Dr Fred M’membe, the Socialist Party (Zambia) presidential candidate, has spoken out about the NAPSA partial withdrawals and the state of the Zambian economy. In a statement released on Friday, M’membe addressed the government’s lack of comprehensive economic recovery policy and strategy, and the potential negative impact of the NAPSA partial withdrawals on the government’s ability to function.
M’membe began by clarifying that he had not previously commented on the NAPSA partial withdrawals, stating, “What was published under my name was Fake News.” However, he felt compelled to address the issue, given the potential impact on the government and the economy.
He pointed out that NAPSA is an anchor investor in government bonds, and the projected 20 per cent partial payment of K11 billion would deprive NAPSA of the liquidity required to participate in government securities. This, in turn, would negatively impact the government’s ability to raise operational funding. M’membe noted that in the recent April 27 bond auction, the government only raised K636 million, which was a massive under-subscription, partially due to NAPSA’s absence or minimal participation.
M’membe also pointed out the negative impact of inflation, which had reached double digits despite assurances from the Minister of Finance that it was unlikely to do so. He said, “All this points to a lack of comprehensive economic recovery policy/strategy by Mr Hakainde Hichilema’s UPND government.” He criticized the government for being “in ‘fire fighting mode’,” focusing on day-to-day operational matters instead of developing a strategic economic recovery master plan.
M’membe called for a clear policy on agriculture, incentivizing domestic value addition, and bringing Mopani and KCM on board, among other things. He argued that the government needed to be more strategic and less operationally focused. “As long as the government remains operationally focused and not strategic, our economy is headed for doom,” he said.
M’membe also criticized the government’s inconsistent policies, citing the NAPSA partial withdrawals and the Bank of Zambia’s recent decision to raise the statutory reserve ratio in the market to stifle liquidity in the hope of taming the Kwacha depreciation. He asked, “So which is it to be? Decrease liquidity to tame Kwacha depreciation or increase liquidity to gain political mileage and appease the masses? What exactly is the policy direction?”
He argued that the fiscal side was canceling out or neutralizing the monetary policy measure, and that a balance needed to be struck between creating an environment for economic growth and managing inflation. He acknowledged that inflation may be negatively affected in the short term, but argued that “contracting the economy by reducing liquidity in the market is like removing blood from a patient. Achieving a single-digit inflation number is meaningless if the patient dies.”
M’membe concluded his statement by calling for a comprehensive economic recovery policy/strategy that addressed the root causes of Zambia’s economic malaise. “We need a government that is proactive, strategic and visionary in its approach to the economy, not one that is reactive, operationally focused and lacking in foresight,” he said.