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Saturday, 7 February 2009

Quote of the week (HH)

"We have once again embarked on an irresponsible borrowing and the problem is that we are using the money we are borrowing for consumption purpose instead of putting that money into productive ventures of the economy...We should borrow with knowledge and the capacity to pay back because this time around, no one will give this country relief because we are busy playing games when borrowing....at the time of attaining the Highly Indebted Poor Countries (HIPC) completion point, the country managed to reduce its external debt to US$500 million...The external debt is now at US$2 billion, but the country should know that this time no one will give us relief because the whole world is faced with a global crisis and hence the need for debt acquisition policy...."

Hakainde Hichilema (The Post)

7 comments:

  1. $1.5bn debt accrued in what, 2 years? What has the Zambian government spent it on? KK accrued $7bn debt in 3 decades, and we can still see what he spent it on.

    Perhaps it's not so surprising when you read the Auditor General's report and see those gaping 'black holes' in some govt departments where billions of Kwacha have disappeared.

    As a HIPC country which experienced the harsh effects of a debt burden, surely Zambia should be wary of hubris and debt, shouldn't it?

    I welcome HH's full awareness that given the current world economic situation, there will never be HIPC again! and the whole nation ought to be aware too.

    What isn't helpful, I suppose, are the misleading media reports when the country secures a loan were typical headlines read, "Zambia lands so much aid".

    All in all, I attribute this reckless attitude to borrowing to a dependency syndrome, where people subconsciously think there is more where this came from.

    However, a more fundamental question is where does the problem emanate from? Is it from the lenders, who create the feeling that they're 'donating' (do they like being called donors?) to disguise the fact that they're lending? Or is it the receiver who is either in denial about their 'addiction to borrowing', or want to hide it from the general public?

    Any explanation?

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  2. this is really a very remarkable quote...just finished reading it...

    - ledz -

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  3. There is indeed alot of wisdom in this quote.I wish we had leaders in this country who would think like HH.

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  4. HH has demonstrated what kind of leaders Zambia should have. We should start question and demand the government to explain to us what really this debt they are acquiring would be paid back. time has come to hold these leaders accountable to its people. these leaders take us for granted. we do not need another HIPC situation.

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  5. However, a more fundamental question is where does the problem emanate from? Is it from the lenders, who create the feeling that they're 'donating' (do they like being called donors?) to disguise the fact that they're lending? Or is it the receiver who is either in denial about their 'addiction to borrowing', or want to hide it from the general public?

    I think the reason why the governmen keeps borrowing, and why there is a hugely bloated government and for instance 29 ministries are the same.

    The government is a tool for personal advancement. Politicians will always try to draw more and more power to their own office, and as the government is massively concentrated in Central Government, it are the central government politicians and civil servants who draw power towards central government, while drawing power towards themselves.

    While they are fearful of the mining companies and as a result bend over backwards not to tax them, they are not afraid of the individual Zambian citizen, which is why they do nothing to reduce their taxes, after having massively increased them over the years.

    If there is famine or hunger, it does not touch them, so they think they can weather the storm. This is how overweight Levy Mwanawasa could go out into a crowd of semi-starving people, and admonish them on consuming too much, and tell them 'we need to tighten our belts'.

    There is a direct disconnect between the people and central government politicians created by having most of the budget going to parliament and central government, instead of local government. Local councillors could not get away with that kind of behaviour for very long.

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  6. Indeed thats a good quote. As you have indicated on this site before, the JCTR has some good work on this including a debt contraction and management framework which can induce responsible borrowing and supports responsible lending. They also have a community led debt monitoring framework which basically seeks to find the efficacy of debt. These two do complement each other very well.

    We need to avoid the most likely situation of becoming a moral hazard.

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  7. Mr K,

    While they are fearful of the mining companies and as a result bend over backwards not to tax them, they are not afraid of the individual Zambian citizen...

    ...nor the law. A very good point which explains a lot.

    Some years ago, I read a research article by some Scandinavian group which concluded that every individual has 'dictatorial tendencies', however it's the people around us (or fear of retribution) that largely prevent that from happening.

    It sort of states the obvious, and am sure the the philosopher Plato (or even our own Yakima) has a memorable phrase for it. But it's important as it fits in quite well with "every nation gets the leadership it deserves."

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