ZAMBIA’s rising external debt, which currently stands at US$3.2 billion, is still sustainable, but if not checked, could erode investor confidence in the country’s economy, analysts observe.
University of Zambia lecturer and economist Chrispin Mphuka said there is need for the country to slow down on borrowing especially that Zambia is now accessing high interest loans on non-concessional terms.
“Zambia still needs to borrow money to enhance various developments but there is need to control the rate at which we are borrowing. There is a danger if we allow this debt to keep rising as it might affect investment inflow,” Dr Mphuka said in an interview recently.
He said national growth depends on the level of investments flowing into the economy and this also on the economic climate prevailing in the country at a particular time.
Dr Mphuka said investor confidence in the economy is imperative as it spurs national growth.
“If an economy is growing, it cannot affect investment coming into the country. With a sustainable external debt stock, we still can attract foreign direct investment,” he said.
Dr Mphuka, however, said Zambia risks to fall back into the debt trap of the early 1990’s if no adequate measures are sought to check the rising external debt stock.
In a separate interview, a business and investment analyst Cuthbert Malindi said the rising debt stock could disadvantage Zambia to be labeled as a risk investment destination.
“Investors or lenders may find it difficult to invest or do business in a country they perceive to be a risk investment destination. Also, a country with a high debt portfolio cannot carry out development projects as resources would mostly be channeled to debt servicing,” he said.
He said while borrowing cannot be avoided there is, however, need to demonstrate discipline and initiate debt control systems to ensure that borrowing is kept within sustainable levels.
What a stupid comment from a lecturer, encouraging indebtedness. If Zambia borrowed for developmental projects, it would be understandable, not borrowing to finance by elections, a bloated cabinet, civil servant salary increases and paying for untendered for projects. Where is the 1.5 billion borrowed so far? Without prudent asset and financial management like what we are seeing with PF, borrowing should not be attempted.
He is a paid gun.
Dr Mpunka is a well known economist. Zambia’s leading Econometrist. Give respect.
@Muzungu even world renowned economists like Paul Stiglitz and Geoffrey Sachs get their analysis wrong sometimes. Which “A” Class academic journal on econometrics has Mphuka published in to qualify as a leading econometrician. I can also run a derivative on the Cobb Douglas function. In fact anyone who knows calculus can.
This Chrispin Mphuka has not shown any good reason why he thinks the current debt level and the future planned levels are sustainable. You cannot base sustainability of a debt on the reason for borrowing. i.e. for infrastructure development. You need to run the debt profile through a repayment sensitivity analysis taken into account the possibilities of economic downturns and other factors. Anyway, to be fair to him, he is just airing his opinion, which may not necessarily be right.
The prescribed medication Dr Mphuka is taking needs modification. One or more of the following modification may be a fix.
Increase dosage
Switch medicine due to drug resistance
Make up for the skipped dosage
Switch to the original ,the generic stuff is no good
See a indigenous doctor
See a sagoma
See Sata’s doctor ( Snake doctor)
Switch doctors/hospitals locals, South African or Indian
let the fat nurse in the Bronx(Bauleni) throw one of her special injection from 4 meters away
Try Impilishi
If non of the above is a fix go see doctor death in Matero.
this is a paid pf stu pidi lecturer. what economics is he teaching? no wonder many unza student are on the streets because they are taught useless lecturerws like mphuku
Please look at the main gist of Dr Mpuku…………
there is need to CONTROL THE RATE at which we are borrowing. There is a DANGER IF WE ALLOW THIS DEBT TO KEEP RISING as it might affect investment inflow,” Dr Mphuka said in an interview recently.
Dr Mphuka graduated from UNZANDO in business. Was an SDF, then managed ZAMIM and was PS at MoFNP. An intelligent man who was my senior at UNZANDO; if I recall correctly he must have been in same stream with Fred M’embe?
@Cyprian Muke.
These are two different individuals. I know both guys. Dr. Chrispin Mphuka was at UNZA and has never been PS. The other one is Dr. Mpuku. Yes Mpuku was PS at the Ministry of Finance in the Chiluba government. Both are great sons of the soil.
@Muke this is not Dr. Herrick Mpuku. In fact Chrispin Mphuka got his PhD very just within the last 2-3 yrs.
Have respect. If you failed to get into UNZA go and express your bitterness elsewhere. Ask people who have been taught by Dr Mphuka and they will tell you.
Regardless, the man is entitled to his own opinion.
this lecturer is silly..get lost..!!who needs such a debt for what?
Britain which is a developed country has borrowed 3.2 billion pounds from China for the construction of airport.
If we need better infrastructure then we have to borrow.
Pio, Britain can borrow that much for an airport because it has a lot of air traffic which can be levied to repay that money over time and that is good as the investment can repay itself. On the other hand, Zambia borrows to build a new airport but has no enough air traffic as most of us do not fly but use bus inside country and to south Africa and Dar. Same thing borrow to build stadium but many of us do not watch local football live but watch man U instead so stadium takings not enough to repay loan.
The educated lot should not mislead the politicians. The current debt contraction is UNSUSTAINABLE if our industrial base remain very narrow, high youth unemployment, low mining taxes (including the non- implementation of the windfall tax), no value addition to our raw materials and low direct foreign investment etc. How can you sustain a debt with 72 ministers, 22 bye- elections, 1.5 billion for the office of the first lady. No people like Dr. Msiska- the Secretary to the Cabinet can issue a circular on board allowances that is ultravires. Dr. Msiska, that circular you issued is illegal as payment of allowances to board members, whether civil servant or not, is guided by respective acts of parliament. Dr. Msiska, consider revoking that circular before you are dragged to court- MOJ.
A little bit of Financial statement analysis and forecast on current revenues and earnings then forecasting for a time say 10 yrs. on GOV balance sheet-Potential GDP and Real expressed as an income will help you see the trend and see the effect long-term.Go further and express the debt and interest as proportion of Taxes received on Investments projecting it for the foreseeable future on both real and actual GDP and see the impact. You will a growth projected deficit higher than 8. When you do that then look at the methods of financing given the current gearing Forecast for 10 years and look at the implicit costs of each possible financing method on the cost benefit analysis.
My last comment…
you are right Dr… i need to drive on a good road now, why should i wait for 2031 when HH is at state house. i might not even be there owing to my VIH status. man of action thats why we voted for you not just academic for 20 years pa paper.
Silly docks and fu Chimwambi chimbwi, even America borrows fro China. Stop insulting the lecturer he is very objective. You cannot attract investment with poor infrastructure. They have already told you that borrowing is not going on to consumption but to infrastructure building. In terms of infrastructure building we were stagnant for about 25 years and to increase investment you need infrastructure build up. Remember when the Eastern block countries opened up? investors preferred these countries because at least basic infrastructure was in place. Armchair critics spare us from your dull economics please. The man is very objective but you open your dirt mouths before thinking just because you hate the gov.
Investments much with returns especially if using external capital should be supported by reinvestments returns from the investments.If projects will create a return for the foreseeable future that is fine.But numbers should be analysed and supported with real optionsThe developmental efforts are well intended but keeping a careful watch on the IRR and NPV of the Gov will be good also.Remember there is the cost of operationalizing and maintaining same projects.Doing and rebalancing the capital structure of the Gov will help the authorities avoid many pitfalls and still sail us through without any durations???
Internal review and analysis will help
I am trying to resist the…
Develop and be creative to have returns worked out and revenue streams to support the financial and operational gearing carefully rocking around sectors towards a common set of economic and social indicators but. Lets watch and balance the economy and its indicators
For now a nurturing approach of the green fields and a priority approach will save much and help reposition Gov. and create fiscal and monetary space.There is seems to be a magnet on LT but .I have left to work quietly and watch though there is always the desire and temptation to comment but will control and resist to maintain.Good site ,a very educative online blog
I have finally left and out……>>>
What is this Lecturer’s economic portfolio? If he is not rich, then, he is not worth listening to. Those who CAN, do, but those who CAN’T, lecture.
so you *****s are at university in america? blindly supporting
There is nothing wrong with borrowing for infrastructure development as long as the debt is within sustainable levels. Why should Zambia remain stagnant with the same roads and university left by KK and a railway which was built by Cecil Rhodes while our population is growing. Some so called economists just want to continue admiring their economic statistics without anything to show on the ground.
may be the question is at what rate are we paying back and how much towards the debt?
Building Zambia is a multi stage project over a horizon.spending a little in reserves buying making the kwacha a competitive currency positioning it to respond to sudden market conditions and slow down or reverse in capital flows.Any slap in external borrowing or capital flows will result in reduced Gov spending resulting in a crisis given the deficit position.Its there fore important to work revenues internally whist creating capacity in our internal financial sector and public resource management given good policies.Establishing also an optimal capital structure and debt portifolio to fiscal obligations will be helpful for our country including the national debt management unit
I have left
Good Intentions from Presdo especially on Chingola RD but lets now consolidate the already and move with reinvestments proceeds whilst creating value in reserves and reversing the deficit.
I have left Finally Natasha???
Jonathanmhango Financial analyst. Reconsider your decision of leaving this site. We need people who can add another dimension to discussions instead of leaving it to mindless tribal bigots who cant think beyond their tribal enclave. They only know how to insult and demean others despite having been to school. You need to simplify your language though.
Still Following Elders LT its a very lively local blog but I feel I need to take a low profile and will still comment if compiled For now low profile and retired but can still come back
I have liked the minds and innovation of LT will still follow and contribute whenever it calls. Its a homely site and friendly but I feel I need to avoid crossing into politics and say factually and articulately. I need to stick to my ethics.
Will still comment directly or indirectly when compiled thanks For now still following where I am quietly
Althhough it is generally believed that Hen parties are usually more sober and quieter and sober than men’s Stag parties, there is no reason to
believe that girls cannot have as much fun. The latest trend in hen
parties is the themed parties. Its great fun and will teach you a bunch of new moves.
Here is my weblog :: Kart World
Pretty nice post. I just stumbled upon your weblog and wanted to say that I’ve truly loved surfing around your weblog
posts. After all I’ll be subscribing on your feed and I am hoping you write again very soon!
Take a look at my web site student loan consolidation
I have been exploring for a little for any high-quality articles or weblog posts on this
kind of space . Exploring in Yahoo I ultimately stumbled
upon this website. Studying this info So i am satisfied
to exhibit that I’ve an incredibly good uncanny feeling
I found out just what I needed. I most without a doubt will
make certain to don?t overlook this website and give it a glance
on a constant basis.
Look into my blog post music artist marketing services
Appreciation to my father who shared with me concerning this web site,
this blog is actually amazing.
Check out my site baby gifts for girls