LUNTE MMD member of parliament Felix Mutati says 2015 is a lost year for the Zambian economy. And Mutati says some of the roads being constructed under the Link Zambia 8,000 projects are leading nowhere.
Mutati, the former commerce minister in the MMD government, said it was very clear that the Zambian economy was currently regressing, with the cost of living for ordinary Zambians going up while money was becoming scarce.
He said Zambians were being driven into desperation and destitution as the regime hungry for political success next year continued to build expensive infrastructure projects with no real benefit to the country. “They are putting the money on what you may call ceremonial infrastructure which has absolutely no return,” Mutati said.
“This year is a lost year, not just for the mining sector, but the economy in totality. There is no revenue that is going to come from the mining sector because revenue is not generated exponentially [increasing rapidly by large amounts]. So you have to begin new investments now and by the time they [mines] are going to produce you the revenues, that will be three to four years from today. But by and large, Zambia is regressing and all economic fundamentals point to that.”
He wondered why the government got money from the US$750 million Eurobond and gave it to Development Bank of Zambia for onward lending when the bank’s loan accounting system had collapsed. “Where in heaven are you going to find the appropriate information to be able to recover those monies that were given to DBZ for onward lending?” Mutati wondered. He also said proceeds from Eurobonds that had been advanced to Railway System of Zambia and Zesco had mostly been misappropriated. “Even the money that was given to Zesco from that debt, instead of it being invested in infrastructure to address energy productive capacity, the money was deposited in a bank account earning interest rates,” Mutati said. He said the country could not continue on the current path of accumulating loans to finance its ballooning budget deficit. Mutati said the government was severely disturbing the economy.
“The [increasing government] debt is creating havoc on your economic fundamentals and when you add to inconsistencies in the policy regime, the consequences are, for example, as you have seen in the mining sector,” he said. “Whereas we had initially planned to mine 1.5 million metric tonnes of copper by 2015, revised projections show that we are only going to produce about 700,000 metric tonnes. And when you see the exchange rate being unstable, the trade deficit ballooning, these are some of the causes.” And Mutati said the amount of money spent on the Link Zambia 8,000 road project so far did not justify the continuation of the programme in its current manner. “The famous Link Zambia 8,000, the progress on the project is less than 10 per cent and so that means 90 per cent remains to be accomplished,” he said. “So, on just 10 per cent of the works, you have already borrowed US$8 billion in total of the exposure.” Mutati said there was need to revisit the project and ascertain whether it was still tenable to continue with the Link Zambia 8,000 in the current form and cost. “And that is why we have insisted that we need to relook this programme; let us prioritise, let us re-sequence, let us cut [and] particularly let us reinstate realism that some of these roads, which are perceived to generate economic activities to induce employment, are roads leading us nowhere,” he said. “So, you just embark on the road that ‘put it there, there it will give us return’ but it’s leading you nowhere in terms of returns to the economy. Those are the tough questions we must ask.” Mutati said the country’s mining sector had been severely disturbed by the PF regime and it would take a long time to rebuild it. He said the country’s investment and business environment had also been weakened by the government’s inconsistent policy decisions and deteriorating economic fundamentals such as the weakening exchange rate, ballooning public debt, government over-expenditure and widening trade deficit. “They have disturbed the investment progression in the country and that is why they are not attracting large scale investments in the magnitude of Kalumbila Mining project [by First Quantum Minerals] or Dangote Cement Plant in Ndola,” said Mutati.