By Dr. Lubinda Haabazoka
In economics, there are several ways one can reach the promised land. The easy way would normally be with the help of others while the hard way would be choosing to go it alone.
Like in politics, economists can be divided into two: Liberalists and Conservatives
Liberalists believe in 100% private sector control of the economy with the government have a very limited role. A typical example of a liberal economy is that of the United States.
Under this paradigm, the strong survive and capital thrives.
Conservatives on the other hand believe in a strong presence of government in the economy and believe that government in the economy should be there to protect small and unsophisticated citizens from exploitation by big capital and monopolies.
The ordinary Uncle Joe and Auntie Agatha are on the streets.
To be honest, liberalist concepts are more favorable to a country because they promote hard work amongst citizens and help build a strong private sector as evidenced in the United States.
The Zambian Case Study
Unfortunately for poor countries such as Zambia, a 100 % liberal direction cannot benefit a large section of the citizens, it’s foreigners that own Capital, and all we can provide is labor.
One can argue that we are the second-largest copper producer in the world, therefore, there’s hope but the mineral resources in Zambia—until KCM and Mopani transactions—are foreign-owned so the benefits from the mines elude us.
The Challenges of IMF Policies in Zambia
The reason why IMF policies fail in Africa is that the IMF fails to defend the interests of ordinary people in the countries they implement their policies. They often put the interest of the IMF first, not ordinary Zambians.
There is a very huge miss when it comes to understanding economic development as propounded by the founders of economics.
Economic development models do not have “a one size fits all approach.” Each country is unique and Africa as a continent is even more unique from the rest of the world.
When foreign capital goes to the USA or UK, the host governments keep tight control over those resources and they definitely get their fair share in form of taxes. When capital comes to Africa, it is overstated and governments get nothing from that in form of taxes.
How Does Africa Get it Wrong?
One of Africa’s biggest problems is the lack of lobbying power! Africa, Zambia included always bargains from a weaker position such that it ends up begging.
Have you ever heard the IMF mention that Africa should own its mineral resources? Have you ever heard the IMF seriously tackle the issue of illicit financial flows?
Have you ever heard the world bank fund the construction of a factory? Have you ever heard the IMF give money to build a new company to be owned by locals? No.
But they will always tell us that we should borrow from them so that we have enough forex reserves to balance our payments. They tell us that once we get an IMF package, we shall get the credibility and FDI will flow into Zambia. Let’s ask questions – Which African country has developed with the help of FDI or an IMF bailout?
Capital knows that it can only operate in countries that are playing on its own rules. So capital engaged the IMF and other strong international funders to drop up rules that favor them.
When those rules are drawn up and a country implements them, money flows into that country. Unfortunately by the time the money is flowing in, all profits go out because of tax concessions that are negotiated! A country actually does better as it has stable exchange rates and rapidly increasing GDP growth figures. But unfortunately, wealth never trickles down to the locals because apart from labour, other factors of production remain in foreign hands.
Lessons Learned
Countries that have learned this trick have advanced their economies. The trick here is to implement self-centered policies aimed at wealth creation amongst locals. But doing it quietly is very important because lobbyists are so powerful that Russia and China now are under sanctions. Sanctions because these countries have chosen not to be conformists. They have decided to create a parallel world order under BRICS to which SA is a member.
The Case of China In Continental Economics
To me, reducing the IMF debate to politics is a waste of time and missed opportunity. The discourse should be on how to prioritize wealth creation amongst citizens. Can you create wealth by increasing energy costs for your business? Can you create wealth by reducing taxes from your mineral resources?
You see, we can’t also push China away because it is set to be the number one superpower and largest economy above the United States soon. Yes this is going to happen in our lifetime.
We had Greece rule, then Rome, then Persia, then England, then USA/Soviet Union, now the USA so it’s now China’s time. The question is, what is our role in global economics? How do we prioritize our citizens? How do we win in this situation?
For me, we are not making bold decisions as the one Kaunda made. Bold decisions to get all mines and own them, build INDENI, build Mansa Batteries, build all the many factories.
Today our bold decision as mentioned by the IMF boss is that we have agreed to remove subsidies and probably privatize one or two companies then get $1.4bn. This is where I am getting worried. I am getting worried because I was born to solve huge and complex issues.
I was born to help create models in my country like never been seen before. Create a modern 24-hour economy. Create a sovereign wealth fund to fund infrastructure development. Create a Zambian Silicon Valley. Create a Zambian-dominated mining industry. Create an agriculture sector not dependent on rain.
These are the ideas we need to start discussing as a country.
But as long as discourse remains political and not serious, then we might as well follow the Clive Chirwa’s to the diaspora!
The author is an Economist, Consultant, Researcher and respected Academician of local and international repute.
Great write up and I totally agree with you. Pity that many African countries fail to see this and allow the developed world get away with it,
All we need are systems to enable us effectively manage any investment we put in place.
Often when the western world praise you, they do so because they know you are promoting their interests. Until we start doing things differently, Africa will remain source of raw materials and cheap labour.
The once great PF bootlicking economist is right on this one………….
I would say zambia and Africa needs strong goverment involvement in creating industries and targeted training of workforce and targeted empowerment of our local talent ………..
As it stands , everything is left to the privert sector with GRZ claiming to provide an enabling environment………..
Not good enough……..
This is the selfsame moron who was encouraging PF and Lazy Lungu to borrow 6 years ago!!
And he has a PHD; oh wait a minute, everyone on Zambia is a DR! So called foreign companies are public. Zambians can buy shares, too, that how Charles Milupi, HH and Inonge Wina became millionaires.
The only thing that matters to the thin people if Zambia is Jobs. Until that is secured our people who continue risking their lives across the Mediterranean.
Doc wisdom is seen and recognized.
This Russian trained mercenary is talking a bit sense but he had created a bad impression for himself by being a PF cadre. he was hoping for a BIG JOB in govt but his name and tribe made him not attract attention of the appointing authority. Now he can craw into UPND and make his contributions. this is a big lesson to some of our intellectuals who align themselves to ruling parties which have lost touch with the masses.
This pompwe is right this time. We need every body’s views on this one.
This guys has talked about so many issues and it is confusing to discern exactly what is the number 1 then 2 or 3 problems in that order, Zambia should solve for its people to achieve their economy independence. This is more like a class room lesson that has no focus on the issues than ideas to provide advice.
The first thing every successful country has done is create a legal and social foundation. In other words, make laws and rules that everybody must abide by and be enforced regardless of status.
The number 1 problem that Zambia and Africa face is corruption. Corruption misallocates resources and dislocates society but he says Africa’s biggest problem is lack of lobby power.
This was the guy that condoned Lungu ‘s wanton corruption and was very ardent supporter of debt…
contraction by PF and today he says he was born to help create models in his country like never been seen before? Truly laughable.
How can you create a sovereign wealth fund with debt and how do you create a Silicon Valley in a country where the intelligentsia are roaming the streets and i-d-i-o-t-s occupy the offices?
He does not understand why capital is efficiently managed in the USA or UK and why Africa get nothing in form of taxes? Reason corruption
This guys has talked about so many issues and it is confusing to discern exactly what is the number 1 then 2 or 3 problems in that order, Zambia should solve for its people to achieve their economy independence. This is more like a class room lesson that has no focus on the issues than ideas to provide advice.
The first thing every successful country has done is create a legal and social foundation. In other words, make laws and rules that everybody must abide by and be enforced regardless of status.
The number 1 problem that Zambia and Africa face is corruption. Corruption misallocates resources and dislocates society but he says Africa’s biggest problem is lack of lobby power. This is not an issue.
This was the guy that condoned Lungu ‘s wanton corruption and was very ardent…
supporter of debt contraction by PF and today he says he was born to help create models in his country like never been seen before? Truly laughable.
How can you create a sovereign wealth fund with debt and how do you create a Silicon Valley in a country where the intelligentsia are roaming the streets and i-d-i-o-t-s occupy the offices?
He does not understand why capital is efficiently managed in the USA or UK and why Africa get nothing in form of taxes? Reason corruption
Too late! He has lost his chance to contribute. Even when he is right people can’t listen to him as his name and organization are both tarnished.
THE WRITER IS SPOT ON!
WE SHALL FOLLOW IMF SOLUTIONS TO OUR OWN GRAVES WHILE WE ARE GNASHING OUR DUE TO GRINDING POVERTY.
SOME POLITICIANS ARE MILLIONAIRES AFTER THEY DEALT THEMSELVES FAVOURABLE CARDS.
.. WHILE GNASHING OUR TEETH DUE TO GRINDING POVERTY
This guys has talked about so many issues and it is confusing to discern exactly what is the number 1 then 2 or 3 problems in that order, Zambia should solve for its people to achieve their economy independence. This is more like a class room lesson that has no focus on the issues than ideas to provide advice.
The first thing every successful country has done is create a legal and social foundation. In other words, make laws and rules that everybody must abide by and be enforced regardless of status.
The number 1 problem that Zambia and Africa face is corruption. Corruption misallocates resources and dislocates society but he says Africa’s biggest problem is lack of lobby power. This is not an issue.
This was the guy that condoned Lungu ‘s wanton corruption and was very ardent…
supporter of debt contraction by PF and today he says he was born to help create models in his country like never been seen before? Truly laughable.
How can you create a sovereign wealth fund with debt and how do you create a Silicon Valley in a country where the intelligentsia are roaming the streets and i-d-i-o-t-s occupy the offices?
He does not understand why capital is efficiently managed in the USA or UK and why Africa get nothing in form of taxes?
Luska times you are wasting your time by blocking my comments. You still have not learnt a lesson from Lungu’s loss.
Ubuchanjeshi bwankoko, kind of thinking 🙂
As African, we need to stop the nonsense of blaming everyone else apart from ourselves – Africa is poor because of poor African policies(mostly). This article is written by a gentleman that had been advising economy policies the PF govt that had been in power for over a decade – were did this get the country to? Deeper into poverty!!
One or two points from the article make sense: 1.One of Africa’s biggest problems is the lack of lobbying power 2. The discourse should be on how to prioritize wealth creation amongst citizens
1.My points
Cost of Capital – To develop the country quicker(majority of the people can’t sweat of longer, genuine route to prosperity, eg China, Asian wat), capital is required. Capital is expansive and its cost is…
cont’d
and its cost is determine by those that own. Do not cheat people that you can develop the country “quickly” without borrowing
2.Blame “every” failure on the IMF
The other day Amb Mwamba wrote an article implying that the IMF should accept complicity responsibility for Zambia taking on debt from Capital Markets, which they have failed to payback. Really?? Was a gun put to someone’s head to force them to take on this debt.
For the millionth time, the IMF does NOT go around looking for countries to lend to – its the other way round. Countries – usually after years of mismanagement, corruption, theft of public resources, go to BEG IMF lend them capital
3.Ubomba mwibala altitude / lack of sufficient education
This is the biggest problem we have. In Africa there is no…
cont’d
In Africa there is no serious concept of accountability in public affairs, and too much respect for elders(in as far as questioning older folks mistakes). Many honest, hard working folk are looked down upon. Added to that is the limited sufficient education
@Spaka
For once you sound very Patriotic Zambian…thats how it’s supposed to be…we will never develop if we have a mindset of borrowing…….we have enough resources and I think we can easily raise I.4 billion without looking elsewhere
Exactly my point Lubinda Haabazoka.
You are so on point.
Please don’t leave Zambia, the country needs you. You sound like a true son of the soil. I like your thinking and with guys like you the country can see light.
Naturally guys like you need to hit the political playground. For me it’s LH 100%.
You sound like a patriot. I have followed your vibes from your CBU times and your Zambia is the kind’a Zambia I desire. I made the statement that Zambia with IMF is like relinquishing our power to run our country get rich on paper and condemn our citizens to delayed progress. We are so lost with IMF.
We have people who believe in having homegrown solutions for the country. The bold and the hardworking and thinking like Lubinda on side, and the weak and dependent characters who at whatever cost would like to go to the West and get emboldened with IMF luring agenda. No matter what you tell them IMF is their thing. It is sickening but as it were, it won’t be long before we are reminded of the cruel nature and ugly face of yesteryears.
@This thorn in the flesh
Unfortunately very few people think like you….IMF is worse than the common komboni shaylock….57 years after independence and we still celebrate getting loans from the west….I think we have a serious problem
As an Economist, I always have a problem with Russian trained Economists who believe that Socialism is the answer to everything even though those policies failed in the countries of their making. Just how you obtained your PhD is mind boggling.
Listening to Habazoka on Diamond TV is really disappointing, but I feel very sorry for students who have passed through his hands
I agree with the gist of the arguments advancde in this article. There’s not counry that has developed from a position that emphasises borrowing. The rapid development seen in China and the middle east, has been the result of a mindset that priotitised national interest and the protection of national assets. Empowerment of citizens through regulation and enlightenement of citizens has created environments to faciltate empowerment and structural re-alignment. However, nothing like that can happen in a country where ignorance has trumped rationality. We’ve seen leaders come with promises, then go the same way as KK did. Our biggest challenge is the Constitution, which is porpous and malleable. There’s nothing in there to protect our country from the worst amongst us, like ECL and his lot. I…
It is only a fool and an ***** who would always want to wear a thick skin against the truth.