Muhabi Lungu’s response to Sata’s justification of subsidies removal

A RESPONSE TO PRESIDENT MICHAEL SATA’S STATEMENT ON THE JUSTIFICATION FOR THE REMOVAL OF MAIZE AND FUEL SUBSIDIES- IS IT A CASE OF IDEOLOGICAL BETRAYAL OR DECEITFUL PONTIFICATION?

As a citizen of Zambia and as well as an active member of a political party which lost office, primarily due to the accusation of being insensitive and arrogant to the plight of the poor people of Zambia, I feel compelled to make an analytical comment. I make comment on the statement presented to us by President Michael Sata, on his justification as to the reasons the Maize and fuel subsidies have been removed. I do this by posing a number of questions throughout this paper. It is my hope that the government will find time to give us answers to these questions while we are sitting together, debating the issues in full view of the public.

Prelude to the Questions

I think we all agree that this decision has been very dramatic, drastic and harsh considering that no one was expecting this type of economic policy directional change; especially by a party claiming to have socialistic leanings. I for one, admit that taking into consideration of all the socialist rhetoric by senior members of the Patriotic Front; I did not see it coming. In fact, I thought that more subsidies would be introduced in order to cushion the suffering majority. Being the Keynesian economist that I am, this did not worry me too much as I considered it justifiable in an environment in which most Zambians felt that too much emphasis was being placed on economic indicators rather than observable improvements in peoples everyday leaving conditions.

Therefore, it is indeed very sad that the poor majority, the church and civil society have been duped. In the typical fashion of Donch-Kubeba, Zambians have been Gonga-ed. The poor majority who through “campaign rhetoric” were led to believe that the MMD were right wing capitalists, while the PF were left wing social crusaders of the poor have been deceived.  Just like Adam and Eve in the Garden of Eden were deceived by the serpent. ‘Saint Michael’ convinced the Poor and led them to believe that infrastructure spending and improvements in the health sector as well as the education sector would be financed by taxing the rich through Windfall Tax, while reducing the burden of tax on the poor; and when the fruit was eaten, when the votes were cast, the poor found themselves exposed and necked. Under the strong and dictatorial hand of the King Cobra, their women would now go through the pains of child birth and their men toil the fields with their own market determined pricy fertilizer for the rest of their lives; Well, only until they cry out to God for the coming of the messiah; and indeed a change is Goner come.

This removal of subsidies, put in another way is actually an imposition of a Tax on the poor and consequently means ‘less money in people’s pockets.’ No honest person can dispute that this is a major paradigm shift by the PF, who claimed that their Manifesto emphasized the reduction of prices for mealie meal and fuel. From the very onset, I would like to challenge the PF, to point out in their Manifesto or in any of their talking notes at which they had indicated that they would abolish or remove the subsidies on fuel, fertilizer, maize and electricity. That they would increase the cost of travel for the poor and ensure that the cost of production for industry is such that the end price for the consumer is higher than it was during the MMD’s tenure.

Where in the PF Manifesto are these undertakings contained? How will the poor benefit in the short term from this imposition of a huge Tax Burden on the vulnerable by a government that promised them free milk and honey?

Main Questions

I believe that there are two main questions to be addressed in discussing this matter of removal of subsidies. The first question is whether the decision to abolish subsidies is the moral thing to do. In other words, is it morally right or wrong? The second question is one relating to the economic argument. Particularly as it relates to whether the decision is based on sound economic principles and subsequently in which school of economic thought these sound economic arguments are based upon. For the moment I propose to leave the second question unanswered. I will leave the soundness of the economic argument, to a later analytical paper. Meaning, in this paper, I will not attempt to address or debate the issue of whether the decision is economically right or wrong; even though, I do believe that at this particular moment, this decision is ill timed, completely ill-conceived and totally insensitive to the plight of the poor. The poor who were expecting a downward trend in prices and an upward adjustment to their standard of leaving.  That is what the PF and its presidential candidate Michael Sata promised poor people.

The Moral Dilemma

From the statement that the President has made and has been advertised in the public media for the past week now, it is quite clear that a dramatic shift of policy has been made by the PF. It is also quite clear that this dramatic decision is indicative of a difference of opinion and perception of what the PF were expected to do once elected to executive office. Is it a question of either an honest misunderstanding of the issues as presented by the PF or was it a case of deliberate deceitfulness and falsehoods that were consciously peddled to the unsuspecting voter?   If it is the later, to what extent can this conspiracy be said to have been fully understood by the well-meaning civil society organizations?

 

Before I delve into the arguments that have been presented by the president in his press release, let me express my extreme disappointment that this most pivotal directional change in policy was not announced by the president himself. Rather than the President addressing the nation through a press conference, at which questions and scrutiny of this gigantic decision should have been presented, the President decided to outsource this matter, first to his Ministers and subsequently to his press aid. This, in my view, is unbecoming of a head of state in matters that possibly will have a great negative impact on millions of people’s lives. It shows a degree of disrespect and dismissive arrogance towards the people who gave him office. The respectful style of addressing the nation set by all the four previous presidents of Zambia, as well as other world leaders has been shattered with a great degree of impunity.

 

Let me now put on the table the four key arguments that the press statement released through Mr Chella makes. These are as follows;

 

  1. That the decision to removal subsidies such as those “on fertilizer is progressive because it will enable development to be dispensed equitably throughout the country.” Supposedly, “the Farmer Input Support Programme (FISP) has been a pillar for the huge economic inequality in our society as they only benefit the already well to do.

 

  1. 2.    That there have been consistent Budget Overruns of trillions of kwacha on an annualized basis as a result of these useless subsidies on Maize and Fuel which have not benefitted  the poor nor have recorded any tangible outcomes. That the money saved, through farmers contributing towards higher cost of fertilizer, and people paying more money towards their fuel bill, will be used to build infrastructure such as the construction of “100 new rural primary schools or over 120 rural health centeres and the construction of grain storage facilities.” Accordingly this will facilitate “greater economic growth”

 

  1. 3.    That the president was “confident that the long-term benefits of these seemingly harsh decisions outweigh the short-term expectations and that all well-meaning Zambians need to look at days beyond today and tomorrow.”

 

  1. That well-meaning Zambians should not give an ear to habitual armchair critics or those practicing ‘megaphone’ politics without immediate or long-term solutions in sight of the numerous challenges facing the country.

 

Observations on the President’s Statement

The first worrying observation is that in this short ‘presidential’ statement, the word ‘Long-term’ appears or is alluded to in five separate instances. The entire argument appears to be predicated on the supposedly long term gains rather than short term measures to cushion the poor and vulnerable.  In fact, the statement ends with a veiled plea for ‘patience’ as the president seeks to thank the Zambia people for enduring the increasing levels of poverty that will result immediately following these PF imposed “harsh measures.”

The second worrying observation is that the word poverty reduction appears only once in the entire statement. Only one time. The arguments are heavily weighted towards preventing budget overruns, long-term infrastructure investment, prudent expenditure controls and efficient macro-economic management. Pro- poor arguments that mitigate the harsh realities of people’s every day livelihoods are conspicuously absent. Instead we are told to “look at days beyond today and tomorrow in order to facilitate greater economic growth” What type of a dramatic turnaround is this? What sort of hypocrisy can this be? It boggles the mind indeed.

 

The third worrying observation is that all these four main points in the President’s statement are not only inaccurate but are highly debatable. For example, if it is true that these subsidies had not benefited the poor, then why did this country experience three consecutive years of bumper harvests that led to clear reductions of the price of mealie meal. In fact, the Ministerial statement made by Hon Robert K.K Sichinga on this subject states the exact opposite of his president’s statement. In paragraphs 10 and 11 of the statement, the Minister states and I quote word for word,

“Farmer input support Programme (FISP) – provides production subsidies, mostly for maize grain production to some 900,000(ODD) small-scale farmers. It has achieved a good measure of success in enabling Zambia attain Maize grain self-sufficiency and security both at household and national Levels. In fact, the programme has enabled exports to neighbouring countries. Mostly from small-scale farmers production. The 2010/11 season achieved, by far the best performance when 3.1 million metric tonnes was produced-while in the 2011/12 the production dropped to 2.7 million and 2013 is estimated to reflect a drop to 2.4 million metric tonnes. However success has come at a very high cost.” Yes Honourable Sichinga, It is true that success usually comes at a very high cost….. So clearly the argument as itemized in number one of the president’s speech is either a total lie or the president and his Mister do not compare notes before they issue statements. Please also note from the Minister’s statement, that since the MMD left office, the production of this most import grain has consistently been dropping. The question is why?

The truth of the matter is that the President’s statement is inaccurate and deceitful. So let us ask the question again??? If the programme was so successful, then why abolish it? A rational and reasonable answer has to be provided to this question. Not the bogus Vituperations that we are being presented with by Mr G Chella. Last time I checked small-scale farmers were not in the category of the “already well to do.” Please let us attempt to be honest to each other in a Christian nation.

If the fuel subsidies had had no impact on the masses, then how does one account for the proliferation of more and more Zambians being owners of motor vehicles and the resolution of the transport sector with the growth of affordable passenger commuter network. Even in America and Britain, plenty of studies have been done that indicate that when the price of fuels are low, the Motor industry tend to boom and that the inverse is true. I can go on, but I had indicated that the emphasis of this paper would not be based on economic arguments. Suffice to say that the MMD managed to build Roads, Hospitals, and Schools and had bumper harvests, while at the same time maintaining both subsidies which led to lower prices for both Fuel and Mealie Meal. Meaning, under the MMD we could afford to do both. ‘So, if we did it, why can’t the PF also did it.’

The truth of the matter is that the PF is on record for apologizing for their poor management of the Agriculture input delivery mechanism for the last farming season as well as the mess that resulted in their failure to pay farmers on time. They should admit that the price of food has gone up because of this incompetence not because of subsidies. They say that one of the reasons for withdrawing the maize subsidy is because that want to invest in long term facilities such the construction of grain storage facilities. However, I need to point out that if the agricultural sector is destroyed in the short term, due to PF incompetence, the so called storage facilities that will be built will be of little practical value to the local producer.

Or maybe, they will be useful towards storing imported yellow Maize, which I see reoccurring, as it once did when then Minister of Agriculture, now Vice President of the republic, Guy Scott had implemented similar agricultural policy initiatives in the 90’s. Am sure, now that he is in charge of Disaster Mitigation, Dotty Scottie will be more than overjoyed to come to the rescue over a matter they were warned about. I bet too, that the money that will be used to mitigate this disaster will not have been budgeted for.

Justifications in comparison to past PF positions

The people of Zambia had given quality space and time to a seemingly messianic and credible “King Cobra.” An enormously big ear was given to a certain habitual armchair critic who pontificated loudly, using a powerful megaphone in the guise of a certain newspaper, and numerous private radio stations to consistently pontificate to them that the MMD were only concerned with statistical numbers and preoccupied with long term measures; measures that had no immediate impact on the poor people of Zambia. According to the PF, the MMD did not care about the immediate suffering of the people. This persistent armchair critic convinced the Zambian people that the MMD were only preoccupied with GDP growth, Inflation rates, credit ratings, infester’s and protecting themselves through corruption. It was successfully pointed out that it was for these reasons that Fuel prices were high, and that Mealie Meal was expensive at 36 Kwacha (rebased), hence the reason people were having only one meal a day. The reasons there were no drugs in the Hospitals, etc.

A good case was put forward, indicating that the position of Zambia in regard to the United Nations Human Development Index (HDI) had dramatically fallen since the late 1980’s. That this was due to capitalist economic policies that tended to favour the long-term economic argument over short term social needs requirements; that the MMD had outsourced the care of Zambian people to the private sector and to the harsh rules of market forces. Accordingly, the solution was a socialist revolution that would ensure a more interventionist government that would provide more programs towards the vulnerable and small scale famers. There would be more subsidies and more programs to cushion the vulnerable peasant farmers, the urban poor and the unemployed youth. In fact, instead of 8 bags of Fertilizer in the FSIP, the PF would increase it to 16. Instead of a few hundred recipients, they would increase it to over a million. Instead of long term visions of the MMD, they would do it in 90 days. They proclaimed that their social policies would not be dictated to by infesters or donors. How ironic, that today the PF can find solace in being defended by the World Bank and its sister organization in the IMF; the creators of the Structural Adjustment Programmes (SAP).  It is ironic indeed that the PF can feel worthwhile being defended and protected by the American Ambassador. Am sure that the Chinese Ambassador would say, ‘We do indeed live in interesting times’ According to them, the PF Manifesto was clearly pro- poor and would ensure among other things some of the following gains;

  1. Reduction in Fuel prices and an end to fuel shortages
  2. Reduction of Mealie Meal prices and  an end to shortages
  3. A general improvement in the standard of leaving through an affordable cost of leaving structure (reduction in the cost of the food basket)
  4. Rapid gains in poverty reduction and a reversal of our Human Development Index
  5. More Money in poor people’s pockets and,
  6. Five million Jobs in five years for the unemployed youth.

Nowhere in their argument did they ever indicate that there would be a removal of subsidies on fuels and Maize. In fact, they said that Fuel prices would be dramatically reduced because they would get rid of the MMD corrupt practices and cut out the middle men. To this effect, a commission of inquiry was instituted shortly after they came into to power. We all waited patiently for the results, only to be told that prices of fuel will have to go up because the ‘evil MMD’ was actually helping the poor by keeping down the price of fuel by the evil mechanism of subsidies. What has happened to this promise? I ask. At what stage did his Excellency Michael Sata realize that fuel prices and maize prices needed to go up and be dictated to by market forces? Was it during the campaigns or has he had an epiphany now that he has haphazardly created more than 30 districts, without consultations, due diligence and without budgeting for them. Has he realized this need now when he has an over blotted cabinet, when in fact he had promised to reduced it? Is It because of the many unfulfilled promises he has been making in order to win the deliberately engineered by-elections?

For Example, In the Chongwe By-election, he promised that all the villages around where he was holding a rally would be electrified immediately. To date, this has not happened. In Chama, he promised that Mulungushi textiles will be operational  by December 2012 and that it would be buying cotton from even as far as Malawi; it is now more than nine months since this promise was made and Mulungushi textiles is still keeping goats and pigs. In every by election that has been caused, he has made undertakings which have not been kept. Is this the reason that poor are being asked to pay for higher prices for fuel and mealie meal? So, it is not OK to subsidize the poor because it causes budget over runs, but it is perfectly OK for budget overruns to be caused when it concerns by-elections, increased presidential emoluments, unplanned creation of districts, unplanned rebasing of the Kwacha, underground train stations in Lusaka and any wild imagination and dreams that the president may pull out of his hat. As for the poor, let the market forces deal with them. Let them pay through their noses and hope to benefit in 10 years’ time when PF will no longer be in government. What a wonderful world the PF has created?

Conclusion

At the beginning of this paper I had posed a question as to whether this dramatic change in paradigm shift was as a result of a betrayal of the ideological underpinnings of the PF or whether it was a deliberate case of deceitful pontificating by our own beloved and believable ‘Saint Michael.’ The truth of the matter is that it is both an ideological betrayal for those people who genuinely believed that the PF were poor loving socialist. They have turned out to be extreme capitalist who would make Milton Friedman and the Monetarists proud. This is the reason why, the World Bank is standing on their side as their most fervent advocate. Yes, I remember that the Word Bank also defended (SAP)-Satana Ali Pansi. I guess this is the second coming of the Anti-Christ.

As for the deceitful pontification, I think we all remember that ‘Saint Michel’ proudly proclaimed that he would lead by God’s Ten Commandments. As for me, I am reminded of what Jesus said to the teachers of the Law that sought to delude the unsuspecting believers with their received wisdom when they asked Jesus, as to whether Taxes should be paid to Caesar? After deducing their evil motive and calling them hypocrites, he asked them to show him the coin and as to who’s face was on it.   “Well then, Jesus said, give to Caesar what belongs to Caesar.” Jesus goes on to further explain about these Pharisees and Sadducees saying, “So beware of these Pharisees and Seducers carrying on as expert teachers of the religious law. For they don’t practice what they teach. They crush people with unbearable religious demands and never lift a finger to ease their burden. Everything they do is for show. And they love to sit at the head table at banquets and in the seats of honour in the synagogues.  For they like to parade around in flowing robes and love to receive respectful greetings as they walk in the marketplaces, and to be called Rabbi. Yet they shamelessly cheat widows out of their property and then pretend to be pious by making long prayers in public. Because of this, they will be severely punished. (Luke 20 verse 45-47)

Beloved country men and women, Youth of this country, next time as you find yourself scratching around every corner of the house, looking to find every coin laying around, in order for you to pay for higher prices of Fertilizer, Maize and Fuel, take a good look at that court of arms on that new and shining silver rebased coin, brought to us by ‘Saint Michael’ and remember, that this is truly a case of giving to Caesar what belongs to Caesar.

Muhabi Lungu

Concerned Citizen, Member of the National Executive Committee (NEC) and Communications Director in the office of Dr Nevers Mumba-President of the MMD

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