By E. D. Wala Chabala, PhD
I quite liked the theme, unlocking economic potential, of the Budget Speech delivered by the Minister of Finance and National Planning, Hon Dr Situmbeko Musokotwane, to the National Assembly of Zambia on 29th September, 2023. It nicely set the framework for what to expect in following the delivery of the address. And, it also made a very good framework for analysing the contents of the budget speech.

Indeed, there is no doubting that Zambia has tremendous economic potential which needs to be unlocked. In terms of arable land, by some accounts, Zambia has 42 million hectares, of which only 1.5 million hectares (less than 4%) are cultivated every year. There are sources which claim that Zambia holds 40% of fresh water of the SADC region, but most of farming done in the country continues to depend on rains with the potential adverse impact of climate change. Zambia possesses one of the world’s highest-grade deposits of copper and is Africa’s second largest producer of the metal, and the world’s seventh. There are projections to almost quadruple production volumes to 3 million tons in the next 6 years. Zambia’s potential in manufacturing continues to hold tremendous opportunities, especially for adding value to most of the products that are traded in raw form. Zambia is also home to rich natural and biological diversity to provide a strong base for tourism, in addition to being blessed with the mighty Mosi-o-Tunya.

Zambia is known to possess a demographic dividend, which if harnessed could drive its transformation into an industrialised economy. With digital devices in the hands of the youth and them being adept at use of applications, Zambia’s demographic dividend could easily be harnessed to propel it into the 4th industrial revolution. Zambia also has significantly more hydro-power generation potential than it currently utilises.

Let us consider how economic potential in each of the above opportunities is proposed to be unlocked in the 2024 budget. Stating with farming, unlocking potential would have been addressing the issue of how to double, then quadruple the production of say maize in the country. The farmer input support programme (FISP) is nothing but a kind of social cash transfer in its current form. Testament to this would be in the fact that despite the erratic and delayed distribution of inputs at the beginning of the 2022/23 season, yet 3.2 million metric tonnes of maize are projected to be harvested. This budget missed an opportunity to put policy measures in place to get better utilisation of the more than $400 million being pushed into FISP, as has always been the case. The sort of detail and focus that has been put in the animal sub-sector is what was needed in the crop sub-sector as well.

Farm blocks are an old Zambian story, whose potential has remained untapped, primarily due to bureaucratic bottlenecks and inability to attract anchor tenants. Not sure whether the measures being proposed will address these challenges. While with regard to irrigation, the many dams which will be constructed may not see much utilisation without matching measures of incentives in irrigation equipment.

What is curious with mining is how not much attention is given to its impact, both adverse and favourable, on the economy. Take for instance the fact that the economy is projected to grow in 2023 (2.7%) at almost half the rate of growth in 2022 (5.2%), with the slow down attributed to just one sector. This demonstrates the vulnerability of the Zambian economy to the mining sector. And given that there is the desire to increase copper production to 3 million tons by 2030, a nominal increase of more than 360,000 per annum from the current production levels, this vulnerability is only bound to get worse. Yet nothing in the budget speech gave one the impression that measures are being put in place to mitigate this, let alone that the economy was bracing itself for consequences of the quantum increase in copper production.

It certainly did not sound like any compelling policy framework was being proposed for ensuring more value-addition is done in-country. And the complete lack of mention of investment or rehabilitation of the railway system was enough to underscore the lack of seriousness in the unlocking economic potential due to the increased copper production. The envisaged additional production of copper if all exported on the roads will put incredible strain on this infrastructure. It is indeed yet a more curious measure that import duty has been removed on rolling stock, but no attention given to the track on which the wagons or locomotives will need to move. So much for an export-led economy.

For manufacturing to be effective in unlocking economic potential, it should be tied to value-chains, whether locally or at the global level. The multiplicity of value-adding activities in the country would generate significant economic activities to absorb many youths into gainful employment. It is difficult to pick out such policy measures that would catapult manufacturing to higher levels. Multi-facility economic zones, while providing incentives for location of business activities, also introduce playing fields which are not level in the economy. A new company producing a drink in the MFEZ with the applicable incentives is able to land it on the market at a much lower cost than the already established players in old industrial zones. Policy measure need to be put in place to address such imbalances.

But, for manufacturing to be effective and have a significant impact on the economy, it should be linked to sources of raw materials, whether these are in form of mining products or agricultural produce. Cluster configurations would be far more effective than MFEZs so that incentives can be provided in ring-fenced catchment areas of production of raw materials and value-addition activities extending to warehousing, logistics and transportation. It is debatable whether the local content allowance is enough an incentive to drive the desired outcome. Also, not sure what the experience on the ground is with regard to tax concessions for businesses established in rural areas. However, curious why the measures applied to cotton could not have been applied to more value chains. The rural electrification authority’s activities can then be linked to such productive centres that are removed from the line of rail.

Many a young entrepreneur would like to venture into some value-adding enterprise, but are constrained by resources, such as access to affordable finance. It is hard to believe that Citizens’ Economic Empowerment Commission (CEEC), and other empowerment funds, are the solution to this. Not only are the funds inadequate to make meaningful impact, but their administration and management leave a lot to be desired. The expectation here was that the Minister and his team would have come up with better solutions than these that have been proven not to be effective over many years.
The unlocking of tourism potential would have to be seen beyond the K770 million allocated to the sector, but in tandem with the upgrading and rehabilitation of airport infrastructure around the country, including access roads. The question is whether there is a link between this infrastructure development and desired tourism growth. The key for increased tourism activity in the country would lie in effective marketing of the tourism potential. Not sure how much of the less than $40 million earmarked for the sector would be set aside for marketing, and if that will even be anywhere near enough to have the desired impact.

The other sector where the unlocking of economic potential does not seem to come though is in education. Commendable that so much resources are being applied for universal primary education coverage and hundreds of secondary schools are being proposed to be built. But then there is only a paltry sum going into TEVET institutions. So, what is meant to happen to all the learners post-secondary school? We keep missing the tremendous opportunity in the youth dividend of the country.

The TEVET institutions should be re-tooled for the digital economy, and for clean and green energy technologies. So, K70m for TEVET equipment really cannot even start to address what is needed to unlock the potential in the youth. Granted there are empowerment funds, including for the youth, but there is enough experience around to show that those are never effectively and impactfully applied.
On the social front, while the Honourable Minister proudly presented how the 2023 budget performance was coming in below target for the fiscal deficit, one cannot help but think that that is a lost opportunity here in terms of cushioning the high cost of living in the country. It is what most economies, including developed ones, would do for their people. While on paper the lower number for budget deficit is to be congratulated, this has only been achieved at the expense of cushioning the high prices of fuel and maize meal to consumers. The government would have been wiser to meet the fiscal deficit target, and at the same time provide some needed relief to the citizens.

In conclusion, while the Minister set out to demonstrate policy frameworks, resources, and incentives for unlocking economic potential for the country, it is being argued here that the demonstrated provision of the resources and incentives may not be aligned to what is required for unlocking the economic potential, and indeed that in some cases the same may be wholly inadequate.
Finally, even without going into the detail of what constitutes unlocking economic potential as done above, one cannot help but feel like one has heard this sort of budget before. Indeed, economies are notoriously path-dependant, incrementally only adding on to where they have been before. Therefore, this budget speech sounded very much like one of those that Hon Felix Mutati would have presented in the previous regime, with all the premises of a home-grown economic rescue package, condoms, and all.

The author is an Independent Economic Policy and Strategy Consultant and MBA Lecturer. He is a former Management Consultant at McKinsey and Company and a former Business Executive in a FTSE-100 Financial Services Company. He has also formerly been Chief Executive Officer of the Securuties and Exchange Commission of Zambia.
[email protected]

By Mwizenge S. Tembo, Ph. D.
Emeritus Professor of Sociology

Introduction

Mr. Mwanza was a short brown man. He was my Grade 6 Science Nature Study class teacher. He had brought in a paraffin cooker and a ten-gallon empty Olivine cooking oil aluminum container for that class period science demonstration. He unscrewed the lid of the container and turned it upside down. Nothing dropped out. He tapped the large tin container with a ruler and the loud sound the container made confirmed that it was empty. His actions were just like a magician would except this was science.

Mr. Mwanza placed the lid of the container on the table. He poured 16 oz or 454gms of water into the container. He lit the paraffin cooker which soon was producing roaring blue flames. He placed the container on the cooker. After a few minutes, the water was boiling as steam was rising out of the opening of the container. After a few minutes, Mr. Mwanza took the hot container off the cooker and placed it on the floor. He turned off the roaring paraffin cooker. He quickly took the lid from the table and screwed it tightly on the container, The class waited.

After one or two minutes, loud popping sounds came from the aluminum container as it twisted, crushed, and collapsed as an invisible powerful force was attacking and destroying the container.

Tamanda Mission Boarding School

I was 11 years old in Grade 6 at Tamanda Dutch Mission Boys Boarding Upper School 58 years ago in 1965. Mr. Mwanza was demonstrating to the class the impact of the very heavy atmospheric air pressure. The measurement of atmospheric air pressure is done with a barometer. Mr. Mwanza said the crushing happened because a vacuum had been created when the top of the container tightly closed the steam from the condensing steam from the boiling water created a vacuum. I later qualified to attend the prestigious Chizongwe Secondary School where our teachers Mr. Varugheese from India and Mr. Wallin from Norway conducted Physics and Chemistry experiments in our school laboratory in Form VI and V up to 1971. Science classes and experiments created my life long deep interest in both natural and social sciences.

Chizongwe Secondary School

After I graduated from Chizongwe Secondary School in 1971 and 47 years later in 2018, I was lucky enough to buy 50 Hectares or 123 Acres of natural wilderness land in rural Chongwe outside Lusaka. I created the Mwizenge Sustainable Model Village. Among the numerous objectives of the model village is to create an environment for social and natural science scientific studies and observations. There are so many exciting things happening on the model village premises. One of the recent highlights is the arrival of a cutting-edge microscope for observation of nature.

We were able to use the microscope because electricity is available through solar power. The village has adult men and women, several young boys, and girls who are in Grade 6, 7, and 8. Once we had unpacked the microscope and hooked it up to the solar power, the moment of excitement had come for me and the gathered curious residents. I had never used a microscope before. What were we going to observe first?

I told them; “We can’t put an elephant under the microscope”, I joked. I sent Joseph, 17yrs, Grade 6 to get the tiniest ant. He searched carefully on the ground until he found the ant. Once he brought it, we placed it under the microscope. I peered through the microscope first. What I saw surprised me. Then everyone was excited and wanted to take turns peering through the microscope. There were excited reactions of surprise of: “Oh-h-h-h! Ah-h-h-h-h!!!” What we saw was the tinny leg of the ant magnified more than ten times had all these numerous hairs sticking out.

Going Forward

The challenge moving forward is that I will need formal practice on the basics of microscope use. How can the samples be preserved? What will be done initially will be just observation of various objects, organisms, creatures, critters, trees, plants, insects and numerous other samples of items found directly in nature as the village is located right in the middle of nature. This may eliminate the need to collect a sample, have it preserved in a jar and transported hundreds of kms to a lab in Lusaka. At least the initial activities will be observations that will be conducted on the premises and recorded. The microscope may initiate some interest in science in both the young and older village residents. We may have to build a model Village Nature Science Laboratory.

Why can’t we have science practices among residents of villages all over rural Zambia?