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Economy is between a rock and a hard place – ZNFU

THE Zambia National Farmers Union says the 2021 national budget is bold and lays bare that the economy is between a rock and a hard place.

ZNFU public relations manager Calvin Kaleyi said the budget tried to strike a middle ground to improve the business environment for selected agricultural commodities by enhancing protective measures while also earning some revenues for government.

Kaleyi observed that on the budget submissions, ZNFU asked for relief on taxes especially on removal of VAT to lower production costs but these were not granted apart from removal of VAT on tractors.

“However, it is important to note that some specific incentives have been granted to the horticulture and floriculture industries. Producers of export flowers, vegetables and fruits are in a difficult situation because of the COVID-19 pandemic which resulted in export markets disappearing overnight,” he said. “The support through the listed measures in the budget is welcomed and appreciated as it will help the industry going forward. As stated earlier, is that in 2020, the economy has been struggling as seen from the economic indicators and other factors amplified in the budget which included management of debt commitments, liquidity issues and a volatile exchange rate that has led to the kwacha depreciating by 41.9 per cent in 2020 alone. We also noted that non-performing loans increased to 12.6 per cent as at July 2020 from 8.9 per cent in December 2019.”

Kaleyi said this was worrisome as agriculture has had loan repayment challenges due to various factors.

He urged finance minister Bwalya Ngandu with the Bank of Zambia to take a keen interest to put in place measures that will help farmers to remain in operation.

Kaleyi said other factors explaining the 2020 poor performance of the economy which is now projected to decline by 4.2 per cent were the adverse impact of the COVID-19 pandemic on general economic activity and employment; episodes of load-shedding due to low electricity supply; rising costs of production largely associated with rising energy costs.

He said amidst those challenges, the 2021 budget aims to support local producers and local value addition.

Kaleyi said this was a huge plus from the budget as it should curtail exportation of jobs.

“We just want to appeal to government to be ahead of the mischief of those that are in the art of evading such measures in various ways,” he said.

Kaleyi also said the country can produce enough beef, chickens and pigs necessary for value addition while fish farming was growing.

“Going forward, it’s important to recognize that the livestock industry in Zambia is still in its infancy when compared to other countries in SADC and COMESA. Hence, a way should be found for further protection against competitors in the region,” he said.

Kaleyi said this can be done by removal of export duty on crocodile skin through suspension of export duty payable on raw hides and skins; introduce an excise duty of K1.50 on every litre of reconstituted milk to encourage uptake of local milk for processing.

“Harmonization of import duty rate on reconstituted milk with other forms of milk at 15 per cent; suspension of import duty on biological control agents; removal of import duty on Greenhouse Plastics and Selected Agricultural Clippers; reduction of import duty on horticulture and floriculture; on selected bulb plants and seedlings from 25 per cent to 15 per cent; secateurs and pruners to 5 per cent from 15 per cent and 25 per cent respectively; selected trimmings to 5 per cent from 25 per cent,” he said. “Suspension of import duty on safari game viewing motor vehicles, tourist buses and coaches; suspension of import duty on refrigerated trucks and reduction of duty to 15 per cent from 30 per cent on electric motor vehicles; educe import duty to 5 per cent from 25 per cent on selected trimmings to promote local garments and textile industry progressive for value addition in the cotton value chain. VAT Zero rate all tractors.”

On COVID-19 incentives, Kaleyi said suspending customs duty payable on medical supplies; waiver on all tax types to individuals and businesses on all penalties and interest accumulated on the principal tax entries and returns between April 1 2020 and September 30, 2020.

Kaleyi said turning to the overall national budget and the allocations towards expenditure, ZNFU was not able to know the total allocated to the Ministry of Agriculture and the Ministry of Fisheries and Livestock from the budget address but hopes to dissect the issue when the Yellow Book is available.

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