The Humongous Collapse of Zambia’s Economy, 2011-2021 (RIP)

Zambia’s economy, in the categories that I discuss today, has collapsed. The trend analysed is from 2011 when the PF took over and projected to 2021. Worse is expected between February 2020 to August 2021 because of the massive corruption that will take place that will distort the economy for purposes of winning an election. The party that will take over after 2021 will have to do massive state of emergency-type salvage operations which will encompass the political and judicial system. Today’s article is limited to the economy.

If anyone has any statistics showing any positive upward swing in Zambia’s economy in the categories that I detail herein, please pass them on to the country and to me. It is of course easy to lie with statistics but the statistics that I deploy here while not 100 per cent clad-proof accurate as of today, they are pretty close. Bring whatever figures you have, let’s compare notes and it will be discovered that my figures are more accurate than yours.
When the PF government took over in 2011, the growth rate of the economy was at 6.5 per cent under the MMD government. The growth rate is now, as of 2020, below 3.5 per cent per annum. Economies must be growing and not shrinking. When the MMD government left office, foreign reserves at $2.3 Billion could cover imports of four months but foreign reserves dropped to $1.60 in 2018 and now stand at about $1.1 billion and can barely cover imports of one month.

When the MMD government left office, external debt stood at $1.9 billion and it was merely 21 per cent of the GDP and the debt service was merely 11 per cent of the GDP. In 2020, the debt load has shot up to about $13 billion, a percentage increase of 450 per cent and an increase of 57 per cent of GDP according to the 2017 figures currently updated and of course the figure is higher in 2020. To service that kind of debt consumes now 29 per cent of the country’s GDP.

In 2011 when the PF took over, the domestic debt was $1.1 billion and now in 2020, it is about K15 billion, a 1,100 per cent increase. Inflation rate was in single digits, but now in 2020, it is threatening to remain in doubt digits.

I recently passed at a Bureau de Change and noticed that the exchange rate per $1 is K14.60 while in 2011, it was $1 to K4.80. Calculate for yourself how much has the economy been battered to yield such a devastating exchange rate and the cost of importing goods and borrowing as a country and as individuals, this entails. Whenever the dollar gains, the cost of your debt increases.

I am not campaigning for the MMD government or for any party. The MMD government lost power because of massive corruption after 20 years in power. But the PF government put back after the death of the beloved Michael Chilufya Sata, the very people into positions of power who had been booted out by the voters for corruption. It doesn’t need a genius to figure out that corruption has gone up astronomically because the very people who were sent packing for corruption have been given a new lease to feast on poor Zambians once again. Some were even insulting the bona fides of Sata. Sata must be turning in his grave, to use a cliche.

These statistics are universally used to measure the health of the economy. The picture is not good as you can see. The Jesuit Centre for Theological Reflections puts out its own statistics about the cost of the food basket per family, a very important yardstick about how Zambians are copping but I won’t go into those statistics.

Transparency International recently supplied a figure that corruption in Zambia has increased and that is one of the causes of the economic hardships, among others that has to be addressed. Another is the uncertain copper prices in the world market. We have not been able despite the rhetoric to diversify our economy since 1964 from copper dependence to other products, including manufacturing, agriculture, tourism and others. The Auditor General has documented corruption, mismanagement, misapplication and wastage of resources without accountability.

The cost of energy imports is another factor. We never benefitted from the Saudi Oil Deal that we were promised during the last election. We will be promised another deal come election time amidst a projected most dizzying corruption orgy in Zambian history.

We were promised, is it one million new jobs or 500,000? All I know is that the Mulungushi Textile factory was supposed to be opened shortly after the 2016 elections but when I recently passed that location on my way to and from the Copperbelt, nothing was happening. It hasn’t supplied the promised jobs. Now this factory is sipping back in the news slowly. I smell an election. If anyone can supply verifiable figures about the number of jobs that have been created since August 2016, the country will be grateful. All I hear from my university students and relatives and others is that they cannot get jobs. There are no jobs.

To resuscitate the economy we are still talking about salvage operations from the World Bank and the IMF. Zambia is courting debt peonage.

Zambia hasn’t learnt any lessons from the devastating effects of debt imperialism and debt peonage, the ouster of President Kaunda because of popular protests against belt-tightening by the masses while the elite loosened theirs and then the auctioning off of Zambia’s wealth by the Chiluba government at the prompting of the World Bank and the International Monetary Fund. Mwanawasa had stepped in and looked like the economic paradigm was shifting for the benefit of the poor masses. Zambia began to get out of debt. But under the new government, debt imperialism has shot up and without accountability. The Eurobond mania which started under Michael Sata now rules Zambia.

Now in a tragic sense of irony, the World Bank is used as an authority on how well the Zambian economy is doing, allegedly with manageable debt even while other countries have pulled off their free aid because of corruption at the highest levels! Knowing the grave danger the Zambian economy is in, the IMF is refusing to pour more salvage funds into this sick economy which is taxing its overburdened poor citizens, to death. Despite the denials of those in power, the evidence doesn’t lie: the dollar exchange rate reached an all time high of K12 to a dollar during the week ending Friday September 28, 2018. And as indicated above it is now at K14.50. And where is the so-called authority (the World Bank) on the well-being of Zambia’s economy to comment on this piece of evidence? You don’t need any other evidence than this. The World Bank and the International Monetary Fund have never nursed any country back to permanent economic well- being since these institutions were formed during the Second World War. The only exception was their involvement during a well planned massive emergency Marshall plan to rebuild a devastated Europe. No similar effort was spared in any other part of the world. The Soviet Union and Japan rebuilt themselves. The role of the World Bank and the IMF in the rest of the world has been to maintain economic stability for the economic operations of multinational corporations in spite of political instabilities. There can be massive economic profits even in the face of political instability, just look at the Democratic Republic of the Congo under Mobutu and the Kabilas. That is the most hospitable economic environment for economic exploitation by multinationals for the benefit of western countries in alliance with the corrupt local elite.

There is massive road construction going on in Lusaka right now but no similar efforts are being made to salvage rural communities where the majority of the people live. Civil servants have been stealing through FISP. Argo dealers are enriching themselves. Government exploits peasants by the artificial lowering of prices for their agricultural outputs. Thus this government is literally exploiting everybody including the peasantry while enriching itself through tenderprenuerships and money laundering and commissions that come from unaccountable and not transparent road construction contracts, the building of airports, police stations, malls, the auctioning of revenue collection contracts relating to the informal sector and private landlords. The list goes on. Government institutions like The Auditor General and the Financial Intelligence Centre, have unearthed evidence of corruption but nothing happens until a foreign embassy discloses that aid has been stopped because of corruption, is there any action of suspensions and investigations but not prosecutions.

In the meantime, Zambia’s debt is accumulating with no prospect of its manageability while the government is denying its un-manageability but supplying evidence of the same because everybody is being squeezed for money through toll-gates, tourism levy, speed cameras, low prices for agricultural crops, high prices at the pump and on everything, delayed salaries of civil servants and the list goes on. The reader can come up with their own list of how they are being squeezed if any.

There will come a day when there will be accounting for the burdens of debt imperialism. The incurring of debt against the public interest and to fuel corruption will be prosecutable commercial and economic crimes. The perpetrators of this debt against the public interest will be personally responsible for repaying it through seizures and sales of their accumulated property no matter where this property and in whose hands it shall repose. The international community and foreign governments are forewarned that fueling corruption in Zambia will be a prosecutable commercial and economic crime offence and that unaccountable for and irresponsibly acquired debt will not be repaid without accountable negotiation and there will be stirrings for the reform of international trade and investment law to accommodate the new realities.

The status quo never remains the same forever, nationally or internationally. Something is gotta give.

Dr. Munyonzwe Hamalengwa is completing a book on Taxation Law.

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