Speaking to the press in Kitwe this morning on the planned trip by ministers and other government officials to China to renegotiate Chinese loans, Mr. Sinkamba said the move is good except the timing is wrong and therefore is unlikely to yield desirable results.
He cited the on-going trade wars between China and the US which in the short to long-term appears to be hurting the Chinese economy seriously, and may increase as the war escalates.
“The tariffs so far imposed account for about 0.1% of the global GDP. This is a massive loss on either side. Both sides are grieving. I am sure either side must be busy trying to search elsewhere in the world where they could generate money to fill up the void created by the trade war. To make matters worse, the tit-for-tat trade war is unrelenting and escalating because both sides are stubborn and equal to the task. So, to ask for rebates from China at this moment in time, on probably non-performing loans, may be like adding salt to an injury,” Mr. Sinkamba said.
On June 15, Trump declared that the US would impose a 25% tariff on $50 billion of Chinese exports. Tariffs worth $34 billion came into force on July 6, with a further $16 billion to begin at a later date. The United States has also stated that it would impose additional 10% tariffs on another $200 billion worth of Chinese imports. China has also reiterated with a $50 billion tariffs.
Mr. Sinkamba said if he were in the saddle, he would have called off the trip stating that the timing is wrong.
“The timing is wrong. It is like going to ask for salt and sugar from a neighbour who is hosting a funeral. That doesn’t auger well. If it were me in the driver’s seat, I would have called off the trip to focus on local economic matrices,” he said.
“The other important issue to be mindful about is the fact that China would want to fill up the void created by the on-going trade war. So, they may employ a shrewd give-and-take strategy whereby they may concede to reduce interest rates on the loans and in return demand that Government guarantees them even more and more loans and big contracts. I think that would be even more harmful to the economy than the status quo,” Mr. Sinkamba said.
Mr. Sinkamba has since advised government to focus on tangible local economic matrices.
“For example, last year, Zambia exported US$8.1 billion worth of goods around the globe. Of this figure, copper contributed US$6.1 billion, accounting to 75.7% of total exports. Other base metals such as cobalt generated US$124.5 million, which is 1.5% of the global worth, while gems and precious metals generated US$101.6 million, which 1.3%. Sulphuric acid from the mines generated US$246 million, which 3% while cement contributed US$157.4 million, which is 1.9%.
“When you aggregate these figures, you will note that the mining sector contributed more than US$6 billion towards. Ask me how much of that money hit the accounts in Zambia and you will be shocked. Less than a billion hit the accounts here at home,” he said.
He suggested that as an austerity reform measure, Government could venture into renegotiating minerals sale agreements in order to make all auction of minerals to take place in Zambia as is sometimes done with gemstones. He said by so doing, Government would move closer to seeing the true value of its mineral wealth.
“Such a move would not only boost tangibility of the country’s austerity reforms but also help the secondary metal trading while simultaneously bring about transparency to the sector,” he said.
He said the measures could be such that the company’s traditional buyers could be allowed to access uninterrupted supply of minerals from the mines provided they competed favourably on the trading floor in Zambia.
He added that such a deal could be fair to Zambia because, for the first time, the country will have direct access to the market.
“ZCCM-IH could be allowed to sell between 10 and 20 percent of minerals production independently from the mining companies, depending on its shareholding in respective companies,” he said.
He also said such a move will allow the country to judge the market and get better value for its produce.
Since privatization of the mines in 2000, mining companies sell their produce exclusively to their clients. Government and ZCCM-IH play no hand in the sale.
“The current market trends are that Government, ZCCM-IH and emerging metal producers are getting low values from their produce in markets abroad that include Switzerland, India, China, Singapore and others.
“We need a monumental development which should now enable mineral buyers to purchase their minerals from Zambia and initiate the much-needed critical mass for secondary mineral trading, for example, in Kitwe,” the Greens leader said.
“We need to give our people direct access to the market which we believe should, among other things facilitate the development of upstream and downstream metal and gem industry in Zambia,” he added.
He said Zambia needs agreements that provide government with an independent sales channel as well as an opportunity to develop an independent price verification system and gain wider understanding of the metal and gem business.
Makes a lot of economic sense. What I miss a lot in this country are serious discussions by government with other stakeholders on strategies and issues and ideas on how to better our economy and improve our standard of living. A more participatory humane approach; Not where you just wake up one day, someone declares, from now onward, you’ll pay us for your dog. Why?
This is a country where abled bodied men and women parade the streets ati fund raising walks. These churches which are not serious are always on the roads ati fund raising and the government is allowing this congestion on the roads. identify farms that need labour and go and negotiate and WORK, not this fund raising walk theft of resources. I am already over taxed and you still want to wipe me clean. How can the economy grow with such jokes
4 years just talking talking NO action. Getting boring man.
Organize rallies and workshops.
@Hippy on High Way: I totally agree with you. This explanation indeed makes alot of sense. As a nation, we need to join hands and focus on growing the economy from own resources. For sure, if the mining sector policies are re-oriented, we can generate the funds required to pay off the Eurobonds. Yes, Together We Can!
@Ze Biggy:
Do you really have brains to think or you are just yapping like most of these PF cadres?
The real issue here is not only paying the debt BUT stealing and massive corruption! We already generate sufficient resources to develop our country and repay the loans. The problem is that all funds generated are either stolen or misapplied! From the little money we have generated, Lungu goes to create 6 more districts in Eastern Province for his political convenience; or Lungu and Kampyongo go to buy 42 Fire Engines at US$1 million forgetting he hasn’t paid the debt yet; or Lungu takes that money to buy 10 councillors from UPND, etc !!! The IMF have given up because this poor leadership and it up to you to stop the thieving – the money has already been stolen anyway and we are left…
You have borrowed unsustainable high debt and you are talking of growing the economy from own resources …its laughable to think that this govt is serious enough for such a task…I mean you have a President who is flying away to campaign against parties like PAC and UPPZ..the only way we can grow the economy is if this govt truly tightens its belt no more excesses and you people agree to increase in taxes!!
Mr Sinkamba is making the mistake of blending the national debt and the GDP -they’re not one and the same.Of course the debt + GRZ budget are just portions of the economy and they do weigh on the overrall economy.We can’t get right prescriptions for our economy if fake and ill equipped doctors like Mr Sinkamba are the ones giving us a wrong diagnosis.
@Mzambia wa Zamani: Certainly you did not take time to read carefully Mr. Sinkamba’s write-up.
Nowhere in the story has he blended GDP and National debt. All he has said is total exports of US$8.1 billion worth of goods around the globe. Exports alone are not GDP.
The only reference GDP is the US$200billion tariffs which he says is equivalent to 0.1% of global GDP.
Ze Biggy – Please dont take this the wrong way …may I ask if you are Peter Sinkamba or a member of the Green Party? I have noticed you always post and engage more than usual in support when there is an article by Peter Sinkamba.
Jay Jay: I am one of the Greens. Quite frankly, I enjoy President Sinkamba ‘s clarity of thought. Thats why I joined the Green Party 2 years ago. Now also tell me: are you UPND? Your seem to be supportive of HH news!
Ze Biggy – I am neither supporter of UPND nor a proponent of Hakainde’s monotonous leadership style…I just feel Zambia desires better than inept Lungu and people automatically assume Hakainde is the alternative. We have come a long long way as a country and we can do better than the two men.
2.4 Jay Jay: Ok. I now understand the rationale for your critiques. Since you say you have turned your back against the two, what is your take on the third person in this matrix- my President?
How can I turn my back on someone I never supported in the first place? my loyalties lay with the Zambian people…as for Sinkamba he needs to work on his image and the people around him selling the Green Brand to a largely illiterate electorate is not an easy sale.
I wish we had a president like this with proper logical approaches in the interest of Zambia not his own bank account and that of carders or focusing on fixing political opponents.
My brother Sinkamba,you appear to me as one of the most rational,sober,knowlegeable politicians whose focus is more on the economy. Why dont you team up with like minded politicians so you give our gvt patriotic advice and offer Zambians a credible alternative.Independents like me want gvt to be aware of alternative views.Hope you read my articles.
You can’t borrow and use the same person you’ve borrowed from to build or supply to you. You paying back almost 75% interest of the loan.
Yes Mr. Sinkamba you are more than 100% right, I always wonder the money which donors give us where do they get it from. Has God not given us wealth in this country, Indians Chinese, Lebanese and many more are making money here in Zambia. However wisdom and knowledge is difficult to find, unless God is with you.
Mr Sinkamba I just don’t get your points because you’re all over the place .Economics is not your forte and neither is it Lungu’s too.
Sinkamba is right especially on the management of the mining industry! IFF we can WEED OUT CORRUPTION GET EVEN OUR OWN PERCENTAGE OF COPPER,COBALT and OTHER MINERALS AND SELL OURSELVES, WE CAN REALIZE MUCH MORE BENEFIT THAN WE CURRENTLY GET!! It appears these mines are ever selling copper to their sisters companies at low prices for them to record losses to avoid paying taxes! HOW CAN IT BE THAT SOME OF THE MINES ALWAYS DECLARE LOSSES BUT HAVE NEVER CLOSED!! HOWEVER, SOME PROPOSALS LIKE SELLING COPPER AT HOME IN ZAMBIA ARE “RADICAL ECONOMIC TRANSFORMATIONS” THAT REQUIRE VERY,VERY COURAGEOUS and CAREFUL THOTS AS THEY TOUCH AT THE VERY NERVE OF CLONIALISTS WHO RUN THE LONDON METAL EXCHANGE!!
..Continued .. WE NEED THAT BUT IT HAS TO BE HANDLED CAREFULLY, knowing that we are not the only copper producer in the world! May be for NOW, LET US FOCUS ON RENEGOTIATING THE MINE DEALS so that we can have more control and more forex coming into Zambia. SIs 32 and 55 of 2014 had tried to make mining companies more accountable, but it was fought vigorous by even Zambians who were in pockets of mining companies. FOR NOW LET US SEE HOW WE CAN BE PART OF THE MARKETING OF THE MINERAL SO THAT WE KNOW HOW TO GAUGE THE REAL RETURNS FROM MINING INVESTMENTS!! As for getting relief from China, it is NOT a wrong time,what WE OWE CHINA COMPARED TO THE SIZE OF ITS ECONOMY and the NEED TO KEEP ZAMBIA’S COPPER PRODUCTION GOING WELL, COULD MITIGATE FOR US!!
While agreeing with the idea of growing the economy with our own resources, I would like to remind readers that in 1988 Zambia had parted ways with the IMF and World Bank and embarked on a policy of Growth from Own Resources. Other donors also withdrew their support. The Fourth National Development Plan was hatched out of this policy. This Plan suffered from implementation challenges in the absence of IMF/World Bank and other donor support. What lessons can we learn from failures of that time, as we talk of growing this economy from our own resources?
One worry I have is that leaders of this country since independence have been preaching about diversifying the economy from mineral dependency to agriculture/ tourism, but the two sectors have largely remained under-developed. Other…
M. Mwanza, I totally agree with you on the need to diversify. Mr. Sinkamba is on record to have suggested legalization of cannabis for medicinal purposes long before most countries did so. Unfortunately, he was light years ahead of most of us. He was reviled and ridiculed. If only his idea was given an opportunity, perhaps today, things would have been different. One problem we have in this country is failure to harness ideas in the interest of the nation.
M. Mwanza – our leaders never learn from history ..after 1988 everything came to a standstill shortages everywhere, no investment in infrastructure what happened next is obvious
I wonder why these government official fail to appreciate the advise and recommendations of the others
several time. they would rather hear from thieves rather than from the voice of the people.
May God help us
PF and lungu are hopless , we told you they only know How to borrow and work with borrowed money…..to them growing the economy should be done by the private sector , lazy corrupt GRZ who think their work is only borrowing and dishing out tenders corruptly…no hope bane.
in Zambia its just talk…talk…talk…talk..No action!
Where have you seen a government in the whole world that expects the private sector to grow the economy for them ?
Maybe I am being naive , but all countries I have lived in , when a problem is highlighted , like skills shortages or importing too many goods that should be produced locally , the governments steps directly in to address the problem, not to leave it to the private sector ….
Sinkamba for President!!
Zambia always reminds me of the Parable of Talents! Zambia is like that evil Servant who hid his talent! To him who has brains, more will be added! To him who has little brains, even the little he thinks he has shall be taken away from him! Umulembwe Wachipuba bupwila muli Tumfweko!
At least wina (Childish) will never be president. This other guy, although “he smokes,” sometimes, has better ideas than Under Five.
I quite agree with the idea of selling copper ‘ locally’. A decade or more ago, there was a columnist in the POST called David Punabantu (?), who also articulated this approach brilliantly and honestly , I used to wonder why Mwanawasa never looked at this option.
They can’t allow you to sell your copper locally, it contains too many valuable minerals to be reprocessed and extracted again overseas….
They can’t allow you to sell your copper locally, it contains too many valuable minerals to be reprocessed and extracted again overseas….
China Debt Trap!!!
Doesn’t this sound familiar??