ABOUT ZAMBIA’S ECONOMY
IONE had a chat with the minister of Finance over the value of the Zambian kwacha and what he told me about the dynamics of the Kwacha was what I have been thinking of for the past 10 years!
When you look at the Zambian Kwacha vs other currencies, we have purely lived at the mercy of copper and cobalt plus depending on what trend the dollar will take on the global forex market.
The issue of the Kwacha has nothing to do with what interest rates the Bank of Zambia (BoZ) will fix or how active it will be with open market operations because these are short term measures.
The Kwacha depends on us producing dollars for the economy! It is us as citizens and companies to generate the foreign exchange.
The structure of Zambia’s economy is what we need to fix because it’s not sustainable for overall economic development and also maintaining strong economic fundamentals.
Let’s look at the mining industry. Copper and cobalt mining is in foreign control meaning forex flies out.
The serious commercial farmers that grow for export are also volatile as they keep their proceeds abroad.
When you look at the tourism industry, the largest tour operators are based abroad. When tourists pay money to our tour operators abroad, the money remains abroad.
The little money that comes here is the money tourists will spend. How much can you spend at Victoria Falls or in the game park when your tour package says all inclusive?
Then when you look at our retail and wholesale business, it’s dominated by foreigners or Zambians of foreign origin who bank their cash outside the country!
The construction industry has the same story!
Now let’s look at these issues: - Everytime you sit in a mini bus, taxi, or your own vehicle which uses fuel, you demand forex! - Everytime you drink mineral water you demand forex because the plastic is imported
- Everytime you eat nsima, vegetables even meat you demand forex because fertiliser, agriculture chemicals and animal food supplements are imported - Everytime I see you in shorts, suits, T shits or any clothes you demand forex because all your clothes are imported.
- When you are driving on the road, you demand forex because bitumen is imported and also the majorily of road funding is foreign debt.
- Everytime you are in a hospital and ask for paracetamol, you demand forex because it is imported - Everytime we take insulin, ARVs, Fansida we demand forex - When you see ladies in Brazilian hair, that’s forex on their heads. - Almost everything we do in Zambia demands forex
The forex problem grows as household income grows because we demand more goods. As government puts up infrastructure, the forex problem also escalates.
Now Zambia is a market economy. Meaning production is not Government’s baby but the baby of its citizens who in turn pay tax.
Once in a while, you call upon the government to participate in certain businesses if they are mining related or they produce a good that is important for livelihoods of citizens like the energy sector.
Now the job of making toothpicks is not Government’s. I hear people condemning Zambia for not being able to produce tooth picks.
Some of those people that condemn are even driving vehicles worth $10, 000 but tooth pick making machinery costs as low as $3, 000! For us to arrest the issue of forex, we need to declare war on poverty as citizens! We need a radical approach and not textbook solutions! We need to produce for both local consumption and export!
China has really made it possible for developing countries to produce for themselves because in China, you can buy cheap production machinery!
Our engineers should be busy copying such machinery and producing such machinery in Zambia then wel shall proudly add “engineer”at the beginning of their names!
In Zambia, everything now is blamed on Government. A child impregnates another child ati government is not teaching morals! What utter nonsense!
I agree that we have economic and administrative barriers that still make doing business in Zambia difficult. We need to work on these now! But in Zambia we concentrate on politics rather than on actual economic topics!
Without doing an audit of the structure of the Zambian economy and fixing it, we shall still be laughing at Government for not making toothpicks forgetting toothpick making is our responsibility!!
I also hear people that laugh at the government for not exporting goats to Saudi Arabia!! Colleagues, the agreement to supply has been signed and it’s up to us citizens to form aggregators that will buy bulk from farmers then export to Saudi Arabia!
Government does not own goats! It’s us citizens with goats! But I know, we are waiting for a white person to open another Goat version of Zambeef to export on our behalf.
What will be interesting is that they will raise that money within Zambia whilst we are attending political rallies or yapping on Whatsapp!!!
We need to do a self-assessment! Blame ourselves for our failures because a country is a collection of individuals!
We ask ourselves why our politics are not issue-based when 80 percent of the population does not understand issues! Until they are educated, these people will dictate how our politics will be.
They demand chitenges, t-shirts and money! They are in the majority so no matter what we do, they dictate to our politicians the name of the game! To eradicate this, education for all! It’s the same with economics! For business to thrive, we need education!
Sustainability of economic freedom is going to rely on education!