Pilgrim Writes…


A sound economy, well-managed, prospers nations. It saves lives, increases both the quality of life and its expectancy, and ensures both social and political stability.

In its current state, the framework of Zambia’s economy does NOT guarantee such desired returns.

The current framework is wrong/poor. It is an inadequate response to existing economic challenges.

In its present form, typified or bedevilled by foreign ownership, import dependence, increasing budget deficits in the face of development demands/needs, the rising pressure to service our budget through debt, low income flows and capital flight, Zambia’s economy remains hostile to the very goals set by its citizens of freedom from poverty.

Things need to change. Economic reforms need to continue.

For example, our economy today can be summarised as ‘ONE THAT TAKES MORE and GIVES LESS.’

The required economic prosperity equilibrium has NOT been reached yet.

Over time, Zambia needs to shift the focus of its economy towards increased citizens’ involvement and ownership, improving its exports’ portfolios, caging capital flight and establishing a stable and non-hostile taxation regime.

The pressures that presently remain on our economy and remain a threat to our wellbeing include, but are NOT limited, to the following:

1. The US Dollar as a Global Reserve Currency

Everything being equal and stable, a mere adjustment in the interest rates by the Federal Reserve Bank of America can have dire and damaging consequences on our Kwacha’s strength, conduct by foreigners which, if NOT well-read, can make a mockery of our development efforts and fight against poverty.

2. Markets

Our economic behaviour as a nation needs to be a reflection of the existing/prevailing commodity deficits and demand patterns of local, regional and international markets.

If the current poverty of control of, access to and influence over markets continues, our economy will always suffer, and remain a slave economy that will remain at the mercy of the machinations and whims of ill-understood global market forces.

Without an appreciably firm hold on marlets, our economy will never expand or grow, and ending poverty will stay elusive.

Domestic and regional markets then become a priority for economic survival and prosperity.

3. Rebates

As a carrot for FDI, tax rebates are a useful tool but, if not well-managed, these can harm the economy by ending up as an unwise subsidy by the citizens to these parasitic firms to the detriment of the citizens, and as a conttibutor to the treasury’s low income flows.

4. Hostile Taxation Regime

Taxation works best when both citizens and corporate entities have the financial space to pay.

When the ratio of income to expenditure is negative, not favourable to a spending entity, taxation becomes a key driver towards bankruptcy and poverty.

Overtaxing citizens takes money out of their pockets, reduces consumer spending and ultimately leads to economic contraction and slowing of economic growth.

It can be a precursor of social unrest and political instability.

5. Capital Flight

Credit flows within Zambia have been severely affected by this economic phenomenon.

…the servicing of external/foreign debt takes money out of the country and leads to poverty. Servicing of local debt is more important. This puts money in the citizens’ pockets.

…however, even when the citizens have money in their pockets, the over 50 per cent existence of foreign trading companies in Zambia dealing largely in imported commodities, ultimately leads to outflows of credit as profit.

…import dependence ensures that credit is hardly domiciled in our economy.

…low production and poor industrialisation ensures that income flows to the treasury remain low

…the low participation of citizens in high grossing businesses in Zambia is a key reason why capital flight is higher than can be stomached by our economy.

…failure of government to sizeably spend on local SMEs kills/stifles local initiatives and innovation.

The Future

Zambia’s survival hinges on Zambians. It is NOT foreigners who will develop Zambia but Zambians themselves.

Foreigners, regardless of their business size, do and will always view Zambia only as a market.

For instance, the prevailing appearance of Zambia as a trading post or economic colony for South Africa requires further study and review.

It is therefore imperative that the Republican President His Excellency Mr Edgar Changwa LUNGU comes up with policies and supportive legislation that ensures the security of foreign involvement in our economy but that ownership of this economy is in the hands of Zambians.

For as long as the government of the Republic of Zambia spends over 60 per cent of its overall budget on foreign companies and NOT local ones, Zambians will for ever remain poor.

It is therefore vital and urgent that capacity for entrepreneurship is built in the Zambian citizens.

Yes, in our primary schools, let us continue to teach our children the life cycles of frogs, house and butterflies, whatever the reason, but more IMPORTANTLY, let us also teach them the basics or fundamentals of business management.

Our children must be equipped with survival skills early. Focusing on basics, they must also learn the life cycle of a project or a business.

Equipped with such knowledge, they will then set up their own businesses as start-ups and run these well.

That many Zambians are today cashflow- management illiterate explains why they are NOT in business in the first place, and when they start, they fail, and instead, as a lazy cushion, they then opt to look for work as employees and NOT be employers themselves.

Further, the Zambian government must understand that vending, whether on the street or NOT, is vital and indispensable for economic vibrancy and national prosperity.

Vending must never be banned. Vending does NOT cause disease. Vending causes economic prosperity.

Any government that bans vending of any kind, or beats and harasses vendors, is itself ignorant and backward. Such a government is a veritable danger to its citizens and itself.

Vending must only be regulated.

All vendors must be registered, categorised, capicity-built and should pay tax.

Banning vending and beating vendors, the required nascent economic actors only requiring improvement and control, is akin to committing political suicide.

Debt contraction by the government ought to be carefully done. It should only be inspired by high and quick yield investments.

Debt that comes with expenditure terms or conditions that favour only the lender must be avoided.

In future, the 20 or 30 per cent subcontraction policy should be reversed.

It is the foreigner that must be sub-contracted and NOT the citizen-owned company.

Though pragmatically sound in terms of performance and quality of works, the status quo is economically anomalous.

Skills development in citizens by institutions of learning must match the development needs of Zambia as envisaged or captured in the Seventh National Development Plan [SNDP] or any such future plans.

With the required reforms in our economy, household poverty will eventually cease and the collectively envisaged national prosperity will dawn.

For now, our reaching our own economic Canaan painfully remains an illusion.

Nonetheless, hope remains.

Dr Canisius BANDA
Development Activist
Former UPND Vice President for Politics