ZAMBIA FEBRUARY ECONOMIC ROUNDUP

UNCLAS SECTION 01 OF 02 LUSAKA 000244

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: ECON EINV EFIN ZA

SUBJECT: ZAMBIA FEBRUARY ECONOMIC ROUNDUP


1) SUMMARY

-- CHINESE MULTI-FACILITY ECONOMIC ZONE
-- 2007 NATIONAL BUDGET UNVEILED
-- ZAMBIA BUREAU OF STANDARDS PUBLISHES STANDARDS
-- CIVIL SERVANTS MISUSE K36 BILLION PUBLIC FUNDS

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Chinese Multi-Facility Economic Zone
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2. President Mwanawasa and visiting Chinese President Hu Jintao
jointly unveiled the Chambishi Multi-Facility Economic Zone in
Lusaka on Sunday, February 4, 2007. Under this partnership, both
Zambian and Chinese investors within an "economic zone" will be able
to import materials and export products duty-free. Zambia is the
first African country to have a Chinese Multi-Facility Economic Zone
that is supported by the Chinese business community and government.
The investment in the facility will amount to approximately $800
million in the next three years.

China signed eight cooperation agreements with Zambia on Saturday
February 3, 2007. The two governments also signed a Memorandum of
Understanding pledging to invest in sectors such as infrastructure
development, to support poverty reduction and to provide more
scholarships to Zambians.

Although Chinese investment in mining, textiles and construction has
increased in recent years, many Zambians accuse Chinese companies of
paying low wages, ignoring labor laws, and employing Chinese workers
for jobs that could be performed by Zambians.

Source: www.zamnet.zm; www.postzambia.com; www.times.co.zm

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2007 National Budget unveiled
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3. Finance and National Planning Minister Ng'angu Magande presented
the 2007 National Budget to Parliament on February 9, 2007. Magande
unveiled a K12 trillion (approximately USD 3 billion) budget for the
year 2007 under the theme 'From Stability to Improved Service
Delivery,' a measure aimed at improving living standards. 72 percent
of the budget will be financed domestically while 28 percent will be
externally funded. About 75 percent will be spent on current
expenditures, 18 percent on capital expenditures, and 7 percent on
constitutional and statutory expenditures such as debt servicing.
Magande said the budget was drawn from the Fifth National
Development Plan.

The main objectives for the 2007 national Budget are to achieve a
real Gross Domestic Product (GDP) growth rate of 7 percent, reduce
inflation to 5 percent, reduce domestic government borrowing to 1.2
per cent of GDP and raise gross international reserves to at least
2.5 months of import cover. A cross section of the Zambian
population and international community commended the budget for its
focus on low-income groups and economic growth.

Source: www.zamnet.zm; www.postzambia.com; www.times.co.zm;
www.parliament.gov.zm

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Zambia Bureau of Standards (ZABS) publishes standards
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4. The Zambia Bureau of Standards (ZABS) published the required
standards for numerous products and services that have to be legally
met by manufacturers and service providers. The purpose of the
publication (which is referred to as a 'declaration') is to compel
individuals or corporate bodies to comply with legal standards. The
declaration relates to the product safety of 15 products and
services, including bottled water, motor vehicles' safety
inspections, vehicle number plates, fertilizers, beer, textile
inspections, fruit flavored drinks, dry batteries and electrical
appliances such as plugs, sockets, adaptors and connection units.
All commodities in the listed categories will be subject to
inspection by the Bureau for compliance.

Source: www.zamnet.zm; www.postzambia.com; www.times.co.zm

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Civil Servants misuse K36 billion public funds
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5. A ministerial statement issued in Parliament by Finance and
National Planning Minister Ng'andu Magande on the alleged misuse of
public funds by civil servants confirmed that K36 billion (USD 9
million) was stolen by 326 public service workers in various
ministries between 2003-2007. The audit revealed that some of the
funds were misappropriated through fraudulent activities although
over ten percent of this figure represents irregular payments of

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housing allowances in the Ministry of Education.

Mr. Magande told the House that for most of the old cases where
investigations were concluded, disciplinary action was taken and
appropriate punishment and dismissals were meted out to culprits.
Many of the Ministry of Education cases involved teachers who were
sharing housing allowances of teachers that had died or been
transferred to other schools. Government did not provide a list of
those involved in the financial scams but assured the House that
Government would continue to strictly monitor the use of public
funds and take stern action against those abusing their public
offices.

Source: www.zamnet.zm; www.postzambia.com; www.times.co.zm;
www.parliament.gov.zm

MARTINEZ