By John Nkole
A few days ago, MMD legislature, Dora Siliya, endorsed her tribes-mate Edgar Lungu for the top job in the country. It’s her choice and should be respected. However, when considered rationally, Dora’s reasoning is cockeyed, inconsistent and bigoted. She argues that the coffers are currently experiencing a deficit such that the continuity of the PF regime would be the assured way of limiting the financial haemorrhage.
This kind of philosophy, which sharply contradicts normal economic and political reasoning, is that a change in government usually attracts attendant costs associated with dismissals and new hires. What she overlooked is the fact that the financial scourge is currently so cavernous that urgent and radical steps must be made. The existence of an opportunity to elect a new government must, therefore, be leveraged to the maximum. Siliya should know that a change of government is the most assured way of attracting the much needed international goodwill to reverse the trend.
An IMF team that recently concluded its two week mission summed up with the following statement released to the media, ‘A new follow-up mission will return to Lusaka after the 20th January Presidential by-election to discuss the policy priorities of the new administration.’ Insiders at the Ministry of Finance are hopeful a new administration is the only feasible panacea to Zambia’s poor standing with both bilateral and multilateral partners.
It is clear the IMF is disillusioned by the financial position of the Zambian economy, ranking it the worst performer in Africa alongside Ghana, currently broke and unable to go on a Programme. Zambia is also expected to be on a Program, implying it has failed the clean bill of financial test and for it to access any additional global resources, it has to be managed through various conditionalities (Zambians should expect SAP again).
Zambia failed the financial test on three main fronts. First, lack of policy consistency which has made it very difficult for any investor, let alone the mines, to inject fresh capital in the economy. It is against this backdrop mining activity recorded lowest output under the PF government, with a negative 7.1 percent contribution to the economy. Mining businesses are the least happy investors in Zambia at the moment despite the growing momentum that they must be cursed for contributing the least. Other companies are also in an uproar for policy reversals on a number of incentives awarded by the MMD government. Is this what Siliya is happy with? Introduction of various statutory instruments, reversals and reversals? Who invests in a climate like this and hope to create jobs?
Second, infrastructure investment has lagged behind in terms of projections made by previous governments that crafted the Link Zambia road network. This is contrary to the common belief by a section of people that the PF government has injected life into infrastructure. The sovereign bond proceeds going into infrastructure do not march what’s on the ground. For this reason, there is a call for a snap audit on Zambia Railways, Road Development Agency, ZESCO and other beneficiaries of the US $1.75 billion bond.
Third on the health check and of grave concern are poor structural reforms. Minister Alexander Chikwanda has consistently second-guessed most of these reforms that are supposed to arrest the deterioration in the economy, a situation that cannot much the spur of the period 2004-2008 when the economy grew at an unprecedented 7.6 percent (compare that to the current downwardly revised figure of 6.1 percent).
When PF took over power, revenues were around 20 percent of GDP, sinking down to 18.4 in 2013 and may be about 19.1 percent this year. On the opposite side of the equation, expenditure reached levels of UNIP, moving from 22 percent of GDP three years ago to the current 24.6 percent. The PF government has spent FAR MUCH MORE than it earns, a situation Chikwanda still insists is sustainable! How can it be sustainable with the GDP growth rate lower than both the fiscal deficit levels and the rate accruing to both international and local debts (international debt servicing per annum stands at about US $125 million)?
Currently, the current account position is very weak, negative imports (compare this with the Ng’andu Magande period) leading to very weak import cover (the worst in many years). Public debt has expanded from 25.5 percent to 31.1 percent in three years, with an anticipation of further borrowing in 2015 in view of the widening gap between revenue and expenditure. Due to weak investor confidence, the Kwacha has significantly lost value in 2014 while lending rates have soared to levels never imagined in recent years (from an average 17.1 percent to 24 percent commercial bank lending just in two years!).
With the foregoing, the question is: Who is sustaining the Zambian economy at the moment? To sustain the sovereign bond debt servicing (so as to keep RDA and Willie Nsanda happy with private proceeds), the Zambian worker will have to forgo salary increments for next five years or longer. The money workers were supposed to earn as additional income per year is the money going to bond issuers.
The Zambian farmer will equally have to entirely mortgage their livelihoods to FRA that now becomes the only available market for both commercial and peasant farmers. The policies are so lopsided they have mercilessly thwarted private initiatives in maize marketing. Zambia is rapidly sliding backwards to the era of UNIP. Poverty levels in rural communities are projected to increase by a rate of 15 percent per annum (implying that every income you earn as a charcoal burner makes you worse off by that margin).
To reverse this trend, Zambians must not venture on the Dora Siliya proposed suicide mission of keeping PF in power. Every day of PF rule is another day of economic recession, poverty, recklessness, hunger, desperation and joblessness. If Siliya is a true leader, her decisions must be based on the survival of Zambia at large and not as an attempt to rescue her personal financial dire straits. Zambia must GO FORWARD and not backwards.