Zambia’s endless misdirection: a troubled legacy

Zambia’s endless misdirection: a troubled legacy
Written by Alexander B Chikwanda

Zambia is regrettably some edifice with a palpably questionable structural integrity. Four and a half decades of independent nationhood and our country with such a vast array of natural endowments ranging from lavishly rich land to minerals, records shattering statistics of 70 per cent of our people ravaged by poverty and squalor. Policy abortions and misdirection which have their origins in a flawed legacy are accountable for the stagnation which is compounded by demography.

The population of Zambia which at independence was 3 million has leaped fourfold to 12 million in the process exerting untenable and unsustainable pressures on the social services in the spheres of education, health and housing, especially in the explosive urban habitats which now account for 50 per cent of Zambia’s population.

Any critical, honest and meaningful scrutiny of the Zambian socio-economic scenario is inevitably a gloomy litany of misery and despondence however well some of the privileged parasitic elite may live. The proliferation of shanties that surround the posh suburbs are a sure time bomb with perilous consequences for social stability.

The country has not got much to show for its fabulous resources of land and minerals even in times of unprecedented booms in commodity prices and we are increasingly lumbering posterity with huge and unbearable developmental arrears.

The problems that bedevil the beleaguered Zambian economy are essentially structural and cannot therefore be resolved overnight with a magic wand. The worrying thing is that at the rate we go, these intractable problems could become ever more insurmountable with the passage of time. There is very little vision and the country’s leadership is embroiled in meaningless polemics and trading endless obscenities.

Zambia has a precarious dependence on external assistance with the donor community underwriting 90 per cent of our country’s capital component of the national budget. External aid cannot be guaranteed especially given the expected difficulties in the economies of the western donor countries currently afflicted with severe recessionary conditions triggered by the collapse of the banking and financial services sectors and indeed other virile sectors including the automobile industries and above all the housing sectors.

Western countries need to do quite fundamental restructuring to get the economies back on even keel. The traumas being experienced in the western market economies marks the end of an illusion. A proliferation of financial institutions recycling money in a dubious value-adding way, lending money for house purchases even when repayment could not be assured was apt to come to a crunch. To recapitalise the banks and get the many shattered industries back on their feet will take a while.

The danger to sustained aid even with profoundly good intentions will come from pressures on the western economies induced by the structures of the population. As the proportion of elderly people increase pension and other welfare schemes will burst at the seams thus reducing the budgetary leeways of governments to maintain and sustain substantial external aid packages to the developing countries so dependent on eternal charity.

Zambia must provide for such eventualities. For many years and untiringly, some of us have humbly submitted that Zambia’s development prospects have been and will always be imperilled by the structural imbalances or deformities in the budget. Emoluments and emolument related expenditures take up a disproportionate percentage of the internally generated revenue which may be up to 70 per cent if not more. Over the years our economic prospects have been impaired by the excessively large recurrent expenditures at the expense of outlays on projects which are growth promoting.

The government establishment has remained ever bloated and instead of rationalising in areas like defence and security it has been business as usual. A few years back a wise decision was made to close some of the diplomatic missions to cut expenditure. Since then all the closed missions have been reopened and yet new ones opened with all the severe cost implications. Foreign missions are a very costly adventure. Some sombre statistic has remained in my mind arising from one of the pre-budget cabinet meetings when I sat in attendance as president Chiluba’s chief of staff.

In 1996 the expenditure on the children of Zambian diplomatic staff was K4.6 billion when the outlay on education services – that is the expenditure on goods and services for the Ministry of Education was K2.5 billion. Ordinarily such injurious disproportions should warrant attention but it appeared and still appears to be a matter of indifference in Government. Zambians happily embrace this culture and legacy of fiscal irresponsibility and even our external benefactors have innocently underwritten our fiscal indiscretions except, I suspect they may not do so in the not too distant future on whatever pretext.

The eternal scapegoats of colonialism and liberation wars support that provided a government gloss for our regression have inevitably faded and become implausible with time. Now we either continue our follies and perish or take profound remedial measures to get our marooned economy into substantial development which should constitute our positive legacy to imperilled posterity. One cannot in a stroke provide a script for the development of our country but suffice to point out the weakness in the hope that we can collectively tackle the obstacles to provide a sound foundation for future generations.

We all agree that the current rates of economic growth especially if discounted for population growth are too low to constitute an effective assault on the insidious poverty levels. There is need to get annual economic growth rates at least up to 10 per cent. To marshal resources for this monumental task a fundamental restructuring of government is needed to downsize and save resources for productive investment in growth promoting ventures.

A major hindrance to development is poverty itself. Low incomes and low purchasing power of the population entail poor economic growth prospects. The thing that can stimulate economic development of our country is drastic improvement of agriculture in the rural sector. When people in the far-flung areas of our country are paid something that represents a fair and reasonable recompense for whatever they produce, there will be a reduction in poverty levels and enhanced purchasing power for many people which can only favourably impact on the economy. All along government has had a profoundly good intention to redress matters by fostering the development of agriculture through various support programmes.

However we have not come up with appropriate combinations to put the act together to achieve success and sustainability. Diversification has lacked and there has been disproportionate emphasis on maize. The flawed approach has been to manipulate the producer price of this commodity so the final product maize meal was not too outrageously higher for the very low incomes of most workers in the stagnant formal sector.

The consideration is predicated on social responsibility on the part of government but it does not achieve the desired upward thrust in the country’s development endeavours. Now government is stimulating development through fertilise programs which as a short term expedient may work but cannot be sustained because of obvious budgetary constraints. Subsidies apart from market price distortions impinge considerably on affordability and are invariably liable to abuses. What government should do is to marshal huge resources for extension services to assist small scale farmers to improve their agronomy thereby increasing their yields without commensurate cost in input costs. This should allow the small scale farmers sufficient latitude to source the various inputs – seeds, fertilisers etc at reasonable cost.

Small scale farmers especially in areas like Southern, Eastern, Lusaka and Central provinces need more logistical support to become role models for the country to emulate.

Already in these areas when the rainfall is adequate and evenly distributed for the season these farmers have maize yields which are comparable to mechanised farmers on the American prairies. We have and will always have limited resources and it thus makes greater sense to spend the nation’s meagre resources on helping the small scale farmers to optimise production and crop yields than to put vast sums of money into subsidies which are so liable to waste and abuse. The department of agriculture from top right up to district levels of assistants within the districts has some of the most dutiful and diligent and even enthusiastic workers. Furnished with the requisite tools these people will deliver wonders. Motor bikes to stimulate and facilitate easy movement will represent a greater return on investment than a proliferation of all sorts of four-wheel drive motor vehicles for the top brass.

A major stimulant to agriculture is simply adequate resources for crop purchases. The resources so far injected in crop purchasing while acknowledging government endeavours are totally insufficient. Participation by the private sector in crop purchasing is severely constrained by the poor infrastructure especially physical communications-roads. Then there is the issue of price. For private buyers of agricultural commodities to end up with what they would consider meaningful margins they would have to pay producers, the defenceless small-scale farmers’ prices that are far below the costs thereby accentuating rural poverty instead of alleviating it.

The growth on a sustainable basis in the agricultural sector has multifaceted benefits, when the policies and commensurate programs of actions incidental to those policies are sensible and consistently rational. Firstly, the country is assured of food security and sufficiently. If the food prices are affordable we can put an end to malnutrition and undernourishment. Enhanced incomes of rural people will mean higher purchasing power for more people which is what our economy lacks and badly needs for sustainable upward thrust. Growth in the rural sector would tone down influx into the urban areas and allow these miserable places much needed respite to fix the social services already bursting at the seams.

Not least a widened economy provides a wider base for tax revenue and gives the authorities latitude to restructure taxes which are at the moment too stiff for the low incomes that obtain in Zambia especially for individuals in the small formal sector that has not increased from the inception of Zambia. To run and sustain an over bloated establishment in the public sector government takes away a huge chunk of resources from individuals and companies who would more productively allocate those resources to help generate higher levels of growth for a squeezed economy. The indirect taxes in Zambia are quite extensive and a reasonable game plan for government should be to grow the economy and in the process widen the base for taxes on goods and services that attract tax instead of reducing the disposable incomes of individuals which is not only a huge disincentive for diligence but the best prescription for ingrained poverty.

Countries are at the end of the day are summations of individuals and their intricate and composite social relationships. Individuals are never a success in life if their bearings and priorities are fundamentally flawed, and so are countries. Zambia should be leaping forward and providing a viable and veritable role model to the developing third world. We are not doing so because we have not got our act together. At independence our Gross Domestic Product of $3.5 billion was the same as South Korea and now at GDP of about $1 trillion our GDP is barely 1 per cent that of South Korea which is nearly $1 trillion. Whatever semantic we have recourse to this huge disparity is difficult to explain, more so that we have huge natural resources which Korea hasn’t and our country 7-8 times larger than South Korea and we have less than 5 per cent of South Koreas population.The contrast between Zambia and South Korea graphically underscores the fact that the greatest asset any country has is simply people with resolute will, and appropriate work ethic and culture and programs of action which are logically consistent with the policy postures and lofty pronouncements.

Zamia does not lack entrepreneurs; you only need to look at the amazing enterprise of our women when they toil on the land or all over the world sourcing stuff to merchandise. What has lacked all along are institutions of development assist those who struggle to uplift themselves. All efforts to create these institutions have been some unmitigated disaster. In succession the Credit Organisation of Zambia, the Agricultural Finance Company, the Agricultural Development Bank and lastly the Co-operative Bank all failed. This cannot be tribute to our country’s and especially government’s commitment, vision and perception. The big lesson is that it is not enough to have good intentions and pious hopes. How we put those ideas into effect and bring them to fruition matters a lot. If we do honest introspection we will not escape the conclusion that one of our major problems in Africa is total inattention to detail itself a manifestation of lack of diligence and discipline.

Hardworking Zambians have no support from institutions of development to prop their stupendous efforts because these institutions don’t exists. The ghastly alternative is the commercial banking system which has always enjoyed unfettered leeway to levy astronomical interest rates. Currently prime rates are over 20 per cent and by the time banks load an array of charges on the prime rates borrowers pay in excess of 40 per cent and since inflation is 14 per cent it means the interest rates are at least three times the inflation level. This is a unique situation which unfortunately makes a significant contribution to the endless inflationary spirals. This helps to make Zambia a very high cost economy and thus not the most attractive investment destination, especially if the exceedingly low purchasing power is factored into the economic scenario.

From time immemorial there has been distinct relationship between forms of governance and social equity on the one hand and levels of development. Zambia will optimise its development if the policies and commensurate programmes of action are consensus driven, widely embraced and there is little dispute of ownership of those policies and programs by the people. Those in Government must show awareness and realisation that they are custodians of our collective interests and have a delicate and onerous task of presiding over our fate and destiny. The government cannot afford to be partisan let alone allow a lunatic fringe to be in the driving seat.

The compelling reason for government to be tolerant and accommodative is that it has the instruments of the state which has the unique preserve and exclusivity of monopoly of legitimate use of violence within the territorial space called Zambia. Thus the state controls the instruments of coercion - the police, the military wings and various security agencies. The privilege to be in government must be tampered with consideration and morality.

Commitment to higher ideals should be reflected in leaders aspiring and visibly struggling to pitch for the moral high ground. This example which our people would have been enjoined to emulate is glaringly absent. What we see is government as the best fast track for self-enrichment. We have a monumental task for deep introspection for collective resolve to roll back the frontiers of this backwardness. Failure will mean the vast majority of our people being ravaged by poverty, squalor and debilitating despondence. We must prevent Zambia going beyond the pale!