Inflation thumbs up!

ZAMBIA has been posting an impressive economic outlook which requires intent harnessing for the attractive indicators to translate into tangible benefits for the general citizenry. The macroeconomic indicators have in the recent past remained buoyant, a feat that demands strict adherence to prudent economic management and fiscal discipline in both public and private sectors. Additionally, this requires accelerated growth in critical sectors of the economy, namely, agriculture, construction, tourism, manufacturing and mining. Economic diversification from copper mining must be accelerated too. A simple analysis of macroeconomic indicators shows the currency exchange rate has remained stable around K9 to a dollar while benchmark interest rate currently stands 10.25 per cent with economic growth this year projected at 4.3 percent from last year’s 3.6 perent. As announced by the Central Statistical Office (CSO) yesterday, this month’s inflation rate closes the year at 6.1 percent from last month’s rate of 6.3 percent. This invariably means that there has been an improvement in inflation levels as in September this year, Zambia recorded 6.6 percent which went down to 6.4 percent in October and further dipped to 6.3 percent last month. Comparatively, last year in December, the rate closed at 7.5 percent from 8.8 percent in November the same year. For the sake of easy understanding, it is prudent to highlight the fact that inflation rate in Zambia has averaged 9.6 percent from 2005 and 2017, peaking 22.9 percent in February last year at an all-time high level. The lowest rate was recorded in December 2011 when it ebbed to 6 percent. Inflation may appear abstract, but citizens must take keen interest in this economic indicator which in real terms is simply the general and sustained rise in price levels of goods and services, which obviously reduces the purchasing power over a particular time. This has a direct effect on the cost of living, which is why Governments world over keep an eagle’s eye on this critical pointer. Inflation also affects the exchange rate as it weakens the local currency. Yes, a contractionary monetary policy is in place to control inflation, but Government must concentrate more on a practical approach such as bolstering priority sectors of the economy to translate attractive economic indicators into tangible benefits for ordinary citizens. Contractionary monetary policy is simply reducing the supply of money in the economy! Already, Government has been undertaking robust infrastructure development across the country. This is a positive stride towards development not only in the construction sector but also in the social sector encompassing education, health and road infrastructure. Nonetheless, there is an imperative need to complete this massive exercise which is also meant to open up the countryside for development. There are sadly a number of structures that are still yawning. In the tourism sector, some roads leading to marvellous spots are rugged and require an urgent facelift. A case in point is the road in Mbala which leads to the Kalambo Falls, an astounding 200m-deep waterfalls whose accessibility is but a nightmare! Admittedly, copper mining has been buoyant with current prices on the London Metal Exchange standing at $6, 825 but this is a wasting asset whose prices fluctuate. Diversification to agriculture and other lucrative sectors must be in over-drive. All encumbrances in the agriculture sector must be uprooted. This industry can swallow the large army of unemployed youths and also provide food for both consumption and export. Agriculture has been the mainstay of many successful economies in the world. The number of people employed in the formal sector must be scaled up from the roughly 630, 000 through various interventions to reasonably high levels while those in the informal sector standing at 690, 000 must equally be boosted. As Zambia crosses into 2018, an integrated approach towards development is required to include all interested parties and politicians across the political divide who should pool resources together and work with the government. For this concept to succeed, the political space must be cleaned up to accommodate productive discourse. Toxic remarks are retrogressive!