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Zambian economy outplayed Lungu

23 Aug 2021 at 06:47hrs | Views
The misconception that a replication of Edgar Lungu's political dilemma will befall Zimbabwe come 2023 will remain a mirage, not only for Nelson Chamisa who rushed to ululate at the then opposition party's victory, but to his kinsmen and supporters who seem to turn a blind eye towards the real facts on the ground.

Noteworthy is the crucial role that the Zambian ailing economy played towards the outcome of the election, surely the Bitis and MDC-A economic advisers cannot elect to ignore these hard hitting truths.

Questioning MDC-A's joy over the Zambia opposition's victory is only reasonable because the two countries' economies are asymmetrical. In terms of the economic outlook, Zambian economy is currently in deep recession, a notable reason for Zambians to want to oust the ruling party, contrary to the situation prevailing in Zimbabwe whereby the Reserve Bank of Zimbabwe (RBZ) has even noted an improved production and projected a 7.8% growth on the economy.

The African Development Bank Group noted that Zimbabwe expects a modest economic recovery this year owing to effective measures currently in place to stabilize foreign exchange through foreign exchange reforms, such as the weekly forex auctions, introduced in June 2020 which has the capacity to create price stability and create room for economic recovery.

Likewise, the International Monetary Fund (IMF) in June revised its economic growth predictions for Zimbabwe from 3% to 6%, citing a bumper harvest, improved power supply and an increase in manufacturing and construction. Concurringly the World Bank has set Zimbabwe's Gross Domestic Product (GDP) growth for the country to reach 3.9 percent in 2021, a significant improvement after a two-year recession.  Likewise Zimbabwe has a GDP of $31 billion and is ranked the 101st largest economy in the world, while Zambia ranked 106th with $26.7 billion.

MDC-A's feigned brotherhood has since seen MDC-A's top brass aligning themselves to incoming president Hakainde Hichilema whose ailing Zambian economy has worked to his advantage. The Zambian economy fell into a recession, real GDP contracted by an estimated 4.9% in 2020. The output contraction is the result of an unprecedented deterioration in all the key sectors of the economy. Manufacturing output fell sharply as supply chains were disrupted, while the service and tourism sectors were hurt as private consumption and investment weakened due to measures taken to contain the spread of COVID–19.

But even before the pandemic, the economy was experiencing serious macroeconomic challenges, such as high inflation, widening fiscal deficits, unsustainable debt levels, low international reserves, and tight liquidity conditions. Price levels and the financial sector are reported to be currently unstable. Inflation has been rising, mainly driven by the pass-through effects of the depreciation of the kwacha and elevated food and transport prices. The country's external position also worsened in 2020, with dwindling reserves (averaging 1.6 months import cover), and is said to remain depressed this year due to copper price and output fluctuations, rising public debt payments, and elevated non-oil imports. The Government's pursuit of expansionary fiscal policy for public investments, despite falling revenues, has resulted in widening fiscal deficits as well (8.3% of GDP in 2019 and 11% of GDP in 2020).

MDC-A's misplaced excitement can be forgiven given their limited understanding of the country's economy. Under former president Edgar Lungu, the Zambian economy degenerated and its currency lost value, depreciating from trading at ZMW 5.25 per US Dollar in 2016 to ZMW 22.21 per US Dollar, hence suggesting that the administration had failed to implement meaningful economic policies to better the country's economic fortunes. Contrary to Zimbabwe's economic policies which are actually yielding better results. Zimbabwe's annual inflation rate for the month of July 2021 slowed down to 56%, from a high figure of 362.63% recorded in January this year and indicators are pointing to an improving economy.

Moving on to international debt obligations, Zimbabwe cleared its  $107.9m debt to the International Monetary Fund (IMF) and currently pursuing repaying other owed international creditors. Zambia on the other hand has been defaulting on its repayments, including debt owed to China and other international creditors leading to the electorate losing confidence in the Lungu administration as China started taking over some of the country's strategic economic sectors and Government institutions such as the Zambia Electricity Supply Corporation (ZESCO), the Zambia National Broadcasting Corporation (ZNBC).

This mismanagement compounded onto corruption allegations which marred the administration as Government officials were suspected of misusing public funds and money laundering. Between 2019 and 2020 a number of ministers were exposed on national television with large sums of money which they would flash to the public. In 2018 Finland, Ireland, Sweden and the United Kingdom are reported to have suspended their development assistance to Zambia following reports on misappropriation of over four million US Dollars meant for social assistance. Zimbabwe on the other hand has been fighting corruption by its head with the establishment of the Zimbabwe Anti-Corruption Commission (ZACC) mandated to investigate and expose cases of corruption. Ministers leveled with corruption have even been dismissed from office, for instance former ministers Samuel Udenge, Prisca Mupfumira, and Obediah Moyo, among others.

Unemployment also rocked the country, while late payment of civil servants salaries became the order of the day. Even on voting day, reports of unemployed graduates going to cast their votes and disgruntled, neglected civil servants who felt that priority was being given to the music industry at their expense was reported.

So how can the MDC even think of comparing these incomparable experiences? Come 2023, the MDC will be crying foul again due to their unquenched and misplaced hope. Open advice to Chamisa, Zimbabwe is not Zambia!

Source - Daphine Zulu
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