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President Hakainde Hichilema sets perfect example for economic recovery in Africa

Economy President Hakainde Hichilema sets perfect example for economic recovery in Africa

Zambia has made substantial strides in driving macroeconomic recovery from a challenging economic situation compounded by the COVID-19 pandemic

President Hichilema’s plan for kickstarting the economic recovery in Zambia included taming inflation, job creation for the youth, restoring the confidence of international investors and addressing external debt.

  • Hakainde Hichilema has guided Zambia towards economic recovery and stability since taking office in August last year.
  • COVID-19 pandemic, climate change, high debt portfolio and other headwinds decimated Zambia’s economy in 2021 to less than 3% of GDP.
  • The proven stability approach sets an example for other African nations looking to bounce back from a raft of economic and inflationary pressures.

The dawn of hope for Zambia

When Hakainde Hichilema got elected as President of Zambia, the country was in economic turmoil. Zambia has faced massive economic challenges as one of the world’s most indebted countries. In 2020, the nation became the first one to default on its sovereign debt, with the COVID-19 pandemic exacerbating the impact

Well aware of the assignment before him, Hichilema unveiled several economic policies to solve the deep-rooted economic challenges of the mineral-rich country. Zambia, Africa’s second-largest producer of copper, has struggled as the price of copper, the country’s main export, fell amid the crippling impact of its debts.

President Hichilema’s plan for kickstarting the economic recovery included taming inflation, job creation for the Zambian youth, restoring the confidence of international investors and addressing external debt. Hichilema remained committed to improving Zambia’s system of education. This way, every young Zambian has an opportunity for government assistance to embark on a productive career. This enables them can make a decent living to provide for their families and contribute to the growth of the Zambian economy.

Zambian citizens were hopeful that the longstanding business tycoon and opposition leader would usher them into a new period of economic recovery and prosperity. Neighbouring African nations closely watched Zambia’s transition hoping for better diplomatic and economic relations.

The road to economic recovery in Zambia

Many people have watched Zambia’s economic performance in the last year. Many have wondered how the country’s economy has managed to shine in areas where almost every nation in the world has struggled.

COVID-19 pandemic, climate change, high debt portfolio and other headwinds decimated Zambia’s economy in 2021 to less than 3% of GDP. This represented a low from 4.9% in 2020 and another 4.0% in 2018.

According to Zambia’s Policy Monitoring and Research Centre, the current leader has overseen a raft of fiscal and monetary measures toward economic recovery.

After taking over the government’s reign, President pledged to implement a robust reform program. The program would reestablish macroeconomic stability and promote a private sector-led economic recovery. The government prioritized social sector spending in line with these reforms.

The President also set Zambia towards improved transparency in debt management and reporting. This was a clear commitment to increasing budget credibility, which remains essential to restoring fiscal sustainability. Consequently, Zambia has made substantial strides in driving macroeconomic recovery from a challenging economic situation compounded by the COVID-19 pandemic.

Addressing inflation in Zambia

Various African countries, including Kenya, Ghana, Nigeria, Zimbabwe, and South Africa, have failed to tame rising inflation and plummeting currencies. However, Hichilema’s government has managed to reduce Zambia’s inflation from 24.4% in August 2021 to 9.7% in June 2022.

Part of President Hichilema’s vision was to quadruple Zambia’s growth through agriculture and upscaling production in all economic spheres. In keeping with the promise to support agriculture, President Hichilema’s government abolished 5% customs on chicken and cattle breeding imports. The government also offered technological and monetary incentives to farmers.

Further, Hichilema’s administration provided a market for various crops and other commodities to reduce post-harvest losses. Moreover, the government also sought to encourage commercial banks to offer low-cost credit to farmers to foster productivity.

These policies have led to a sustained fall in food prices. Notably, the prices fell from 12% in July to 11.3% in August. Consumer prices have also remained steady in the last year. However, challenges persist in Zambia’s mining sector, which accounts for up to 10% of the country’s GDP.

During a meeting in November last year, Zambia’s monetary policy committee boldly raised the monetary policy rate to 9%. This rate, equivalent to 50 basis points, has since remained unchanged.

The government under Hakainde Hichilema had the ultimate target of inflation reduction to between 6% and 8% by June 2023. The monetary committee has since revised this goal to the first quarter of 2024. Nevertheless, Zambia’s inflation rate has decreased as the growth in food costs eases.

Achieving currency stability through debt restructuring

Zambia has dealt with the legacy of years of economic mismanagement, with an especially inefficient public investment drive. Zambia has been in debt distress. Therefore, the country needed a deep and comprehensive debt treatment to place public debt on a sustainable path.Zambia’s bilateral creditors, including France, the UK and China, agreed on July 30 to provide the financing assurances that Africa’s first pandemic-era sovereign defaulter needed to secure a final economic bailout.

After months of negotiations, Zambia agreed with the International Monetary Fund (IMF) to restructure its debt. On August 31, 2022, the IMF approved a $1.3bn loan to Zambia. This was in addition to another $1.3 billion special drawing rights apportionment from the fund it received in August 2021.

The bailout package has helped contain the rising prices due to supply-chain disruptions emanating from the war in Ukraine and the ravages caused by the covid-19 pandemic. This has seen Zambia’s national currency, the Kwacha, strengthen against the US dollar. Consequently, the Zambian kwacha is the best-performing currency in the world, rallying over 18.5% from January to September this year.

When he initially took office about a year ago, Zambia’s current leader was mocked by critics. Many dubbed him “the calculator lad” because of his strong emphasis on the economy and career as an accountant.

Looking back, it is clear that Zambia needed these abilities to get out of the economic quagmire it was in at the time. Hakainde Hichilema has guided Zambia towards economic recovery and stability since taking office in August last year. The proven stability approach sets an example for other African nations looking to bounce back from a raft of economic and inflationary pressures.

Source: The Exchange

12 COMMENTS

  1. I am / was PF supporter but jealous down, the opposition candidate I called under 5 is impressive, my conscious won’t let me free if I don’t. Keep up the good work Eagle 1.

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  2. LIES… LIES… LIES ….. Consumer products are going up everyday. Has this been written by someone who is in diaspora and has not been to Zambia in the last 13 months. The current agriculture export market is the same that HH found. Nothing has been gained apart for the talk that HH has addressed that Zambia needs to find better and bigger markets… such as our neighbours. and europe.

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  3. Why do we hate TRUTH in Zambia? The truth is the cost of living in Zambia is higher than what it was before UPND came into power. Can anyone show how the prices of meali meal, cooking oil, bread, etc has dropped between August 2021 and today? Yes the Kwacha has improved from K18/USD to K15.50 USD but if people who import things like soaps, food stuffs have not reduced prices to reflect this gain what is the benefit for ordinary citizens. As regards inflation, Zambia is the only country in the world with a formula for inflation that gives a lower inflation rate when goods and services prices are going up. In the USA and Europe the inflation is going up because goods and services prices are going up. Please let us stop tickling ourselves.

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  4. Which country are they talking about? Definitely not my country Zambia. The commodity prices have risen in some cases threefold in the last one year. This is mere propaganda!!!

  5. The only thing that HH has single handedly achieved is to reduce the amount of Kwacha in circulaion which has the obvious effects that are being sang about day and night but the benefits to the common man are a pipe dream. This self praise style is not different from that of Trump. Urging other African countries to adopt this tree without a fruit as a blue pri nt to reduce inflation is dis enginious because these countries mentioned have very different problems and at different levels. I pray that this writer does not get closer to an IMF job because Africa the main recipient of the so called IMF bail out will not go anywhere. Conmen have a way of making you believe things that you have doubts about. It only becomes clear when they have successfully coned you and are gone.

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