ZAMBIA IN A CRISIS
On the 7th of September 2015, the cabinet of the republic of Zambia sat to discuss the following items:
• 51st Independence celebration
• Construction of prisons through PPPs
• Traditional medicines and alternative medicines
• Declaration of National health week
• Construction and purchase of mission properties abroad
• Importation of power by ZESCO and briefing of Kariba repairs
Fellow Zambians, I was totally shocked when I read the press release concerning the cabinet meeting of 7th September 2015. I was shocked because of what the Patriotic Front government was discussing during this time when our beloved country is in a very serious crisis of monumental proportions. How can they be discussing such irrelevant things during a crisis? How can the power issue be the 6th item on the agenda? They have no vision, no direction, no solutions, no new ideas and no ability to steer us out of trouble. The President Edgar Lungu cannot even manage to call a press briefing to address the nation and explain what he will do to fix the problems.
In the midst of this crisis, our people are looking to the president and his team to provide a sort of roadmap, as it were, to stabilize the ship. The country is in despair. The country needs a leader. We need strong leadership. Let me briefly outline the challenges we are facing and what needs to be done to fix them.
1. THE ECONOMIC CRISIS
The following are the main challenges we are facing:
a) The Kwacha to Dollar exchange rate recently breached K10 psychological barrier to $1. The Kwacha has been the worst performing currency in the world out of 150 being monitored in the 3rd Quarter of 2015, dropping in value by 27%. The PF government is already considering introducing foreign exchange controls which will only worsen the situation and take us back to UNIP times.
b) We have a very unfriendly investment climate with many projects worth billions of Dollars bogged down by corruption, nepotism and bureaucracy. Nationalization of Zamtel by the PF government in 2012 sent wrong signals to investors. Deportation of foreign key management personnel in Zamtel was a Public Relations disaster for Zambia.
c) We have an ever expanding budget deficit due to excessive reckless spending by the PF. The IMF has projected it could reach 7.7% by the end of the year. The PF government says it will reach 6% which is simply not believable.
d) We have had incoherent haphazard economic policies such as the burdensome Statutory Instruments SI33 and SI55. The PF removed the tax breaks negotiated by the MMD government for the Pepsi factory and suddenly slapped them with a $3 million tax bill instead if just waiting for the expiry of the concession.
e) We now have the lowest Copper prices for 6 years. Copper accounts for 70% of our exports. The PF want us to believe that there is nothing they can do to mitigate the situation. However, this is not the first time this has happened. The current copper price is not even the lowest it has ever reached. It happened during our rule as MMD but yet we managed to cushion the effects for our people. We went through the worst economic global recession between 2007 and 2009 and yet the people of Zambia hardly felt it and the economy actually grew during that period. So let not the PF keep giving useless excuses that it is there is nothing they can do about the effects of the low Copper prices. Let them provide solutions now.
f) Zambia is now at risk of having double digit inflation in 2016 because of the budget deficit and weakening Kwacha which has began forcing prices upwards.
g) Zambia now has reduced Foreign Direct Investment (FDI) due to the Chinese stock market crisis and impending US Federal Reserve interest rate hike.
h) Ever since the PF took over, there has been no new mining investment they have brought in. All the investments coming in were prepared during our tenure. The PF have messed things up by antagonizing the mining investors and mining companies have stopped investing. Just last year, First Quantum Mining announced they were suspending a planned $1.5 billion investment. Barrick Gold also announced they were considering pulling out of Zambia. Just a few days ago, Mopani Copper mines announced that they are closing down for 18 months. All these just demonstrate how incompetent the PF government is.
i) Poverty is worsening every single day. The MMD is the only party in Zambia that left the country better than it found it. UNIP left it worse than they inherited from the colonialists and PF in just 3 years managed to take the country backwards and they shall leave it worse than they found it. MMD reduced poverty during its tenure.
2. THE ENERGY CRISIS
a) The massive power deficit that has not been arrested and will get far worse before it gets better. The nation may have a total nationwide blackout towards the end of the year. The lost productivity is colossal as businesses scale back or close down. All companies are affected from huge mining operations to SMEs.
b) Load shedding is encouraging more crime.
c) We have relatively higher prices of petroleum products even when the rest of the world is reducing prices.
d) We recently had a scandal of contaminated oil feedstock at Indeni. This appears to be a case of corruption in the oil procurement process. No one has publicly apologized for this in the PF government and no one has been fired. This problem has caused huge amounts of money to be wasted to fix the problem by purchasing purification equipment.
e) Indeni is outdated and has been for a long time. It produces expensive petrol, diesel and paraffin due to using outdated equipment. Zambia needs a new refinery.
f) There has been very low and slow investment in the energy sector due to lack of confidence in PF. When PF took over, Maamba and Itezhi-Tezhi were about half done and were scheduled for opening but PF has delayed the two projects. Within 6 months of forming government in 2016, those two shall be opened.
g) Under the PF government, there is no foreseeable solution for at least 5 to 10 years since they have proved they are incapable of providing solutions.
3. THE DEBT CRISIS
a) Zambia now has the worst debt since we reached HIPC completion point in 2005. Current total debt stands at around $10 billion which includes foreign and local debt. When we include the debts owed to contractors and suppliers, the debt is much worse. Nobody is talking about this massive debt owed to contractors and suppliers who are made to wait for a year or more to get paid. Some road contractors have even stopped work due to lack of payment.
b) The PF keep getting kaloba as if there is no tomorrow. They have on average borrowed one billion Dollars for every year they have been in power in 3 Eurobonds. They are about to borrow another $1 billion to cover Indeco, Zamtel and other pet projects. Future generations shall be indebted due to this recklessness by the PF.
c) The cost of borrowing has been escalating, reflecting increased lack of confidence by lenders. The first Eurobond was at 5%. The last one was at 9%. The next one will be probably 11%.
d) The weakening Kwacha means that repayments will actually be double because we have to earn twice as much Kwacha to pay for the same Dollars. The Kwacha has depreciated by 100% since 2011.
e) There has been a credit downgrade this year. Another one is looming which will make future borrowing costs even far worse.
f) We are running the risk of defaulting on our debts 7 years from now when the first Eurobond becomes due. The consequences are too ghastly to contemplate.
4. THE EMPLOYMENT CRISIS
a) We have very high unemployment, especially for the youth. Whenever there is an economic crisis, the youths are the first people laid off. Last year, 300 youths were laid off in Mongu after being engaged by the PF government.
b) High unemployment is leading to more crime and juvenile delinquency.
c) Despite their claims to create another 100,000 new jobs, the PF will fail because they are not prudent with national resources. They think they shall employ more people next year in government so that they win elections but we all know this shall not happen because the government is broke and will remain so.
5. THE POLITICAL CRISIS
Historically, we have spoken about the importance of our national unity, within the context of our ethnic and tribal diversity. We are appreciative of the peace and unity that our country has continued to enjoy over the years, since independence.
However, in the immediate recent past, we have seen a sharp polarization the country in terms of political views and this has all centered on tribe. We now have the infamous Rupiah Banda led “Wako ni Wako” tribal polarization of our people from the East, in rallying around a fellow easterner and now president Edgar Lungu, at the expense of his own political party, the MMD. RB has poisoned the minds of his people against the people from the Northern block when we are all traditional cousins and have lived in peace for many decades. He has never wanted a Northerner to lead MMD or this country again. RB has taken his “Wako ni wako” philosophy into PF with terrible consequences. The late president Mr Michael Sata must be turning in his grave.
We are all created equal by God and there should be no shame, disadvantage or even ill treatment of any kind arising from the fact that you are one tribe or the other. We should all be proud of our tribes and live together in peace and harmony.
A few points to note are as follows:
a) We now have the worst cadre violence since independence. MMD believes in peace and under my leadership, there have been no incidents of violence unlike in other parties.
b) We have corrupt electioneering in which the PF is buying off people as they did to our Solwezi West parliamentary by-election candidate.
c) We now have tribal voting. The PF has managed in just three years to turn our citizens on each other based on tribe.
d) There is too much voter apathy and fatigue after endless by elections. In the last 5 years of MMD, average voter turnout in by-elections was 44%. During the PF era, it is below 30%.
6. THE MORAL CRISIS
Corruption is now so entrenched and endemic In Zambia. It now done from roof tops instead of under the table. The PF has a culture of winning at any cost which has bred moral depravity. There is too much vote buying in by-elections and I again refer to the case of our Solwezi West candidate. This must stop now.
Fellow Zambians, do not worry or panic. We must not emphasise the negatives at the expense of solutions. We must think outside the box and creativity will be of utmost importance. We must not allow any opposition party to paint a gloomy and hopeless picture of ourselves to the citizens, investors, neighbors and potential business partners.
I am calling upon all Zambians to all do what they can to save our country from complete collapse by increasing our productivity. We only have one country Zambia, so let us work together. Let me give examples from my own life. Despite being a mere High Commissioner to Canada, I brought in an 8bn dollar investment from Barrick Gold in Lumwana. Despite being an opposition leader, I marketed Zambia in South Africa at a global business forum last year. This kind of thinking is what we must all adopt.
MY ADVICE TO EDGAR LUNGU
Mr. President, you are leader of all Zambians. Please take heed to the following points that you need to do in order to begin fixing this great nation.
1. Arrest the out-of-control government expenditure and let us live within our means. We cannot keep spending like there is no tomorrow, like there are no future generations.
2. Stop corruption in government.
3. Get rid of weak ministers in Cabinet and put better quality people. Get rid of cadres in important positions.
4. Begin to consult and use our competent Zambian technocrats. Zambia has no shortage of brains.
5. Stop antagonizing investors with incoherent confusing policies. The technocrats will guide you.
6. Make it easy for business to be conducted.
On the economy:
1. Give confidence to businessmen so that they keep foreign exchange in Zambia and stabilize Kwacha.
2. Fast track projects that have been bogged down.
3. Make mining taxation predictable and stable.
4. Make stable clear policies.
5. Arrest spending and get budget deficit to zero. This will also curtail inflation.
6. Make investor friendly policies and systems.
7. Diversify investors taken from East and West.
8. Grow economy at 10% pa.
As MMD, we shall bring in $20 billion worth of investment in my first year in office once we form government in 2016. There are many projects the PF has sat on and we shall revive and complete this. This will also contribute to employment creation.
1. Liberalize electricity tariffs. This solves load shedding and new investments.
2. Unbundle and professionalize ZESCO.
3. Give back oil procurement function to Indeni and let them inspect from source through entire value chain.
4. Get rid of the import tariff on finished products.
5. Stop corrupt oil procurement.
6. Build new oil refineries. This will reduce costs of finished products. A new refinery will allow us as Zambia to process real crude oil which will apart from driving down the cost and the price for petrol and other petroleum products, will give out a lot of by-products. The set up of the Refinery can help us set up a whole manufacturing sector by taking advantage of the by-products which include bitumen, for road works, hydro carbons for plastic products, nitrogen for fertilizer production and all these, at a far much cheaper price. All this we shall do as MMD when we form government.
On the debt crisis:
1. Stop kaloba. Stop any further borrowing now. Shelve any plans to borrow more Eurobonds.
2. Be prudent on spending which will improve credit rating.
3. Grow the economy quickly to avoid default. MMD shall have a target to growing the economy at 10% per annum during my first term in office.
On the political crisis:
1. Stop cadre violence.
2. Stop corrupt electioneering.
3. Speak against tribal voting.
On the moral crisis:
I have always said that “The equitable delivery of goods and services to any people depends on the morality and integrity of its leaders”. We need new moral leaders of integrity. Corrupt elements must be removed from government and replaced with people with a proven track record.
Dr Nevers Sekwila Mumba