Zambia’s long-term hopes are pegged to a probable successful debt restructuring programme that would see debt reschedule, or debt cancellation or debt forgiveness.
By Amb. Emmanuel Mwamba.
The Economic team led by President Hakainde Hichilema and Dr. Situmbeko Musokotwane is failing and falling and is not doing anything different from its predecessors.
The cost of living has reached perilous levels, cost of fuel and essential foodstuffs is at a level that can spark social unrest.
They are relying on foreign designed and prescribed economic programmes as a solution and have ignored measures to raise resources from domestic revenue.
Also Read: This is a wrong time to align Zambia to the US with a changing geopolitical landscape.
They are accumulating debt at an alarming faster rate, and are relying on external factors to resolve internal issues and crises.
The key sectors of health, education and agriculture are collapsing while the nation is treated to repeated false assurances.
They are fasting and praying for international charitable and benevolent actions of creditors and multilateral financing institutions.
Like their predecessors, they are stuck in a begging-bowl mentality.
The country has not been servicing foreign debt since December 2020, yet Government continues to accumulate more local and foreign debt.
As at December 2021, foreign debt was at $13.04b and publicly guaranteed debt was at $10.5bn.
Total Public debt and publicly guaranteed debt was at $23bn.
▪️ Now in 2023…
External:
Central Government – $14bn,
SOEs – $3.44bn.
Total External – $17.4bn.
Domestic:
Domestic Debt – $14.23bn.
Total:
Total Debt without interest arrears – $31.63bn.
Adding interest arrears of $1.18bn, brings the total to $32.8bn.
Minister of Finance and National Planning, Dr. Situmbeko Musokotwane, says the increase in external debt stock can be attributed to new loans and continued disbursements on existing project loans, mostly from multilateral institutions and bilateral creditors to finance on-going priority projects.
Recently the Zambian authorities and IMF staff team reached a staff-level agreement on the first review of Zambia’s economic program under the Extended Credit Facility arrangement.
The staff-level agreement is subject to IMF Management approval and Executive Board consideration once the necessary financing assurances have been received.
An agreement with official creditors on a debt treatment in line with program parameters would provide the needed financing assurances.
To remove any hurdles to the timely completion of the review, Zambia needs official creditors to move forward and reach agreement on a debt treatment in line with the financing assurances they provided in July 2022.
Their master, the IMF have just given them an optimistic evaluation and states that the economy has rebounded, fiscal credibility has been restored, and, with the authorities’ continued strong reform momentum, growth is expected to pick-up further in the medium-term.
Zambia’s long-term hopes are pegged to a probable successful debt restructuring programme that would see debt reschedule, or debt cancellation or debt forgiveness.
The praise from the IMF is after the Zambian authorities removed or reduced subsidies on fuel, Farmer-Input Support Programme and Electricity (partial) and cancelled public investment in infrastructure projects.
▪️ What We Would Do Differently.
We would make Zambia a healthy, educated, wealthy, industrialised and prosepeorus nation, an export hub of electricity, food, finished products and skills.
How it can it be done.
1. Remove tax holidays and tax incentives unfairly provided to the mining sector. The mining sector will pay just taxes and fair mineral royalties.
2. Renegotiate unfair and corrupt Power Purchase Agreements entered into by ZESCO and Independent Power Producers that serve to milk ZESCO of its revenue and investible resources.
3. Reform Zambia Revenue Authority (ZRA) and widen tax-base to achieve tax revenues of above 22-25% of the Gross Domestic Product (GDP). Revise taxes such as Value Added Tax (VAT) that are frequently abused and form part of tax refund abuse and fraud.
3. Empower ZCCM-IH to immediately run KCM and Mopani Copper Mine, and immediately implement a scheme to run gold and gemstone mines with artisanal and small-scale miners.
4. Increase ZCCM-IH shareholding in all large-scale mines to 49%. This means there will be an increase in revenue from royalties and an increase in state participation in mining income. However, this will also ensure the mining sector has enough income to encourage foreign direct investment.
5. Many experts have stated that Zambia’s economy is far larger that the statistics of $20billion GDP and is in excess of $60billion…
Together with the IMF and AfDB conduct an honest, transparent and true measure of the value of the economy and its activities. This will help rebase Zambia’s GDP to its true value. This immediately dwarfs the so called debt crisis.
African countries enjoy under-stating the size of their economies in order to enjoy concessional loans and free poverty grants from multilateral institutions.
This is the laziest way of running government and serves to provide inherent relevance to these extortionist and predatory multilateral institutions that survive on the poverty and under-development of poor countries.
6. Plan and implement an immediate and robust programme to grow food and export to the 400 million people in the SADC region.
7. Reform Law Enforcement Agencies that focus on the petty, narrow and political issues. Remove laws and regulations that criminalize wealth and wealth creation. The current approach encourages illicit financial flows and externalisation of resources. It is for this reason that the wealthy in Zambia keep money in off-shore accounts and outside the country.
8. Fight corruption by reforming tender processes, remove politicians and public officials from the process and remove politically exposed persons from hijacking the procurement system.
9. All government expenditure and contracts including fertiliser, fuel and others to be awarded to citizen-owned companies. If the procurement requires specialization or international bidding, promote mandatory joint ventures with citizen-owned companies.
10. Government service providers, contractors, suppliers, and consultants to be paid within 30 days after presenting verified invoices or verified interim payment certificates.
11. Promote technological advancement, boost levels of labour and capital, grow the economy, improve standards of living and eliminate extreme poverty.
12. Promote an aggressive industrialisation programme including establishing value added and value-chain industries per districts.
13. Revert Zambia to Non-Aligned Policy, close US AFRICOM security offices and revert to multi-state collaboration with the USA, Russia, China, UK and France. Apply to be a member of the BRICS.
Join us as we continue to improve on alternative programmes. We can make our country a developed, prospeprous, wealthy country while enjoying its cherished peace and stability.
EM8: Transformational, visionary, experienced, focused and pragmatic.
About The Author: Currently standing for the position of president of the Patriotic Front, Mr. Mwamba is former Ambassador to the African Union and former Permanent Representative to the United Nations Economic Commission for Africa. Previously, he served as High Commissioner to South Africa, Permanent Secretary and Spokesperson to Second President, Frederick Chiluba.
©2022 Woodpecker’s Digest Inc.
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