The Civil Society Organisation Debt Alliance (CSODA) has expressed concern over the significant setbacks faced by Zambia's Eighth National Development Plan (8NDP) (2022-2026) in 2023, revealing critical financial challenges.
In a statement made available to the media CSO Debt Alliance Coordinator Peter Mumba said the Issues such as incomplete debt restructuring, illicit financial flows, and inadequate domestic resource mobilization have worsened the financing gap, hampering the nation’s progress towards its development objectives.
He explained that the 2023 Annual Progress Report on the 8NDP implementation indicated that only 46 percent of the targets for 2023 were met.
"The 2023 Annual Progress Report on the 8NDP implementation indicated that only 46 percent of the targets for 2023 were met. Out of 1,053 targets, 485 were achieved, 109 were partially met, and 459 were unmet. The Economic Transformation and Job Creation Strategic Development Area experienced the highest financing gap at 76.9 percent. Despite planning to spend K107 billion on 8NDP programmes, only K48.3 billion was allocated, resulting in a financing gap of K58.7 billion,"He said.
Mr Mumba noted that significant revenue leakages through illicit financial flows (IFFs), including tax evasion and trade mis-invoicing, have fostered the situation.
"Significant revenue leakages through illicit financial flows (IFFs), including tax evasion and trade mis-invoicing, have fostered the situation.The Financial Intelligence Centre (FIC) reported K56.5 billion in suspected IFFs in the third quarter of 2023 alone, which could close 96 percent of the 2023 8NDP financing gap. Tax audits conducted between 2014 and 2020 suggest that Zambia could increase tax revenues without raising tax rates, addressing a total tax gap of 47 to 56 percent (United Nations),"He said.
Mr Mumba said the incomplete debt restructuring process poses additional risks to Zambia’s debt sustainability, affecting credit ratings, access to capital markets, investor confidence, exchange rates, and fiscal policy flexibility.
He said addressing the financial challenges is crucial for Zambia to achieve its 8NDP targets.
Mr Mumba stated that to combat illicit financial flows, the government must develop a robust policy and legal framework that enables effective tracking and prosecution of illicit financial activities.
He noted that the Revenue Authority should enhance tax collection in key sectors such as mining and ensure that tax evasion is minimized by rigorously monitoring mining activities.
Mr Mumba added that government needs to finalise the debt restructuring process to unlock fiscal space.
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