Zambia has been lucky in one sense: all the presidents we’ve had have been people with very big hearts who deeply cared for the people. We tend to insult them while they are in leadership,but many years after they leave office, we are able to clearly see that they were only trying to do what they thought would help the people.
The biggest example of this is our first president, Kenneth Kaunda. He was so desperate to help the Zambian people that he decided to nationalise private companies so that he could give jobs to many more people while also spending the profits of those companies on free services (like education, health, etc). He also controlled the prices of commodities so that the people could afford to buy food and other essential items. He was a very good man indeed. But unfortunately,
the result of this wonderful good-hearted generosity was total economic disaster!
Economic principles don’t care about your heart or its good intentions. It turns out that nationalising companies is a terrible idea because companies do not do so well when their motivation is not maximising profit. Running companies with the intention of giving jobs to people is always guaranteed to produce losses, which makes those jobs useless. Price controls are also generous, but they always lead to shortages so that the people you were trying to help end up with nothing to buy, which makes their money useless.
President HH is also a caring man with a big heart and I believe him when he says he spends some sleepless nights trying to solve the big problems that Zambians are going through, with ever-rising commodity prices, power shortages, currency weakening, and so on. Presidents ECL and Michael Sata from the preceding PF party were similarly men with big hearts.
The biggest problem is that our good presidents continue recycling the same mistakes that the first president made, which makes them fail to achieve any real economic breakthrough. It’s like the mistakes of KK are now in the DNA of Zambia. For example, the generous HH decided to bring back the free education of Kaunda because he sincerely wants to help so many poor Zambians get the opportunity of education; the policy sounds very sensible. He is also sending money to many poor Zambians through his “social cash” transfer program, hiring many thousands of people to government jobs, and many other big spending programs. If you oppose any of these programs you look like a heartless person who doesn’t care for the people.
But once again, the results will continue to be more deadly than the problem they are trying to solve. The same people he is trying to help will suffer the most from these high spending policies, and their poverty will just be prolonged more.
What Zambia needs is a thriving economy where many people can have good jobs and make good money, but this can only come from private companies being given permission to succeed and expand. This can’t happen when their taxes are too high.
For as long as HH keeps his generous social spending high, he needs to also keep the taxes high. Which means the companies will not be able to make profits, which means they won’t be able to hire more people, which means the poverty will keep growing, which will lead to the president spending even more money, and so on. The cycle won’t end. Even the money you will pay to those newly hired teachers and nurses will mean nothing, just as it happened in Kaunda’s time.
Besides increasing taxes, he also has to increase his borrowing in order to meet all these different spending needs. And to pay for that borrowing he has to find even more taxes to squeeze from the struggling sector of private employers.
He might not be nationalising companies right now, but the result is exactly the same as if he nationalised them. At best, they will be forced to lay off workers so that they can make a bit of profit after losing money through the taxes and inflation that come from these spending policies.
It is for this reason that Zambia has no chance of recovering economically at the moment. The main key to bringing economic recovery is to radically reduce taxation for all Zambian businesses and their workers, but this can only be achieved by also radically reducing spending and borrowing.
By Chanda Chisala
The author, Chanda Chisala, is the Founder of Zambia Online and Khama Institute. He is formerly a John S, Knight Fellow at Stanford University and Visiting Scholar to the Hoover Institution, a policy think tank at Stanford. You can follow him on X @chandachisala.
Excellent analysis! The only fear I have is when ZRA makes an announcement that they have exceeded their tax collection limits. Because that translates to so many SMEs going out of business. That’s a grim reality. Extremely sad situation.
To the Author, l have a question. HH says he’s following the Singapore model of growing the economy, what do you think of that?
Enough with these scholarly and general conversations about the economy that set people like DejaFoool ranting like rabbied rats.Travelling from Livingstone to Kitwe I see so many businesses running even if they seem small.There is enough funds for entrepreneur-minded Zambians.Some enterprising Zambians have found business niches that are surviving the prohibitive interest rates and know how to access small amounts of capital.But there still some Zambians who are laying down with open mouths demanding that HH drops some soup in their mouths.
Get skills, people. Only then will you get the requisite exposer and realize how sleepy you have been while your friends are partnering with foreign and local to spread risks
“Get skills” Perhaps the right call but 60 years late! China’s development was inside 70 years. The USSR was challenging the USA inside 60 years. Those are good examples of focused development
Most Africans including Zambians will tell you they follow the English Premier League. “Its fantastic!” they rave. But look at the standards in their own countries. 100 years behind. Africans are good at spectating. Emulating is another case altogether.
The article is fully pregnant with facts and is spot on.
One sided facts
Every year our financial intelligence
Reports show alot of funds exiting
The country illegally. If that can be
Stopped then we can see some benefits to this economy.
Illegally? Illicite but not illegal there is a difference bwana stop misinforming people with lack of insight. That is not factual. Cite the year of the report, page and example of such a transaction. Most of these amounts are made by “happy go lucky” investors that see opportunity to make a quick buck in Zambia. People we have read are involved in the purchase of the Ambulance. Yet their investment licience suggest they are running a pharmacy. Yes, we as Zambians have give a chance to people to come and form tutembas in Zambia. Cause we as Zambians are not innovative to fill that void. Unless we change in habits and outlook this will continue to happen.
Herod does not have a big heart!
Good leaders are seen from the appointments they make and seriously speaking, HH hasn’t scored on this. There’s nothing wrong with any government spending money on its citizens, so I don’t think it’s correct to try and demonize the free education, social cash transfer and many other such policies that cushion the most vulnerable. Have you ever heard about UB40?
If it were not for the crippling drought caused load shedding, I believe……..
You were all going to be on a different Hymn book , ……….
FWD2031
Drought Drought come on now ? the question is why were no safety measures put in place perhaps by putting loadshedding in a more foregiving way … This weather pattern hasnt just suddenly be put on us
Same with the maize shortage loomimg as ZNS has slowed down Drought again ???
My friend you singing from a different Hymn book
@Takki…do we need to send you to grade two to learn to connect the dots?
Simple logic. To the why. Debt. Crippling debt. Not just to people outside the country, but local debt where people were being without supplying anything.
Take a simple class in economics not for the qualification, cause you want to learn and undertsand issue. Its very rewarding and insightful. Stop nkani yamu moba…think critically.
You should be asking why billions was being spent on hydro power knowing the climatic risks……….?????
Compounding the debt even further for hydro projects that even reck the immediate economy
FWD2031
HH does not have a big heart and he does not love the people. If he did, he wouldn’t be giving control of the economy to foreigners at the expense of the people.
If you want an example of a leader that loves the people, look at Ibrahim Traore of Burkina Faso.
Do you have the capital to have paid the 2billion dollar debt that PF acquired in the glencore deal? No!
Bane, its so much easier to ask that demonstrate one’s ignorance.
Yes, hate me but am astounded by where people come up with with unsound statements. Read. Not just this site, the author is a Hoover Scholar. What has written aside fron this article. Is this stuff he shares here credible? Is it peer reviewed in others considered more credible.
Remember GIGO….unless we learn to read. We will accept and demonstrate that we can be mislead by the most foolish of people.
God has endowed us with so much, its so sad that we waste what God has given us. Count your blessings and make the most of it. It may not be money. But its a gift
Comaparing chickens and eggs is not the best analogy.
Cause the grass “appears” greener on the otherside doesnt mean its green when actually get there. Lets focus on Zambia and its issues and problems, not za ba neighbour. How do you know what is really going on there? Ma stori? Kikiki…perception is not everything.
No one is comparing chickens and eggs.
Fact check:
1. Both are presidents of their respective countries.
2. Both have been in power for a few years. Traore 2 years, HH 3 years.
3. Both countries were in economic distress and debt when the leaders took over.
Now compare the progress and results each country has made. Those are the facts, my friend
Mwata
Zambias 2024 GDP $133 billion
Bukina faso 2024 GDP 93 billion…….
No disrespect to what taore is doing , but……..
That’s like comparing the complexities of running a Conner shop to that of a multi commercial cooperation
FED2031
Why restrict the argument to GDP? That is being narrowminded. Zambia is a much bigger country and with more known resources to say nothing of untapped resources but despite that Zambia isnt a multi-commercial cooperation. Its economy is as simple as that of BF or Malawi. Its a one resource exporter, has no industries and the biggest employer is government. The economy is indeed at its lowest stage of development
@Jata God knows what you on about ?
the trend to aportion blame on everything that befalls us and our leaders never take responsibilty for their failings
AND by the way I was responding to my friend Spaka’s comment
and not the economy
May I suggest you understand what you read 🙂
He’s not a good man. If he was he could have been three quarters near to solving our problems. Instead of working out ways to get out of this our current mess, he spends sleepless nights trying to find a way to find Edgar Lungu. He has located the ACC to his office instead of letting them work freely.
By the way that Social Cash Transfer is from donor countries and the way things are it may come to an end too.
He is not a good man. He is a very bad man, full vergence. The guy is still in prison, it seems.
I cant agree more. HE IS NOT A GOOD MAN. We shouldnt let anyone cheat us. Nor should we cheat ourselves!
If all the money that was used to employ civil servants, social cash transfers, free education,etc had been used for agriculture and food production or mining, we would not be in this bad position and we would have many people employed in sustainable jobs. However, our man that never consults Zambians is spending on consumption and employing his kinsmen. For example the diplomatic service can be made smaller to a quarter of its size. For instance the whole Schengen area, you just need one office with smaller consulates to cover the whole region. Same for South America. No ambassadors in some countries, just administrative officers that are well trained. But now we have a bloated civil service and very little production taking place. HH is that guy that knows it all!!
There are more than two hundred civil servants whose jobs have been taken over by the new dawn sitting at home getting free salaries.
We dont need the diplomatic service. What for? They are all parasites just sucking our hard earned income. Tell me what Zambia benefits from diplomatic missions
The country requires industries, nothing else. Employment of teachers, medical workers and others much as it is good will never expand Zambias economy on any day. Incentives for land, capital and other things should be made readily available on a non selective basis.
Free education and social transfers are investments for the future this is forward thinking he won’t be president then but you have to make that start. Why should children not be educated because their parents are poor because they didn’t have an education that’s why they now need social transfers. Zambia should make the most of the goodwill of other countries this will soon come to an end educate your children business people of tomorrow. Digitalise all government departments because you still need them.
What they are calling free education can be attained in other ways other than this wasteful system whereby you pack hundreds of pupils in one class. That activity is not productive. Did you know that work and education can be combined together, so that people are doing both at the same time? The issue is that this govt never consults people because they are angels that know everything, as seen by their unproductive activities.
This thinking is flawed. Indigenous entrepreneurship has to start with education. Countries like China and South Korea have demonstrated the effectiveness of HH’s chosen approach. Comparing America to Zambia isn’t fair as our country didn’t benefit from slavery. We were a colony and black people didn’t have access to decent education, until independence. Those and other factors made KK fail. Education, education, education is what Zambians need for entrepreneurship to bloom. Only then can we have a thousand flowers to bloom.
On a scale of 5, I rate his leadership at 2.5, 5 being the highest. He managed to defeat a very corrupt, divisive and violent regime in PF. However, he is a big letdown on reforming and restructuring the economic governance of the country. He had adopted the failed MMD approach of relying on foreigners via so-called foreign Investment.Like any country foreign investment is okay but you at least 70 to 80 percent homegrown through innovation, entrepreneurship and government driven capitalism.
Ok Blago , Zambia Airways,Zesco or any Zambian owned enterprise where is there no incompetence/rotten performance? That’s why we have Shoprite and Chinese owned mines.
Njipusheko mkwai. Nomba ku Chaina bachita shani?
Do you know what one of biggest drawbacks is for international manufacturers to invest in Zambia is……….?
Lack of skilled man power…….
That is why foreign companies bring their own workers, we lack enough skilled manpower……
This GRZ has started retooling the nation from the bottom with free education……..
FED2031
Skilled workforce is at reasonable levels now.The problem is poor work ethic nd corruption. Someone has to closely supervise Zambian workers in Zambia or walk around with a cane for them to put in a solid day of work.They also expect to be bribed to work. Which international company wants that? Diaspora workers had to learn to operate differently to work in foreign nations.
Blind follower. We have people who can do the job. The trick lies in who is brave enough to tell First Quantum that YOU CANNOT BRING RIG OPERATORS WHEN WE HAVE TRAINED PEOPLE. The second problem is that the investor has not come here to create jobs for you but for his own compatriots.
Gee! We are tired of “good men” who dont perform. It just means they arent good enough for the job at Plot 1
Chanda Chisala unfortunately has hazy eyeglasses or blindspots or to put it another way , he’s measuring these economic dynamics with a broken tape measure.Of course he’ll come up to wrong conclusions.