By Hjoe Moono
A good finance minister vs a bad finance minister
We have time and again on this forum argued that there is a clear and visible difference between a good and a bad finance minister. A good finance minister keeps his nation informed about the true state of the economy and prepares public opinion for adoption of appropriate policy measures to keep the economy healthy. A bad one, on the other hand, misreports facts and tries to trick the public into believing that all is well, until the economy begins to fall and is beyond repair. But then there is another kind, such as the one Zambia has, who, even when it is clear that the economy is falling apart under his nose, strongly argues otherwise, as if he lives in a vacuum where he is the only citizen. Such a one is one that governs via deception, but for how long?
[pullquote]you cannot tell that a road is straight until you see a crooked one besides it[/pullquote].
And like wise, a good government is distinguished from a bad one by the appointments it makes to key positions and the respect it shows for rule of law. So far, it is very clear that the PF, with regards economic governance appointments, has no interest nor desire to build vital national institutions-if anything, the trend has been in the opposite direction. I am incapacitated to comment on the PF’s adherence to the rule of law. As the saying goes, you cannot tell that a road is straight until you see a crooked one besides it.
Chikwanda’s Denial
Finance Minister Alexander Bwalya Chikwanda, or ABC as he is affectionately referred to, called out of retirement, and charged with the Ministry of Finance portfolio, a position he held 40 years ago—yes, four decades ago—with clear poor economic management records, is in a state of denial about the state of the Zambian economy. He demonstrated this denial in his state of the nation address when he withdrew SI33 and SI55, and recently when he arrogantly told a BBC reporter that the IMF is not the ‘sole repository of knowledge’ and therefore its assessments of the Zambia economy are untrue. Yet, this is the same man who, a few days ago in congratulating Mr. Chibamba Kanyama on his appointment to the IMF claimed he was Zambia’s Governor at the IMF in Washington—the same institution he disagrees with. Mr. Chikwanda goes on to claim, to the entire world on BBC, that the Zambian economy is ‘doing very fine’, and that exports are on the rise owing to the depreciation of the kwacha. Clearly this man seems to live in some other distant country other than Zambia. The flaws in his understanding of policy issues and his approach to the country’s economic management are too obvious to be ignored.
We clearly live in the era of Chikwandanomics—Debt. Denial. Deception.
But then, this is what you get when appointments to key institutions are based on political expediency and personal loyalty rather than professional competence and personal integrity. There was no integrity in having an entire Minister of Finance argue with a reporter and dispute an undisputed assessment of the Zambian economy by the IMF. But that we have continued to be governed by such, it seems such appointments enable the rulers to exploit national financial resources without any hindrance, even when they are hurtful for institution-building and macroeconomic management. And I guess ABC is doing very fine and does not see the problems facing his economy—Denial.
We all would agree that it would be absurd if a poorly trained head of a private security company such as ARMCO is appointed as the Army Commander. What would happen to the defence of the country? So why do we then have compromised appointments in the affairs of our economy?
Zambian economy sailing in dangerous waters
Mr. Chikwanda was Minister of Finance in the 1970s. Holding onto him now is like bringing a steam powered locomotive engine from the museum as the main service carriage for Zambia Railways, and hope that the company will grow. It’s clear it wouldn’t grow, and clearly our economy is breaking apart. Calls by former PF cadres such as Dr. Mbita Chitala and Madam Edith Nawakwi are justified—Mr. Sata needs a new set of economic managers and advisors to commandeer this country into safer waters. We are currently sailing on dangerous waters: Debt is high. Inflation is rising. The Exchange rate is out of control. Foreign reserves are being depleted. These are clear evidence of poor economic governance which the IMF has raised, which everyone on the streets is concerned–yet, we have ABC deceiving the world that all is well—Deception.
ABC and his colleagues recently celebrated the new debt of $1billion at a higher interest rate, and one would wonder what really there is to celebrate. At this rate, if Zambia is to issue another bond, it will be at an even higher interest rate, but the denial type of leadership we are experiencing doesn’t seem concerned at the repercussions of such actions. The ever increasing deficit is a clear reality that the government is unable to generate enough revenue to meet even its non-debt-servicing non-developmental current expenditure. Accordingly, a part of its current non-debt-serving expenditure, all debt-serving and debt repayments, and all development expenditure is by now being financed through borrowing, creating the classic situation of debt trap. Ngandu Magande, arguably one of the most accomplished Ministers of Finance in modern day Zambia, recently challenged the government on the debt trap we are headed to, which the IMF raised concern, but clearly, one would not expect a reasonable response when the people in charge live in denial and survive on deceiving the head of state and the nation that all is well.
The minister, with his colleague at the central bank, has adopted an impotent approach of talking tough accusing ‘cartels’ in the financial sector with the assumption that the exchange rate is being driven by speculation and manipulation. He deliberately denies that there is some inherent incompetence which is expected of someone that last worked on such a job 40 years ago: He is out of date. He needs to accept this, and pave way for possibly more recent practitioners in the field such as his PS or Secretary to the Treasury—they have the potential to do a better job.
We can only imagine the reality that will be hidden behind the web of trickery of the budget documents and wordiness of the finance minister in his budget speech. We would suspect that there will be enormous effort to camouflage the facts, dodge difficult economic policy decisions and at the same time avoid a crisis on their watch by more borrowing—the only thing they know well.
Not being able to control expenditure, and unwilling to collect taxes from the mines, even when we are being mocked by KCM’s CEOs, the government has adopted the politically easy course of taxing the poor through borrowing and inflation.
Chikwandanomics is not working!
Hjoe,
You are trying to hard, I have scanned through this article and quiet frankly , what a waste of 44 seconds that I will never get back in my life.
How about an apology please?
Thanks
F you Mushota, what do you know about the economy? this is too advance for you shallow brain.
Dear Mushota,
Should Hjoe apologise that his article is above your understanding?
@mushota
you have outlived your usefulness just like your uncle!! wabe ntwanekani!!
Mushota only understands better about Blowjobs
There is no different between an educated bemba and a kaponya on the street, they both think the same. ABC is just a kaponya who happens to speech good English. He is a misfit for that job.
Mushota, you’ve got very short brains.
We are not developing building roads. Sometimes I wonder whether my studies in development were misleading and that the layman’s association of development to road construction is correct. Can PF please tell the nation how removing subsidies on agriculture and fuel and constructing a dual carriage way leading to Chilenje market stimulates development. Look, I know development. Development is all about people’s quality of life and this must include access to quality education and health care, creating employment opportunities, availability of clean and safe drinking water, freedom from the threat of cadres and so on. That is why the United Nations emphasizes human development and not infrastructure development.
Development must encompass key variables like life expectancy, adult literacy, access to all levels of education, as well as people’s average income. Development must further incorporate all aspects of individuals’ well-being, from their health status to their economic. Our so called development in Zambia is not matched by similar progress in human development. Instead this failed PF is prioritizing roads at the cost of greater inequality, higher unemployment, weakened democratic tenets and loss of our cultural values and identity. Honestly, what development is there when going to UTH the country’s highest level referral hospital is the same as a death sentence, a place where you take your sick alive but bring them out in a casket?
What type of development is this where you walk along dual carriage ways in pain from a curable infection like cervical cancer just because the failed PF wants roads instead of investing in Radiotherapy equipment and personnel in the theatres at UTH? Our key sectors are simply facing under investment.
Do you mean human development while driving on gravel roads,human development where it can take a preganant woman many hours to reach the hospital due to poor roads,human development where you can build a school,clinic or a hospital where there is no road leading to the structures?????????????? Development can come in phases whereby development of one structure such a road can pave way to the next infrustuctures such a shoping mole,university,hospital ,clinics ,schools etc.The roads you are talking about might just be the first step to human development that you are som much desiring.
Mr. Sata Sir and your PF, Zambians are not dull people. Zambians know that prioritising one sector is ok to bring about development but you are doing it wrongly. Productive sectors, say, agriculture or industry are the ones that can bring about development in Zambia where simultaneous investment in all sectors of the economy is not attainable. It’s not the roads which are only meant for people to see. Investment in agriculture will increase demand for irrigation and associated equipment, fertilisers and seeds, roads, and communication and stimulate greater investment in these industries that produce or utilize them while at the same time create employment in both the stimulant and stimulated sectors.
Alternatively, investment in power generation would make available cheap electricity and this electricity is expected to encourage the growth of small scale industries, irrigation works and thus in the end stimulate the growth of the agriculture sector. It is this process of sector linkages that any Govt must exploit and not your blind investment in roads, stadia and universities in Muchinga. Zambia has more graduates to steer the economy than what a Mushindo University can produce.
I would be ashemed of myself if I published such a shallow and emotive piece of work. For once, I agree with Mushota – Hjoe is a Keyboard Economist or Scholar. How can you argue against the statement that the IMF are not a dipository of knowledge? Follow the UK growth projections from the IMF over the last 5 years and see how accurate they were. Who advised Zambia to sell the mines for a song? With regard to the budget deficit, please realise that donors have STOPPED supporting the budget to the same level that they did a few years ago. How does the country improve its infrastructure without borrowing?
Why are you contradicting yourself? You say: Follow the UK growth projections from the IMF over the last 5 years and see how accurate they were—-if they were accurate, how then can we dispute them? On the issue that the IMF raised, haven’t we heard the same concerns from locals? Or are all Zambian nationals now IMF?
Ba Kangwa, the IMF projections were dead wrong; that is why I invited people who are able to analyse issues to check for themselves. I was NOT contradicting myself. On the issue of debt, my understanding is that the villager in Shangombo, who will have a clinic built nearby does not worry about debt rather he celebrates that his life might be saved when he needs urgent medical care, similarly, the rice farmers in Western Province who will have a reliable road to transport their rice to market do not worry about debt. In short, the concerns about debt arise from a mistrust – that the money borrowed is not being used properly.
Why Sata is still keeping Chikwanda in this key position is beyond me and probably highlights where the actual problem is:Sata himself! Like the Governor of the Central Bank, the Minister of Finance is an extremely sensitive and crucial position and one over which the President must always seek substance over patronage and competence over relationship. Many of the economic challenges we have had since 2011 including the down-slide of the local currency and an increase in debt stem from ABC’s sheer incompetence. Chikwanda must go!
One simply can never understand Zambians.
A dull like never understands
president Mwanawasa introduced wind fall tax but sata and his minions are busy celebrating that that there are able to borrow money at higher interest rate the same money they could have raised via windfall tax from mining companies zambia has gone to the dogs
I listened to the old hag’s interview on BBC last week and felt “ground swallow” me! Is this my Minister Of Finance making stupid denials and “hiding behind a finger” all the time and being stupidly defensive. The man must gracefully leave office and go home to rest. A weak Finance Minister and a president who will not consult when he makes pronouncements with a financial implications is a recipe for disaster. Chikwandanomics are economics of a foregone era. The clowns must get out. The government is running a debt bill that posterity will be hard pressed to pay, all in the name of expediency!
This is the same Minister who told the citizenry that “one would be mad to insist on introducing windfall tax”. In the meantime he lets the Indians run circles around him with on the mines. (we begin to suspect he must have had his hand oiled to shoot down the need for paying windfall tax). Why does he vehemently discourage it when government can not procure enough drugs for the hospitals or secure ample agriculture inputs, or adequately provide for social services that this country desperately needs? It is not fun to be led by clowns! Out with them in 2016!
I would gladly volunteer to rape mushota and infect her with syphillis if she’s a woman. Her thinking is very shallow devoid of character
The problem I see is that Zambians are naturally emotional. That’s why it’s easy to receive all sorts of punches even from the weakest. We like competing over what it should have been instead of championing what we want done. We waste serious man-hours pointing fingers at each other. What has happened to us as a nation is not happening for the last time, nor is it here for the very first time. Someone tell me what it is we are going to get from the every day baby cry we’ve been of late. So, is it Chikwanda, the KCM boss, or the way forward that is supposed to be of interest here?
The kwacha rate is now at 6.73 to the dollar ( us). I am informed it will breach the 6.90 by end of month. Your capitano speaking hang tight and enjoy the ride
Brilliant and sober article.