credit Reference Bureau to address
the poor credit culture, promotion and
development of bank branches, agencies,
Automated Teller Machines and Point of
Sale terminals across the country. Work
towards harmonisation of financial sector
legislation was also initiated.
107. Sir, to further increase financial
inclusion, Government will facilitate the
operationalisation of a National Financial
Switch platform. This will integrate different
payment channels such as Automated Teller
Machines, Point of Sale terminals, mobile
and internet banking platforms, and other ecommerce
and e-government platforms.
Industrial Development Corporation
108. Mr. Speaker, Government has
transferred its shares in 29 out of 33 State-
Owned Enterprises from the Minister of
Finance to the Industrial Development
Corporation. This is with a view to
enhancing the strategic focus of parastatals
in order to maximise their contribution to
national development. To this end, the
Industrial Development Corporation will
promote economic diversification and
increase non-traditional exports by investing
in strategic non-mining sectors. In addition,
dividends earned by the Industrial
Development Corporation will be
channelled to the Sovereign Wealth Fund to
spur further investments for the benefit of
future generations.
109. Mr. Speaker, in 2016,
Government proposes to spend K53.14
billion, representing 25.8 percent of GDP.
This will be financed through domestic
revenues of K42.11 billion and grants from
co-operating partners of K550 million.
Financing will comprise K6.07 billion in
net external financing representing 2.9
percent of GDP and net domestic borrowing
of K1.75 billion representing 0.9 percent of
GDP. Amortisation is projected at K2.66
Expenditure Allocations by Function:
110. Sir, I now present to this august
House the expenditure allocations by
function of Government for the year 2016.
2016 Expenditure by Function
K’ million
Percentage of
General Public Services 19,171,696,837.00 36.1%
Local Government Equalisation Fund 717,013,167.00
Tripartite Elections/Referendum 727,900,000.00
Public Affairs and Summit 82,691,590.00
External Debt Interest 3,615,559,302.00
Domestic Debt Interest 3,549,266,545.50
Sinking Fund 536,237,121.00
Awards and Compensation 100,000,000.00
Defence 3,145,795,491.00 5.9%
Public Order and Safety 1,840,555,811.00 3.5%
Economic Affairs 13,247,239,002.00 24.9%
Empowerment Fund 373,255,937.00
Fisheries Development Fund 5,000,000.00
Farmer Input Support Programme 1,000,355,810.00
Food Reserve Agency 750,000,000.00
Rural Electrification Fund 118,186,876.00
Roads Infrastructure 6,629,938,774.00
Environmental Protection 151,406,460.00 0.3%
Housing and Community Amenities 468,751,628.00 0.9%
Water supply and Sanitation 283,647,640.00
Health 4,431,850,156.00 8.3%
Drugs and Medical Supplies 754,000,000.00
Medical Infrastructure and Equipment 387,070,833.00
Recreation, Culture and Religion 261,545,249.00 0.5%
Education 9,143,215,926.00 17.2%
School Infrastructure 637,325,937.00
University Infrastructure 390,000,000.00
Student Loans and Bursaries 310,913,011.00
Social Protection 1,273,768,804.00 2.4%
Public Service Pension Fund 805,000,000.00
Social Cash Transfer 302,000,000.00
Food Security Pack 20,000,000.00
Grand Total 53,135,825,364.00 100.0%
2016 Budget
General Public Services
111. Mr. Speaker, I propose to spend
K19.2 billion on General Public Services.
Notable expenditures under this category
include K5.5 billion and K4.3 billion for
external and domestic debt related
payments, respectively.
112. Sir, to ensure that adequate
capacity is built to repay the Eurobonds as
and when they fall due, I have allocated
K536.2 million to the Sinking Fund.
113. Mr. Speaker, I propose to spend
K727.9 million to cover all the costs related
to the 2016 Tripartite Elections and the
Constitution making process.
114. Sir, to continue providing Local
Authorities with buoyant and more
predictable resources, I have allocated to the
Local Government Equalisation Fund a total
of K717 million. This represents an increase
of 22.2 percent from the 2015 allocation.
115. Sir, K100 million has been
allocated to cater for litigation costs and
related expenditures under Compensation
and Awards.
Economic Affairs
116. Mr. Speaker, the Patriotic Front
Government remains fully committed to
supporting the expansion and diversification
of our economy. Consequently, I propose to
spend a total of K13.2 billion, or 24.9
percent of the Budget, on the economic
affairs function.
117. Sir, a notable allocation under this
function is the K6.6 billion for road
infrastructure. This allocation is for the
continued implementation of the Link
Zambia 8000 project, Pave Zambia 2000,
the L400 road project in Lusaka,
commencement of the C400 road project on
the Copperbelt and rehabilitation of rural
roads countrywide.
118. Mr. Speaker, K498.4 million has
been allocated for the upgrading and
expansion of the Kenneth Kaunda
International Airport and the establishment
of a national airline.
119. Mr. Speaker, to advance our ongoing
programme to extend the area under
irrigation so as to reduce our dependency on
rain-fed agriculture, I have allocated K56.7
million to irrigation programmes.
120. Sir, I have allocated K1.0 billion
for the Farmer Input Support Programme of
which K248.3 million will be disbursed
through the e-voucher modality to cover
about 480,000 farmers of the targeted
1,000,000 beneficiaries of the programme.
121. Mr. Speaker, I have allocated
K750 million to procure grain in the 2016
crop marketing season.
122. Sir, to provide credit for small
scale fish farmers, I have allocated K5
million for the establishment of the Fisheries
Development Fund.
123. Mr. Speaker, to provide for the
economic empowerment of Zambians, I
have allocated K187.5 million to the
Citizens Economic Empowerment Fund,
K150 million to the Action Plan on Youth
Employment and Empowerment and K35.7
million to the Women’s Economic
Empowerment Funds. A further K49.5
million has been allocated for youth skills
training and development.
124. Sir, to facilitate rural access to
electricity, I have allocated K118.2 million
to the Rural Electrification Programme.
Education and Skills Development
125. Mr. Speaker, I propose to spend
K9.1 billion on education and skills
development. Of this amount, K1.0 billion is
earmarked for various infrastructural
projects in the sector, such as schools,
universities and trades training institutes,
while K217.8 million is for the recruitment
of an additional 5,000 teachers.
126. Sir, to enhance the cognitive
ability of vulnerable children and encourage
school attendance, I propose to allocate
K35.6 million to the rolling out of the
School Feeding Programme, which has
proven to be a very successful programme
especially in the rural schools. A further
K311 million has been allocated towards the
implementation of the Student Loans
Scheme for university students.
127. Mr. Speaker, to ensure equitable
access to quality health care, I propose to
spend a total of K4.4 billion. This allocation
includes K754 million for the procurement
of drugs and medical supplies and K340.7
million for completion of on-going health
infrastructure development projects. The
allocation to the sector also includes K73.8
million for the net recruitment of additional
frontline health personnel and K6.3 million
towards the establishment of the National
Social Health Insurance Scheme.
Housing and Community Amenities
128. Mr. Speaker, I propose to spend a
total of K468.8 million for the rehabilitation
and construction of water supply and
sanitation infrastructure, implementation of
housing development programmes,
undertaking of physical planning activities
and resettlement of displaced persons.
Public Order and Safety
129. Sir, I have allocated K1.8 billion
towards the maintenance of public order and
safety. Key interventions will include the
rehabilitation of prison infrastructure and
completion of the construction and
rehabilitation of police stations and posts.
Social Protection
130. Mr. Speaker, to uplift the living
standards of vulnerable Zambians, I have
allocated K1.3 billion for social protection
related expenditures. Of this amount, the
allocation to the Public Service Pension
Fund is K805 million while the allocation to
the Social Cash Transfer Scheme is K302
million. The allocation to the Social Cash
Transfer Scheme represents an increase of
67 percent over the 2015 allocation.
Other functions
131. Sir, the remaining functions of
Defence, Environmental Protection and
Recreation, Culture and Religion have a
combined allocation of K3.6 billion.
Revenue Estimates and Financing
132. Mr. Speaker, in coming up with
the revenue measures for the 2016 Budget,
the Government has had to circumspectly
balance the need to raise adequate resources
for various development programmes with
the need to generate these resources in an
equitable and efficient manner.
133. Sir, a summary of the estimates of
revenue and financing to support the
expenditures in 2016, is as follows:
Total Revenue and Financing for the 2016 Budget
% of
Total Tax Revenues 30,410.3 57.2%
Income Tax 14,340.3
Company Income Tax 3,239.1
PAYE 7,934.4
Withholding & other 3,166.8
Insurance Premium Levy 44.0
Value Added Tax 9,893.5
Domestic VAT 1,503.4
Import VAT 8,390.1
Customs and Excise 6,132.5
Customs duty 2,488.9
Excise duty 3,643.6
o/w Fuel Levy 991.2
Non-Tax Revenues 11,698.9 22.0%
Fees & Fines 7,645.3
Exceptional 1,164.4
Mineral Royalty 2,889.1
Domestic Revenue 42,109.1
Domestic Borrowing 2,509.5 4.7%
Total Domestic Revenue and Domestic Financing 44,618.6
Total Foreign Grants and Financing 8,517.2
Grants 545.9 1.0%
Project Grants 545.9
Foreign Financing 7,971.3 15.0%
Programme Loans 3,954.3
Project Loans 4,017.0
(K’ million)
Revenue Measures
134. Mr. Speaker, in addition to other
interventions to encourage the development
of sustainable and alternative sources of
energy outlined earlier, I propose to
implement the following measures:
(a) increase the capital allowance
for implements, machinery
and plant used in the
generation of electricity to 50
percent from 25 percent;
(b) extend the 10 year period for
carrying forward of losses for
businesses engaged in the
generation of electricity using
hydro and thermal, to
businesses generating
electricity using other sources
of energy such as wind and
solar, but excluding wood;
(c) increase the period for
claiming input Value Added
Tax, as an intending trader,
for electricity generation to 4
years from 2 years; and
(d) remove the 5 percent customs
duty on Pitch Coke and the 15
percent customs duty on
Petroleum Coke.
135. Sir, in addition to the revision of
electricity tariffs towards cost reflective
levels, I am confident that these tax
concessions will encourage capital
investment and act as a catalyst to enhancing
the development and diversification of the
energy sector.
136. Mr. Speaker, the development of
the manufacturing sector remains key to
achieving our objective of diversifying the
economy. The Government will, therefore,
continue to promote manufacturing by
providing an enabling environment that will
encourage competitiveness of the sector. To
this end, I propose to suspend excise duty on
clear beer to 40 percent from 60 percent in
order to spur local manufacturing, promote
investment and curb smuggling.
137. Mr. Speaker, to further promote
economic diversification and expansion of
the base for non-traditional exports, I
propose to remove the 15 percent and 5
percent customs duty rates currently
applicable on greenhouses and rose
seedlings, respectively.
138. Mr. Speaker, in order to spur
vibrancy in the financial markets and
address the low level of liquidity in the
secondary market, I propose to restructure
the taxation of interest on Government
bonds by removing the withholding tax
applicable on the discount income while
maintaining it on the coupon income.
139. Sir, the current rate of property
transfer tax at 10 percent has discouraged
people from completing property transfer
transactions as it is prohibitive. I, therefore,
propose to reduce the rate of Property
Transfer Tax on land and shares to 5 percent
to enhance compliance.
140. Mr. Speaker, to reduce the cost of
upgrading of existing infrastructure for
digital migration and encourage the
establishment of community based
television and radio stations, I propose to
suspend customs duty on transmission
apparatus for television and radio for a
period of two years.
141. Sir, as a result of these measures,
Government will forego K138 million.
142. Mr. Speaker, the current
withholding tax system on rental income has
presented challenges for some taxpayers. In
this regard, I propose to restructure the
taxation to provide for a landlord to account
for tax on rentals in circumstances where the
tenant cannot withhold the tax, subject to
approval by the Commissioner General.
143. Mr. Speaker, in order to
streamline the taxation of income earned
from the provision of management and
consultancy services by resident consultants,
I propose to extend the application of
withholding tax at the rate of 15 percent to
this stream of income. However, this will
not be the final tax.
144. Mr. Speaker, the application of
Value Added Tax in the insurance industry
has been a challenge in view of the nature of
the industry. I, therefore, propose to simplify
the taxation of the insurance industry by
removing Value Added Tax and introducing
a levy at the rate of 3 percent on insurance
145. Sir, I also propose to increase the
specific excise duty rate on cigarettes to
K200 from K90 per 1,000 sticks and
introduce incentives to support local
manufacture of cigarettes.
146. Sir, to encourage local value
addition and enable us benefit from our
natural resource endowments, I propose to
introduce an export duty on unprocessed
wood at 40 percent and semi processed
wood at 20 percent. In addition, I propose to
increase the customs duty to 40 percent on
all wood and wood products.
147. Mr. Speaker, to combat unfair
competition from cheap imports and spur
local production of edible oils, I propose to
increase the specific customs duty rate on
refined edible oils to K4.0 from K2.20 per
148. Sir, to discourage the use of
plastic carrier bags and reduce their negative
impact on the environment, I propose to
increase excise duty on plastic carrier bags
to 20 percent from 10 percent.
149. Mr. Speaker, I propose to adjust
upwards customs duty on selected categories
of motor vehicles excluding buses and
trucks. Further, I propose to introduce a
surcharge of K2,000 on motor vehicles older
than five years from the year of
150. Mr. Speaker, the estimated gains
in 2016 as a result of these measures will be
K93.9 million.
151. Sir, I propose that consideration
fees for any category of land to be acquired
by non-Zambians be adjusted upwards
relative to the market value. I further
propose that consideration fees for high cost
residential, commercial and industrial land
also be revised relative to market value.
152. Sir, to augment efforts of
enhancing domestic revenues, I propose to
revise upwards various fees and fines to
bring them to appropriate, cost recovery
levels of providing the respective services.
These fees include those collected under the
ministries responsible for immigration and
153. Mr. Speaker, the estimated gains
in 2016 as a result of these measures will be
K5.0 billion.
154. Sir, all the revenue measures I
have announced will take effect from 1st
January, 2016, apart from measures relating
to consideration fees on land which take
effect from midnight tonight.
House Keeping Measures
155. Mr. Speaker, I also propose to
carry out revenue neutral amendments to the
Income Tax Act, the Customs and Excise
Act and the Value Added Tax Act so as to
update, strengthen and remove ambiguities
in certain sections of tax legislation and to
make tax administration more effective.
156. Mr. Speaker, as I conclude my
address to this august House, I have a moral
imperative to be candid and honest with the
people of Zambia. The year 2016 will
witness further challenges to our efforts to
raise the economy to yet higher heights so as
to eradicate poverty. In addition to elevated
risks from climate change, the outlook for
the world economy is not particularly
cheerful. As a result, Zambia should be
prepared to meet the challenges that may
arise from externally-induced shocks,
especially further falls in commodity prices
and their knock-on effects on our economy
and society at large.
157. Sir, to meet the challenging times
ahead, I am confident that Zambians have
the collective resolve, unity and character to
assign primacy to the national interest over
personal and selfish ambition. Our mature
commitment to pluralism and democracy in
diversity, our tolerance and accommodation
of others and our abhorrence of xenophobia
and love for peace, earn Zambia a coveted
position of distinction in the global
community. It is in this context that I urge
all Zambians to honour our collective duty
and responsibility to ensure that mistaken
perceptions about our country, especially in
global markets, are not created.
158. Sir, I wish to emphasise to the
Zambian people, and to the wider global
community, that while Government has
made adjustments in light of the more
challenging economic environment, there
have been no policy somersaults as regards
our commitment to social justice, anchored
on consistent, predictable and marketfriendly
economic policies. Zambia is, and
will remain, one of the few African
countries without crude controls, even in the
critical area of foreign exchange. This is
why Zambia is, and will remain, a credible
investment destination.
159. Mr. Speaker, let us put narrow
polemics and hollow feuds aside as we, as a
nation, unite to move our country forward.
In His Excellency, President Edgar Chagwa
Lungu, we have an honourable leader with
the necessary attributes of accommodation,
tolerance and ingrained humanity, shrouded
in total humility. He has flawless depth,
affability, and the ability to relate to and be
available for us all. These attributes vest him
with the capacity to unite our great nation in
these challenging times. Under his
compassionate and able leadership, let me
enter a passionate plea to each and every one
of us, to join him in our collective march to
a brighter and more prosperous future for
all. We owe mother Zambia and posterity
that debt.
160. Sir, may God bless Zambia.
161. Mr. Speaker, I now beg to move.

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