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ZAMBIA: 16 years audit report ending 2022 opens can of worms in procurement irregularities (See details)


The Report of the Auditor General on the Audit of External Debt Stock of Zambia for the financial years ended December, 31, 2006 to 2022, has uncovered significant financial discrepancies and other irregularities.

Among the alleged financial irregularities and discrepancies included the questionable advance payment totalling US$33,750,000 for the construction of FTJ Chiluba University.

Acting Auditor-General, Dr Ron Mwambwa, released the report in Lusaka on Tuesday which also alleged questionable procurement practices related to fertilizers amounting to US$44,854,511.60.

It also claimed questionable acquisition of counterpart funding totalling to US$36,730,000 for the three University Colleges Project and wasteful expenditure of US$35,731,614 on the Kalabo-Sikongo Road project.

The audit also reported weaknesses in the contraction of external debt with the government signing seven contracts in amounts totaling over US$958 million to finance various projects from 2014 to 2019.

Other alleged notable discrepancies reportedly pertain to the contract for the supply of school requisites between the Ministry of Education and Mikalile Trading Company at a total contract sum of US$402 million on October, 27, 2017.

The audit report claimed that the contract was over priced by US$60 million, with interest that was supposed to be over US$78 million, pegged at over US$138 million.

In the contract for the supply of police uniforms and riot gear amounting to US$70 million under the Ministry of Home Affairs and Internal Security the report alleged that supplier was paid despite not supplying items valued at US$4.5 million as at January 31, 2024.

Releasing the report, the Acting Auditor-General said under the Report, it was established that Zambia’s External Public Debt increased from over US$1 billion in 2006 to US$14 billion in 2022.

“From 2014 to 2020 the country recorded a significant increase in external public debt stock from 30 percent to 70 percent of Gross Domestic Product (GDP),” Mwambwa said.

He said an amount of US$2,106,260,540.44 disbursed to 12 State Owned Enterprises for various projects including working capital injection from October 2000 to November 2017 had not been serviced as of December, 31, 2022.

Mwambwa stated that the failure of State-Owned Enterprises (SOEs) to service the loans lent to them was depriving government of valuable financial returns.

“These could be used for public service provisions and subsequently places the burden to settle the primary loan obligations on the government and the taxpayers thereby straining public finances,” he said.

Read More: Auditor General’s report hints at anomalies in petroleum products procurement

In order to address these audit findings, Mwambwa recommended that all borrowing activities adhered strictly to the guidelines outlined in the Public Debt Management Act No. 15 of 2022.

Additionally, he suggested that borrowing for project financing must align with the directives set forth in the Public Investment Management Guidelines of 2023, as issued by the Ministry of Finance and National Planning.

“These recommendations aim to enhance accountability, transparency, and prudent financial management practices within the borrowing and project financing processes,” Mwambwa said.

He also recommended that the government should tighten controls regarding contraction of loans through Supplier Credit Agreements by ensuring that the loans are only recognised as debt upon successful delivery of goods or services.

“The long span in the audit period for the audit of external public debt was necessitated by the need to have a verified position of the national external debt amid the various conflicting figures,” Mwambwa said.

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