Sinking Fund strategy to liquidate sovereign debts such as Eurobonds cannot work in Zambia at the moment because Government’s lack of fiscal discipline.

The sinking fund and sovereign wealth fund strategies only work in environments where there is fiscal discipline− whereby a government respects budgetary and other financial tools that are put in place to ensure prudent management of national income and expenditure.

At the moment, Zambia lacks this requisite fiscal discipline, as can be deduced with a very high degree of certainty from annual reports by the Auditor General and Financial Intelligence Centre which always show habitual budgetary overruns as well as high levels of corruption, theft, misappropriation of public funds and other resources.

Lack of fiscal discipline is the major reason why Zambia has failed to operationalize the Sinking Fund and the Sovereign Wealth Fund since 2012.

What can work in Zambia under the circumstances is crowdfunding, a practice of funding a project or venture by raising small amounts of money from a large number of people, typically via the Internet. The characteristic version of crowdfunding is the crowdsourcing strategy which was employed by the UNIP Government in the 1960s to raise funds for construction of UNZA.

The modern approaches to crowdsourcing use independent internet-mediated registries and platforms that employ crypted technologies such block chain.

Here is how it could work. Government could propose a crowdfund under the tag of “EUROBOND REDEMPTION 2021 FUND” which is moderated by internet platform. Businesses, individuals or groups who support the idea could be brought together by the moderating organization or the platform to launch the idea. The platform, in conjunction with a team of audit firms could then be appointed as managers and custodians of the funds held in trust.

The idea that could be launched, for example, would be that for every dollar deposited by a subscribing party, they get 35% tax rebate on all of their taxable income the following year.

Businesses such as the mines, banks, contractors and even individuals or groups who support the idea, could then source money from elsewhere and subscribe with a view to get 35% tax rebates on their taxable incomes the following year.

I am sure that by 2021, such a fund could generate in excess of US$6 billion which is more than enough to dismantle all the Eurobonds and other debts.

Peter Sinkamba

President

Green Party

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