By Hjoe Moono, Secretary of the Economics Association of Zambia
History has been made once again in Zambia. Since Frederick Chiluba, President Elect H.E. Edgar Chagwa Lungu is the only president to be elected by a vote of over 50%. Marginal as 50.3% might seem, it speaks volumes, and indeed, congratulations are in order to the Head of State and his party, the ruling Patriotic Front. Once the dust has settled and jubilations are over, we will revert to the one issue that ought to have taken centre stage in the campaigns: the economy. The current and continuing government will continue to face the challenges they faced before re-election.
Key among them are:
1) Fall in growth of the economy – from a sustained high of over 6% to 3.7%;
2) A volatile currency;
3) Swelling foreign debt;
4) A swelling budget deficit ~9% of GDP;
5) Higher poverty levels;
6) Higher levels of inequality – Zambia being one of the most unequal countries in the world;
7) Fall in global commodity prices (esp. Copper);
8) Double digit inflation;
9) Higher youth unemployment; and
10) For business, high costs of finance for business growth overall.
These challenges are not new, nor were they imposed on Zambia through a cruel act of God nor thrust upon the economy by enemy aliens. No! They are largely as a result of cumulative policies, decisions, actions (or non-actions) which were mostly inconsistently adhered to. Furthermore, these challenges would still have been here had the UPND, or the FDD, Greens or indeed any other party have won the August 11th elections.
The solutions to these economic challenges and the associated costs will signal the seriousness of the government, as well as form a basis for the next feasible election campaigns in 2021. Five years is a considerably long time given the continuity in leadership. If we are really serious about the economy, statesmanship in economic governance will have to take the place of slogans.
In the next five years, it will be expected that a clear economic vision for President Lungu’s government will be in place. Let’s call it Lungu-nomics.
Whatever this vision will be, it is expected that at the bare minimum:
1. It should exist;
2. It should set out to from the onset to address the current economic challenges as outlined above;
3. The policies and actions of Lungu-nomics should be coherent and implemented consistently; and
4. It should plan for the long term, beyond the term of office.
There are two approaches to economic governance that are at President Lungu’s disposal. The first is that he can come up with a set economic targets and tell his economic team to come up with a policy package to achieve those targets. Here, the quality of his economic team – those charged with Fiscal and Monetary Policy – will determine how successful the targets will be.
Alternatively, President Lungu can tell his team what type of economic policies he can politically adopt and then direct his economic team to come up with a package of fiscal, monetary, exchange rate and other policies that reinforce each other to achieve those targets and objectives. His economic team should be able to advise him of the costs and outcome of such policies. With this, the PF government can then use its political strength- having amassed the bulk of Parliamentary seats – to get such a package through the National Assembly and ensure its effective implementation. Once that rational approach is adopted, the president can then hold the economic team accountable for the results. Perhaps a novel starting point to all this is to set-up a National Commission of Inquiry Into Growth & Development Options, to produce a ‘Zambia Growth Commission Report’.
This shouldn’t be hard to do with the many think tanks and experts—both local and foreign— that are willing to help Zambia in economic matters. I am sure donors would be more than willing to support such an initiative as it will be a signal of the PF’s concern for the nation and a way of bringing divergent views to drafting a national document that all would contribute to, and thus support in implementing its recommendations.
Disclaimer: The views expressed here are my own and do not in any way reflect the views of my employers.