Thursday, June 13, 2024

The Coming Storm: Preludes To Socioeconomic Collapse

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By Dr Canisius BANDA, Development Activist

Zambia’s CSO announces single-digit inflation. Fools rejoice. The wise frown. No citizen smiles. All economic experts remain askance.

Then the Bank of Zambia steps in. It comes to say, explaining, that the single-digit recorded, the 9.7 percent, is the rate at which prices continued to rise over a given, measured period. The BOZ does NOT deny that prices are rising. Without a word, it acknowledges that the cost of living in Zambia is now reaching a breaking point. Some of its own workers are grumbling.

Every day, the people in the compounds feel the negative impact of the rising prices, they groan. And with the rising prices, the people’s anger also continues to rise, their BPs now causing splitting headaches. How high the people’s anger will rise no one really knows.

But what is certain, if we continue on this path, is that a socioeconomic storm will soon hit Zambia. Something will happen. The dam of anger will burst. Something gotta give. The clouds are gathering. The birds have all flown away, and an eerie calm now obtains. Salaries have remained stagnant in Zambia. They are not predictable anymore. The cost of production is daily going up. Prices are rising. Consumer purchase power continues to erode. The level of credit in the economy has fallen.

Copper prices are plummeting, from a high of USD 11000 per ton to about USD 7000 now. The government has given Zambia’s money away to mining companies through tax holidays. The Federal Reserve Bank of America will again soon increase its interest rates. Zambia’s debt will also soon increase. The fiscal space will shrink further. Over time, Zambia’s gross national income will gradually continue to fall.

And as all this happens, the expenditure side of Zambia’s budget continues to grow. Come on, Denny, watch that Imports-Cover carefully now! The clouds are gathering. An eerie calm obtains. Global winds of economic and political change are blowing.

Any worthy expert will tell you that Zambia is presently veritably in a state of STAGFLATION, a state of chronic high inflation in the midst of high unemployment rates and stagnant and falling consumer demand. This is a precarious economic situation, a clear prelude to a socioeconomic volcanic eruption. Debt cancellation and government economic stimuli are now recommended. Barring these, companies will be hurt, jobs will be lost, incomes will further fall, further hurting consumer spending which will further hurt companies, which will further hurt… A vicious cycle. See?

And then collapse. You see when one borrows one must pay it back. That is a sacrosanct law of business. When this law is flouted it hurts everyone involved. If an entity repeatedly borrows and repeatedly fails to pay back and, such an entity is repeatedly saved through debt cancellation, that then, my dear friends, is the very definition of idiocy.

See? Corporate/entity cognitive lameness. Zambia has all it needs to survive and prosper as a sovereign nation.
Everything, except something.

What then is required?

The enlightenment of its people. The realisation by Zambians that, through resource security and fair trade, Zambians themselves must collectively exploit their God-given resources for their own communal well-being. An aware people, a people confident in themselves than as a sovereign, that is the only way to live. A people accommodating to strangers but wary of them. But then the impending collapse of the US Dollar as a reserve currency might just be the divine intervention that will change the whole game.

BRICS plus. Zambia keep your gold! For now, the clouds continue to gather. The ground is shaking. The rocks are moving. The smell of sulphur is in the air. The socioeconomic volcano is about to erupt. There is trouble ahead. Serious trouble. Terrible times. Terrible. We pray.

16 COMMENTS

  1. Thanks Doc for sounding the warning! We shouldn’t turn a blind eye to what’s obtaining on the ground. every person doing business in Zambia have a story to narrate about scarcity of cash. From the groundnuts seller on Panganani road to more affluent companies like Toyota Zambia have felt it. And yet Bally and his cronies keep on showering us with false hope that ALL WILL BE WELL. Ballynomics and Nalumangonomics economic models aren’t working.
    A hungry stomach has no patience!!

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  2. The problem with making wrong decisions is that at the time you could be effective, you’re already out of the loop. Had you stuck with the Party through the struggle Dr you could have been useful. You decided to join the plunderers when everyone could see that PF was on its last legs. These articles are not inspiring, they don’t make anyone move. They will not cause an uprising.

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  3. We have money now to develop, it is just that the damage that the PF left was too much. We are making huge savings now as the huge imports of tear gas have gone down

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  4. Shrinflation inflation is what we are experiencing in our commodity markets now with weaker ZABS compliance this sought of INFLATION cannot be easily measured because people could be buying the same old commodities or services at the same old price but quanties are being reduced in a way There are many forms of inflation and the way it manifests that is whay addressing core inflation measures and basically productivity longterm measures up

    If you buy less than what you used to in the markets then that is inflation at the same price

  5. Broadening measures of inflation and looking at the inflation satelites and where economies are heading with imf reducing growth forecasts could complement macro prudential econmic management for long-term based on solid investments in econmic areas and productivity

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  6. Never noticed these things during your marriage to PF, the architect of our problems after inheriting a fairly decent economy from the MMD

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  7. Mananging causes of inflation is important in longterm management of the economy because inflation comes in many waves over the ecnomic cycle It could be shrinkflation or skimpflation As inflation expectations due to risks affecting global markets manifest,we expect more manifest of forms of inflation in shrinkflation or skimpflation
    What Bloomberg Economics Says…
    “It was premature for some to preemptively dismiss the June CPI report as old news, as it shows inflation creeping up in places where it can be harder to squash. The Fed is right to worry about the unmooring of inflation expectations — and this report raises the chance of an even larger rate hike than 75 basis points down the line.”

  8. Too much inflation little or no is also a problem but price stability is key to the growth of the economy Zambia for longterm You may have external FDIs and Investments Including Budgetary support or Financing but if you wont perform the economy longterm it becomes an economic cycle with little positive growth

  9. A a sign of exhaustion. It would help you to take a break from politics. Give yourself abou one year before you confuse and mislead yourself and others. You are encouraged to reflect more and say less

  10. Development activist my foot! You are PF MCC member and it is your job to oppose everything that government does.

  11. Development Activist is indeed an interesting title. What does a ‘development activist’ do again?
    Not sure anyone would listen because the PF government that you were cozying up to r@ped the economy of this country so badly that I don’t expect anyone to reverse that damage within 10 years.
    As someone has alluded to above, you see you could be the Veep to HH by now, perhaps implementing your development activism within govt.

  12. In all seriousness let’s not mislead people by pretending that economical issues being experienced at the moment such as high inflation are unique to Zambia. The entire world is feeling the pinch of inflation, low productivity and stagnant growth and salaries, partly due to COVID; Ukraine war and global supply chain issues. The advanced economies are feeling it perhaps even more than Zambia. That is reality! I actually think Zambia is doing much better than I expected under the circumstances.

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