Why PF’s IDA is a wasteful experiment

Now that president Edgar Lungu has gone full circle taking the country backward to the miserable Indeco, Mindeco, Findeco, Memaco era through his IDA experiment, we dug out this wonderful piece of analysis by Muhabi Lungu on how Indeco damaged the Zambian economy:


By Muhabi Lungu

March 3, 2014

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.

Of course, this is not to deny that UNIP fought a gallant but debilitating struggle against racism and apartheid in aid of the African National Congress (ANC). This is not to deny that the country supported other liberation struggles in the region that contributed to bringing the Zambian economy to a stand still by 1991. But the real problem was the choice of economic policy. None of these things are an exaggeration and no sane or fair minded individual can honestly dispute these facts. Not if one has a clear conscience, as does Honorable Chikwanda.

Even in the face of a dramatic turn around in economic indices over the last twenty years, I can safely anticipate that a deceptive person such as yourself will probably say that all these improved economic indicators count for Zero and that poor people’s lives were still not positively impacted. This, of course, would be a blatant lie on your part; a blue lie, peddled to innocent Zambian people as if they were gullible children. “Do you remember M’funda? My grandmother, the way she died in the desert! Like scum of the earth.” Shaka Zulu, asking his tormentor on the day of reckoning. Well, let me remind you that at this time in 1991, there was in existence, humiliating queues of virtually every essential commodity such as Mealie Meal, Sugar, Bread, cooking oil, bath soap, washing powder and at times even tissue paper. All these products were supposed to be produced by the INDECO group of Companies. Super Baking Company Limited failed to produce the famous Super Loaf bread; Refined Oil Products Limited (ROP) failed to produce cooking oil, soup and washing Pounder; At one time, Zambia Sugar Company Limited could only produce sufficient stocks in order to supply the European market for the purpose of obtaining the much needed foreign exchange for the country; Dollars and Pounds which were in shortage and were being auctioned though a window at the bank of Zambia (BOZ).

Even then, Zambia Sugar Company Limited could not even meat Zambia’s Sugar Quota to the European Economic Commission (EEC), granted under the Lome Convention. The result of this is that Sugar had to be rationed for the masses of the Zambian poor. Both National Milling Limited and INDECO Milling Company Limited struggled to produce Mealie Meal for the Copperbelt and Lusaka. I am sure you remember the coupon system for Mealie Meal which created massive shortages of the staple food for urban poor consumers. Have you conveniently forgotten about the food riots of 1986 and 1990? Yes, Mr. M’membe, Food Riots! And then you and Mr. Sata suggest that INDECO Milling should be re-established? IKONA MAN.

Can you remember that poor people spent days at bus stops attempting to board the infamous, INDECO owned, United Bus Company of Zambia (UBZ). After boarding, people would than spend some more nights on the road to get from say Lusaka to Lundazi, Kaputa, Mongu or even Livingstone? Even city travel within Lusaka and the Copperbelt was a nightmare of enormous proportion; yes, especially for the poor. The cause being bad economic policy choices; some of which the PF are quickly beginning to re-embrace through your suggested revisionist socialist agenda. IKONA MAN

All the young people of today below the age of 25, an entire generation, can easily take for granted the fact that you could not find chocolate, apples, or even coca cola at the most critical period of this time. The simple joys  that are derived by the sparks of fireworks so commonly seen in the night sky during Christmas and New years’ eve, nowa days, had long since disappeared, especially  for the poor. The sparkle of life for the poor had grown so deem that all of us disputed the call by the leadership then, of “A light at the end of the Tunnel” These were indeed dark days for the poor. It is therefore a total deception, a cold blooded blue lie, for you to proudly state that “neo liberal policies, blindly pursued by the MMD in government did not bring about any meaningful development to the country.”

I have never seen in my entire life how a person can go to these lengths to stretch lies towards a perceived personal agenda. Perhaps from a historical point of view, it can only be equated to the propaganda machinations of Joseph Goebbels during Hitler’s attempted conquest of the world. That is the type of ambition that can capture a person and bring him to this level of delusion and selective amnesia.

Nostalgia-A personal Confession

Before I proceed, let me just make a few clarifications by way of personal confession to you, in order to avoid misunderstanding and for the sake of being fair on the enormous contributions made by our founding fathers to this country. I confess to some degree of nostalgia towards those ‘good old days’ of the 80’s for which I believe had some good and positive values and memories which we as a nation should fully embrace and never throw away. I genuinely applaud the wonderful work done by the United National Independence Party and Dr Kaunda in educating the Zambian masses; ensuring a chain of unbroken peace for more than 30 years; the creation of a united “One Zambia One Nation” which has built an unshakable foundation for our country.

Much can be said about the many wonderful things about this period, including the fact that I was a direct beneficiary of the system since my father was a Diplomat and a Senior Civil servant in the “Party and it’s Government.” Nostalgia is in part the reason why I deliberately stood side by side with Dr Kaunda, post 1991 in an attempt to defend and keep alive the Independence Legacy. This was being done at a time when many, including you yourself as Fred M’membe, and several of today’s young dynamic leaders were busy making money off the Privatization process and portraying KK and UNIP in very disgraceful terms as the boogieman and the Party of an unwanted past. The main argument towards promoting overzealousness in the privatization process was due to what was a considered view that INDECO and ZIMCO had failed to make meaningful contributions to the Zambian economy. The process of privatization and the dismantling of INDECO were being superintended over by a Cabinet to which Minister Michael Sata and Minister, Dr. Guy Scott belonged. Dr Scott and President Sata were chief priests in the privatization crusade that dismantled INDECO.

Hypocrisy should not be entertained just because circumstances have changed and the people who should take the responsibility for failures have walked away to leave behind the mess for others to clean. Please Mr M’membe, let us not re-right history because it is convenient to our current set of circumstances. History must be left in tact, as it was, so that future generations are able to draw upon it and create a better future for all of us.

Yes, I have and should have some degree of nostalgia to those glorious days past. But none of these positive attributes and memories can take away the fact that the economic situation had totally collapsed and the delivery of social services for the poor had become unsustainable. Indeed, the impressive Human Development Index (HDI) of Zambia recorded in the 1960’s and 70’s had began an incredible nose dive in the mid 80’ and continued all the way until the late 1990’s. Although, it should be noted that economic growth in this country began in earnest in 1998 under the leadership of late Dr Fredrick Chiluba. Let us not take away and discredit the contribution of this man, regardless of what his shortcomings may have been.

I also confess that, in spite of the great achievements of the last ten (10) years, under the leaderships of Levy Patrick Mwanawasa and Rupiah Bwezani Banda, in uplifting the economy and improving upon the lives of millions of our people, that the MMD did not solve all the problems of Zambia.  Yes, we are guilty of many undesirable actions. The MMD did not get rid of poverty, although there was some reductions; it did not create sufficient employment for the youth and was unable to provide holistic and complete solutions in both the health and education sectors. This is accepted, and the party has taken responsibility and has been apologizing for the past 2 years and half. We have done enough apologizing and it is time for all of us to move on as a nation and correct that which we did not finish in achieving in the last decade.

To deny and attempt to extinguish the proud achievements in education, health, agriculture, promotion of private sector business and infrastructure development as achieved by the MMD, is being totally untruthful. To pedal the lie that 20 years of MMD brought nothing is completely delusional. Even if your sole aim is to deceive people, and attempt to kill the MMD-for what ever pleasure that this will bring to your life, you cannot go on this path to fully execute the axiom that “a Lie repeated often enough sooner or later is believed to be true and therefore becomes a fact.”  Let us stop this madness, because it is not doing our country any good at all. As we confess in the MMD,

I challenge Dr Scott, President Sata and even you (yourself) to accept, not only the good things that we have done, but also the bad things we have all participated in collectively doing. This is the Christian thing to do in a country declared to be a Christian Nation.

Let me now get to the issue of the Industrial Development Cooperation and its theoretical underpinnings.

—————–END OF PART TWO————–

Writtern by Muhabi Lungu



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