Former Deputy Minister of Finance and academic, Dr. Mbita Chitala has rejected the proposals from four fellow economists proposing that Zambia begs to go back to an IMF program and abandons all borrowing until the economy improves.
But Dr. Chitala says the IMF program is neo-liberal in nature and is likely to be harmful to the economy, to the security of state assets and may lead to numerous job losses as witnessed in the past IMF programs.
Former Ministers of Finance, Situmbeko Musokotwane, Ngandu Magande, Felix Mutati, and former Minister of Commerce and Trade, Dipak Patel and former Bank of Zambia Governor, Caleb Fundanga have signed an open letter to President Edgar Lungu and Minister of Finance Ngandu Magande suggesting the primacy and importance of clinching the IMF deal.
But Dr. Mbita has proposed that Zambia still had an opportunity to go back to bilateral and international capital markets to contract long-term debt.
Dr. Chitala Wrote;
Running the risk of offending some of you may I say this.
The prescription suggested by those colleagues that our government adopts a humiliating IMF programme when we know that such a scheme would bring untold suffering, instability and worsen the poverty in our country is not smart at all.
The neo liberal Washington Consensus is dead. Such a humiliating programme would mean surrendering our governance to Washington technocrats, reducing public investment in health and education, stopping deficit financing to tackle any recession, place our trade unions to be at war with the state as we reduce the wage bill, freeze wages and salaries, eliminate subsidies to our small farmers FISP, petroleum, electricity, education etc which will tend to increase poverty and cost of living, abandon most capital expenditure such as construction of roads, schools, clinics and public goods such as Kafue Lower Power etc, further selling off to foreigners of our strategic companies and institutions such as NAPSA, ZESCO etc that will result in more unemployment and underemployment, reducing recurrent budget spending on goods and services that will mean weakening the state and making it vulnerable, devaluation of the Kwacha and increasing costs in our economy.
All these negative social outcomes will lead to people rage as Africa and other developing countries witness in the 80 and 90s leading into state instability and downfall of governments.
There is a solution to all this. We need to have our own developmental state as the Eastern Asian dragons and China have demonstrated.
We can still go to International capital markets or bilateral partners to contract long term debt.
There is nothing wrong with this.
More importantly we should have our own middle class on which our development will be anchored. We must have our own cobalt and copper mines owned by Zambians.
We must rejuvenate our manufacturing and agro business. We must stop capital flight and introduce smart capital controls.
We must create employment creating programmes such as the national service, small enterprise promotion, local banks etc.
We have largely not been successful so far because we failed to be patriotic, never provided incentives for our people to save, invest and innovate and so we are poor because our leaders so far have made this choice.
What option does that dead beat country under drunken master have ? All debt they contract will be misappropriated which ever way. They wonder why I moved away from there ? I am doing much better here where the economy is stable. I am not judged for the choices I make based on some imagined notion of a Christian nation. I can be with a partner of whatever gender without being killed. Foote was right.
He is right. Exactly my views. When you have a league of ex-Finance ministers and economists in your country believing that the IMF is holy and pure, the only solution to your problems.. then you have a real crisis. Worse than Covid-19.
The problem here Chitala has been rewarded a position as ZCCM Chairman by this reckless regime …do you expect him to say otherwise?
Mbita is right, if those guys think IMF can give Zambia money to service the Chinese debt then something is definitely wrong with them. The best option Zambia has is to renegotiate the Chinese debt and to refinance the Eurobond. PF must also control their reckless expenditure that’s largely driven by the desire to get commissions. PF is a disaster
I respect Dr Chitala’s views, but with due respect, he’s not giving a prescription for our current liquidity crunch and economic mess. He’s rather giving an idea of an alternative long term approach we can take to managing the economy. What does he suggest we do right now to arrest our impending economic collapse?
Defending ZCCM indirectly. Fear for Job loss. Thats the problem of being an employee. You are always scared of losing your job. Join the private sector and you will see what Magande and others are seeing.
LT should do something about this fake Tarino Orange with a disturbing image on his profile pic. We know that’s not the real Tarino, who though controversial does not post the provocative nonsense like the other one is posting. Why should someone be allowed to use another blogger’s identity and push through their personal, disgusting agenda?
A functional smart National Service is feasible. The choice between voluntary military training and voluntary civilian community service needs to be considered. Employers would sponsor employees and government would sponsor some more volunteers. Regarding IMF, it seems some tough negotiations could also help. Home grown solutions do not necessarily need to be in conflict with development partnerships. National reconstruction and construction after WW2 benefited from Breton Woods institutions. The allergy for IMF is a manageable condition. Just give the people what they need. There is no need to glorify IMF. What is needed is to make IMF deliver benefits in targeted sectors. What works, works.
Just stop corruption that’s all and recapitalise local capital and local production.
Oh dear, wht capital markets is Mbita Chitala talking about that we can go to and borrow from? We borrowed from the bond markets and the bond market is part of the capital markets. Does he know wht he’s talking about? The whole truth will soon be known after we default in 2022 and Chitala will know wht default on bond redemption does to your economy. This is a guy u cannot hv a sober debate with on this issue. And who pushed Zambia to borrow money from the bond markets? Chikwanda took the country there of his own free will.
Chitala sounds reasonable if the governors can have financial discipline. ECL call these guys the authors of the letter and few other economists for a dinner discussion on the way out. The answer lies in our heads if we can think a little bit out of the box.
Dr Makasa Kasonde: Wht national service are u talking about? The one where the state is competing wth small scale farmers growing cabbage, raring guinea fowls, chickens and rabbits? Why should the state be involved in that as we hv a failing vegetable market?
Quote: “We need to have our own developmental state as the Eastern Asian dragons and China have demonstrated. We should have our own middle class on which our development will be anchored. We must have our own cobalt and copper mines owned by Zambians. We must rejuvenate our manufacturing and agro business. We must create employment creating programmes such as the national service, small enterprise promotion, local banks etc. We have largely not been successful so far because we failed to be patriotic, never provided incentives for our people to save, invest and innovate and so we are poor because our leaders so far have made this choice.”
How true.
Ba Derrick Chitala, just keep quiet you do not have the mental capacity to understand the economic problems zambia is facing.
“The neo liberal Washington Consensus is dead. Such a humiliating programme would mean surrendering our governance to Washington technocrats, reducing public investment in health and education, stopping deficit financing to tackle any recession, place our trade unions to be at war with the state as we reduce the wage bill, freeze wages and salaries, eliminate subsidies to our small farmers FISP, petroleum, electricity, education etc which will tend to increase poverty and cost of living, abandon most capital expenditure such as construction of roads, schools, clinics and public goods such as Kafue Lower Power etc” But sorry to remind you that all past and present governments have lamentably failed to inject cash into the health sector, education, energy, etc, hence countrywide strikes,…
There you have it. From a pragmatic and genuine patriot. This guy was there during the painful SAPs and privitisation. Under Mwanawasa, they put the current mining contracts on paper and signed them, they sold ZANACO yet some people say it was the best era and are crying to go back to it. Thank you Dr. Mbita Chitala.
BA TATA ABA MWANTI BANTUNTULU?THESE ARE *****S WHO DON’T NEED IN THIS SOCIETY. HE IS FAILED ***** LIKE KZ.
Derrick is right. Mr. Magande tell us how you gave away KCM to Vendatta for free free without any dollar coming into the country.
If this is not corruption, What is it?
Bulaya medical procurement under your very nose. Yet another corruption
You maintained inflation at low figure to please the westerners yet the country witnessed, high poverty levels, pot holes on our roads
all over the country. Monies budgeted for projects were returned back to the treasury unused. What a legacy you left
During your tenure I can only think of Pedical bridge as a major project you did
So what can you advise today.
You want to give away ZESCO, NAPSA, ZAFFICCO etc for free free NO NO NO TWAKANA, VIVA DERRICK
You can support IMF and World Bank structure adjustment plans and this has never worked in…
@Tembo D: Mwanawasa and Magande left us 1 UTH, loadshedding by bringing in a lot of investors and not building power plants, they left us basic schools. All they are interested in is priming the country for the selling off of ZESCO, ZAFFICO etc, and giving away the new gold prospects cheap.
Mbita Chitala is enjoying himself at ZESCO with a hefty salary and allowances. So he does not want anything that will threaten his position at ZESCO. The likes of Caleb Fundanga and Ngandu Magande should be listened to. They are the ones who made the economy under Mwanawasa to flourish before we made the gravest mistake of our country by voting for PF in 2011. Money was flowing in the Zambian economy. We had more money in our pockets only for the PF to come and introduce untold misery and poverty. Shame!
There is a lot of truth in what Dr Chitala has written, especially the fact that during the last SAP, we were made to sell all our national assets including the goose that was laying the golden eggs – ZCCM. When IMF comes in, a lot of restructuring is demanded from freezing the wages, reducing the numbers of civil servants, revamping inefficient parastatals to the extent of privatising or completely disposing them off. This entails job losses and short term to medium term suffering, which is extremely painful and far reaching. Therefore, his alternative seems attractive but the QUESTION is, are we in a position to take this option? Already Zambia is deep in bilateral debt and we are still sinking…..We have nothing to show for all the debt we have incurred because 1. the due diligence…
Continued: We have nothing to show for all the debt we have incurred because 1. the due diligence needed before borrowing was either shallow or not done as people were blinded by the prospect of kickbacks, 2. like stated before, less oversight leads to mismanagement and plunder, making borrowing from China more attractive for PEPs.
One thing you must give to the IMF, they will never let you borrow for a project that is short-sighted and has narrow benefits, like purchasing a new presidential plane. Their funding comes with unpleasant conditions but also with strict prescriptions and monitoring. So, given a government like the PF who have already gone to the open market to borrow, squandered the money and left us at mercy of the international Shylocks, what is your prescription Dr…
Question is: why do get ourselves in such quagmire in the first place? First it was UNIP who ruined a robust economy inherited from colonial Britain. MMD worked to wipe out 7 billion USD debt. Rebranded UNIPists returned as PF to take us back to the misery of the 1980s. Before we even talk about eastern dragons. Let’s examine ourselves as a people. Do we have the discipline, work ethic, honesty, financial prudence. We are a lazy lot engrossed in loud mouthed politics, tribalism, corruption, nepotism, under the table deals, prayers without deeds, superstition, self hate and jealousy, hypocrisy, theories without practice, importers of luxury goods we cannot manufacture, reckless with money that we gifts for slay queens & buy drinks even for people we don’t know. Are these the…
Continued: Are these the characteristics of the populations of the Eastern dragons countries? NO. Now what makes anyone think one can transplant a model from Asia to work here with such a spoilt population?
Mbita Chitala’s prescription is itself full of acute economic sickness,lots of blind spots and blind faith in skills we clearly don’t have.His economic rearview mirror is also broken.
Dr chitala, what is wrong with you.
Is Zambia in its current state because of these people.
U make feel like puking
Uwakwisano: Do u know hw many jobs are being lost now and there’s no IMF programme in place? Find people who regularly monitor economic activity and engage them in conversation. It’s frightening.
This kangaroo still exists, these are the ones misleading the president with their online PhD with questionable existence. You can’t argue with experienced economist like Magande, we know him he has been tested.
Derrick chi*ala those four (or should I say three excluding Mutati) are more believable and trustworthy than you any day of the week because they have proven records. Look at your record.
Thank you Former Deputy Minister of Finance and academic, Dr. Mbita Chitala. WHEN COMMUNITIES ARE IN TROUBLE, LET THE WISEST AMONGST YOU SPEAK.
Wknow IMF very well from our past. Nothing good comes from that satanic gathering. Only severe austerity is their solution, an then interfering with democratic political choices. If you want them to impose a leader that has no love for Zambia but sells everything to greedy Western conglomerates, Take their money if you care.
We need to control income from our resources, Nationalise our Mines.
Both Chitala and Magande and group are deadly wrong with there prescriptions. What Zambia needs to heal its economic ills is a home brewed social and economic development package using our own resources.
Where are the resources?
CM: Home grown economic programme wth own resources. Why don’t u start tomorrow then? Wht’s stopping u? We claim we’re sovereign and independent. That’s wht it means, determining your own destiny.
It is wanton maddening stupidity to suggest Zambia still had an opportunity to go back to bilateral and international capital markets to contract further long-term debt! This is gutless stupidity and it does not come as a surprise coming from a red-lipped snake who gave his gun to his house kaboy to go and kill Dean Mung’omba’s wife. Actually, Derrick Chitala should have been charged with accomplice to attempted murder and sentenced to death!
Spot on, we would rather die of hunger than selling our souls to the IMF. Ask yourselves, who owns the IMF? They need us more than we need them. Have we ever prospered under their draconian rules? Time we moved on and joined the new order. Lets talk to the Africans and do business with Africa.
IMF is a bitter pill to take for countries that don’t know how to manage their resources well so that once done they should never repeat it again.
Dr Chitala Mbita reminds of arguments we used to have as freshmen at UNZA in the mid 1970s. If IMF is not a viable option what solution is Dr Mbita suggesting? He shouldn’t just criticise but provide solutions on the Zambia Debt Crisis.
Our so called failures in the UNIP era was largely due to sanctions. Yes, KK overstayed but that wasn’t reason for all the assets that he accumulated to be stripped and sold cheaply. What came out of privitisation?? MISERY!! We thought, just like now, the Westerners would revamp the parastatals and employ us and our children. But we got zilch!! Arabs, Asians and South Americans guard their resources with their lives. WE WANT TO AUCTION THEM TO IMF as our “elders” say. Saudi Arabia is oil, Chile is copper, we are copper. Get those mines, GRZ.
Nemwine: We have vast resources in Zambia. This country needs a team of Think Tanks to harness our vast resources. We have a plan, when given an opportunity we can help emancipate this country. As a concerned citizen I am currently working on what I call as a Water Revolution. I am experimenting with a number of devices like a Electric Generator running on water, Motor Car Engine running on water. We can drastically stop the use of oil in Zambia. For more information get in touch with me,
Chitala reminds me of the Chiluba regime in the 19910s and how they wrecked the economy and got away with it. He was deputy minister at Finance then. I doubt he can give credible advice given the terrible grievous things they did to the country. These are guys who got away with economic crimes.
That *****ic Mbala mafia as Deputy minister of finance once went with Dean Mung’omba to Paris to negotiate for loans. They stayed in the Ritz Paris Hotel for a month incurring a collossal bill which the French government deducted from the loand secured. Levy fired the pompous ***** about he disregarded diplomatic protocal as Ambassador to Tripoli by critisising South Africa and Nigeria from whom we needed support for Inonge’s candidature to be AU Chief. Levy dismissed the diseased yellowish lipped snake one time. Even this PhD of his from Warwich or is it Cavendish university he did by candle light is nothing but crap, I would not use it to wipe my backside!
Aba kwena abena Chitala ku wayawaya fye. Which Capital markets is this crocodile talking about? Besides that, what is a Capital market? The answer ll still take u back to IMF. In short he is saying no “Not state house,but a place the president normally uses as his office”. This is the Chikwanda mentality of “Sinking funds” instead of telling pipo we will accumulate Debts. He refused, he said no, we wont ve a debt, we ll only ve a sinking fund.
These fly by night Doctors, they cant be trusted. Chikwanda breed. Right now, we need the Magande breed ,maybe the idea isnt rosy but, he is the man Zambia really needs in situations like these, he did it before,with no questions asked.
Nigeria has lots of resources: oil, gas, minerals, arable land, a long coastline and a large population. Why’s it not a developed country? Simple. It has no accountable government. The PF hv had a lot of money to spend. Why are so many projects they started incomplete and now we’re in unsustainable debt and there’s no IMF programme? Who has driven the country to a debt situation which is resulting in failure to fund ordinary govt programmes without getting more debt? Is it the IMF and its neo-liberalism which has put you in this situation? Mbita Chitala doesn’t answer this question.
Dr Mbita Chitala is just failure, what has he achieved in life to give us advice on the economy, or indeed to question luminary economic experts like the six who have written to the President to give him sound advice? The poor guy lives hand to mouth. The President would do well to ignore him, he is among the circle of “advisors” that President Lungu must begin to discard if he is to redeem himself from past economic errors which have brought his rating and popularity to almost zero. He now works for the equally useless Mundende I hear, is that correct? Mr President, discard tgese characters immediately if you want to redeem yourself, nit tge kibd if people to surround yourself with unless you want posterity to judge you harshly.
So far Mr President you have exhibited exemolary…
…..So far Mr President you have exhibited exemolary leadership with COVID-19 by listening to sound advice of proper experts, you can do the same with our economy, trust me.
@Daniel: Chiluba and his team didn’t wreck the economy. They found a battered economy with hyperinflation which UNIP had left. It is they, with Ronald Penza as finance minister, who stabilised the economy with IMF/WBs SAPs and laid a foundation for Mwanawasa to look like he was the best. But without that foundation, Levy would have struggled, and the commodities boom of the 00s equally helped him. Learn to follow history not the cr@p the opposition failures are feeding your head!!
he IMF myths and v truth and why Zambia needs bailout
International economy has experienced the following monetary systems: classical gold standard, the golden standard, the interwar period and the current Bretton Woods system. Following the end of the World War II, the international monetary system was unstable, currencies were volatile and many economies on the verge of collapsing. This propelled the 1944 Bretton Woods conference to respond to the challenges affecting individual countries in particular and the global economy in general. Thus the formation of the International Monetary Fund (IMF) and International Bank for Reconstruction and Development (IBRD or World Bank).
The IMF’s primary purpose is simply to ensure the stability of the international monetary system, the system of…
Theres a video circulating that the American policy on Africa has always been to make sure Africans do not develop so that we dont use the natural resources for our own development so do you think loans from IMF are in good faith. Unlike these western bootlikers who failed to bring any development in Zambia. Mbita is100 percent correct
Those who advocate for IMF still dwell in the past or are beneficiaries of outdated economic advice. Zambia does not need IMF, in fact they will try so hard to destabilise our country because of it’s resources. The IMF only benefit the larger economies with a much bigger equity or controlling stake. This in turn is used as a tool to destroy weaker economies when their governments differ with them. A classic example is the situation with our mines. We don’t benefit from our mines because countries with a much larger equity share in the IMF would simply lobby for conditions which would disadvantage us as a country and put the blame on our leaders. Trump is showing you how this is done. Learn from your past mistakes and do a donchi kubeba.
The owners of these organisations steal from you using these rogue organisations which have never benefited any poor nations. Please name one country on this planet which has prospered due to IMF? Banks are not there to make people rich, they exist to make themselves wealthy not you.
Quote from Mbita: “We can still go to International capital markets or bilateral partners to contract long term debt.” End of quote. With Zambia’s credit rating approaching junk status, grabbing of mines, low forex reserves, difficulties in debt servicing and global liquidity squeezed by Civic 19 lockdowns, which international capital market will be so foolish/crazy to offer credit to Zambia? Maybe bilateral; China, in exchange for Zambian land and the same national assets you are trying to keep from foreigners. Too much theories but zero practice.
Look here, IMF is a short-term lender. For long-term lending, it’s the WB. That’s where to get money to build power stations and hydro-power dams at low rates so long u hv an accountable govt the WB can work wth. They want discipline in procurement so that govt gets value for money. The PF doesn’t want this discipline. That’s why they went to bond markets to borrow money at 7.5% and later at 9.5% whn WB money was available at 1.5% for longer periods and with options to renegotiate if u get into trouble. It’s a self-inflicted crisis. And who has stopped the projects they financed from performing? They chose them themselves in their infinite wisdom.
Zambian Citizen: KK had done a lot of things wrong, hyperinflation, shortage of forex, high cost of living, not to mention lack of democratic space in Zambia and indeed the wind of change was necessary. However, I still believe the MMD and be extension, the IMF, got the fundamentals very wrong when implementing the recovery program. Their SAP actually impoverished us to the core by obliterating even the little manufacturing base that KK had built. Just take a look at the Industrial areas of Ndola, Kitwe, Luanshya, Chingola and even at the mining operations generally on the Copperbelt. When you compare, are we any stronger? Yes, reforms were necessary but the MMD fundamentally destroyed our manufacturing base and with it, many lives. If the IMF were to come, this is one aspect we have to…
One question that can be put to Mbita Chitala and his ilk is, at wht rate is government borrowing money locally whn it issues treasury bills and bonds compared to wht they found in 2011? Wht has driven interest rates high since 2011? Is it IMF neo-liberalism?
Dr Mbita Chitala, its as if has just woken up to reality of the economic desperation Zambia is today. His prescriptions have already outlived the normal economic transactions and viability reliant to engage any financial institutions on either bilateral or multilateral conversations. The reason being the precursor of any discussion is the viability and creditworthiness a country masters. That position generates the starting point or lays the foundation of discussions. In the absence of such a factors talks are as dead as a dodo. Time for old ideologies of neoliberalism or modern liberalism is past we require complex management with innovative way of creativity to fit in an ever changing environment as failure in doing so spell out death of a system.
The trouble is the local mismanagement of resources like buying ambulances at out of this world tag prices, fire tenders, road contracts and other vices is what is killing this country. Yes, IMF are such bad institution for this country, but Zambians in authority disadvantaging fellow Zambians is what is really really sad to say the least. We now have people in the morning working with normal civil servant salary the next day building houses way beyond their economic muscle. Some political leaders becoming millionaires over night. Surely, a bit prudence in the management of the national resources would go a long way in sending the neo-liberal institutions away from Zambia.