By Chibamba Kanyama
1. My first contact upon returning from IMF in 2017 was Felix Mutati, Finance Minister. We discussed strategies on engaging stakeholders on the planned IMF programme, including his Cabinet colleagues apprehensive about the Program. ‘Assure them you have already embarked on tough measures such as removal of subsidies ahead of the programme,’ I shared with him, fully aware he did not have consensus on the subject.
2. Subsequent meetings centred on implications to the economy if he was removed as Minister. International counterparties saw him as only mover of the IMF programme. I offered to meet the Head of State so that I could personally share with the President how to handle and manage the Minister of Finance during IMF programme discussions and when the programme kicked in. Did not have the opportunity.
3. The issue of China also came in; as the best option to Zambia’s budget support and balance of payments. The view was China would never support the budget let alone balance of payments support. The other strong feeling was that it would be suicidal to the economy to engage China when negotiations with the IMF were ongoing.
4. Mr. Mutati is now out of the Ministry of Finance; this happening when the IMF discussions are reaching a dead end owing to debt sustainability problems. However, according to international assessments, the economy taking shape: economic growth at a reasonable level of 3.3 percent year on year; inflation around 6.2 percent, government hit its targets for the 2017 budget, the deficit at around 6.8% of GDP better than projected (7.5%), the debt position as a ratio of GDP reduced from 60 to 56 percent; the Zambian Revenue Authority beating the target by over K1 billion as we closed the year, and Moody giving a stable rating early in 2018.
5. Mutati also credited for introducing debt acquisition reforms that would see parliament in 2018 decide on debt contraction procedures.
6. International watchers on the Zambian economy shared apprehensions early this year of what would happen if Mutati was fired. They concluded, ‘That would imply a complete takeover of the current process and an erosion of economic institutions.’
7. The promotion of Margaret Mwanakatwe as Finance Minister has not gone well with many economic watchers, analysts and advisors on Zambia. Following my interview with Bloomberg where I indicated some level of optimism, I was swamped with international calls. Two of the fund management advisors made it very to me, ‘Chibamba, you seem to be the only one optimistic about the appointment of Mwanakatwe. We don’t know her, and she is little known despite having worked for a global institution and served as Minister of Commerce’.
8. Despite my numerous concerns such as the new path to restructure Chinese debt which I think Mwanakatwe will be driving, and the motivation for her appointment (possibly as a friendly party in government’s desire to support spending ministries), and the outstanding petition, I am still optimistic she will succeed purely on the back of my two assumptions:
• She is much more accepted in the Cabinet ranks than Mutati was. It means objections to fiscal compromises will be taken in good context. In other words, she has more authority within the ranks to say ‘no’ to unplanned spending than her predecessor had.
• She is an accountant and a banker who is expected to apply maximum due diligence and ethical leadership in the execution of her duties. Being a banker provides her the best leverage to negotiate financial deals with expected acumen. She should, however, work extremely hard to restore the decline in confidence following the removal of Mutati as Finance Minister. The court case about her election and uncertainty around it will play large among investors, and some are already unsettled.
If she can bring the IMF back to the table, which is very unlikely as things stand, international investors will rate her highly. It is more a question of whether she has the appetite for an IMF program than what the IMF has just said about the unsustainability of Zambia’s debts. For me, a firm decision about the IMF programme must be made in the next few days so that we end all speculations around it as this is damaging the credit rating of the country.
According to Kambwili, Mwanakatwe is only good at two things:
1. speaking the Queen’s language
2. Booze
That’s not me, that Kambwili the NDC consultant
The issue with IMF is not an issue with personalities, it is country problem. I doubt Mwanakatwe will have any real impact with the international community. The thought that since she is banker and would know how to handle the international lenders is fallacy. The time Mrs Mwanakatwe was operating under Barclays she had expectation of the board who were guided by the strategy from the group. The strategy framework is not there and the board is powerless. The one thing I know about Mwanakatwe is that she has a huge risk appetite and given the opportunity would be worse than Chikwanda at contracting debt. Additionally I dont know what sort of a banker she become who is a delinquent. She failed to pay her CEC loan, which she shouldnt have borrowed in the first instance. Her court case is…
… Her court case is another can of worms on her plate.
I am really surprised Chibamba Kanyama gives the drunk Margaret Mwanakatwe some chance. This lady has failed everywhere, fired from Barclays, fired in Rwanda, Fired in Ghana, failed at her bee keeping business, fraudulently borrowed money from CEEC and defaulted. Her husband was fired at Airtel, fired at Zamtel..surely, is this the desired CV for a Minister of Finance?
Both Mutati and Mwanakatwe are not good for the economic growth. I country that thinks ZRA is their only source of income is a dead country. All state owned institutions are inefficient, unproductive and run by uneducated cadres that no nothing. Just like many ministers. For Zambia to Change? We need inspirational leadership with a proper strategy than these clowns.
While Kanyama seems to believe in Margaret to do a good job, he over emphasises on the need to engage the IMF and seems to think that the IMF is the only solution. My question is, since 2014 when we slid into a crisis, how have we pulled through without IMF, even turning reversed growth into real growth today??? Inflation spiraled out of control hitting 21% but has come under control??
It is because the Zambia Plus and all measures Zambia has undertaken such as relaxation of liquidity in the market, removal of subsidies on energy, rationalisation of FSP etc are all based on the IMF Article IV advice for 2014-2016.
Are you asking how you have pulled through since 2014??? Are you blind to the ballooned debt? At this point in time no one is interested in lending money to Zambia unless you want the chinese to r.ape you. A lot of people misunderstand the role of the IMF. The IMF is a cushion, it a signal that the world can do business with you… what the IMF does is a complete due diligence which gives third parties assurance to lend you many… with out that fine comb you are dead…
At this point in time the IMF is smelling a rat…. the Zambia thing is smelling and no one will come near you. Some grade 3’s are saying we can do with out it…. are you sure? Do you know where the medicine you use in your hospitals come from? Who supports your ARV’s medication? Who supports your medications…
IMF is not involved in all economies, are they??? Some countries borrow directly from other countries. IMF is not so active in South America or Asia yet those regions are growing. Moody’s wouldn’t have upgraded our status if we were on IMF life support, would they??? From 2014, we borrowed to cushion the deficit that was created by the reducing revenues derived from exports (copper) due to high expendiyure mainly due to the infrastructure drive. But this pressure has been eased by the reduction in borrowing and slowdown in the infrastructure projects. We repositioned and survived. We adjusted and our debt/GDP ratio is reducing. With our main earner looking up, our local collections improving drastically, do we really need the IMF????
Levy Mwanawasa benefited hugely from bilateral partners like Britain,USA,Canada,Sweden,Finland,Germany and Japan.
Why have they abandoned Zambia such that we are going China and IMF for money?
It means that the former Bilateral partners don’t have confidence in ECL and the PF.
@Independent: Benefited hugely??? How?? Remind me of the date Britain or USA gave a loan of the size we are soliciting from IMF today??? Because what I know is under PF, the Scandanavians are still pouring huge amounts into our health system, USA is undertaking the millenium challenge drainage system in Lusaka, and other projects. So don’t post falsehoods, those bilateral partners are still very much in Zambia and doing the same things: THAT CONFIDENCE RHETORIC IS NOTHING BUT upnd POOPOO!!!!
Really laughable how one can surely ask how we had pulled through since 2014 without IMF, do you know the role IMF I may ask…surely where would you start explaining to an individual who pauses such a question – funny enough these are the selfsame Pro Lazy Lungu bloggers like the above that are in the forefront supporting blindly like guard dogs…you are better off simply talking about football and FAZ or Premiership. How can you talk fiscal discipline to such?
If you are so conversant with fiscal discipline why did you choose to abandon your country to clean your white masters’ bottoms instead of helping your country achieve fiscal discipline??? To choose to be a fringe citizen than be a leader in your country doesn’t earn you respect. What can you teach me about IMF??? Pathetic excuse of a human being!!!
@Zambia… we live in a Global Village Mr Dumb Bell.. your small narrowmindedness will take you nowhere….to you everyone in diaspora is wiping bottoms….really laughable…the world has changed since they kicked you out for overstaying. I doubt you even have a passport.
Anyway life goes on!!
Global village my a.r.s.e!! You think the Britons will ever see you as their equal?? You are just a cowardly skunk who chooses to insult the president wilfully while hiding behind a keyboard but you are just a pathetic fringe citizen in a foreign land living with people who will throw bananas at your children. You are laughable!!!
I think you have personal issues; you tell me where I have insulted the president and I will back it up with evidence why I have used that term you allege to be an insult.
You numpties think just because PF is in govt we have suddenly started hiding behind keyboards…most bloggers have been on LT since Old man Sata was in opposition. Zambia is not PF and not everything revolves around Partisan politics …you snigger at the term “Global Village” yet its the same EUROBOND you misappropriated you obtained it in, you wonder why Mutati was flying to and fro Washington. You are too small/narrow-minded to see beyond your nose….continue mouthing out silly profanities. I have no issue with you… You have no concept of anything!!
Chibamba you’re diplomatic. Its a bad move,our view is the desire for Lungu to dip his hand in the treasury unrestrained to finance the expensive premature campaigns. Mutati was seen as an obstacle.
Margaret cannot and will not surpass Mutati in anyway. She seems to have a bad reputation with alcohol as well
Margaret stopped drinking last Friday, strengthening the Kwacha at once!!!.
On a serious note, changing leaders in critical times is seen a litmus to worse times, unless the successor is of unquestionable superior calibre. In this case, I doubt Margaret is the name of such a successor.
I think one weakness of the current government is that the centre of everything seems to be 2021. I think the focus should be to get out of the debt crisis whilst strengthening the SMEs thereby building the middleclass. Once we have got a strong middle-class, everything else will fall in place; a wider tax base, higher standards of living etc. Then people can vote again. But trying to please everyone physically including the Jerabos will not get us out of the current quagmire.
For me Mutation loves to hear his own voice even if it was usually empty in substance. He lied at IMF and cost Zambia the package we desperately need!
Mwanakatwe is no different! Wither Zambia.
In the due diligence undertaken by IMF it is apparent that Zambia is a high risk country to led money because chances of default and mismanagement of loaned monies are high because of horrible record for with regard to fiscal discipline. Other than that the President of this country has in his arrogance and short – mindedness shown a middle finger to IMF in the past, telling them to jump into the lake! Thereby, demonstrating lack of serious intent to honour obligation. The thieving, pilfering and scandals seemingly spawned at State House will not inspire any prospective funder.
Dudu has a fractured image to spruce up if the international funding community should take her seriously. And that is not something she will achieve overnight. Does she have the backbone and mettle to say “NO” to a president who more inclined to spend on sectors not planned for as happened to Euro bonds????
I am an engineer not an economist. Perhaps this is why I don’t understand why there is a lot of talk about Zambia’s deficit of 6.8% of GDP. America has just added trillion of dollars through tax cuts and is about to add more through funding of infrastructure. Japan is more than 100%. Does this animal called deficit apply only to s*t hole countries? Kindly advise me mwema economists.
A simple answer which a grade 3 can understand and which i fail to understand an engineer like you can fail to see….
GDP America $18.5 trillion
GDP Japan $4.9 trillion
GDP Zambia $19 bn
Hope you understand why they call it a s*t hole
You are the one who seem not to understand. I am not talking about GDP of countries. I am talking about the deficit in terms of the percentage of the GDP. If the deficit of Japan is over 100% then the deficit is over $4.9trillion whereas Zambia is only 6.8% of $19 billion. This is I believe is what they call deficit financing. Why these double standards where the West are allowed to finance their economies by over 100% of their GDP and people start talking when the PERCENTAGE OF ZAMBIA OF ITS GDP IS ONLY 6.8%. 1% OF A THOUSAND OR A MILLION OR A BILLION IS THE SAME BUT THE AMOUNTS ARE DIFFERENT.
Another confusion is between deficit and debt. I believe Zambia’s debt percentage to the gdp is higher but less than that of Japan which is over 100%. Zambia’s debt percentage is at least 30% but the deficit percentage is 6.8%. Are these % different because the debt is annualised i.e. paid over a longer period.
If you trying to understand the relationship between GDP and deficit in economics terms rather than in mathematical engineering terms you might get it….
maybe a little help… try to find out what underlines the ability for Japan to have a 100% and why its not possible for Zambia to do the same…
Go to the world bank website the are a number of papers on my countries like Zambia can not sustain a deficit more than 6%. Its not voodoo… the is science behind it.
What is problem with you people. The issue with Ministry of Finance is not an issue with person. It involves a lot of people country problem. Mwanakatwe might not have any real impact with the international community but there people who have real impact. BOZ governor once worked with international community. A lot of people have have been involved and will be involved in the management of Finances and plans of this nation including Felix Mutati at Cabinet level and not forgetting about permanent secretaries. Even some of the teachers of Mutati and Mwanakatwe. There more people who are more educated in government than Mwanakatwe and Mutati who contribute to the running of economic affairs of this nation.
The promotion of Margaret Mwanakatwe as Finance Minister might not have gone well…
with many economic watchers, analysts and advisors on Zambia. What difference are they seeing between someone who is just an Accountant and One who is both an Accountant and a banker.
One thing some need to know is that these people what they announce in parliament or in the media is a collective decision with a lot of consultations. If these are the only ones in the shows of the nation abolish other ministries and departments including Bank of Zambia.
That is why I get concerned with some statements like this person or that person can do this or that to the economy this nation. NO NO NO ONE PERSON can change the image of this nation alone.
I share your sentiments. That is the reason why I take time out from the forum once in a while. So many comments are lacking in substance and purely driven by hate from usually the same bloggers time and again. If you’re not careful, you end up getting drawn into their mediocre way of thinking.
Fact is that the minister has not taken over an easy task but she it is not a one man’s job so she is not there as a superwoman. There are several factors at play, some of which Chibamba has already outlined, which will subsequently determine the success of the entire ministry.
Levy Mwanawasa benefited hugely from bilateral partners like Britain,USA,Canada,Sweden,Finland,Germany and Japan.
Why have they abandoned Zambia such that we are going China and IMF for money?
It means that the former Bilateral partners don’t have confidence in ECL and the PF.
Bloggers and contributors on this subject, what achievements have you made personally to substantiate your rantings? Some of you are im mid forties and I can deduce that you are suffering from what is widely known as middle age crisis.
Ba Kanyama, a TV announcer turned self proclaimed economist, where are your investments which you can proudly point at? None! The problem you all have is that you are cowards, critics for nothing, and most of you dont even know when you last took your families on holidays to reflect on where you are, where you gonna be in the next 5 years, zero. All you know is criticize President Lungu forgetting that yourselves are a total failures!
Malinso, my guy, your are 100% right!!!!! It’s really becoming irritating how these failures always attack the president on anything, in their eyes he will and can never do anything right.
Whats your contributuion today apart from character assasinating the author…why should someone justify their achievements to you when you have not introduced yourself? Have simply drop-in to read comments?
His contribution is highlighting the pathetic behaviour of you negative, ungrateful, vile, bitter, tribalistic skunks who see the bad side of everything. Bembas say, “uushi tasha, mwana wandoshi.” I guess this saying covers you pathetic skunks thoroughly.
Chibamba Kanyama has already summed it up when he stated that he had asked for a word with the President via Mutati and nothing was forecoming meaning that either the messager didnt pass-on the message for fear of being outshone by Chibamba which is always the case with most Zambian who put selfish interests first or the President as usual didnt want to listen to someone who was not a cadre.
Mutati is just a good public speaker and he usually doesn’t mean what he says, I knew him when he was at Commerce. I am surprised that Chibamba has given him such a higher rating, anyway I am not surprised because he is also a Board Room analyst; he doesn’t know the challenges of running a business in Zambia. The Chinese are doing 83% of projects in Zamiba so they can’t be ignored. Whoever advised to negotiate to restructure their debt is wise because if that happened we might not even need the IMF. It could be the reason they are hesitant because a large chunk of the money will go to China, these institutions are also not above board; they have interests to serve. Zambia accessed their support when it was in a worse situation than now. Chibamba look at the figures for 1986
Ayatollah – restructuring a debt is not cheap, you are simply going back to your lender asking for more time and more money on top of what you borrowed…IMF will give funds at low interest rates but with very stringent terms and conditions which this PF govt has lamentably failed terribly to achieve. …moreover the numbers do not add up!!!
It’s laughable to say international partners have expressed apprehension at the removal of Mutati because they don’t know Mwanakatwe. It doesn’t make sense. Suppose Mutati were not in govt? These are the tactics of the West capitalists, just like some have been made to believe that Hichilema will just him the buttons: ctrl+alt+delete and all Zambia’s problems will disappear! Just like others believed that Zambia’s economical survival hinged on Magande, but RB showed him the door and Situmbeko did a great job. There’s no one that is indispensable. The instability that change sometimes causes isn’t permanent, what Margaret needs is support. We know that there are those that wish misfortune on Zambia so that they may get an opportunity
Senior engineer RTD – an engineer here to lend a helping hand! Do not confuse deficit and debt. Debt is overall amount of money owed (outstanding loans). Deficit is budget overrun. Deficits make financing or repaying loans unsustainable. The other major difference with developed countries is that they borrow from their own citizens especially pension funds, so the money essentially circulates within their countries funding internal economic growth. When we borrow from China and the projects are awarded to Chinese companies we are simply funding Chinese economic growth. The money does not even touch our banks! Therefore, the USA and Japan may have debts higher than ours as a percentage of the GDP; the difference is the debts are within their control whereas we have subcontracted our…
contd….we have subcontracted our control to others.
The ignorant economic verbature Kabamba Chinyama often raves off is most nauseous! Honestly, it’s advisable to just shut the god damn f**k up if one has nothing to say than puke such excrement all in a quest to appear relevant.
@Jay Jay, the case with Zambia is different. RDA awarded contracts to Chinese companies who in turn borrowed from Chinese Banks at 6% per annum. Now what happens is that when the project is handed over and verified, RDA is obliged to pay within 28 days failure to which the might owing begins to accumulate interest at 24% per annum. What this renegotiation will address is the 18% that the Chinese contractors are making. What govt wants to do is borrow directly from Chinese banks and save 18%. Would you call that imprudent? That’s the assignment which Margaret has and not what you’re talking about. 83% of projects means all the money is going to China. The IMF arrangement is borrowing to pay another debt which doesn’t make sense.
Given Zambia’s debt-to-GDP ratio i.e. the ratio between our cumulative government debt and our gross domestic product (GDP – measured in years), we are doomed no matter who Koswe Mumpoto hires at the treasury or regardless of how much oral diarrhoea Chinyama Kabamba oozes from his stinky backside. This is for the very simple reason that with such a high debt-to-GDP ratio, ours is an economy that produces and sells goods and services inefficiently thus seriously incapacitated from paying back existing debts without incurring further debt. It’s a catch 22 only solvable by debt cancelation, period! So no matter how much Chinyama wants to belabour the working of the IMF where he worked for a few months as a gate-boy, he is wasting everybody’s time.
By the way, this is the reason you see that the Chinese have taken almost all projects and are delivering on time. Zambian contractors borrow at as high as 40% and those funds are not readily available. Except for Access Bank, I am yet to hear another local bank that has financed any construction project. They have now even stopped doing it, even if it’s order financing. They’re only giving loans to civil servants and Zesco workers to buy smart phones and plasma TV. Today there’s no servings account in Zambia, any account you open is liability. The bank chews your money in fees, no wonder people are now keeping their money in mobile money because it will remain intact. Put K5,000 in your account and check after 6 months then come we discuss
chibamba,
you have spoken the truth and l agree with you .
some people may not see your reasoning but l do.
keep it up
Chibamba is like TB JOSHUA ,ONLY TALKS AFTER NEWS ALREADY IN PUBLIC DOMAIN AND CLAIM TO SAY I PREDICTED. ALSO U ARE A NOTHING IN GOVERNMENT IN DC U WERE JUST A SECRETARY FOR COMMUNICATION , JUST SAY THE TRUTH THAT PLEASE APPOINT ME AS MINISTER OF FINANCE PS and wait for your UPND BY 2031 TO BE APPOINTED MINISTER OF FINANCE.