THE 2022 NATIONAL BUDGET ...a philosophical change?
ONE of the greatest debates concerning economic development is this: that what is more valuable between the thing which is produced or the one with the skill to produce that item?
In other words, should we invest in profit or in the ability to create profit (human capital)? The difference between the two is that one focuses on the present, while the other builds a future.
In my view, the 2022 budget has refocused national priority towards human capital so that even infrastructure is readily linked to commerce and the opportunity to create profit.
It appears to use investment and income from existing growth sectors such as mining and agriculture to build a new infrastructure in Science and Technology and/ or the Green economy for the future.
The budget has proposed or projected that Zambia should begin to produce three million metric tonnes of copper over the next ten years, for example. And this is my singular focus for now.
This projection is partly anchored on the growing electric car industry. According to a Reuters article on May 5, 2021, electric vehicles use twice the copper a normal car uses. In ranking order, electric vehicles are composed of cobalt, aluminum and then copper. But who is driving electric vehi
cles and where is this new market for copper?
The United States will invest an estimated $3 trillion in green infrastructure (electric vehicles, municipal transit networks, expansion of broadband/wireless broadband infrastructure).
Meanwhile, Germany is
investing way over Euros 130 billion in the green infrastructure which inevitable includes electric vehicles.
Other advanced economies like the United Kingdom are heading that direction as well. The African business magazine in September 2021 noted that
Rwanda and South Africa are early leaders in this EV market in Africa.
In Kenya, over 60 percent of investors in the green infrastructure have invested in local assembly. So clearly the market for copper is expanding beyond the traditional London Metal Exchange (LME) and recently China. That means jobs, incomes and revenue for government. If that growth assumption of 3.5 percent per annum is based on such anchors, then that target will be exceeded in the long run.
The statement made in the budget is deliberately targeted to Financial Markets, investors and (local) entrepreneurs. It also gives a broader view of the Ministry of Science and Technology on one hand, and the Ministry for Green Economy on the other as future growth sectors.
What is missing is an instrument similar to the Farmer Input Support Programme (FISP) in the agriculture sector to turn budding entrepreneurs into bankable assets. This means creating linkages between technology and finance with the government acting as a form of guarantor. Singapore, South Korea and China have done so to an extent by linking local entrepreneurs to markets.
If, however, these sectors represented by the new ministries do not get funding and direction, or perhaps misdirect that funding, then the vision is lost. Future leaders could reduce them to departments instead of ministries and independent sectors. So, while we debate monetary allocations, its essential to debate the common vision.
While numbers are essential for budget analysis, the vision is more important because it explains the reasoning behind the numbers. Even more, a good vision of where we are going as a country will create a unity and consensus of purpose.
Each one of us will understand how we are interlinked into the budget. Resultantly, electoral debates and national discourse that goes beyond a five-year elective period and revolve around that unique vision.
This also means that we expect to be seeing monetary value in the newly created ministries in the coming budgets.