By Chimwemwe Mwanza
Try as we might to spin the metrics, the reality tells a different story. The economic hardships facing the general populace are palpable. Liquidity is in short supply and small businesses are choking to inflation. The local bond market – which is a key determinant to measuring a country’s investment credibility has lost its lustre. Simply put, the depreciating currency and rising costs of living is now conspiring against hopes of a weary electorate that bet their fortunes of a better life on a change of government.
Then boom, amidst this gloom, a pandemic which has come to define our rain season suddenly emerges from its slumber – thanks in part to dry weather experienced in recent weeks, the El Nino phenomenon has helped to avert a full-blown cholera crisis.
Yet the Barotse – people of the plains want none of this respite. Like a shark circling wounded prey, they can sense that now is their perfect time to settle a long-standing grievance. This Government is battling to quench fires, left right and center. You see, gloom festers despondency and dejection – the twin canon folders often abused by political opportunists. But political gimmicks aside, is it even possible for the western province to start agitating for a secession – 60 years after independence? At face value, these noises smack of political poppycock propagated by a dark force.
Makes you wonder, where are our opposition politician’s consciences in fomenting this crisis? Other than sitting on the edge and waiting for an implosion of sorts, is there anything coherent that’s come from the opposition bench thus far? I mean, what joy is there to derive from dancing on the graves of Cholera victims? It’s important to ask such legit questions granted these are the people who will be lining up for your vote come 2026. Patriots don’t root for an economic free-fall just to engineer an easy passage to State House otherwise you will have no country to govern when you take over reigns.
Insignificant as this might seem, it’s important to re-trace the root cause of the country’s economic challenges. The former governing party borrowed billions for consumption and sprinkled some change on some infrastructure projects. The logic underpinning the so-called infrastructure spend was to disguise a wanton looting spree. And now, the chickens are coming home to roost. The inflation choking this economy is the previous dispensation’s making hence their talk about having a plan to fix the country’s debt burden makes mockery of common sence. You don’t break to fix later.
Economic lay of the land
While the African Development Bank (ADB) anticipates local GDP growth to tick marginally by a percentage point in 2024, largely the result of government’s implementation of policy reforms, this forecast is off little consolation to the 54% of Zambians wallowing in abject poverty. But didn’t Bally after all promise to fix the country’s economic woes once elected to office? Painful as this sounds, the sad reality is that it will take a long while for this economy to begin to show green shoots.
And to his credit and very seldom do we give such, President Hakainde Hichilema has resisted the temptation for an easy fix to this malaise. His best and simple option would have been to print more and flood the economy with hot money – the PF way. However, the reality is that flooding the economy with hot money would be akin to pouring kerosene on an inferno. As it is, this economy is already overheating with hyperinflation. In fact, there are some parallels to draw from President Frederick Chiluba’s era to the challenges facing the incumbent government – the only difference being Chiluba was more forthright to the electorate regarding the economic pain he would inflict on Zambians once he assumed the reigns.
He bore the brunt of citizens when he adopted the IMF’s Structural Adjustment (SAP) Policies. And while history has been so kind to President Levy Mwanawasa’s Presidency, the boon years enjoyed during the Mwanawasa era were largely the result of the foundation laid by Chiluba. His reforms enabled the country to reach the Highly Indebted Poverty Country (HIPC) completion point and the massive debt cancellations arising from the HIPC initiative is largely what helped to ignite growth.
Given our deeply polarised society, it’s possible that we are probably too consumed in the politics of the day to see the bigger picture. And just so we are clear, this summation is hardly an exoneration of the incumbent government’s complicit in the hardships facing Zambians. On evidence, the country’s current monetary policy which is premised on fiscal consolidation has been ineffective in curbing inflation and this trajectory has thus far failed to arrest the local currency’s depreciation against major convertibles. Isn’t it time to perhaps change tact? Over to you Dr Kalyalya.
Zambia needs a bottom-up structural rebuild which is anchored on large scale re-industrialisation. Its industrial base is non-existent. Put differently, besides Trade Kings and Zambeef, is there any other industrial conglomerate that can ably display the country’s manufacturing prowess. Where is Kawamba Tea or Mansa Batteries. What happened to the Mununshi banana scheme – those from Luapula should be forgiven for raising nostalgic questions.
Southern province had the Livingstone Motor Assembly plant and a radio manufacturing company called ITT supersonic. At its peak, the Inter-Continental Hotel and Rainbow Lodge – had the largest combined employee workforce in the province bar Nakambala Sugar. Mulungushi Textiles, Zambia Railways, and the Zinc Mine in Kabwe made Central province one of the most attractive investment destinations in the country. Today, a distinct record as the most polluted mining town in the world is the only accolade Kabwe has to its name.
Copperbelt had Kafironda Explosives, Mpelembe Drilling, Ndola oil refinery, Zamox and CPC among the entities created to benefit from that region’s mining value chain. All inputs which are critical in manufacturing are imported – or otherwise brought into the country as finished products. This economy is indirectly exporting massive jobs. Begs another question. Is there any hope of an economic rebound on the horizon or at the very least is there a possibility of reincarnating these companies albeit with different names?
Mining has potential to catalyse growth
The fact that Zambia stole the limelight at the recent Africa Mining Indaba held in Capetown is indicative of the country’s economic potential. President Hichilema’s virtual address to delegates was captivating. He listed a catalogue of investment pledges to the sector – which if they come to fruition would change the face of the economy. His Finance Minister Situmbeko Musokotwane, Mines Minister Paul Kabuswe, the Presidential investment advisor Jito Kayumba including First Quantum Minerals Country Manager Dr Godfrey Beene, PPDF Director General Andrew Chipwende, among others, presented a solid investment case for Zambia.
So, how best can the country use mining to re-industrialise its economy. This country has abundant mineral resources. It is home to 6% of the world’s Copper ore reserves with Copper accounting for 80% of the country’s export earnings. Other than Copper, it has substantial Cobalt, and gold reserves including Lithium, Nickel, and Manganese – the minerals often referred to as ‘Critical Minerals’ or minerals of the future.
The ambitious plans by developed countries to deploy clean energy sources alongside clean technologies including electric vehicles (EVs) bodes well for the future of local mining. This optimism is premised on the fact that Electric Vehicles (EV) sales could account for more than two-thirds of market share in developed markets by 2030. This will in turn push battery demand for mobility and stationary applications and by implication increase demand for Critical Minerals. This scenario is good enough a case to justifying government’s ambitions to increasing Copper output from the current 850,000 metric tons/annum to 3 million by 2031.
What role then can mining companies play in helping industrialise this economy – after all government has dolled out billions in tax incentives to help boost their production output. This is a discussion for another day.
Mwanza is a keen reader of history and philosophy. For feedback, contact him on [email protected]
