Difficult Decisions

The last few weeks have been characterised by rumblings and upheavals in the global economy and some new challenges in the domestic economy.

Banks and Insurance companies have run to their Governments in the developed world to seek financial support to remain solvent while others have chosen to remain mute while their businesses face collapse. Some businesses have been allowed to close their doors because they were poorly managed and became a liability to the economy.

In Zambia, we have had upheavals in respect to the privatisation of Zamtel, our exchange rate is on a free fall manoeuvre, some parastatal companies are unreasonably over exposed, copper mining companies are planning to close some plants and retrench workers, and there is a Mealie Meal shortage experienced in Lusaka and several other towns.

In the face of these economic rumblings Zambia is preaching about Economic Zones and new investment as the magic bullet to lift our economy out of the doldrums brought about by low copper prices and low market demands.

The 2009 budget is very dependent on tax collection in the areas of import customs duties, VAT, PAYE, company tax, and excise duties. Another huge component in the budget is the 24 percent budget support pledged by the pool of international collaborating partners.

It is quite evident that as the Kwacha depreciates against the US Dollar, and as businesses slow down because of the global recession, there will be less tax to be collected during the year. In addition, as our international collaborating partners find themselves having to support their own economies more than they had anticipated at the time when they made pledges to support the Zambian budget for 2009, some pledges may not materialise into cash on the table for Zambia.

Zambia has to therefore engage in a process of making those difficult decisions that may hurt some sectors in the short term but will ultimately support the development of the economy in the medium to long term. There are some economic sectors that with the right focussed support and facilitation can bring about quick wins in an effort to continue to market Zambia as a good investment destination for both local and foreign investors. Tourism, Manufacturing and the Services sector are on the top of the list for quick wins.

The tone for a tightly managed economy starts from the top. The President must be the first person to lay down the agenda for managing Zambia during the current global recession. His message must be clearly understood by his Finance Minister, his Cabinet, and his Government. With this lead the necessary work must be done on the ground to ensure that Zambia will be well run, will not tolerate rogue behaviour within its ranks, will get the work done to stimulate economic activity, and will move into action in areas of private sector activities that may undermine the development of the country and her people.

All companies are already engaged in this process. Those Directors and Managers that are not working in the best interests of a company are immediately being laid off. Many companies are tightening their expenditure budgets. Staff is being re-trained and re-skilled to become more productive. The level of service is being raised in order to keep existing customers and attract new business. The management teams are constantly re-grouping to make sure that they are focussing on the same goals, and any team member that is not working by the set rules is dismissed. This needs to be emulated in the Government machinery too.

At the national level, we are facing upheavals with the foreign currency situation and the Bank of Zambia must act to bring sanity to the sector. The issues in the Ministry of Transport and Communication and at NAPSA must be decisively dealt with for the purposes of clarity and nation building. The plight of the bulk of Zambian owned businesses which fall into the Small and Medium Enterprises sector must be addressed decisively. Any accusations of impropriety aimed at the family of the Head of State must be responded to in a manner that does not disadvantage any party, but commits to accountability and transparency.

The country is currently given some breathing space as the mining companies reduce their demand for electricity. The occurrences of blackouts and load shedding have reduced, and the upgrading works in the power stations have brought more power on line. What happens when the situation turns around and the demand increases again? Will Zambia go back to load shedding? This is the time for the difficult decisions. Let us decide to get on with it and find new partners to build the Kafue Gorge Lower power station. Let us decide whether we can continue with the almost derelict railway system in Zambia, or do we find some new partners to develop and upgrade this infrastructure? Let us decide to get Maamba Collieries up and running again with an injection of new capital or new partners. Let us decide to move Nitrogen Chemicals and Mulungushi Textiles from sleeping giants to productive industries. Let us decide to open our minds to new options beyond those constantly being drummed into our minds by the World Bank and IMF. Let us consider what is going on in South America with Venezuela and Brazil and learn a few lessons from them on how we can take our country forward. Let us decide to encompass our own people in national development in the role of investors and not just labour resources. Let us decide to empower our people and private sector with a more robust mechanism than that of the CEEC which is subject to budgetary allocation. Let us take the bold step of making the DBZ a special purpose vehicle for citizens economic empowerment so that Zambians can invest in the new Economic Zones that demand a minimum investment of almost K3 billion. Let us decide to amend the ZDA Act, the new Public Procurement Act, and any other legislation, so that Zambian businesses are supported and facilitated to become part of the greater economy.

Zambia will be no exception in addressing the challenges brought about by the global economic recession. Zambia will be left out and left behind if the leadership does not consciously make those difficult decisions.

Published 24 February 2009