By Henry Kyambalesa
The recent revelation made in Parliament by Hon. Lameck Mangani that Zambia will give K2.7 billion to Zimbabwe as a contribution to the country’s economic recovery needs to be condemned, because Zambians like their counterparts in Zimbabwe are equally facing very serious socio-economic problems.
There is, therefore, no wisdom in “stealing” from the poor in Zambia to give to the poor in Zimbabwe. In fact, there is no guarantee that the money will not end up being used by Robert Mugabe in his 2011 presidential bid. Mugabe has already announced that he is ready to contest the 2011 presidential poll regardless of whether or not the country’s new constitution will have been enacted by then.
Zambia needs to stop using borrowed money on unproductive ventures. For too long, a significant portion of loans secured by the MMD government has been used on keeping inefficient state companies in operation, financing the production of non-tradables, subsidizing consumption, financing government leaders’ superfluous perquisites, and/or on other unproductive schemes.
This misapplication of loans has led to one obvious consequence: forlorn development projects and programs have not provided an enabling environment for the private sector to mass-produce for export markets and generate the foreign exchange needed to service external debts, let alone provide for capital accumulation to facilitate and expedite socio-economic development.
What Zimbabwe needs today more than ever before is greater trade with Zambia and other African countries in its quest for economic recovery, not free money which is likely to end up in the pockets of politicians.
Trade is an essential element in a country’s quest for heightened socio-economic development; it can function as a “vent for surplus” for a country like Zimbabwe which has abundant unemployed resources which cannot be fully harnessed due to a small domestic market.
Also, trade between Zambia and Zimbabwe can bolster the creation of new jobs in both countries. As economic units in each of the two countries expand their production capacities to meet the demand for their product offerings in both markets, they are more likely to hire additional employees in order to facilitate the production of higher volumes of their product offerings.
Moreover, trade among the two nations can generate competition in their domestic markets and consequently foster innovation and creativity among economic units in their domestic economies. Such competition can be beneficial to the economies of both countries; for example, it can give suppliers the incentive to be efficient in order to satisfy the changing and divergent needs and expectations of consumers. Specifically, competition can lead to lower prices, high-quality products, and greater variety and abundance of products.
Further, trade among the two countries can boost their foreign exchange reserves—depending, of course, on whether exporters in the two countries would demand for payments in currencies other than the Zambian kwacha or the Zimbabwean dollar.
Besides, greater trade between Zambia and Zimbabwe can create opportunities for commercial and industrial undertakings in both countries to attain “economies of scale”—that is, reductions in the average cost of producing a particular class of products resulting from mass production of the products. It can also make it possible for commercial and industrial undertakings to attain “economies of scope”—that is, cost savings gained through the production or distribution of a wide variety of products.
It is not prudent for Zambia to continue to secure loans beyond the current US$1.2 billion in external debt, and to become a donor country using borrowed money. Borrowed funds need to be used in providing for subsidies, tax incentives and cooperative government-industry programs designed to create a comparative advantage in industries which have the potential to support economic growth and job creation.
“What Zimbabwe needs today more than ever before is greater trade with Zambia and other African countries in its quest for economic recovery,”
I don’t know what you meant when writing this article but here are some things we have to consider. Zimbabwe is part of the Southern African Development Community (SADC). A few years ago (not sure when) SADC signed a Free Trade Agreement. Zimbabwe is also part of COMESA which also has a Free Trade Agreement and a Customs Union. Zimbabwe and Zambia also share the Chirundu One Stop Border Post which is one of the busiest border posts in Southern Africa in terms of traffic. Putting all this in consideration, Zimbabwe has no excuse to not trade with other African countries including trade with Zambia.
“depending, of course, on whether exporters in the two countries would demand for payments in currencies other than the Zambian kwacha or the Zimbabwean dollar.”
OK, you need to educate me on this, I was under the impression that Zimbabwe abandoned the Zim dollar and started using the US dollar and South African Rand. When did they start using the Zim Dollar again? or where they already using it? 😕
Henry,
Are you forgetting that Zambia owes Zimbabwe US$3 million for the maize they gave to us 10 years ago? We were in need and we asked for urgent support so we could survive. We are merely reciprocating today. They need their money back and we’re giving it to them. Last time, we settled part of our debt with maize from Zambia.
The fortunate reality from this unfortunate situation is that Zambia has become a dominant food supplier in the region. We literally carry Katanga and Zimbabwe. We also export to Malawi, Mozambique and Angola. These devastated countries have had to depend on our agric-economic strides in order to feed themselves.
Had Sata won in 2006, we’d probably be begging for food right now. Chinese investment would have dissapeared and poverty would have increased.
Thank you Mr. Capitalist #2,
It appears this PF aggitator (Henry) has forgotten that the Zim Dollar does not exist anymore. Furthermore, how is Zimbabwe supposed to trade with other African countries when it has nothing to sell nor money to buy anything with?
Its industries are delapidated. It has no funds to buy raw materials. It has an under handed embargo from the EU & USA. Its farms are run down. etc…
This is what happens when you are being squeezed by the west. They make sure they destroy you economically.
Now imagine where we’d be today if Sata had won in 2006? We’d have nationalized the mines, deported Chinese, Lebanese and Indians, we’d have reduced taxes and our councils will have failed as they have done today.
Thank God, MMD & Levy won in 2006. Phew!
Well said Bishop Mambo!
You should head the Catholic Church in Zambia.
I was in Zim last week. The country is ravaged. Grabbing the white mans assets (the black mans natural resoucres) was a big mistake. Their industries are dead and they surely depend on their neighbours even for the simplest of goods and services.
What can Zimbabwe export to us? We have a lot to export to them but they have poor economic activity and as such, they have no money to buy anything from us besides bread and milk.
They need the K2.7 billion desperately!
If we owe them US$3 million, lets pay them back!
All these big words used by Kyambalesa were used on us in 1991. Ati growth, employment, foreign reserves, etc… and yet we were all retired and were left homeless after change of government.
Today i have learned not to trust people who use big words and phrases like “Also, trade between Zambia and Zimbabwe can bolster the creation of new jobs in both countries. As economic units in each of the two countries expand their production capacities to meet the demand for their product offerings in both markets, they are more likely to hire additional employees in order to facilitate the production of higher volumes of their product offerings.”
This is just academic hot air. It has no truth. The reality is that money makes money! Zim & Zam have no money with which to make more money!
If Zim made itself a tax free zone and subsidized labour, then you’d see China pumping in $50 billion in economic activity. You must have something to bargain with. Not just stories of “we grabbed our land and we’re not letting go of it!”.
So what if the land is owned by a white man. He cant take it to the UK with him anyway. Furthermore, he’ll use the land to make more money where we Africans will just cut trees to make charcoal and abandon the deserts we leave behind.
Now we in Zambia what to follow by nationalising the mines, the banks, Zamtel, etc… Cant we see that it does not work?
Henry is confused with western propaganda. This is what happens when you forget where you came from. He needs to comeack home and spend time here in order to see things right. For now, his ideas are purely impractical and academic.
Henry,you must first sit down,read a bit of international economics and finance and you will understand what you are suppose to write.Dont think like you are in a classroom.As renouned International Economist Noriel Roubini put it: Dont just google and comment about economics,go.travel and smell the air around the globe and come up with a conclusion.If Henry had been in Zim,his article will be sensible.
Henry i couldnt have put in forward any better than you have. Nothing is for free just like every other aid Zambia gets. “lets not give each other fish but lets rather teach each other how to fish side by side”:)>-
True, we cant give what we dont have. This is RB’s mentality to help his place of birth. He is also helping Mugabe his counterpart to hold on to power by giving his money to abuse through evil campaigns. Shame! If the money has been paid out already, RB must be prosecuted.
This picture reminds of German in 30’s when they used wheelers to carry large sums of money. Zimbabwe and the Zimbabweans are our friends and I believe what they need most at the moment is trade and investment. Hon Mangani & GRZ should have asked the Zimbabweans before going to the press. Is this the kind of calibre we need in our leadership? What is Mangani’s CV/Resume?
Is this the real bishop Mambo or just another blogger using Mambo name?
Do we have the K2.7billion to give as aid or repay what ever we owe Zimbabwe or they will just have to syphone from our meagre salaries as usual, or, maybe, introduce a Car steering Tax like they have introduced Gas Emition tax? Somebody fill Me In.
Henry is ignorant. When you owe, you must learn to pay back. Give them their $3 million not just a ka K2.7 billion. Give them what you owe them.
Dont talk of fake issues like trade. Zim has nothing to trade with Zed. Zed has a lot to sell Zim but it has no money to pay us with. Lets get real here. Henry is telling false tales and making false promises like PF and Sata. Zim has no money. It is broke! There is no stimulating growth through trade blah blah blah! Lets be practical. They are broke!
#15 Ba Lungu amwishiba abashona pa zim have got far more money than Zambians (and they know how to use it). Only if you are familier with the Beit bridge border post(Zim-S.A) and Zim flights from OR Tambo would you know what I mean.If its ordinary people have that lot what about the government itself? Never underestimate a berger papa;)
Zimbabwe currency is currently ZWD 373 to 1US$, Zambian currency is ZMK 4564 to 1US$ who is poorer? people wake up and see that Zambia needs more help than Zimbabwe.
🙂 has LT become a government propaganda machine. What happens to it’s journalistic integrity. The are beginning to sound a lot like gay membes post or narrow controlled daily and times.
I don’t know why the LT delights in showing a man holding a stack of notes. The Zimbabwean currency came under attack from the Bush Administration through the Zimbabwe Democracy and Economic Recovery Act of 2001, which in 2002 put the Zimbabwean government on a credit freeze, forcing it to operate on a cash only basis and forcing it’s healthy trade surplus to collapse into a trade deficit.
And for what? For redistributing the nation’s land to the people. A fellow African government tried to make good on the promise of liberation (the return of the land) and they are being mocked for it?
May I remind anyone that under the compliant MMD, the Kwacha went from 113 to the dollar in 1991 to 6,000 to the dollar today?
Zambia, Malawi and Zimbabwe for a brief 10 years used to be the same country. When it was broken up, the Zimbabweans were stuck with the largest white minority, and they had to pay the price for their liberation.
Zimbabwe fought 15 bloody years and paid for it with 50,000 dead, so that Zambia didn’t have to.
How much is that ‘worth’?
And today again, they are paying the price for doing what needs to be done – the return of the economy into African hands.
Does anyone really believe that world record anything, in this case world record hyperinflation, happens by accident? The Zimbabwean currency was destroyed by the Bush Administration, through economic sanctions that the MDC don’t have the guts to even admit exist, but are a matter of public record.
Instead, we have a smarmy Finance Minister trying to tell us that we really shouldn’t tax the foreign owned mines. Meanwhile, people are dying because lack of services, and all other government ministers do is go around the country and ‘decry’ and ‘bemoan’ the crumbling infrastructure and complain that ‘we don’t have the money’.
That is the price we are all paying for the mines being in foreign hands and having so much money that they can buy whatever politician and political party they want. Because of their money, they have better representation in parliament than the Zambian people. That is not *democracy*.
Sanctions are just another form of warfare. In the words of Chester Crocker: “To separate the people of Zimbabwe from ZANU-PF, we have to make their economy scream.”
This article is one of Kayambalesa’s best contributions on LT web site; it is a must-read for students of International Economics. He has applied theory to a practical situation. I am, however, disappointed that none of the bloggers has challenged the author about the need for Zambia to provide aid to Zimbabwe. All I see are the petty, nit-picking and pedantic musings of people like Mr. Capitalist, Bishop Mambo, Sharp Shooter, Mwamba Mulenga, etc. Zimbabweans still use the Zimbabwean dollar and are allowed to conduct business in other currencies alongside the Zimbabwe dollar in an effort to stem the country’s runaway inflation. And those who read Zambian newspapers know that the K2.7 million is intended to be humanitarian aid to Zimbabwe, not a repayment of any amount owed to it.
… And there is nothing “impractical and academic” about suggesting that Zimbabwe can pull out of its current economic doldrums through production for export. This is how countries like South Korea, Thailand, Taiwan, Singapore, and Hong Kong are making a headway in improving the lives of their people — by exporting their way out of poverty. And this is exactly what leaders in developing countries are yearning for — greater opportunities for trade with industrialized nations, rather than aid. Take time to read Dambisa Moyo’s book on this subject to understand Kayambalesa’s reasoning.
:d.Of to buy bread with all that money
:(( people are suffering in our own country and we are giving money away!!!! whats the sense in that?????? honestly, if we continue like this, that picture will be of a man in zambia, when our inflation rockets and there will no one to help us.
I comend the step to give, at least for once.
From a christian perspective, it is better to give than to receive. The givers receive more enablement from God so that they can be able to give more. They prosper in the process. So, I guess Zambia has started taking some very significant steps towards econimic recovery. You do not need to have so must to give. You can give even in your poverty. Just make sure you do not die in the process.
Next time, send a few guys there to help set up something. Some goverment initiated investment.
The wisdom of that would be that, if we can do it for others how can we fail to do it for ourselves?
However, I’m sure everyone is waiting for the next elections.
God’s laws govern the universe his principles are supreme and they work.
Zambia’s government has been granted a $1 billion concessional loan by China for various development projects.:o:o There ARE ALSO A LOT OF PEOPLE LIVING IN POVERTY.I FIND IS USELESS AND SENSELESS TO DONATE MONEY TO ZIMBABWE IF OUR PRESIDENT CAN’T SOLVE ECONOMIC PROBLEMS IN OUR OWN NATION.
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