UK freezes aid to Zambia amid fraud, corruption allegations

Britain and Finland have frozen funding to Zambia on suspicion that USD$4 million they channelled into the Social Cash-Transfer scheme may have been misused.

The social cash transfer scheme is a donor-supported programme under which the government relays money to vulnerable households in rural areas in the country.

Britain's High Commissioner to Zambia Fergus Cochrane-Dyet confirmed the suspension of funding in a tweet posted late on Monday.

"Correct that UK frozen all bilateral funding to Zambian government in light of potential concerns until audit results known," Cochrane-Dyet wrote in a tweet. "UK Aid takes zero-tolerance approach to fraud and corruption."

Britain's development ministry says on its website it earmarked £48 million (ZMK689m) in aid for Zambia in the 2017-18 fiscal year. The amount that has been suspended is unknown.

Presidential spokesman Amos Chanda said Lungu ordered an inquiry four months ago into possible “misuse” of the aid funds between 2012 and now, and a number of suspects were due to be prosecuted.

“They notified us about the suspension of aid to the social cash transfer scheme but all other forms of bilateral aid are ongoing,” Chanda said. “Following the investigations, the secretary to the cabinet actually presented a report to the president on Friday.”

In a statement late on Tuesday, President Lungu said he was not satisfied with the pace of the administrative measures and gave the secretary to the cabinet, Roland Msiska, the deadline for action.

“I want a speedy and decisive investigation into the matter to establish the status of the disbursement of the social cash transfer programme,” President Lungu said.

“Wherever cases of abuse requiring criminal investigations may arise, such cases must be reported to relevant agencies and where administrative action is required I want to see prompt action taken.”

He gave no indication what the consequence would be if the matter was not resolved.

Former foreign affairs minister Harry Kalaba, who resigned his position in January this year alleging "swelling" official corruption, said Britain's decision proved there was a problem.

"I feel vindicated. The very first time I resigned and when I spoke people felt that I was speaking politics," said Kalaba, who is still a member of parliament under President Lungu's party.

"But now the foreign community is saying what I said when I resigned. What is sad is that the innocent souls will suffer."

Zambia’s external debt rose to USD$9.37 billion by the end of June from USD$8.7 billion in December, the finance ministry said in July, a week after the International Monetary Fund raised concerns over its high borrowing.

Chanda said the welfare scheme would “continue on a smaller scale and we hope the donors can quickly get back on board”.