Feasibility of Zambia’s intention to exit from depending on foreign aid as a tool for development financing.

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Makungu, Moses
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The University of Zambia
Zambia has been classified as one of the poor developing countries in the world with a monoculture economy that depends on copper as a main source of revenue. Revenues from copper have been used to finance development since the time of independence. However, the upward and downward fluctuations in copper prices during the 1970s and 80s resulted in budget deficits. This forced the Country to resort to acquiring aid as additional resources to finance the growing development problems. In 2014 and 2015, during the presentation of 2015 and 2016 National Budgets, Government of Zambia made public pronouncements that the Country would embark upon the process to exit from depending on aid to finance development. The study investigated the feasibility of Zambia’s intention to exit from depending on foreign aid for development financing. The study was guided by three (3) specific objectives. The overall objective was to find out whether it is feasible for Zambia to exit from depending on foreign aid as a tool for financing national development. The first specific objective was to examine the effect of foreign aid acquisition on the financing of national development programmes in Zambia. The second specific objective was to analyse outcomes of the measures on Zambia’s aid exit intent and the third specific objective was to establish the social, economic and political implications of Zambia’s intention to exit from depending on foreign aid as a tool to finance development. The study used exploratory research design which was able to capture largely qualitative and some quantitative data. The study sampled a total of thirteen (13) respondents of these respondents, one (1) came from Ministry of foreign affairs, one (1) from Ministry of Finance, two (02) from Ministry of National Development Planning and one (1) from Development Economic Association of Zambia, one (1) from Institute for Policy Analysis and Research, one (1) from Action Aid-Zambia, one (1) from Jesuit Centre for Theological Reflection, one (1) from UKAID - Zambia, one (1) from Civil Society for Poverty Reduction, one (1) from Water Aid, and two (02) Academicians from University of Zambia. Data for this research was collected using in-depth interview guides and analysed using Qualitative Content Analysis method. In addition, secondary data was collected through literature review. The main finding of this study was that it is not feasible for Zambia to exit from depending on aid as a major tool for development financing. It is only feasible for Zambia to exit from aid upon meeting the three specific pre conditions namely; Expansion and strengthening of domestic financial resource mobilization mechanisms, Prudent use of mobilized financial resources and Strong and Sustained Political Will to Overcome Aid ‘Dependency Syndrome.’ The study also revealed the following three specific findings. First, aid resources have been used to finance development development especially the following social sectors education Health, Water and Sanitation and Social Protection. Second, although Government intended to exit from aid, Zambia does not have a comprehensive aid exit strategy in place to guide its aid exit intention. Third, there are more negative than positive social, economic and political consequences if Zambia decided to exit from aid a tool to finance development. Therefore, this study recommends that the Government of Zambia should reconsider its intention made in 2015 and 2016 National Budgets. Key words: Foreign Aid, Aid Exit, Feasibility
External debt--Zambia , Foreign aid--Zambia