Press Statement for Immediate Release
26th November 2015,
Today President Edgar Lungu called a press briefing were he was expected to give practical solutions to the economic crisis the PF has plunged the nation in. Instead the President used the occasion to cause further suffering on the already bleeding masses by directing ERB and ZESCO to increase fuel prices and electricity tariffs respectively.
The President further put a tombstone on the fate and hopes of miners by confessing that there is completely nothing his Government can do to stop the lose of jobs in the mining sector.
With the impending hikes in fuel and electricity coupled with the massive loadshedding and the depreciating Kwacha the cost of production will escalate resulting into a higher cost of living and further job loses as prices will rise and most companies will have to either prune the labour force or in the worst scenarios completely shut down.
It is now clear to all that President Lungu and his Government have no solutions to the country’s economic problems they have put us in.
Now let us dissect the President’s speech Line by line
1. ON THE DEPRECIATION OF THE KWACHA
The Kwacha has continued to depreciate as a result of the widening fiscal deficit ( caused by the PF Government’s fiscal indiscipline), reduced production and exports ( caused mainly by the crippling load shedding) and the falling copper prices on the international market and loss of investor confidence in the economy (as a result policy inconsistencies and the depreciating Kwacha)
So for as long as the PF continue with their reckless borrowing and spending, for as long as mines and other companies continue to close or scale down their production owing to massive load shedding and escalating cost of production the Kwacha will continue its downward turn.
Increasing interest rates and pumping in borrowed dollars in the economy is not a solution to the depreciation of the Kwacha. In fact it is worse than gambling at a Casino.
2. ON FUEL AND ELECTRICITY
The decision by President Lungu and his Government to increase both fuel and electricity prices is a disastrous move to the economy as it will automatically push prices of essential goods and services and the cost of doing business up. You don’t reduce poverty or fix the economy by increasing the cost of Energy. Energy is to the economy what blood is to the body.
3. ON LOSS OF JOBS IN THE MINES
The President has said that there is nothing that him and his Government can do to save jobs on the Copperbelt.
It is extremely painful that thousands of miners and families are suffering due to the PF Government’s failure to heed to advice. What is happening in the mining sector today is as a result of the incoherent and inconsistent policy direction in the sector on the part of the Government. The PF Government has had no clear policy on mining : be it on taxation or production. The way to save jobs is to fix the Energy crisis, lower electricity tariffs and fix the Kwacha. Unfortunately Mr. Lungu and his Government have no clue on how to deal with that.
It was laughable to hear the President say that his Government has the capacity to run the mines when they have failed to even effectively conduct Grade 9 ICT exams let alone build a toilet at intercity bus terminus.
4. ON LOAD SHEDDING
With the huge power deficit we expected the Government to invest in alternative sources of Energy such as solar, wind and thermal as opposed to continually focusing on hydro power which is hugely dependant on the often undependable rainfall pattern. These alternative sources of energy are cheaper and easy to establish.
We are spending over 13 million dollars per month, importing 148 MW of power from Mozambique and this Government is broke hence this is unsustainable.
5. ON THE ECONOMY
It was unbelievable to hear President Edgar Lungu say that his Government has focused on diversifying from mining to Agriculture as the main economic stay for the country. Really? How can you talk about diversifying to Agriculture when you have been reducing the budget allocation towards Agriculture in the past three years? The allocation towards agriculture in the 2016 budget has hit an all-time low. Actually the President even lied to the nation that all the farmers who supplied maize to FRA have been paid when most farmers are still waiting for their money. Which farmers was he talking about?
6. ON POLITICAL VIOLENCE AND PUBLIC ORDER ACT
It was disheartening to hear the President who is himself a lawyer defend an archaic and repressive law such as The Public Order Act just because it is working in his favour. The Supreme Court of Zambia in a case of Christine Mulundika and others ruled that the Public Order Act in its current form is null and void as it conflicts with fundamental principles of our Republican Constitution.
The Public Order Act and its selective application has contributed to the prevailing discontent, repression political violence and police brutality. Instead of addressing the root causes of political violence which are the selective application of the Public Order Act, wide spread illiteracy, ignorance and destitution among the many youths who are hired by politicians as tools of violence the President reinforced his unconstitutional directive to bar opposition parties from holding public meetings on the Copperbelt.
7. ON THE COST OF RUNNING GOVERNMENT
It was good to hear the President direct a reduction in foreign travels by Ministers. However, that is not enough. We expected significant spending cuts to be instituted such as the abolition of the excess ministries, scraping off of the position of District Commissioner, and the closing of economically and socially insignificant foreign missions.
While we further welcome the President’s directive that no new infrastructure projects should be embarked on, the truth is that there is no money to even pay for the existing projects. This Government owes road contractors and consultants in excess of K3 Billion in unpaid fees. Several infrastructure projects have either stalled or have completely been abandoned as a result of the Government’s failure to pay contractors.
It is now clear that Zambians have to brace themselves for harder times.