Aid in Zambia | How much aid is too much aid?

 

Zambia is a former British colony, it got its independence from Britain in 1964. After 1964 British born citizens started departing for South Africa fearing resentment. Most of the British people who lived in Zambia lived in the Copperbelt and most of them were miners. In my view, Zambia has still not recovered economically because of the lack of handover when the British people left. This, I think is why South Africa has remained the economic superpower of Africa for some time compared to other African countries.

unlike other African countries, after  Mandela came to power, he advocated for reconciliation and did not move to deport white people from South Africa. I don’t think South Africa ever had a complete regime change from top to bottom. They changed leadership at the top but everything else run as usual. For example,  Mandela still had a mixture of a white and black security detail personnel. Unlike Zambia or  Zimbabwe which in 2006 deported all its white farmers, South Africa still allowed all the white farmers to stay after independence. Considering how uneducated the majority of South Africans were back then, imagine if Mandela deported all the white farmers without having qualified people to take over?

A necessity for any country to sustain itself includes food production, and if people are not being fed, you get riots and unrest as it has been the case in Venezuela.


 


 

Unlike South Africa,  Zambia does depend too much on outside aid for survival. According to the Times of Zambia, 5% of the budget comes from aid which for any developing country to rely on is asking for trouble. The total Zambian budget for 2018 will be K76.6 billion and that will have to look after an estimated population of 16.1 million.  Zambia does not a have social security system so if you lose your job, the government will not bail you out. The health sector is underfunded and sometimes civil servants will go three months or more without being paid.

Zambia doesn’t have a socialized health care system, the road conditions are hazardous and Zambia consistently has load shedding. “Load shedding is the deliberate shutdown of electric power to prevent the failure of the entire system when the demand strains the capacity of the system.  The Government does not seem to want to do anything about it.” One has to wonder where the Government spends the K76.6 Billion. The situation can get really bad some time that for example, when health care workers went on strike at one point, there were reports of a pregnant woman giving birth outside the hospital.

Zambia does not invest money in science and technology, two things that are a driving force in any economy.  And despite Zambia making progress economically in the past decade, many Zambians still remain in poverty and with no work. That is why most the gaps left by the government are filled by institutions like the Catholic church UN agencies. Also because the state institutions are too small and do not have that much power, some African countries are safe havens for libertarians.

Small companies can continue to do business without paying tax for a long time.  And it is not because Zambia has a small government philosophy of lower taxes, it is because the Zambian revenue authorities do not have proper means of getting taxes out of people. This is part of the reason corruption is widespread. There are not many forensic accountants and the government is not efficient enough to police tax fraud. Even when tax evasion has been policed, the fines are too lenient, currently, the monetary fine for tax evasion is 52.5% of the amount evaded plus interest of 5% with an option of a jail sentence.


 


Zambia’s Tax revenue declined in the 90s from 30% of GDP to only an average of 13% GDP.  This was mainly due to a reduction in money mining revenue and weak tax administration. Despite the creation of the ZRA, the collection of tax has remained at 17% over the last five years. A recent study done by the Zambia Institute for Policy Analysis and research found the majority of people in Zambia had limited to no knowledge of the way the tax system works. They also found that company tax was too complicated for the average person to understand. Compared to other countries like Malawi and South Africa, Zambia’s tax administration is abysmal.

This paper is not advocating that western countries withdraw their aid entirely, aid has done some wonderful things. For example, the battle against HIV has largely been financed by aid from other countries, and as a result, a lot of people lives have been saved. Aid has also played a big part in Malaria research, and the way malaria is managed. Aid is needed, but most of it should come from private local institutions.

Finally, no amount of aid in Zambia or Africa, in general, will change the way things are. What Africa needs is better and stronger government and state institutions that are accountable. Ranging from the education sector all the way to the agriculture and healthcare systems. Institutions that are well-educated and governed by the rule of law.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s