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Thursday, 20 November 2014

Monetary Policy Statement (November 2014)

Editor's note:  BOZ Governor Michael Gondwe yesterday delivered the following Monetary Policy Statement. It is intended as a quarterly snapshot of the state of the economy, with particular focus on the monetary side. 
The Monetary Policy Committee (MPC) met yesterday, 18 th November 2014, to consider developments in the domestic economy over the third quarter of 2014. In its deliberations, the MPC also considered global economic developments and their likely ramifications on the Central Bank’s ability to achieve its core objective of maintaining price stability.

GLOBAL ECONOMIC DEVELOPMENTS

The prospects for global growth have worsened since the August MPC meeting, with repercussions on commodity prices and global financial flows.

Thursday, 13 November 2014

Hichilema stutters on the economy

Hakainde Hichilema  (UPND) has kicked off the bid for your presidential vote with an interesting press release.  Here are the key quotes relating to the economy :
“It is time to strengthen our economy to allow for job creation, stable prices and wealth redistribution. We can only do this through prudent economic management. We need a strong and stable economy to support our middle class and SMEs which are basically struggling for survival. The middle class and SMEs are key to economic growth. We must support our economic development with a strong agriculture sector, free appropriate and good quality education, and quality healthcare” 
“We must continue with the infrastructure development but at an accelerated pace. Infrastructure is the conduit for economic development. I have always maintained that where a good road goes, development goes. Nonetheless, infrastructure development must be done in such a manner that it does not hurt economic fundamentals. We must increase our revenue collection capacity to fund our infrastructure as opposed to borrowing expensive money. And in some cases we must partner with the private sector (Private Public Partnerships) so as to reduce pressure on the public purse” 
(Source: UPND)
From the above we can summarise that HH is promising free and good quality education and health care. He also broadly plans to continue Sata’s infrastructure delivery. HH plans to deliver this via increasing "revenue collection capacity” rather than “borrowing expensively”. This could either mean more taxes on ordinary Zambians or mantaining the new mining fiscal regime which is facing a serious backlash.

Tuesday, 11 November 2014

Zambia after Sata

Zambia is pregnant with opportunities but the country is facing delicate economic risks that demands focused leadership. Given the strong focus that Michael Sata placed on social infrastructure in transport, health and education, coupled with ramping up of social cash transfers it is reasonable to assume that poverty will hopefully fall in the next few years.

If PF can focus on sorting out the politics of the country, including delivering a new constitution, the future for Zambia may well be very bright. That is a big “if”. At the moment the PF leaders appear completely oblivious to the economic potential and risks facing the country. The risks have been there for the last year or so, other risks were triggered by the Budget 2015, and yet others by Michael Sata’s death. Surprisingly, though it was public knowledge he was sick, PF appeared to have made no contingency planning.

Monday, 10 November 2014

Drug quality and global trade

Editor's note:  The article below is taken from a VoxEU publication 'Drug quality and global trade' by Attaran et al. It finds that drug quality is poorer among Indian-labelled drugs purchased inside African countries than among those purchased inside India or middle-income countries. 
Data from the Pharmaceutical Security Institute indicate that poor-quality medicines were found in 124 countries in 2011, with the problem more severe in low- and mid-income countries than in developed countries (IOM 2013). While much attention has been focused on intellectual property rights protection (notably issues surrounding the WTO's TRIPS agreement), poor-quality samples were more prevalent in cheap, generic drugs than in expensive, innovator-branded drugs when we tested drug samples from 18 low-to-mid-income countries (Bate et al. 2011). Moreover, many people in developing countries have to rely on cheaper, generic drugs for most diseases, and the percentage of imports in drug supply is as high as 70% in African countries (UNAIDS 2013). From the public-health perspective, international trade is arguably more important on the low end than on the high end of drug quality.

Tuesday, 4 November 2014

Shocking political incompetence

It has been another day of shocking political incompetence in PF. We woke up to news that Nixon Chilangwa MP had naively taken on the most unwanted job in the country. He had accepted the job of PF Secretary General after Davies Mwila MP turned it down. Mwila's resignation brought much embarrassment to VP Guy Scott. As Chilangwa was accepting the appointment, riots from overnight were still continuing by students and PF cadres.

Pardoning Criminals

The last act of President Michael Sata was to pardon 975 inmates as Zambia marked the National Independence Golden Jubilee. The president has powers under Article 59 of the Constitution of Zambia to exercise the prerogative of mercy, which includes pardoning criminals.

This is the second largest number of inmates released on presidential amnesty in the history of Zambia after more than 2,318 were released in 2012, also by Michael Sata. The total number of criminals allowed back on Zambian streets since the PF came to power now stands at around 5,700.

The driving reason for the releases are that "the conditions in the prisons have always been a concern of the Patriotic Front (PF) Government, and this move is in line with the Patriotic Front manifesto of turning the prisons into correctional facilities”', according to the Home Affairs Minister Simbyakula. In short we need these large amnesties because of appalling prison conditions.