Here are a few reasons Kwacha keeps deppreciating

Kwacha almost back to its real worthless value

Mr. Editor,

Reference is made to the above story. As you may recall, a few weeks ago you reported that Zambia’s economic ratings had been downgraded for the second time since the PF came into office. Today you are reporting that the Kwacha has weakened again.Mr. Editor,

All these are economic indicators of Zambia’s down turn and should be expected in a country which lacks serious policy direction.

Just look at what happened during the recent presidential address to parliament.  In normal cases, such an address should provide the road map for the country’s legislative agenda. Instead, Zambia ended up with what can mildly be said to have been a less-than-serious address to parliament and through parliament, to the nation and the international business and diplomatic community.
Many diplomats had converged on the parliamentary building to listen and thereafter, to try to decipher the future direction of the country. All indications are that they left parliament in horrified surprise at the lack of substance in the Zambian political leadership.

Then came the budget address which was presented by an acting president who is the finance minister. Apparently, and in line with the new protocol, as acting president, the finance minister excused himself from the debates which should have followed his presentation. For three consecutive days now though, the budget has not been debated by parliament because MPs want the minister of finance to be present when they debate it.

Business confidence, whether local or international, does not thrive in an environment of confusion. Confusion does not inspire confidence in the business community. In these matters, business confidence is the king; and such confidence can be destroyed overnight by incorrect and inappropriate actions.

Furthermore, business confidence does not thrive; nay cannot exist, in an environment riddled by the following:

  • ·         Corruption: Two very powerful ministers have been accused, or have accused each other, of corruption. These are Geoffrey Mwamba, the Minister of Defence, who according to protocol, is third in line from the President and after the Vice President. The other is Winter Kawimba the new minister of Justice and Chief Executive Officer of the ruling party, PF. Additionally, there are reports of malfeasance concerning the contract awarded to a company owned by the Minister of Finance Alexander Chikwanda, in refurbishing State House and its residence, Nkwazi House. Chikwanda who holds the purse of the nation, also always acts as President whenever Sata is out of the country. So, three most powerful ministers have been accused of corruption.
  • ·         Undermining the Judiciary: Over the past few months, the Chief Justice and his Deputy have been unceremoniously retired through a Presidential fiat.  A judicial inquiry headed by an unknown Malawian judge Chikopa, with alleged connections to President Sata, was instituted. This inquiry is at a standstill as its legality has been challenged in the Supreme Court. However, in spite of these contestations, Chikopa was sworn-in by President Sata but remains for months, cocooned in his five-star hotel room doing nothing! Furthermore, the symbolic ceremony for the retired Chief Justice and his Deputy which normally takes place at the High Court buildings in Lusaka has yet to take place. In itself,   the delayed ceremony is a further sign of confusion in the conduct and management of national affairs.
  • ·         Contempt for the law: Apart from the manner, in which the Chikopa inquiry was instituted, the country has witnessed the specter of opposition parties, more especially the more serious ones – the MMD and UPND – being illegally denied “permission” by the police to hold rallies. All the time, the police give frivolous reasons for not being able to police the rallies as requested by the political parties. These are serious violations of the people’s constitutional rights of association, assembly and expression which do not contribute to the view of Zambia’s stability in the long term. Then there is how the Barotseland issue is being handled. There is a potentially explosive situation here which needs to be addressed. That is why the British High Commissioner and the Head of the United Nations community in Lusaka have separately been to visit Mongu over the past few months. the American CIA also rates Barotseland as an area of concern in Africa.  
  • ·         Uncertainty over tax regulations: During the campaigns, the PF had promised to revise the tax regimes for the mining companies. Although no new steps have been taken towards fulfilling those promises, the business community views those promises, as well as the contents of the PF manifesto, as still on the medium to long term agenda of the PF government. Your guess is as good as mine as to when the PF will clarify its true position on mining taxes, beyond accusing the mining companies of under-reporting their production quotas.
  • ·         Unclear economic policies: Going by the PF manifesto, the current ruling party is socialist-inclined, along the lines of Kaunda’s UNIP. Indications for that inclination are clear. For example, Zambia Railways has been re-nationalized, and so has ZAMTEL. But in a rather confusing episode, the previously nationalized Finance Bank, which used to be owned by an ally of the PF, has been handed back to the previous owner. Additionally, a minimum wage was proclaimed without any consultations with the main stakeholders, the Chambers of Industry or even the SMMEs, who are major employers of labour in Zambia, besides the government. Then new provinces, districts, universities, etc have been announced without any proper prior research being undertaken to assess their viability. The absence of budgetary provisions for many of these presidential proclamations has also undermined the confidence of the business community in the management capacities of the current PF government.
  • ·         Violent industrial and other actions: the nation has over the past few months witnessed violent activities at various commercial and industrial establishments, whether these are owned by the Chinese or not. Some of this violence is/was spawned by the ‘crisis of over expectation’ which was generated by the promises made by the PF before they came into government. Additionally, UNZA and CBU have been involved in some violent activities which, had they been managed properly, could have been avoided.
  • ·         Low competence levels in the leadership of the Civil Service: Almost every position in the top leadership of the civil service has been replaced by PF cadres in line with the PF manifesto. Most of these, except perhaps in the Ministry of Health, are under qualified presidential appointees who have fumbled along at the expense of service delivery. Most of the people appointed to leading positions such as those of Permanent Secretary are what someone referred to as “people of room temperature IQs.” It is not every Jim and Jane who can professionally lead a Ministry. A business management manual states that you need no less than 10 000 hours [in other words three and half years of 8 hours per day spent] of consistent work before you can consider yourself an expert in any field. Is it any wonder that the President could not find space on a recent Johannesburg to Brazil flight?
  • ·         Muddled-up foreign policy: The absence of clarity in Zambia’s foreign policy has not helped. Dramatically, our close associations to President Mugabe and the discredited North Sudanese President Bashir are cases in point. Instead of associating with new emerging BRICSA (Brazil, Russia, India, China and South Africa) economies, Zambia is being banded together with Mugabe and Bashir.

All these factors have added to an environment where Zambia has successfully created a culture of mediocrity over the past year which has resulted in the lack of business confidence in the Zambian economy.

As already indicated above, business confidence is the king in the development of the national economy. But for business – whether local or international – to have confidence in Zambia, you need an efficient and highly qualified civil service that is corruption free, i.e. in Botswana. You also need to ensure that other instruments of governance, such as the judiciary and the police, are not undermined by an over-zealous Executive.

These are just some of the reasons why the Kwacha keeps falling and Zambia’s ratings are lowered at every stage while we say “Ndeloleshafye’.

 Name with held.

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