Zambian Voice Press Statement on Economic Challenges facing Zambia

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Zambian Voice Executive Director Chilufya Tayali
Zambian Voice Executive Director Chilufya Tayali

The Zambian Voice Press Statement on:
ECONOMIC CHALLENGES

06TH September, 2015

1. How did we get here?

Colonial Days

During colonial days, our people were disgruntled by the rule of the British. The economy was fine but the indigenous felt they were not having an equal share and their freedoms hanged in a balance so they fought for independence which they got.

First Republic under Dr. Kenneth Kaunda (KK)

After independence, President Kaunda tried to satisfy the people’s desires. He gave them some freedoms and share of the Country’s resources using socialism. KK gave the Zambian people almost everything for free starting from Healthcare, Schools, Food and employment through Nationalization.
Companies and manufacturing industries were subsidized by the mines just to protect people’s jobs albeit not making profit.

Kaunda also built a lot of infrastructure ranging from roads, hospitals, schools and other fixed assets.
Kaunda’s intention was good to build a nation however, the over dependency on the Copper let him down when the copper market just plumed down.

The companies were in debts and failed to run or produce commodities for consumers. This caused a lot of shortages of commodities on the market.

In the 1980s the Zambian people blamed Kaunda for mismanagement and revolted against him for a new party with new brains of intelligent young men.

Second Republic With MMD Under FTJ Chiluba

Chiluba came in as a revolutionist to change the Socialism of Kaunda to Liberal-Capitalism and sold many companies to bring in the private sector. Some companies just closed because Chiluba cut subsidies to keep them running.
The intention was to make the companies and industries operate freely and make profit which in turn would revive the economy.

To attract investors, FTJ opened the markets and gave too many incentives to foreign investors. To feel up the shelves of shops FTJ opened the borders for finished products to come in.

Chiluba reforms worked in some sectors especially on transport which to-date is a marvel. Unfortunately in some other sectors it did not work, for example the manufacturing Industry. The imports did not encourage agriculture and killed manufacturing industry because products were, and still are, coming in finished form. Zambia became a dumping site for all sorts of products, including second hand underwear.

The incentives given to the mines and other big cooperates, denied our Country the much needed forex liquidity.
The other unfortunate aspect which the Chiluba Government brought was political-businessmen who used politics to amass wealth. Politicians engaged in “Nichekeleko” (Cuts) which were just fraud and corruption.

Many Government officials always wanted a cut out of every business transaction. This made government to enter into many fraudulent contracts which made Zambia lose a lot of money and slowed economic development.
After thwarting the third term attempt by President Chiluba, Late President Levy Mwanawasa came in and tried to fight the corruption that was taking root under his predecessor.

Mwanawasa tried to do business legitimately which made him win citizen, investor and international confidence. With the financial discipline Mwanasawa managed to reach the High Indebted Poor Countries (HIPC) bench mark and had most of Zambia’s debt written off. This made our economy better because Zambia did not have to service huge foreign debts.
Upon Mwanawasa’s death Mr. Rupiah Banda came in. As a veteran politician, businessman and diplomat, he managed to engage a number of Countries and investors to support the economy. The problem was that RB brought the “Ukulyamo” syndrome which was just another version of corruption from the FTJ government one. This syndrome made RB to lose power to Late President Michael Chilufya Sata because life was not getting better for the people.

Basically we did not have much policy change during President Mwanawasa and President Banda from the ones which were introduced by President Chiluba. The liberal-capitalism permeated through all the three MMD presidents.
What stands out is that, Zambia benefited from many imports while losing manufacturing industry and losing gripe of the forex market because the Kwacha was losing value.

FOREX MARKET

At this Point, ladies and gentlemen allow me to explain a little bit about the forex market before I come to where we are with the Patriotic Front (PF) Government.

To buy anything on the local market one needs Kwacha, but to buy something on the international market Dollars are needed. So before something is bought on the International market, dollars must be bought first. The market where you buy dollars or any other currency is called Forex Market.

On the forex market, all currencies can be taken as products. The currency with a high demand compared to the other currency, gets a higher rate.

At the moment Zambia is importing a lot of things therefore we are creating a high demand for the dollars so that many traders can import many of the products Zambians are consuming today.

This situation leads to many people to be dealing in dollars so that it is easy for them to get out and import their merchandise, unfortunately this adds more pressure on the Kwacha because many people want to convert their Kwacha into dollars.

Any Country earns its forex from exports unfortunately for Zambia, most of the export earnings do not come back to Zambia because the mines are owned by foreigners who have such incentives that allow them to keep the forex they earn in their Countries or wherever their financers are.

PF Government Under President Sata.

President Sata was very focused in his approach. He was a popularist leader who wanted to see an immediate impact on the lives of people just like President Kaunda did.

President Sata embarked on similar projects that Dr. Kaunda did – infrastructure development. Unfortunately there were no resources to finance all the projects hence the borrowing. The logic of President Sata was that he will borrow to invest so that Zambia can reap economically in due course.

The intention was good but the problem was on priority and viability of some of the projects. The other problem was that most of the projects depended on imports which put more pressure on the Kwacha because more dollars were needed to supply all the material required.

The other thing that Sata wanted to achieve was to fight corruption unfortunately he did not have the strength to run with the clever government officials to stop them from cutting deals.

President Lungu has pretty much continued with governance of President Sata except in the fight of corruption. He has continued on the infrastructure development which seems to be doing it for them to win by-elections because people seem happy. Unfortunately President Lungu has no money to finance these projects hence further borrowing.

To make things worse, the price of copper which brings in Forex in the country dropped to about 26% coupled with low demand of the commodity by our major buyer China due to the difficulties in production.

This situation has just torn the Kwacha into pieces hence hitting a record poor rate of almost K10 to USD$1.

2. Who is to Blame for the economical stress we are in?

To analyze our current position, it would be very unfair to single out one system of governance led by one President or ruling party. Our problems have built up successively starting with President Kaunda right through to our current President Edgar Lungu who has been in power for 8 months now though that is no excuse because he has been part of government and the party which he leads now.

On the other hand we should not just look at the negatives and claim to be the waste nation. Zambia has developed in many aspects starting with human development, civil rights and freedoms, Democracy, Infrastructure, Education and Healthcare. We are not the same from the time we got independence.

Therefore, we should not completely condemn our former leaders for their efforts to change this Country positively but overlooking the downside of their policies. Their intentions were good but missed it somewhere, therefore no figure pointing, rather we should thank God for our leadership as a Country.

Of course while we have done well in some things, other problems have been created such as higher poverty levels, unemployment, corruption, materialism, loss of identity, unpatriotism, laziness, over ambition, hate, vindictiveness, injustice and general citizen anxiety. All this has contributed to bring us where we are today.

Amongst all this, our Country is over exposed to imports, over dependence on Copper, unguarded monetary policy and retrogressive foreign investment policies.

3. What are the possible solutions?

It is consoling to learn, through the statement which was released, that President Lungu understands the economic circumstances and he is trying to address them. However we wish to submit our humble suggestions.

A. SOCIAL

Development of a nation is not just economical; it starts with the attitude of the people. Zambians must change their attitudes in many areas. First and foremost, we must start by being selfless. The attitude of “it is not my problem unless it is on me”. The World is round, so the problem of your problem if not fixed will surely catch-up with you somehow.

We also need to be patriotic and look at ourselves to sort out these problems other than always looking elsewhere and condemning. Before we condemn let us check what we are doing to help the situation.
The problems of this Country need everyone not just the politicians or the current PF government or indeed President Edgar Lungu. No one person, no matter how intelligent, or educated, or rich, has the solutions to the problems we are going through as a nation. Therefore, citizens must watch against those politicians who claim to be magicians to turn this Country over night yet the mistakes has been done over years.

B. POLICY LEVEL

I. CUT THE IMPORTS AND CREATE INDUSTRIES

Government must lobby for citizens’ support to implement austerity measures reduce on high consumption of foreign products. Let the consumers rally behind local products to stimulate market for local products which will revive the manufacturing industries. This will also create employment.
Basically to take a bit of Kaunda Policies but maintaining some liberalism of Chiluba so that the private sector runs the businesses.

Such policies need the citizen’s sacrifice to put up with shortages of some commodities and compromised quality while the industries hold their grounds. However this may be easier at this point because foreign investors who have been making money out of their products which they have been exporting into Zambia would be willing to partner with Zambians to setup similar industries like they have in other Countries.

II. REVISE FOREIGN INVESTMENT INCENTIVES

It is clear that some of the foreign investment incentives such as Tax-holidays, VAT Rule and forex exchange freedoms have cost the Country more than it has benefited, therefore, it is only fair that we sit and discuss with these investors. The situation is not helping as it is even if they threaten to close shop because nonetheless we are not benefiting. However, with a mutual engagement and respect we can negotiate something out of these partnerships.

III. DILUTING SHAREHOLDING IN ALL MAJOR COMPANIES.

We need to retain control of our resources by giving Zambians to run these Companies other than leaving it in the hands of foreigners who are busy sending money back to their Countries. There is too much magnanimity towards foreigners while we treat our fellows Zambians with scorn and stinginess.

The income of these companies should come to Zambia other than our current situations where we are not seeing the colour of the dollar from our copper.

IV. RE-INTRODUCE THE SI 33 AND SI 55

Our Country is so exposed to global monetary shocks and manipulations, therefore we need to put some control to maintain monetary sovereignty. Our Kwacha is under pressure because everyone wants to trade in foreign currency, so people are busy looking for dollars making the forex on high demand. The SI number 33 of 2012 was meant to promote the Kwacha as the sole currency for domestic operations so it must be returned.

Our little exports are not making an impact on our economy because our foreign investors are not bringing back the forex earned on the international market. The main objective of the SI 55 was to monitor Balance of Payments in a transparent and accountable manner so that we can make sure we are getting that Dollar in our reserves.

Of course this will not be welcome to the foreign investors but with discussion and negotiations we should reach a common ground otherwise it is not fair that we should be suffering while the mint.

V. SUSPEND SOME INFRASTRUCTURE PROJECTS

While the infrastructure development is a welcome move and it has been appreciated by many Zambians, we have to stop and face reality that we have no money, therefore, it is wise to halt some of them for a while so that we can recover from this economic turbulence.

It must also be realized that, these projects are putting pressure on the Kwacha because most of the material is imported. Added to that is the fact that most of the constructors are foreigners so Zambians are not benefiting apart from unskilled labourers who are paid very little to write home about.

VI. CUT GOVERNMENT EXPENDITURE

It is unfortunate that President Lungu has not embarked on reducing his government to cut on huge government spending. Government needs to take up austerity measures to spend only on priority matters. Issues like increasing salaries for government officials and Parliamentarians should not be entertained until further notice.

VII. MARKETING ZAMBIA ON THE INTERNATIONAL FORA

While others have been criticizing the President from traveling, we think it is good for him to sell this Country to win goodwill on the international sine. Goodwill is so important and valuable than the business transaction one can get.

Out of goodwill, you get great benefits which you might not have to pay back for. However, it must be cautioned that, the expense is minimized on the travels through large groups of delegates and hotel bills.

This must also be supplemented by provision of information about Zambia by ministries and major institutions. It is said that the Ministry of Finance, Bank of Zambia, Tourism websites are not updated with relevant information that would attract outsiders.

VIII. FIGHTING CORRUPTION AND INEFFICIENCY

Corruption is one of the greatest enemies of a growing economy and at the moment we don’t seem to be doing very well to curb the vice.

The President needs to be firm on corruption to send a message to many of his ministers who are busy taking advantage of their position to enrich themselves.

The President must also lead in showing seriousness at work and being effective. The president should be seen to be attending to stressing issues as soon as possible before the public start talking because it creates anxiety and speculations. Government should not be reactive, but proactive and on point.

If the President should show that Ministers and their juniors will follow other than what we have these days. There is too much corruption and inefficiency across the board.

EXHORTATION

All Zambians must unite and take this as a challenge for them to change things for the better. They need to unite with Government so that Government can have confidence to implement some of this austerity and foreign investment threats policies.

The opposition must not just talk the opposite on everything, there are times when the nation has to stand together regardless of the political affiliations.

Zambians should also know that foreign products are not only messing up our bodies but also our economy, so let’s avoid feeding this big “Ilomba” called the Dollar which is eating up our economy. Let us cherish and love our local products and pay in Kwacha, ABASH PAYING IN DOLLARS, DON’T SPEND THE DOLLAR BUT EARN IT.

Chilufya Tayali
EXECUTIVE DIRECTOR

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20 COMMENTS

  1. We knew it! This chap is a real Arse – he has now been paid off and bought by RB and PF! Basically he is telling us that this mess we are in is nobody’s fault and is instead blaming all previous Govts!! He was all along busy blackmailing RB only to tone down his Idi.ocy after getting a cut!! What an Idi.ot this rapist is!!

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    • Some points do make sense, let us not condemn all what he wrote because it has to start with all Zambians. paying brides to police and other public office should stop. Zambians in these offices should also change and know that they are working for the people not doing people favors. This is the attitude from ZRA officers to even Ministers / MPs.

      Well written Tayali. Change will only come if we filling positions with right people and not cadres, who know nothing.

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    • The problem though is Edgar and his cohorts have no clue on how to solve the problem. To them, blaming it on external forces is the solution.

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    • The chap is talking sense, critising anything is getting us no where, this politicians you have hope in have no solutions neither,the solution lays in every zambian hands,let change our atitude of always wanting those in power to fail becouse you want your tribe men to rule.it wil not help.what if they do not rule. Are you going to continue crying like a dog sitting on a pin and cant get up. Get up zambians help build our nation proud and free.

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    • The chap is talking sense, critising anything is getting us no where, this politicians you have hope in have no solutions neither,the solution lays in every zambian hands,let change our atitude of always wanting those in power to fail becouse you want your tribe men to rule.it wil not help.what if they do not rule. Are you going to continue crying like a dog sitting on a pin and cant get up. Get up zambians help build our nation proud and free.lets go zambia lets go

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    • Tayali stop patronizing us, Lungu is failing to show leadership here, that is the issue. Stop giving us lectures on issues you seem to have limited capacity to interpret and hence giving it a simplistic view of yours.

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  2. Very elementary. Could have been drafted by a first year at UNZA. Anyway, they need to be commended for putting these thoughts forward. Opposition should do the same.

    I do not agree with some of the suggestions such as the reintroduction on SI 33. This will take us back to capital controls.

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  3. Levy had problems when he was head of state, but because he always looked in control, he gave us the “feel good” factor. His handlers were always reminding us how he was the first in the office at 0500 & the last at midnight. Its small actions like these that gave us the confidence in his ability.
    On the other hand ECL seems to be taking it easy while everything around him is falling. The buck stops at his desk. He won’t escape the blame. So he needs to be reminded to show leadership.

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  4. Very level headed contribution from this chap on a serious issue than the epileptic contributions we hear from the so called parties lead by educated people. Keep it up kid

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  5. The other solution could be to ask President Lungu to
    1. Cut on his drinking where he finishes 25 bottles of mosi per day
    2. Edgar Lungu should on global trotting
    3. Edgar Lungu should stop being corrupt, currently; he is the most useless president since inde[pendence
    4. Lastly, president Lungu should resign voluntarily.
    ZAMBIA WILL BE A BETTER PLACE WITHOUT THE DRUNKARD IN POWER

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  6. These are good ideologies that should be common to every citizen of Zambia. We know what and how to do it but we dont do it, that’s the problem. This is what should be the issues parliament must discuss plan and implement exhaustively. So Mr Chilufya Taylor, to start, please go to parliament and present your thoughts. Give them 6 months and let us review on what will be addressed or not.

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  7. Comment:well analysed chilufya.at times I’m against you contribution regards national issues.but this time around I strongly support you,its not about education but analysing the problem from histolical view like in this case when zambia got independence thru to our time the mistakes made by the govts including the current one.then what are the solutions that needed all zambias to be part of it to resurrect the economy of this country to at least 60 percent then bit by bit thing and changes can take place.but what is needed now let’s put polical affiliation and political rhetolics if we are going to develop as a nation.the bible advise is that and I quote”where there is no advise nations perish”.so let politician start working together then thing will be ok.keep it up chilufya!

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  8. This is the problem in Zambia. Where are the experts who should be speaking on these matters? Tayali is mixing up serious matters in a very dangerous way. The challenges of this country are partly coming from deep weaknesses in our monetary policy and our fiscal policy compounded by persistent inept political leadership since independence! From what Tayali is saying, he has just exhibited dangerous ignorance of key issues. Tayali has a right to express his views. But hey he has mixed up issues dangerously!

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  9. Well done Chilufya. This govt must be tough on forex it must restrict people getting it. Imports must be controlled. All goods produced in zambia. Like potatoes detergents cooking oil peanut butter soft drinks beers whisky must be stopped immediately. All imports must be valued and profit taxed. But like you have said its our mind set, are we able to do this?

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  10. @Malama you cant be serious even on serious matters like this one.plse take your foolishness to your fellow commoners,if Edger used to pick you from that bar and f… you when he was a commoner,forget he is no longer in your class madam,he wil not even remember you.maybe he didn’t pay for the last round and the following day he was the republican president,just forget he is nolonger in your class and have no time for the beer with you madam don’t waste your time find someone else.

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  11. Anyone who thinks Sata was focused is sick. We are in this mess because of Sata. Sata did not prepare a leader to take over from him, that is why after he died there was so much confusion on who was to succeed him that even his wife wanted to take advantage of the confusion. Where is focusness in that? sata loaded most positions with his relatives even when he knew these had no requisite qualifications. he fired all managers at ZESCO and the result is this loadshedding we are experiencing now. He put a Lawyer and a Pychologist at Bank of Zambia to be in charge of our money matters. Is anyone surprised the kwacha went is now crazy? Dr. Kalyalya came in when enough mess had already been done. The Food Reserve Agency has not seen any stability with wrong managers everywhere. Focused?

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