Zambia: The government must keep debt low and improve governance

L-R: Secretary to the Treasury Fredson Yamba; Minister of Finance Alexander Chikwanda; Bank of Zambia Governor Michael Gondwe. Photo source: Lusaka Times
L-R: Secretary to the Treasury Fredson Yamba; Minister of Finance Alexander Chikwanda; Bank of Zambia Governor Michael Gondwe. Photo source: Lusaka Times

The Zambian government has eliminated 113 business licences out of the targeted 170 deemed to be unnecessary as part of its private sector development reform programme. In 2008, an inventory recommended that out of Zambia’s 517 business licences, 170 should be eliminated, 57 reclassified and 99 amalgamated into 21.

Meanwhile, the Sixth National Development Plan (SNDP) 2011-2015 has been realigned to fit in with the ruling Patriotic Front’s (PF’s) development agenda. The medium-term plan was largely drafted by the previous Movement for Multiparty Democracy (MMD) government to support its vision of becoming a middle-income country by the year 2030. The PF had initially rejected the plan but has since changed its mind.

The theme of the plan has been changed from “sustained economic growth and poverty reduction” under the MMD to “people-centred development” under the PF. The means to achieve this have also changed slightly from “accelerated infrastructure and human development, enhanced economic growth and diversification, and promotion of rural development” under the MMD to “promoting employment and job creation, rural development, developing human capacity, and developing infrastructure” under the PF.

The PF aims to give prominence to capital projects and programmes in agriculture, infrastructure and energy development. It also aims to invest significantly in human resource development focusing on education and skills development, provision of quality health services and water & sanitation systems.

Source: The Zambia Weekly

The World Bank’s Ease of Doing Business ranking places Zambia at No. 94 in the world and No. 8 in Sub Saharan Africa. No. 8 in the region is a decent position and the country could easily be higher. That said, one should not get carried away with positions for position’s sake. It’s fair to say that the previous two governments did much to make Zambia an attractive and viable investment destination to foreign and domestic investors. That’s why it’s great to hear that the PF will be continuing with the SNDP plans albeit in a slightly different form. If something works well then let’s build on it; no point reinventing the wheel.

Two things to bear in mind however:

a) It’ll be vital for the Treasury to keep government spending within manageable limits. The Minister of Finance’s recent confirmation of a budget deficit two years into office raised eyebrows from different quarters and caused spirited debate on social media. We cannot afford to let national debt spiral out of control again. This theme has been discussed in the Zambian Economist online journal here and here. We saw what happened during the days of HIPC (Heavily Indebted Poor Countries) and the Bretton Woods-initiated Structural Adjustment Programmes so let’s learn from history. From a fiscal policy point of view, we must borrow only to invest.

b) Simply delivering on infrastructure is no guarantee that the PF will achieve electoral success in 2016. The last MMD government did deliver on some key promises, particularly on the economy, but we also saw endemic corruption and arrogance consume many of its top officials. Zambians detest that. Good governance matters. It shouldn’t just be rhetoric but it should be practised. It won’t be enough for the PF to point to infrastructure projects and expect votes from a population that are seeing their freedoms such as expression and public assembly incrementally squeezed. President Sata needs to take particular note of this and he could start by giving regular press conferences. I’d personally like to hear my President give clarification on many themes and respond to people’s hopes and fears.

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