NDC members
NDC members

On or around 25th April 2018, President Edgar Lungu signed into law the National Health Insurance Bill despite widespread opposition, rejection and condemnation of this bill by most Zambian citizens who took time to read this bill and understand it’s far reaching consequences. President Edgar Lungu and his government seem to know that the people of Zambia did not want this bill to be signed into law hence the bill was signed into law in a shroud of secrecy. It seems only the government friendly media such as the Daily Nation, Times of Zambia and PF social media blogs were aware of the signing into law of this bill because they are the ones that broke the news to the public. However, the consequences of this law cannot be hidden, it’s now only a matter of a few months before Zambians who are formally employed start to see the salary deductions off their payslips when this law is implemented.

In this policy release, we will address three items for discussion;
1: Our understanding of the National Health Insurance Act
2: The negative consequences of this law for the people of Zambia
3: The NDC policy alternative for financing of the health sector.


The preamble to the national health insurance act states that the objectives of the law are to provide for sound financing of the national health system and to provide universal healthcare services to the people of Zambia by way of establishment of a national health insurance fund, funds of which are to be collected through a national health insurance scheme (tax) administered by a new parastatal body to be established called the National Health Insurance Management Authority (NHIMA). This law mandates every working Zambian citizen above the age of 18 years to make monthly payments or contributions to NHIMA. These funds are then pooled together into the national health insurance fund. Those citizens who are working and paying into this scheme will be given membership cards which they will be able to use at a few select private clinics and hospitals where they will be able to obtain some discounts whenever they require medical treatment. A big chunk of the funds collected from this tax should then be used to rehabilitate government hospitals and clinics that are to be used by Zambians who are not members of this scheme. In terms of collection mechanisms, for people who are in formal employment, payments to NHIMA will be made in a very similar manner to NAPSA contributions. Both the employer and the employee will have to make equal contributions to this scheme. For the employee, this will come as a deduction from the salary. For those in informal employment or self-employed, the PF government does not have any solution of how they will compel these Zambians to voluntarily pay into this scheme. So in essence the NHIMA will only be able to collect this tax from formally employed people, these are people working for companies in established industries such as banking, mining, manufacturing, retail, telecommunications, parastatals, transport, insurance, government institutions etc. In short, as long as you get a payslip from your employer, you will be the first to be hit hard by this tax, because it’s the easiest way for the government to collect money from working citizens, in the same way that ZRA collects PAYE and NAPSA collects pension contributions.


In this section we outline the social and economic impact of this law. We discuss which sections of Zambian society will be most affected by this law and how companies and employers will react to this law or tax. We also give 11 reasons as to why the National Democratic Congress (NDC) opposes this law and calls for its immediate repealing and abolishment of the National Health Insurance Management Authority.


The people who will be most affected negatively and short changed by this law are those that are currently in formal employment. By formal employment we mean those that are working for companies that are registered with PACRA, ZRA, NAPSA, Workers Compensation and that comply with legislation regarding taxes and already remit PAYE taxes and NAPSA contributions on the employee’s behalf to ZRA and NAPSA. Examples are companies like KCM, MCM, Airtel, MTN, FNB, STANBIC, STANCHART, ZESCO, ZAMTEL, SHOPRITE, PICKNPAY etc. Companies like these will be the first to be required to start deducting health insurance taxes from their employees salaries because it is the easiest way for the government to collect taxes. NHIMA will operate in exactly the same way that ZRA and NAPSA operate, they will focus on the formally employed as a mechanism to collect these taxes. Employees working for companies like these should expect salary deductions to start within the next few weeks.


Many Zambians in formal employment already have private health insurance provided to them by their employers through institutions such as Hollard, SES, Madison and ZSIC. These employers pay monthly premiums to these private health insurance providers to provide health insurance to their employees. These employees are given membership cards which they are able to use at healthcare providers such as CFB hospital to get medical treatment. Infact this national health insurance scheme is an exact copy of this type of health insurance scheme with one fundamental difference. With private health insurance schemes, employers do not deduct premiums from the employee’s salary, they provide this insurance as part of the conditions of service. In contrast, the government health insurance plan requires salary deductions from the employee and an equal contribution from the employer. Now, these Zambians who already have health insurance through their employers are being asked to pay into this NHIMA scheme, is that fair? Is it fair to ask someone to insure themselves twice? This law is mandatory and does not have exemptions, the result is that employers such as the ones we named above will now be contributing into two health insurance schemes, these are, the already existing private scheme and the mandatory compulsory NHIMA scheme. It will become very expensive for these companies to maintain two health insurance schemes for their employees, as a result, these employers will cancel and void the free private health insurance that they are currently providing to their employees and only pay into the compulsory government scheme. So not only will employees lose their superior free private health insurance, they will now also be getting a lower salary because the government will be deducting more taxes from their salaries. This law does not give any exemptions to those Zambians who already have private health insurance.


The biggest mining companies on the Copperbelt such as KCM and MCM own hospitals which provide healthcare services to their employees and immediate families. These mining companies together employ thousands of people. These thousands of employees don’t need government health insurance because their healthcare needs are already catered for by their employers through the hospitals and clinics they own and manage. Is it fair to tax and compel these workers in the mining companies to pay health insurance to the government when the companies they work for have hospitals? This tax will be extremely unfair to thousands of miners on the Copperbelt who are being forced to pay for something that they will never even use.


The number of Zambians in formal employment is estimated to be around 850,000. This constitutes less than10% of Zambian citizens of working age. These citizens are already the only ones who pay very high PAYE taxes. These are the same people who will be the ones paying this insurance tax to NHIMA. To make it clear, being in formal employment does not mean that one gets a good salary, it simply means they are working for an employer that is formally registered and therefore makes it easy for the government to collect taxes from these people by way of salary deductions from the employee by the employer. These deductions are then reflected on the payslips. Most Zambians in formal employment earn less than K5,000 per month. So this sub section of the population that constitutes less than 10% of the working age population of Zambia will now have a new heavy health insurance tax to deal with on top of the high PAYE taxes that they are already paying. In essence, the government is going to be deducting more money from the salaries of these people to rehabilitate UTH and government clinics, but isn’t this why these people already PAYE? Isn’t PAYE tax supposed to be used to maintain government hospitals, schools etc.?


How does the PF government intend to collect health insurance taxes from the self-employed or informally employed?
ZRA and NAPSA have failed to implement fully functional systems for collection of taxes and contributions from the self-employed, so how is NHIMA going to do this? This goes back to our point 4, if this institution called NHIMA fails to collect from the self-employed they will begin to increase deductions from the formally employed in order to raise more funds, the same way ZRA keeps increasing PAYE tax rates for the formally employed but fails to collect 3% turnover taxes from the self-employed and informally employed.
A tax can only be fair if every working citizen contributes towards it, asking 10% of the population to pay for the social needs of other citizens, some of whom are wealthy self-employed people but not paying their fair share will result in resentment of this tax. This tax will be the downfall of this government.


This new health insurance tax is another cost of doing business for employers. The basic objective of every business and company is to make a profit. Companies make profits by keeping expenses and production costs as low as possible and maximising employee productivity. This new tax which employers will also be required to pay is an extra expense and additional cost of doing business. As a result, employers will hire less workers and require more productivity from existing employees. This law will stunt job growth in the economy in the long run as employers will opt to keep their workforce as low as possible in order to avoid having to pay this tax. Companies with very large workforces will have a big monthly insurance tax bill to pay to the government. The result in the long run will be that employment opportunities will reduce because companies will be looking to have less workers on their payroll.


The fundamental reason why companies engage in casualization and sub-contracting operations to Chinese companies with poor working conditions is that they try to avoid these government imposed mandatory financial outflows such as NAPSA contributions, Workers compensation, gratuities and this new national health insurance tax. These big companies choose to avoid these costs by passing on these obligations by means of sub-contracting to Chinese companies that do not observe Zambian labour laws, therefore absolving themselves of all legal responsibilities for the welfare of their employees. Today many mining companies on the Copperbelt have outsourced key mining functions to Chinese companies which do not remit PAYE, NAPSA and Workers compensation contributions to these institutions. This new law will encourage further casualization and sub-contracting as large companies try to avoid paying this new tax to NHIMA. The long term effect of this law is that people working in the mines will no longer be direct employees of KCM or MCM, but they will be working for Chinese sub-contractors who offer terrible slave like working conditions. The Chinese seem to have preferential treatment by the government of President Edgar Lungu and can get away with not observing labour laws because the PF government is compromised by Chinese owned institutions.


The first impact of this law is that salaries of working Zambians will be reduced due to further tax deductions from their salaries. At a time when the cost of living is increasing sharply, inflation at roughly 8%, it doesn’t make sense to burden the citizens with further taxes. A recent report by the Jesuit Centre For Theological Reflection states that the cost of living in Zambia for a family of 5 is now over K5,000 per month. This means that the poverty line for an average Zambian family is now K5,000. Anything below that can be deemed to be living in poverty. The vast majority of Zambians earn well below K5,000. Does it make sense to impose further taxes on these people? Aren’t you subjecting them to further poverty?
The second impact on wages is that the employers will now be reluctant to give their workers salary increments due to the fact that they now have another cost or expense to deal with in terms of payments to NHIMA. Funds that would have been reserved for annual salary increments will now be diverted to pay insurance tax to NHIMA. The long term result is that wages will be stunted at a time when the cost of living is increasing which the ultimate result will be an increase in poverty.


The NDC opposes this law for the simple fact that the citizens of Zambia are already over-taxed. Zambians have the lowest salaries in the SADC region but pay the highest taxes. Does this make sense? Zambians already pay the highest PAYE taxes in the region. In just the last few months the PF government has increased or proposed the following taxes; 70% increase in electricity cost, increase in fuel price, proposed borehole water tax, increased TV levy, toll gate fees, increased import duty tax for motor vehicles, increased presumptive tax on public transport, abolition of maize and fuel subsidies and proposed talk-time deduction tax for garbage collection. All these are in addition to the already existing taxes such as PAYE, land rates, council rates, VAT, Excise duty and rising inflation.
Does it make sense to burden the people of Zambia with this new health insurance tax?
What will the people have left over from their salaries to pay rent, school fees, build a house, buy a car, buy groceries and even save something for a holiday if the PF government is going to take everything from their salaries in the form of taxes?


The PF government and quasi government institutions have become notorious for various abuses of public resources. We won’t delve deep into these abuses because they are clearly documented in the Auditor General’s report and others in the public domain. Examples such as the corruption and cost inflation involving the purchase of fire tenders, ambulances and road projects are widely documented.
Can we therefore trust that NHIMA will be any different from RDA or Ministries of Local Govt or Health?
What guarantee is there that NHIMA will be paying the private hospitals on time so that those who have health membership cards can access health services at private hospitals like CFB?
Government institutions are known to pay their creditors late, some pensioners have been waiting for years for their pensions, government contractors are getting paid after two years. Today NAPSA has mismanaged member pension contributions by building thousands of houses in Kalulushi and Lusaka which they have failed to sell, and invested hundreds of millions of dollars in shopping malls with tenants that are failing to pay rent. These terrible NAPSA real estate investments have become ghost loss making toxic assets that they are even failing to sell off at discounted prices, ghost houses that no one will ever buy or live in. NAPSA is cash strapped and is failing to pay lump-sum payments to retirees because the funds were mismanaged and now tied up in these loss making real estate ventures.
What guarantee do we have that NHIMA will be any different from NAPSA?
What guarantee do we have that these funds held by NHIMA will not be diverted to pay the $700 Million and $1.2 Billion Eurobonds which are due for payment in 2022 and 2024. We have seen how toll gate revenue is being misused and diverted with impunity and without consultation or transparency to apparently fight cholera and pay down government debts. NHIMA will become another RDA with very little oversight and gross mismanagement of proceeds.
What will happen if NHIMA fails to pay the private hospitals on time, and then those hospitals turn away patients with membership cards? Will Zambians be reimbursed their money?
These are private hospitals which the government cannot compel to attend to patients as they do with UTH and other government hospitals. If the government hasn’t paid them, they will not attend to patients.


This bill was signed into law without informing the people of Zambia how much will be deducted from their earnings. This has struck fear and panic in the hearts of many Zambians. This law states that the tax deductions or tax rates will be at the discretion of the minister of health. To this date Dr. Chitalu Chilufya has not given any indication on how much Zambian citizens will be required to pay on a monthly basis. If Dr. Chilufya says that the amount will be K500 per person no one will be able to challenge him because he will have full authority on this matter.


Having discussed the reasons why we oppose this law and call for its repeal and abolishment of the National Health Insurance Management Authority, we will now outline the actions that the NDC will take when elected into government to manage the health sector.


When elected into government, the NDC will immediately begin the process to repeal the National Health Insurance Act and abolish the National Health Insurance Management Authority. The repeal and abolishment of the NHIMA will be done in a responsible, orderly and phased manner to ensure a smooth transition to a new healthcare financing model. The transition will take 6 to 12 months. We will ensure that all outstanding debts to private healthcare providers are paid and all supplier accounts are paid before termination of these contracts and closing down the NHIMA accounts. NDC will immediately cease deductions from employee salaries to give Zambian citizens more disposable income. Those Zambians who wish to go into the private market to buy health insurance will be free to do so without the government compelling them to do so, employers will be encouraged to provide private health insurance to their employees. Any excess funds being held by NHIMA at closing date will be transferred to Treasury Control Account 99.


While the NDC will seek to reduce the cost of doing business for companies and employers, we will require those employers that do not provide private health insurance to their employees to give those employees a health insurance allowance, similar to transport allowances, accommodation allowances, and meal allowances which are already required by labour law. We will ensure that these amounts are reasonable and lower than what the employers had been previously paying to NHIMA. This allowance will only be meant to subsidize the health needs of the employee and not to cover the whole cost. The employee will not be mandated to go and buy health insurance from this money, they will be at liberty to do what they want to do with it but will be responsible for their own health needs. The NDC will also increase the tax-free PAYE threshold from the current K3,300 to K4,500. This means that the first K4,500 earned each month will be tax exempt giving the Zambian worker more disposable income. The Zambian worker can then use these extra funds to buy private health insurance or pay for medical bills as and when they arise. There will be no mandatory requirement for citizens to have health insurance.


An NDC government will restructure the ministry of health, today the MOH is bloated with many bureaucrats occupying offices who are not actually involved in health service delivery. These include several high ranking officers, directors and other office bearers who are not essential for the function of the ministry. These bureaucrats will be removed from their offices and taken off the ministry of health payroll in order to free up resources and funds that be used to increase nurses’ salaries, improve health infrastructure, build more health infrastructure and hire more nurses to attend to patients. The goal of the NDC is to reduce the doctor to patient and nurse to patient ratio by having more health workers in service delivery and less highly paid administration bureaucrats. There will be less administration but more service delivery which will result in better outcomes for patients in the form of faster and better treatment due to availability of more medical staff.


The PF government states that the objective of the health insurance law is to raise funds for financing of the health sector, while we agree that the health sector needs funding, we fundamentally disagree with the means by which the PF is using to raise these funds. Zambian citizens are already over-taxed and cannot bear any more taxes. As NDC we will raise these revenues by taxing other avenues such as the mining companies. We will not introduce any new mining taxes, we will only strictly enforce existing mining taxation laws to ensure that mining companies are tax compliant and remitting to ZRA all taxes that are due from them by law. It’s a well known fact that mining companies are involved in tax evasion activities that have caused Zambia to lose billions of dollars. Just recently ZRA unearthed a scam of close to $7 Billion dollars by First Quantum Minerals in evaded taxes, and this is just one company. All other mining companies are involved in these tax evasion activities ranging from transfer pricing to induce artificial losses to overstating production costs, and understating revenue to reduce their tax bill. With strict tax compliance and enforcement, billions of dollars will be raised to fund not only health but education and other key national infrastructure. The NDC will also revise and reduce tax incentives that are given to foreign nationals, they must pay taxes just like Zambian citizens do.


An NDC government will immediately change the procurement process for medicines by the Ministry of Health. There will be no more middle-men in the procurement process. NDC will purchase medical supplies in bulk directly from the manufacturer, in this way we will cut out middlemen profits, take advantage of bulk buying discounts and ensure proper controls on the quality of medicines and supplies that end up in our hospitals. This will result in abundant, cheaper and better medicines and supplies for the people of Zambia.


The PF government of President Edgar Lungu is running a bloated government. We have too many ministries and unnecessary government officers who are drawing huge salaries. As NDC we have identified about 5 government ministries that can be closed down or fused into other government ministries in order to save hundreds of millions of Kwacha. Ministries such as (agriculture, livestock and fisheries) (finance and national planning) (mines and energy) (education and higher education) (tourism and chiefs), these can be fused together or consolidated. This will result in the savings of billions that can be funnelled to health and education. The ministry of religion will be closed permanently, our church bodies do not require a ministry to oversee them, they have functioned very well for over 50 years without a minister. We will also abolish offices such as district commissioner as well as close non-useful embassies to save money that will be used for health service delivery. It costs the government over K50 million per year to maintain one embassy. Expenses include diplomat salaries and allowances, rentals for diplomatic staff, building rentals, air-tickets, school fees for children etc. These expenses can be done away with by closing embassies in countries with which Zambia does not do any meaningful trade such as Cuba, Malaysia and Egypt. These millions can then be funnelled into the health sector.
In conclusion, the NDC believes that the National Health Insurance Act is a flawed, ill-conceived law that will not succeed and will be a burden to the people of Zambia.
As the NDC we believe that the alternative policies we have put forward would work well for the people of Zambia, hence when we are elected to office we will immediately begin the process to repeal the National Health Insurance Act and abolish the National Health Insurance Management Authority.