14th February 2014
Mr Fred M’membe
Editor in Chief and Managing Director
The Post News Paper
P/Bag E352, Plot No 36
Roads Park, Lusaka
RE: LIES-A Response To Post Newspaper’s Editorial Comment-“WHY IS MMD OPPOSING SATA’S INDECO IDEA?
By Muhabi Lungu
Your editorial of Wednesday January 8th 2014, entitled “Why is MMD opposing Sata’s Indeco Idea? is one of the most uninformed, shallow and pedestrian comments on an economic subject that I have come across in decades. Quite clearly, it shows your lack of understating of general economic principles as is required by the discipline. Your attempt at lecturing to us ‘ignorant’ MMD economist; economists such as Dr Musokotwane, N’gandu Magande, Dr Caleb Fundanga, Emmanuel Kasonde, Ronald Penza, and Edith Nawakwi, is callously diminutive of their well earned international reputation in the science. It can only be equated to my giving a counter legal opinion to one provided by either Sakwiba Sikota, Vincent Malambo or Professor Patrick Mvunga. In such an event, the legal fraternity would obviously be justified to recommend psychiatric help for me and I would humbly be willing to accept it. Moreover, the political subtext by which you attempt to bring to this economic analysis on the subject of INDECO is highly dishonest, as is now your custom, and clearly designed to drive a socialist revisionist agenda which is in itself not fully understood by the author.
As with other editorials you have written, it contains quite a number of lies, which I believe to be intentional, sinister and retrogressive for a newspaper that once used to pride itself as a “paper that digs deeper.” In this response, it is my intention to assist you have a greater depth of understanding in this economic subject matter.
Your editorial deals with three primary issues that are all important for national debate as we move forward and surmount our Jubilee year; to boldly aspire towards new dreams as a sovereign nation in our next 50 years. In accordance with your prioritization, the three thematic arguments are as follows; the theoretical underpinnings of Capitalism vs. Socialism; the efficacy and goodness of the INDECO idea in itself; and the value systems or the characteristics of the people entrusted to execute these ideas. In subsequent editorials, such as the one of 11th February entitled “Sata’s development idea,” you attempt to mitigate your earlier ignorance on the subject by bringing in a fresh argument in regard to the ‘Developmental State’; a subject for which I am well versed.
It is my civic responsibility to evaluate your views and propositions on all the above three thematic arguments you set as parameters in your untruthful comment of January 8th. Of course, I am quite conscious of the fact that in my spending time to do this, it may appear to be putting you on a pedestal of importance, which soothes your ego even further. I assure you that this is not my intention. However, if this be your interpretation, I believe it is worth it, if for posterity’s sake, but a hand full of the thousands of innocent young minds can be saved from your obnoxious corrupting influence; An influence arising from your abuse of the wide circulation of the post newspapers, build on long forgotten past glory and integrity.
For the moment, I will postpone the argument against your opening assertion about the “MMD leadership questioning the rationale behind the re-introduction of the Industrial Development Corporation.” Yes, the fact that we are definitely questioning the rationale towards this incredible directional change in economic policy is true indeed. However, this will effectively be dealt with in the second part of my third letter to you. I will also shed some light on the correct circumstances in which the ‘Developmental State’ has and can succeed.
In this first part of my letter, I wish to begin by making some comments on your second paragraph at the very beginning of your editorial at which you state and propose the following; I quote, “The MMD in government blindly pursued neoliberal policies which have not brought any meaningful development to the country for the two decades they were in power. What meaningful benefits have their capitalist policies brought to the poor of this country?” So you ask.
A Contrast to your Proclamation and an Answer to your Question
First and foremost, I hope you have the decency to agree, that the conclusion you arrived at in the above proclamation is very subjective. Secondly, and notwithstanding its irrational subjectivity, the above statement is a complete lie. Allow me to bring to your attention the first Patriotic Front (PF) budget speech of 2011, delivered by the Minister of Finance, Honorable Alexander Chikwanda. In the second paragraph of his first budget address to the 11th National Assembly, he states the following; I quote,
“Mr. Speaker, as I begin this budget address, I wish to acknowledge the macro-economic achievements that the country has attained when the economy was under the stewardship of my predecessor, Hon. Dr. Situmbeko Musokotwane, MP. I would like to pay tribute to him and the previous administrations for laying a strong foundation upon which this Government will build.”
This acknowledgment by Minister Chikwanda is self evident for any honest person to see and understand. Honorable Chikwanda’s approach towards his predecessor is in great contrast to that of Minister Emmanuel Kasonde’s approach to Mr. Rabbison Chongo, the last Finance Minister under the United National Independence Party (UNIP). In his first budget speech of 1992, Minister Kasonde undertook a vitriolic attack of UNIP’s appalling economic record, without the slightest discomfort that his predecessor was present in the House and that he might take offence. In his view the state of the economy as was found by the MMD had to be put in the correct context. I am sure that Minister Kasonde genuinely believed and expected that Mr. Chongo was man enough to understand his disposition. I can also recollect, in the various discussions that I have had with Mr. Rabbison Chongo, a very close personal friend of mine, how he could not help but develop some anger and at one point even considered walking out of the gallery in protest as to why he was invited to this mercilessly tearing apart of the UNIP record. I only bring about this point to show a contrast in the enormity of differences of economic circumstances between the two major political party transitions in our country. This point will become clearer to you as we move on in this discussion.
Let me get back to my substantive point, regarding Honorable Chikwanda’s paying of tribute to the previous administrations of the MMD for laying a strong foundation on which the PF government could build. I am sure that Honorable Chikwanda was not referring to the PF’s government attempt at claiming responsibility for providing 4,336 medium and low cost housing to the Zambia Defence Forces. It is incredible for President Sata to claim, through his face book page, that he is the one that has provided shelter to the army. It is even more incredible that instructions can be given to the Zambia Daily Mail and the Times of Zambia to carry banner headlines entitled “Sata Shelters army” and Defence Wings get over 4,000 houses. Can a Christian nation surely accept that it is OK for one President to be worshiped for delivering a project started, and had its financing arrangement already prepared for, by another President?; and not a word of mention about the origins of the that Project nor the mention of the names of Levy Patrick Mwanawasa or Rupiah Bwezani Banda.
The whole sordid affair reminds me of a story told to me by a brother of a deceased man. Accordingly, a dishonest man married a widow, whose husband had built her a number of houses and died just before he could finish painting them. Comes the new husband, paints the houses and says to the still grieving wife, ‘Honey, here, I present you these wonderful houses that I have build for you and your children.’ Of course, the wife began to doubt as to the soundness of her decision to marry this man in the first place and immediately begins to contemplate divorcing the ‘apparent gentleman.’ While a person such as yourself may not have a problem with such behavior, I am quite confident that Honorable Chikwanda would not stoop so low. Amazing Grace, Zambia needs deliverance.
It is quiet evident that Honorable Chikwandda was referring to the unprecedented levels of macro economic stability in regard to a number of key economic indicators; A stable foreign exchange rate with significant currency convertibility; Gross International Reserves (GIR) of US$2.7 billion dollars-representing four month worth of import cover; a single digit inflation rate of 6 percent; a downward trend towards lower interest rates reaching 17 percent; an impressive external debt position of US$500 million dollars and a Gross Domestic Product (GDP) growth rate averaging above six percent for the previous six years. A budget size more than 10 times of what it was in 1991 and one which was funded 82.7 percent from domestic revenues.
He was acknowledging that the size of the Zambian economy was so much bigger in 2011 as compared to what it was in 1991. With greater revenues generated from domestic financing, the government in 2003 was able to reintroduce agricultural subsidies through the Farm Input Support Program (FISP). This fertilizer and other input based support program, partly contributed in bringing about an unprecedented three successive bumper harvest in our country; In the agricultural season 2010/2011, more than 3 million metric tones of produce consequently meant that income distribution to the farmer would have a direct impact towards the improvement of millions of livelihoods in rural Zambians. This is what had enabled the economy to embark on an aggressive infrastructure development which the PF are still struggling to complete to day. This acknowledgment by Honorable Chikwada was a mark of honesty and integrity in the mind of a man fully aware of our country’s historical context.
The Situation the MMD Found in 1991
In comparative terms, and if you set the dial twenty years back, you would find the empirical evidence of total macro economic instability; a two or multi tiered foreign exchange rate with a strong presence of a dollar black market rate at Katondo street and subsequent shortages of foreign currency; virtually no Gross International Reserves (in most cases lucky to have two weeks of import cover); inflation rates in excess of 90 percent; interest rates above 50 percent; an external debt of above US$7 billion dollars, and a persistently negative GDP growth rate for more than 15 years in a row; the only exception being the miniscule growth rate achieve in the two years of 1987 and 1989 when the country broke off from the International Monetary Fund (IMF) and hence suspended debt payments for that period.
Nevertheless by 1990, the size of the budget had dramatically reduced and was more than ten times smaller than what it was to become in 2011. It is also important to note that this much smaller size budget was primarily being financed by external bilateral and multilateral donors to the turn of 60 percent and above. And since the ZIMCO/INDECO group of companies could not generate sufficient taxable revenue for government, the bulk of the remaining budget expenditure was financed by borrowing; much like what the government of the PF is plotting to do more that 20 years later. Government could not even pay salaries, particularly for local authorities, on time and at times paid civil servant salaries in the middle of the following month. It is indisputable that the Zambian economy was on it knees as the majority of the INDECO group of companies were insolvent and the mining sector was in an intensive care unit. Consequently, there was general infrastructure decay in the whole country and a breakdown of basic social services. Within fifteen years between 1974 and 1989, the country slipped from being a Middle Income Country to being a Low Income Country. Zambia’s GDP per Capital dropped from above US$900 to below US$300 by 1991.
———-END OF PART ONE———-