Zambia’s economic decay phenomenon needs to fixed

Bloomberg says Zambia’s economic growth is among the fastest growing economies in Africa only second to Ethiopia.

Speaking at the 2018 Bloomberg Africa Business Innovators Summit ((ABMI), Bloomberg Editor in Chief, Mathew Winkler said foreign direct investment from China and others countries has helped the rapid and consistent economic growth of both Zambia and Ethiopia.

Giving an outlook of Africa’s economies, Mr. Winkler said there is remarkable growth in Zambia’s mining and other sectors including telecom and technology sectors.

As the Greens, we agree with the Bloomberg analysis of the Zambia economic output as it relates to 2017. However, we think that this analysis does not give a complete picture and for that reason, may be deceptive.

We hold the view that an economic growth analysis for a country must not be one-off but be holistic and ought to cover a reasonable period of time. Most importantly, such analysis must also include economic stability aspects.

By economic stability we mean the absence of excessive fluctuations in the macro-economy. We think that this is a very important factor in an economic analysis of any country. An economy with fairly constant output growth and low and stable inflation over a reasonable period of time is considered economically stable. Zambia has failed to achieve this sort of benchmark in the last 10 years.

To prove our point, lets take an example of GDP growth in the last 10 years (2008-2018). It will be noted that Zambia’s GDP grew without fluctuations from US$15.33 Billion in 2009 to US$28 Billion in 2013, an increase of US$13 Billion in 4 years.

Thereafter, it will be noted that Zambia’s GDP started shrinking up to as low as US$20.95 Billion in 2016. Using simple arithmetic, this works out to be a decrease of about US$7 Billion in 3 years. Simplistically, this is like wiping out the entire budget of Zambia for one year considering that national budget has averaged US$7 Billion from 2014 to date.

In 2017, GDP grew to US$25.81 Billion. Compared with the 2016 output, this is an increase of US$5 Billion in one year. Nonetheless, when compared to 2013, the GDP attained in 2017 is still less that the US$28 Billion achieved in 2013. It falls short by US$3 Billion.

Meantime, Inflation Rate has averaged 9.78 percent from 2008 to 2018, reaching an all time high of 22.90 percent in February of 2016. In 2018, it will be noted that annual inflation rate has consistent increased from 6.2 percent in January to 8.3 percent in October.

These economic statistics exhibit economic instability— which in the long-run exhibits a decay phenomenon. This decay must be fixed. Zambia needs an economy that fairly constantly achieves economic output growth which is upward ever, and backward never! High inflation is a cancer that an economy needs to be inoculated against.

And we Greens have economic inoculation to fix this sort of decay phenomenon.

Legalize it. Growth the Economy. Heal the Nation. End Poverty!

Peter Sinkamba
President
Green Party of Zambia