By Mwansa Chalwe Snr

The International Monetary Fund (IMF), has never been popular in Zambia as it presided over the destruction of Zambia’s industrial base and social fabric from the 1980s to mid-2000s, through its application of the Washington Consensus’s Structural Adjustment Programme (SAP) and its flagship privatisation programme. The current level of high unemployment, high poverty levels and the huge informal sector comprising of about 85% of employment in Zambia, can all be mainly traced back and be attributed to the IMF SAP programme. But, the IMF of the 1980s, 90s and early 2000s, is not the same IMF of 2022. Far from it. And people should not be misled by people who do not read and research to update their knowledge because they packed their degrees after graduation.

Zambia has been trying to get the International Monetary Fund (IMF) deal for eight years, since June, 2014 under the late President Michael Sata, as well as under former President Edgar Lungu, who took over from him in 2015.The Patriotic Front (PF) failed to secure the IMF programme because they were bad economic managers and not trusted by the financial markets including the IMF. I was a supporter of the IMF Program under the PF, and I have also been a supporter of the program under the United Party for National Development (UPND), because my opinions are based on facts and rationale. I am among non-partisan and patriotic citizens, the likes that any seating government should be seeking independent advice from, in order to get an objective and fair view of issues on the ground.
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Dr. N’gandu’s frustration with delayed IMF bailout understandable, but who is to blame?

On the 31st August, 2022, the United Party for National Development (UPND) government, led by former businessman, and Zambian President Hakainde Hichilema, managed to secure the IMF deal within one year, which eluded the Patriotic Front for seven (7) years. The Fund released a statement announcing the approval of Zambia’s bail out.

“The Executive Board of the International Monetary Fund (IMF) approved a 38-month arrangement under the Extended Credit Facility (ECF) in an amount equivalent to SDR 978.2 million (around US$1.3 billion, or 100 percent of quota). The program is based on the authorities’ home-grown economic reform plan that aims to restore macroeconomic stability and foster higher, more resilient, and more inclusive growth,” The IMF said in statement announcing the bailout approval. “The authorities’ program, supported by the ECF-arrangement, will advance the authorities’ home-grown reform plan to restore debt sustainability, create fiscal space for much-needed social spending, and strengthen economic governance.”

I am one of the commentators who has written several articles on Zambia’s pursuit of the IMF program for eight years, including writing a book on Zambia’s ten year road to economic ruin under the Patriotic Front (PF), and the attendant result of the country turning into a battleground for the stealth economic war between China and the West, before most experts could discern it. The book is on Amazon, It is catalogued both in the USA Library of Congress and the United Nations library and as well as their on line libraries. READ MORE: CHINA-WEST BATTLEGROUND IN AFRICA: DEBT RIDDEN ZAMBIA: Why U.S. May Lose Geo-Economic Competition to China.

On the basis of my knowledge of the Zambian economy in recent times, and how a country that was weaned off the “dreaded” IMF, went back cap in hand for assistance, I decided to write a summarized educational piece on the expected impact of the IMF program from both the technical angle and from an ordinary Zambian’s point of view. I will also show how the IMF is using Zambia as a Case study to promote its new brand. I was motivated to write this piece because there is so much ignorance and lies flying around following the Zambia IMF deal.

Technical benefits of the IMF Program

Economic experts have explained and justified the benefits of the IMF program to be as follows: facilitating debt restructuring of Zambian foreign debts, supporting balance of payments, attracting foreign investments, facilitating borrowing from concessionary sources such as multilateral and bilateral partners and attract grants funds, reduction in domestic borrowing thus stopping government from overcrowding the private sector, and lastly, to make funds saved from debt repayments available to support social programs.
The majority of stakeholders agree that the IMF is highly effective during a financial crisis. It is also valued most for helping countries overcome financing difficulties and providing sound policy advice. The IMF has built its global reputation around these areas: providing sound policy advice and technical assistance to member countries, helping countries overcome financial crises but it has failed to meet its goal of promoting jobs.

There is no need to elaborate or expand on the above technical benefits because the targeted readership understand them very well. The problem is, the man on the street does not know the costs and benefits of the IMF program. And the lack of a communications strategy with a clearly laid out simple message has been the Achilles’ heel of many African governments, including the New Dawn. There is need for an aggressive communications strategy with simple messages in a language that the most important demographic- the uneducated and non-technical people – understand. I am going to provide free knowledge consultancy services to the current administration, which foreign advisors, who are out not in touch with ordinary Zambians, the voters, cannot provide. The advice herein should be the basis of how they should explain the IMF Program to the man on the street including villagers.

Expected Benefits to Ordinary Zambians of the IMF Program

The impact and translation of the technical benefits alluded to above, can be summarised as follows: the cost of living and doing business is likely to go down due to the strength of the kwacha, medicines in hospitals are likely to be available as there will more donor support, and even the donors who had left may come back or resume their support, more donor aid will flow in to support social programs due to perceived reduction or fight against corruption, free education financing likely to be sustained, fertilizers will be cheaper and more subsidies to deserving farmers is likely, low interest rates for micro and small businesses (MSEs) as the cost of capital will go down because banks will be stuck with billions of cash since government will no longer be borrowing at same level as before (Standard Chartered Bank’s recent reduction of interest rates is a good example and others are likely to follow). The cheap money is likely to result in increased economic activities and some limited job creation, but not the millions required which need extraordinary and innovative measures like the one I will suggest later in my conclusion. There should be no dispute that Zambia’s social programs will be supported in the current IMF deal. The 21st Century IMF has gone on record and committed to supporting Zambia’s social programs.

“Spending on social protection is projected to more than double from 0.7 percent of GDP in 2020 to 1.6 percent by 2025 (around the average for sub-Saharan African countries). Measures to support the most vulnerable include increasing the number of recipients of the Social Cash Transfer to 994,000—an almost 50 percent increase over 2019 recipients—and the monthly benefit increased from 90 to 110 kwacha, with World Bank support. Other social protection programs are also being expanded:  including programs to mitigate food security risks, keep girls in school, and help provide meals for students in schools. The Fund-supported program incorporates providing access to free education for all and a much-needed increase in spending on health and education, including hiring over 41,000 additional health and education workers,” They stated on their website.

According to some studies, IMF programs have been correlated and credited with an increase in free and fairer elections, free speech, and the right to organize in countries that were under IMF agreements. In some countries, therefore, the IMF has been said to be a blessing in disguise by their citizens in that it has helped them move from dictatorship to a democratic dispensation with good governance, rule of law, control of corruption, freedom of the press, strong and independent governance institutions. The Zambian Opposition and those against the IMF Program, should sometimes really think twice because most of the civil liberties that they are enjoying are courtesy of the IMF program. They should be thanking the IMF for the civil liberties that they are enjoying currently, because some of them could have been be in imprison by now serving huge sentences after trial in Kangaroo courts. This is a fact.

What are the possible conditions and negative impact of the current IMF program?

The critics of the IMF programs are predicting that Zambians will experience hardships like in the past during the Structural Adjustments Programmes (SAP). The summarised standard SAP conditions which Zambians should be looking out for and use as the checklist of the current IMF deal, are as follows: reduction in government spending and foreign borrowing, encouraging privatization of state owned enterprises, increasing taxes and enforcement, removal of agriculture subsidies, removal of free basic education, reduction in funding for the health sector, relentless fight against corruption, good governance and human rights promotion, lowering or eliminating tariffs on imported goods, opening up the economy to foreign investors on advantageous terms at almost any cost. On the basis of the aforementioned, they can make a determination whether the IMF has invoked these conditions in the current deal or not, and whether some the above conditions are good for the country or not. If the Authorities are not disclosing the IMF conditions, the above check list should be enough for critics to provide the checks and balances they need. READ MORE:

How the IMF of the 80s/90s has ‘changed’ in the 21st Century.

In my reading, I doubt whether ordinary Zambians will be substantially badly affected by the IMF deal than they are now, by the feared austerity measures as in the past. There are two main reasons for my view. The first is that Zambia has been on a de facto IMF programme for about seven years because the Patriotic Front (PF) had implemented most of the prior actions that the IMF normally demands. Zambians have been going through an effective austerity for quite a long time. It has been spread out over a number of years without ordinary citizens knowing and realizing it, and consequently attributing it to the IMF Program. To illustrate this point, is issue of power and fuel. The prices of fuel and power have been progressively going up over the years, as subsidies were being removed by both the PF and more recently the UPND. The current high cost of living started some years ago and it can easily be attributable to the prior conditions that IMF demanded under the four Finance Ministers: Felix Mutati, Margret Mwanakatwe, Bwalya Ng’andu and now Situmbeko Musokotwane. The high cost of living has just continued in 2022, but likely to level off later this year or next year due to the improved kwacha exchange rate.

The second reason is that the IMF of the 80s, 90s and early 2000 is quite different from the current one. This is due to the reforms the Fund embarked on in 2009, when most countries started avoiding to borrow from them especially after 1998 Asia Financial Crisis. IMF ended up getting stark with billions with no takers. IMF got resurrected by 2008 financial crisis caused by subprime mortgages in US .There is some evidence in the Zambian bail out deal of the new IMF, which can only denied by Opposition politicians and their sympathisers.

Is Zambia a Case study of the 21st Century IMF?

There was so much excitement after Zambia’s IMF Program was approved by the Board of Directors. The program was approved unanimously. And surprising enough, the excitement extended to the IMF management circles. Any curious observer could infer from the excitement that the Fund could be using Zambia as a benchmark case study in a number of respects. And the IMF Managing Director Kristalina Georgieva remarks seemed to give an inkling of that.

“Today’s decision is also a major milestone for the G20 Common Framework. Successfully implementing this programme will unlock new growth potential for the Zambian people and it shows others that the G20 Common Framework can deliver,” said Georgieva in her comments on the deal.
There is also evidence in the Zambian deal that IMF may want to launder its past image and improve its brand by projecting an image of a responsible and caring lender who is sensitive to members’ social programs. The Fund has allowed President HH’s administration to implement social programs that were unheard of before. Zambia has been allowed to increase the size of its civil service by the employment of teachers and health workers ,increase in the number and amount paid out as Social Cash Transfers, allowed increase in the Constituency Development Fund as well as doubled the amount of the Farmers input Support Program (FISP) in 2022 budget to K10billion from 2021.

The standard IMF conditions in the past have been reduction in the size of the civil service and elimination of subsidies and social programs. This is clearly not happening in Zambia, at least not to the same degree as in the past. This has shocked many people including former IMF employee and Zambia National Broadcasting Corporation Director General, Chibamba Kanyama. This has disarmed and silenced many objective critics of IMF.

“We have seen the IMF for the first time approving what they could not ordinarily approve. How do you employ 40,000 Civil servants within a given budget year? IMF would have resisted this. They would have recommended the opposite that you retrench the civil service,” Kanyama said to a Nigerian TV Station in an Interview.

Conclusion

Zambians should not be mistaken that the IMF program will solve the country’s economic problems, if no serious economic transformational steps are taken by the New Dawn government. The IMF deal is a pain killer, like Panadol, and it cannot be expected to heal the diseases in our economy, if the current structure of our economy is not changed. We have an economy which is foreign owned, dependent on one primary export which is copper, import dependent, without any manufacturing base, an undiversified economic portfolio and 85% informal economy! You cannot hope to develop with such an economic structure. The New Dawn should look on the above list and start addressing them
As Zambians, we should not be necessarily celebrating clinching the deal from an institution that specializes in bailing out countries who find themselves in desperate financial stress, because it is the third time that we have approached them. Botswana, which is less endowed has never been bailed out by IMF in 56 years of indpence but in fact lent IMF funds at one time. We should all be filled with a sense of shame about being such irresponsible managers of our economy and affairs. We can of course give credit to President HH, who is currently in charge to have brought back credibility and normalcy to Zambia. And one hopes that he starts listening more to those outside his inner circle. His predecessor partly failed due to his arrogance and ignoring advice outside his inner circle, including from this Author. He was so drunk with power that he publicly declared himself as the Alpha and the Omega.

“The same way people feel ashamed to go to a micro-lender (read Kaluba) because often-times it may reflect a serious lack of prudential discipline, in my view, is the same way Zambians should actually be feeling a bit of shame instead of celebrating as if we are in victory. This for me should have been a defining moment of deep self-reflection, for a 58 year old country during which we commit ourselves never again, to mismanage our affairs into such shame by making sure that we begin to make practical changes to our governance systems to ensure that no government or politicians such as the ones who ruled us in the last 10 years, ever get into leadership roles in the first place,” Jeff Mbizure, an Academic, posted on the University WhatsApp group of the pioneers-most of them retired after distinguished careers – of Zambia’s first Business School in Kitwe.

President HH launched the National Development Plan 8 (NDP 8) on the September 1, 2022 which is a very good document and Plan. But Zambia’s problem has not been the lack of plans but rather the absence of designing of innovative and practical programmes and projects to implement such plans. It is this respect that I would like to publicly ask the President to engage me so that I can share my designed innovative and technology based Programme to fast track the creation of hundreds of thousands Youth jobs through the transformation of Zambia’s huge informal sector as part of implementing NDP 8. The Initiative is based on three years of painstaking research to find solutions to Youth unemployment, and so it is not something to take lightly.

The writer is a Chartered Accountant and Author. He is a semi-retired international MSMEs Consultant and an independent financial commentator. He is also an Op-Ed Contributor to the Hong Kong based, Alibaba owned South China Morning Post (SCMP) as well as Author of : China-West Battleground in Africa: Debt ridden Zambia; Why US may lose Geo-economic Competition to China.
Contact: [email protected], www.youthemploymentcreation.com

Dear Mr. Hakainde Hichilema,

I write to you this open letter after visiting Mr. Sean E. Tembo, the leader of Patriots for Economic Progress -PEP, who as at today, Sunday 4th September 2022, has been unlawfully detained at Woodlands Police Station in Lusaka falsely accused of defaming you as President of the Republic of Zambia.

My brief chat with our brother Sean, through the bars of the cell door triggered memories of my own arrests. During one of those arrests when I was leader of an opposition political party, as you will surely recall, you spoke to me on phone. I had been arrested in Kasama on 6th January 2014 on false allegations of defaming the President, the popular “chumbu munshololwa” case. In our short conversation you made it clear to me that my arrest was a violation of my constitutional right to free expression. You unequivocally condemned the arrest and reminded me about the need to unite and work together as members of the opposition.

You made it clear that your presidency would mark the end of such violation of human rights and intimidation of people with divergent views. As you know, every Zambian knows the position you held on such arrests as Mr. Tembo’s and many others. Of-course, you too were arrested and during such arrests you reiterated your views about the abuse of power to silence opposing views.

Against this background, I wish to add my voice to those of many Zambians who are saying that the unlawful and senseless detention of Mr. Sean Enock Tembo is an indelible mark of shame on your once very promising presidency. It represents a growing notorious violation of human rights under your leadership. Moreover, it is a prominent dent on your image. This recent detention of Mr. Tembo and the many arrests of Zambians with divergent views distinguishes you as a tyrant determined to crash all opposing views in a futile attempt to create a society that sings your praises.

I know that you will with disdain say that you don’t instruct the police to arrest people but that they operate independently. Please remember that your paramount job is to protect the constitution of our country. Hence, the responsibility to safeguard our constitutional rights and freedoms including freedom of expression rests squarely on your shoulders. Therefore, you cannot wash your hands like the biblical Pilate when the police are violating human rights in Zambia. Moreover, when you and others were arrested in the past, you directed your condemnation at the President as well using the same rationale.

Mr. President, please be reminded that these senseless arrests fly in the face of your own claim of more democratic space in Zambia upon your becoming President. Therefore, heed the call to stop this abuse of power by your administration. It is time for you to shake off intolerance and begin to repair your image which has been dented by the numerous violations of the rights and freedoms of innocent Zambians under your presidency. Please don’t be misled by praise-singers around you claiming that your record remains untainted. The contrary is the reality.

Yours truly,
Frank Bwalya
Member of the National Council Management Committee
Socialist Party Zambia
LUSAKA
4th September 2022

By Maiko Zulu

(PLEASE READ BEFORE YOU COMMENT)

I had a chat with Dr Sishuwa Sishuwa yesterday. He posed a few questions and said something that left me troubled. I asked him for permission to reproduce part of our conversation. Here is part of what he wrote to me during our chat:

“More people have been arrested and jailed for defamation of the president in Hichilema’s first year than were under six years of Lungu. On average, a Zambian is jailed every month for insulting President Hichilema. Take the last 4 months as an example.

In May, Andsen Zulu, a 46-year-old driver of Evelyn Hone College in Lusaka was sentenced to 12 months imprisonment for defaming Hichilema.

In July, Danny Kapambwe, 28, and Justine Chimpinde, 19, both unemployed and from Chiengi, were jailed for two years with hard labour for insulting the President on TikTok!

In August, Benson Tembo, a man of God in Chipata, was sent to 15 months imprisonment for calling Hichilema a satanist.

I will not take about the arrests of citizens using the law on defamation of the president because these are a regular staple under the Hichilema presidency. Just the other day, on 1st September, police in Lusaka arrested Lawrence Bwalya Muchinda, an unemployed 35-year old man for alleged defamation of the president. On the same day, police arrested Sean Tembo, a 42-year-old opposition leader, for allegedly insulting the president.

I have two questions.

First, why isn’t this new onslaught on human rights and democracy in Zambia attracting much outrage from the Human Rights Commission, from broad sections of civil society organisations, from international human rights bodies, and from Western diplomats – as the old onslaught did under Lungu? Is there a specific threshold of human rights violations that these actors and institutions are waiting for before they can raise their voice against these continuing attacks on political and civil rights?

Second, how does Hichilema sleep peacefully amidst all these arrests and imprisonments of citizens, for “insulting” and “defaming” him, that are being carried out in his official name? This is a man who, when in opposition, promised to repeal the defamation law immediately he assumes office but he is now presiding over the arrests and jailing of citizens using the same law he criticised and condemned under the PF. What really happens to people after winning power? Repeal of an Act of Parliament only requires a simple majority!

Argh!

Politicians sometimes behave like they are born from the same mother…open to feedback when in opposition but easily get intoxicated when handed power. Worse, they don’t even learn from those before them and yet they get surprised when voters give them the boot for their arrogance. Their behaviour is similar to that of minibus drivers…very nice to you before you jump on their bus but they will either haul insults on you or be quick to flex their muscle once inside, especially when you remind them of their responsibilities.

The truth is that all these arrests and jailings of Hichilema’s critics are happening because the legal architecture that enabled the authoritarian tendencies of Lungu and previous leaders remains unchanged under Hichilema. We often forget that it is not about the persona or goodness of the President; it is about institutional reforms.

Although it has slightly improved under Hichilema, Zambia’s democratic trajectory remains most concerning. Based on its track record over the last 12 months, the Hichilema administration has shown a lack of willingness to make structural changes to strengthen accountable, democratic governance. As a result, Zambian institutions will remain as susceptible to manipulation as they were under Lungu.”

Source: https://m.facebook.com/story.php?story_fbid=pfbid02qnKAEiYexfvWGTgDDtM9ZiAuPCSJRX7FBQYqmYQV8U2yDv93rfPhK9qGAhw3dhHSl&id=100044152703455&m_entstream_source=timeline&anchor_composer=false

By Chibamba Kanyama

One African country, Ghana, provides us with incredible lessons about how not to manage an International Monetary Fund (IMF) programme. In 2015, Ghana accessed an IMF loan worth US$918 million to help it stabilize the economy. Unfortunately, it seemed the leader of the country had its own ‘most urgent’ priorities outside what was agreed with the lender. It is a case of getting a loan from a bank to finance your chicken business but children are out of school for lack of fees; you have a long list of relatives requiring urgent help in India and you owe the local tavern in unpaid bills stretching two years. The tavern owner has heard about the loan and wants a settlement at gunpoint.
In the case of Ghana, knowing that the IMF was watching, it decided to secretly print money (estimated to be equivalent to US $20 million) to finance pressing needs, most of them related to elections. Political pressure can easily make any country under an IMF programme go off the terms of the loan agreement.

Here is what government officials, political leaders and citizens should know from the moment you sign for an IMF loan: you are simply naked! There is a full requirement you disclose all government initiatives. You cannot spend money on any project outside what is agreed (the budget) and the IMF must know and possibly approve if there is any slight change to the plan. It is all about transparent dealings, openness to scrutiny, accountability and integrity. This is what the previous regime in Zambia feared. Full stop!

IMF HAS INCREDIBLE EYES!

Ghana thought the printing of money (which is a form of borrowing) would not be known by the IMF. But even in pregnancy, there are signals something happened before. The rate of inflation rose amidst an IMF programme when the opposite should have happened because that was the intention of the loan: stabilize the economy.
Civil society in Ghana, which had been thoroughly oriented to the IMF programme and its core terms of agreement, blew the whistle. I was at the IMF at that moment when the information leaked, that Ghana had borrowed money without the knowledge of the IMF, a key line in the loan agreement requiring disclosure of any intention to borrow during the period of the programme. The IMF reaction was adverse. It suspended the programme within a year of signing it (though restored after the vice President visited Washington DC a year later to plead for resumption).

The worst thing you do not want to have as a country under an IMF programme is a suspension. It signals to the entire world that you have messed up. Investors panic and all those other cooperating partners freeze support. Your new position can potentially be worse than your situation before the IMF programme.

IMF PROGRAMME CAN FAIL

Once you sign to the programme, you must behave! It is strict discipline. You cannot start a course of Tuberculosis medicine and discontinue midway because of the inconvenience associated with it. I know the IMF programme can fail in Zambia if it is left to the government alone to manage it.
The only other critical player capable of helping the government implement the medicine for the full course of the programme is civil society. The IMF itself fully appreciates the role that civil society plays in ensuring government fully commits to the terms of the loan agreement. This is the reason Action Aid country Director Nalucha Ziba and colleagues are pushing for the Government and the IMF to fully disclose the terms of the agreement. Though I doubt there are any undisclosed information on the terms of agreement, I support the position taken by civil society that they should understand what has been agreed. This is because of the role that civil society will play going forward.

MONITORING PERFORMANCE

The IMF deal captures several areas that will define government focus and they basically form the terms of the agreement. For example, there will be need to rationalize subsidies on energy and agriculture, reform of non-performing parastatals, increase revenues, prudent expenditure, rationalise debt acquisition, transparency, and accountability in disbursement of social cash transfer, effective procurement systems and elimination of corruption. The IMF will closely monitor how government manages all these elements. These will form part of the milestones for further disbursement of funds.

One way IMF will monitor the behavior of government is through Ministry of Finance data, the periodic information that government agencies will release. The IMF, through its local office, will occasionally access media reports to ascertain the efficacy in the implementation of the terms of the agreement. For example, if there is any piece of information on corruption in government, IMF will take that as a lead to have responses from government. If there is a story saying elderly women in Kasama have not received social cash transfers for two months (possibly due to technical glitches), the IMF will want to have an explanation from government.

However, much of this feedback on the roll-out of the IMF progamme will come from civil society. The IMF has always engaged civil society in Zambia as part of the Article IV consultations. This engagement will deepen. Civil society will be the whistle blowers about any misbehaviour by government.

Civil society has its eyes everywhere, including in the communities. It is for this reason government and civil society will need to quickly orient themselves about what is expected of each other in the next three years and even beyond. The IMF deal will certainly succeed but with the full involvement of civil society.