The Center for Trade Policy and Development recently concluded a follow-up study on government’s decision to relaunch Zambia Airways. Through an assessment of the proposed business model for Zambia Airways and an analysis of the financing options for the airline, it has been established that the relaunch of Zambia Airways will add to the unsustainability of Zambia’s Public debt.
Our recent meeting with the staff of the International Monetary Fund (IMF) as Civil Society Organization revealed that the IMF will not initiate talks on a possible program with Zambia as long as debt remains unsustainable.
CTPD Researcher Bright Chizonde is calling on government to halt this decision since the current macroeconomic and fiscal position is not allowing for the relaunch of Zambia Airways.
‘’Government should instead harness the potential of the private sector through policy interventions in order to improve Zambia’s connectivity to the rest of the world. The relaunch of Zambia Airways, seems to be of high priority since government has continued its plans amid economic and fiscal limitations,’’ He said.
Mr Chizonde noted that Government’s non-discretionary expenditure, which comprises personnel emoluments and debt servicing, is currently at 50.1% and 40% respectively, giving a total of 90.1% of the annual budget as of 2019.
He stressed that this leaves the discretionary expenditure amount of about 9.9% of the annual budget.
“The rapid increase in debt serving is due to the pace of debt accumulation. In 2018 alone new loans amounted to US$ 2.6 million, compared to US$ 1.75 billion contracted in 2017. Since Zambia Airways may require financing through domestic tax revenue or debt financing, the relaunch of the airline will result in increased fiscal challenges,especially in the likely event of airline failure’, He added.
Mr. Chizonde said CTPD therefore urges the Zambia government to focus on implementing measures aimed at restoring debt sustainability.
He added: it is no longer a debate that Zambia’s debt stock is negatively affecting macroeconomic stability, government budgeting and the ability of government to deliver critical social services such as health and education.
‘’Taking on more public investment, over and above the US$ 1 billion spent on upgrading airport infrastructure, through launching a national airline is excessive in the current environment’’, Mr. Chizonde noted.
Mr. Chizonde said there is need for serious austerity and fiscal consolidation if Zambia is to achieve debt sustainability.
Let me tell you something. There’s no nobility in poverty.
Where is Zambian Airways? It will never happen, it was set to relaunch on the 24th of Oct 2019 but this never happened. And no plane has been purchased.
This is just another PF fake promise.
Very few people get on planes in Zambia.
A rail line infrastructure is more emergency and first priority than an Airline developmental undertaking.
More people would desire to get on Trains in Zambia.
An airline development should have come secondary. I wonder why heavy laden trucks keep damaging our roads.
After ECL, I will be falling for a leader who will come to improve and fix our Railroads infrastructure.
Damn it, that guy Mushimba didn’t deliver on fast electric train he talked about.
No vision no Plan, Here we go again. Yet we had private sectors with international Airlines who wanted to step in and help. They refused, ate the money and gave our Airline to the Ethiopian Government. As long as we have this leadership in Power. Zambians will see nothing tangible. I am sure they have stolen enough before even the Airline is launched.
Debt ratio at 90.1%, how does any sane govt contemplate taking on a big venture that will be a sponge to the fiscas?
Current discretionary expenditure of 9.9% will no doubt drop to half meaning govt won’t have capacity to continue providing adequate service delivery nor embark on new development projects like in electricity generation & agriculture were it is most needed.
Where is Bro Mumba, lets roll when you are struggling to pay Eskom for electricity. This is not a priority it can wait, I hope these guys don’t add more debt by trying to experiment with this idea. It is going to take years before you recoup the money you desperately need for other needful ventures.
FORGET CADRE B.R MUMB4!!
He is just an “educated” P.F Dem@gogue cadre, who’s educated but unfortunately can NEVER see the wider picture.
To him mouthing of mantra & slogans like “Let’s Roll” & “We rule this country” equates to development, when the picture on the the ground is totally to the contrary.
Have you noticed how he’s been in hibernation, since his beloved P.F has been “rolling” out scandal after scandal on a daily basis?
Every day you get to a non compromised P.F aligned news outlet, YOU GET A FRESH P.F SCANDAL, & I mean on a Daily basis!
MUMBA HAS BEEN REDUCED TO “ROLLING IN HIS DREAMS” whilst he’s in deep slumber, as ONLY in the Dreamworld is P.F truly developing.
Going by the trend in appointments observed so far, to imagine they think cadres can run such a complex international air transport operations. Unbelievable!
These are decisions made over Jameson shots, until this bunch of junkies get out of power, the country will continue to be high on drugs-hallucinations.
LT the headline is misleading. Currently, the economic fundamentals are at variance with relaunch of the national Airline.I really doubt if its on the Finance Minister’s 2020 top priorities.
I think the headline of this article is the direct opposite of the text!
That kind of thinking and fear of the unknown will not take us anywhare please let the airline start so that our youth with a passion in aviation industry get the much needed jobs from their own government after all its our treasury and they are our children what you are fearing debt un sustainability is an intangible issue that does not favour humans in any reality scenario please allow our boys and girls get on that 737- 800 and take off fly it it will make them happy and all zambians proud think of it zambia had no national airline for nearly 30 years you still have same problems so please don’t blame your failiers on
the noble airline business
The relaunch of Zambia Airways was ill-conceived. Despite all the resistance and advice from well-being Zambians…laymen, experts, professionals and others, the PF-govt decided to go ahead with the airline which is doomed from the start. I hope it never launches. We don’t need a national airline considering the current state of our economy, poor performance and mismanagement of SOE and the cut-throat airlines business which has continued to face challenges. South African Airway is on the verge of collapse while other regional airlines such as Kenya and Rwanda air are also loss-making and heavily subsidised by the government. How on earth does the PF-govt think we can make a success of this venture?
If there is a plan that can transform the Airline Sector and its sustainable so why not implement it and take the spoils and Customers from SAA that is under restructure taking advantage of those usual customers to Zambia and opportunities created in airports and facilities Invested The method of Financing can be “Off balance sheet” but it must be a must have sovereign accessory especially for business linkages and support with the support from SAA becoming dearer by the day (Business rescue)
Your approach and business model is what will count ” low-cost carriers or other(utra and full service careers because the industry is competitive but yet profitable for those with proper working…
models and business linkages and promotions Unlike old days airline travel and booking have reduced in costs of Booking and arrangements You can book online for example (no need for more unnecessary expenses and workers ) What you will need is to carefully chose the network of your routes and manage your fleets and be in competitive strategy Like wallen buffet will tell you from experience the airline industry offers an exciting prospects and it will not be smooth selling except for those well positioned Like Qatar or Dubai you can grow the revenue passenger per kilometers and add passengers numbers on our airports from 20000 to 1000000 over the years and volumes of cargo that come with…
support services like hotels ,clearing and forwarding etc including tourism It also improve service delivery in other sectors also
Issues of debt sustainability should not crowd your mind too much otherwise you become lock up and begin to fail to see the real options that is my point here If you can work out sustainable Financing methods and partners take the opportunity from other airlines and differentiate
When you do a proper sectorial analysis, you will see and observe that having a Sovereign airline will reduce the costs of business,create synergies and business linkages that will grow the economy and contribute to the reduction of deficits(trade and others and eventually help to retrace the…
debt levels to sustainability if well managed The decision to not Invest and do nothing is also opposite true Having a local airline also attracts global airline industrial and service performers for further economies It should be seen much broader you will not effectively run your medical tourism without own airline etc and etc Thus said it must be commercially and well modeled if it will have to perform
In-fact if the fiscals were as powerful as we one would have wanted,the business case could have been different so So lets be the next Qatari and see what it means to venture into profitable and yet committed business and write a story of success otherwise we wont invest and work…
very hard amidst challenging environments having learned lessons from SAA
Imwe bane… we told you in 1994 when you liquidated Zambia Airways kuti this is not a bus company! You will regret this liquidation! Why do you think SAA, Air Namibia na aba benangu are still grappling with their airlines? They know dismantling is much, much easier than rebuilding. Useless chaps, always on the reactionary. Awe mwe! Kaya koma pa Africa cabe. CTPD is RIGHT!!!! Vilekeni cabe vi ma Zambia Airways ivo!!!
Its well understood that airline industry is cyclical ,volatile and sometimes of low profit margins in nature and the most creative and linked airline will perform for long-term to register gains on the economy When you see the performance of SA and Katutura(namibia) on the economy (forget administration issues),the airlines have been key directly and indirectly facilitating those performing sectors in trades tourism and Growing the economy through alliances and partnerships can be observed The issues of administration are another and must not be issue to refuse the investments that will perform the economy The airline industry and sector is significant to the economy and cannot be left alone to Ethiopian…
airline or Qatari or air Rwanda The reason why you see Rwanda performing (growth)is chiefly also due to airline Rwanda connectivity So the airline industry can perform Global overall revenue in 2018 was $824 and $885 2019(expected) Profits have increased from $32.3 in 2018 to $35.5 in 2019
THE KEY WORDS SHOULD BE SUSTAINABLE INVESTMENTS THERE AND NOT INVESTING AT ALL THAT IS ALSO WRONG BECAUSE DOING NOTHING BECAUSE OF UNSUSTAINABLE DEBTS (WHEN IS DEBT SUSTAINABLE NOT TO INVEST) IS NOT GOOD ENOUGH
Naphali you points are very valid but I think, in my personal view, looking at the current situation of our economy is an airline on the top 3 of the priorities for our country? I think no,t especially in view of how we cadrerise appointments in the running of parastatals and GRZ aligned entities.
@Lusaka times, your headline is misleading!!!!
CTPD was right but not correct in this context of the airline business there completely offline in their report and very misleading the zambian government has 27 years experience in running a national airline what happened in 1994 was a mistake because in my view low calibre politicians also became business decission makers whatever they said would be supported by their equally ignorant political followers that is from the zambian population we zambians have noted that we have a kind of a disease we are not aware that exist in us but an outsider can clearly see it in us surely 27years of successfully running a national airline cant be ignored this also indicates that the government can still do it for another 30years or more
Some of these articles do not even deserve a comment. This project is beyond our capacity as a nation. We are failing simple issue of power deficiency. How are we going to run a national airline? Zambia Airways was run down by cadres. As long as political cadres are in the forefront, failure is inevitable. Such a viable project cannot be run by political cadres but professional cadres with skills and intellect. ZESCO is being eroded of its capacity owing to political cadres who have infiltrated the institution. It will continue making losses as long as the hand of politician is secretly running its agenda. To revive Zambia Airways, is a pipedream if a feasibility study is not conducted. Political cadres are destroying all viable institutions because of ignorance.
THIS ZAMBIA AIRWAYS RELAUNCH WAS NEVER PROPERLY THOUGHT OUT.
The relaunch is a futile exercise to reward Cadres, Praise singers, relatives, tribal cousins and friends who shout “ni Ba Jem@soni chabe’ 2021”
The whole aircraft would have had ba J0 n@’ whisky’z portrait plastered all over the cabin, & the cabin crew rather than serve, entertain, & offer passengers safety drills, would have been campaigning for their “beloved P.F”, whilst f!lthy D@ndy Cr@zy’z songs blast in the background. The whole thing would have been a drain on the treasury, only benefitting Bembers, & Nyaanjerz, whilst the other tribes are omitted, despite equally paying taxes to the treasury.
P.F’ failures, & trib@l!sm are eyewatering to say the least!
Disclaimer; I AM NOT U.P.N.D, & I AM NGONI, but…
cont;
Disclaimer: I AM NOT U.P.N.D, & I AM NGONI, but Evil is Evil, & P.F misrule & tribalism is eyewatering, & must be outed, & called for what it is!!
Only UPND sycophants and zealots and enemies of progress who are into group think mentality are not innovative…Zambia is strategically located and will push away South African Airways and Zambians will benefit…Hence they’ve sponsored useless NGO’s and organisations loyal to the Supreme leader HH of the UPND to give a bad picture because they suffer from acute inferiority complex
Musobela na ndeke imwe!!! Big airlines are struggling imwe ati airways airways.
most airlines are Financed by equity and investors are making a return Some are crowd funded(form of smart clubs and subscriptions by citizens with royalty options from other clients) Its good thing for cargo and passengers to have a sovereign airline that can support commerce quickly