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Thursday, 9 April 2009

The Case for Rupiah Banda

Writing in the GRZ controlled Times of Zambia, Kennedy Limwanya presents a vigorous and detailed defence of the Republican President as a man "showing leadership in face of present challenges" :

Rupiah shows leadership amid global crisis, Kennedy Limwanya, Times of Zambia, Commentary :

Global financial crisis, credit crunch, economic meltdown, global recession and economic downturn have all been the buzz phrases in world economics since around September last year when the effects began to be felt in the United States.

Before long, what seemed to be a remote cry in the world of the rich has come to the doorsteps of even those countries whose only crime has been their increased integration into the global economic and financial system.

The meltdown has slowed down growth in nearly every part of the world and, even more severe, the Third World countries, which largely depend on funds from richer countries and the Bretton Woods institutions— International Monetary Fund (IMF) and the World Bank.

The outlook is not too good for Africa which does not have the kind of money that the richer countries are putting together to stimulate their respective shrinking economies.

The inevitable outcome of the crunch may soon be the diminishing willingness of rich governments to give financial aid to developing and underdeveloped countries, deepening their poverty further and prompting the cutting of subsidies.

Soaring food prices

Just between April 2007 and April 2008, world food prices soared by an astronomical 85 per cent and, with the current crisis, the situation may just get worse. In their own ways, African leaders are anxiously mapping out strategies to extricate their countries from the economic quagmire, more so that their traditional donors are equally in a rut.

In Zambia, President Rupiah Banda is hardly half a year in office and, already, is faced with a seemingly insurmountable challenge that requires more than just the Government’s input. World Bank vice-president for Africa, Obiageli Ezekwesili, has said it as it is and warned that a full-blown socio-political crisis is imminent in many African countries as the United States and other big economies step up measures to cushion the effects of the global economic recession.

In her paper titled “Africa: Dealing with the Global and Financial Storm” delivered in February, Ms Ezekwesili said most African countries were already falling short of the Millennium Development Goals (MDGs), including halving poverty by 2015, just as the crisis will complicate the attainment of the MDGs.

To cushion the effects of the economic glut, Ms Ezekwesili proposed far-reaching remedial measures such as proper management of public finances, well-managed fiscal stimulus programmes and proper enthronement of market-based principles.

These programmes, financed with external resources, could avoid a sharp fall in growth in African countries while investments in safety nets and infrastructure spending, notably in maintenance, will cushion the fall and position Africa to take advantage of the rebound of the global economy when it occurs.

Ms Ezekwesili further called on African leaders to sensitise their citizens on the challenges ahead and options to solving the economic monster.

“This is a time when African governments must engage their citizens in an open dialogue about the challenges ahead and the difficult options for dealing with them”, she said while adding that citizens will be part of the solutions.

President Banda is alive to the fact that a citizen-driven solution is what Zambia needs to pull out of the effects of the economic downturn.

In this regard, the just-ended two-day indaba in Lusaka, under the theme “Global economic crisis: a wake-up call for Zambia’s economic transformation”, is President Banda’s honest recognition that no government, however big, can have a monopoly of wisdom over its citizens.

How right Gerald Ford, the 38th US president (1974 to 1977) was when he said, “If the government is big enough to give you everything you want, it is big enough to take away everything you have”.

This is the one truth that opposition political leaders, church organications and individuals that boycotted the indaba, ought to be aware of, and they must not forget that the Zambian people are watching and their eyes will remain open up to the next election.

It is in such difficult times as the current crisis that real friends are known, for it is in prosperity that people know their enemies and, in adversity, they know their friends.

If what these political leaders and their sympathisers want is for the Government to fail to find solutions to the current problems so that they can go to the next elections using that platform, they had better think again.

Zambians are not gullible and are fully aware of what is going on around the world and what remedial measures Mr Banda’s Government has already put in place even before calling for the indaba which, at the end of the day, will help broaden the scope of tackling the crisis.

Mr Banda’s initiative of the calling the indaba is, by no means an admission of failure but an inclusive way of tapping into the ideas of every Zambian to find solutions to a national problem that should not be cheapened by parochial political interests.

This is a critical problem, as IMF managing director, Dominique Strauss-Kahn told a Brookings Institution seminar in Washington DC early last month.

“While the global crisis has taken a little longer to reach the low-income countries, the outlook for these economies has deteriorated dramatically,” said Mr Strauss-Kahn, noting that a global recovery would be delayed into 2010, even if countries adopted the right policies to fight recession.

He further said the most recent growth forecast for 71 countries eligible for concessional IMF lending was just over four per cent in 2009-more than two percentage points lower than what had been expected a year ago.

Stagnating income

“And in any case, while this growth rate may seem high compared to the outlook for the economies, in per capita terms, many low-income countries may at best see incomes stagnate next year - and possibly even contract,” said the IMF head.

With this, it should not be totally strange to see the visible impact of the economic meltdown at local level with the companies’ downsizing of workforce or, at the worst, complete closure. Zambia has seen the ceasing of operations by Luanshya Copper Mines (LCM), significant workforce reduction at Bwana Mkubwa Mine and the imminent closure of Mopani Copper Mines’ Mufulira shaft.

Elsewhere, employees of pay-television service provider, Gateway Television (GTV), have been offloaded onto the streets while the situation continues to look bleak in many companies.

While analysing these effects at local level, it would be important to take a look at the report of the heads of the African Development Bank (ADB), the African Union (AU) and the United Nations Economic Commission for Africa who convened a meeting of African ministers of Finance and governors of central banks in Tunisia in November last year to discuss Africa in the face of the global financial and economic crisis.

The meeting created a committee of 10 to take stock of the impact of the crisis on Africa and provide appropriate advice to African heads of State.

The report stated that although Africa had made steady progress over the last decade, building the foundations for higher growth and poverty reduction, “This more optimistic picture is now being undermined by factors outside its control. While the initial effects of the financial crisis were slow to materialise in Africa, the impact is now becoming clear.

“It is sweeping away firms, jobs, revenues, and livelihoods; it is, in short, a full-blown development crisis. For the first time in a decade, there will be zero growth per capital.”

Remedial measures

This is a report coming from experts, and for a local politician to make fun of the efforts being made by the Zambian Government to address the country’s economic ills is betrayal of the highest degree an insult to the Zambian people, some of whom had travelled from diaspora to come and help with solutions.

What is reassuring to the country is that Zambia’s donors were appreciative of the Government’s initiative of an all-inclusive indaba which brought together key players from diverse backgrounds.

World Bank country representative, Kapil Kapoor, said the indaba was testimony of the Government’s commitment to finding solutions to a problem that has engulfed the entire world.That the donors pledged to continue supporting Zambia’s development programmes despite the difficulties facing their own countries, was, in itself, a vote of confidence in President Banda’s administration.

The cooperating partners made the pledge at a high-level policy dialogue with the Zambian Government in Lusaka on March 30, four days before the indaba opened.In a further show of support to Mr Banda’s Government, the indaba was attended by, among others, high-profile international figures including Ms Ezekwesili, representing the World Bank, and African Development Bank president Donald Kaberuka.

While, for whatever reasons, the Patriotic Front (PF) and the United Party for National Development (UPND) stayed away from the indaba, Mr Kaberuka extolled President Banda’s initiative of the gathering, urging him to remain focused during the crisis in order to drive the country’s economy forward.

Attitude change

President Banda, in his opening remarks, called for a change of attitude among Zambians and made it abundantly clear to the more than 600 delegates that there was need for collective wisdom from different sectors of society for the country to get itself out of the current problems.

“This indaba is for all the people,” said the president, adding that Zambians should embrace a spirit of hard work because if the effects of the recession were not realistically addressed, the levels of poverty would shoot up.

The indaba, indeed, was for all the people as, apart from representatives of key corporate and business sectors, there was political support from opposition leaders such as Ben Mwila of the Zambian Republican Party, United Liberal Party’s Sakwiba Sikota, All People’s Congress Party (APCP) president Ken Ngondo and Edith Nawakwi from the Forum for Democracy and Development (FDD).

The country’s founding president Kenneth Kaunda and his successor Frederick Chiluba also attended and took part in the deliberations which came up with far-reaching recommendations to the Government.Good investment destination

The indaba recommended that, grim as the situation may appear, Zambia was still a good investment destination with vast potential to rise above the current crisis and become the region’s food basket.

This does, in fact, tally with the observations made by the report released by Africa Progress Report chair, Kofi Annan in January, during the World Economic Forum in Davos, Switzerland. The report titled, “Africa: Preserving progress at a time of global crisis”, Mr Annan said Africa could be an important part in a global economic stimulus plan because the scope for investment was vast.

It added that Africa’s medium-to long-term prospects were now better positioned to stimulate the economy and recommended that the continent should realise its potential for a green revolution in food production. This point about the green revolution was also stressed by Ms Ezekwesili in her keynote address at the opening of the Lusaka indaba, challenging Zambians to intensify efforts in diversification as a means of surviving the global meltdown.”

The single biggest element in the transformation of Zambia’s economy has to be a renewed focus on agriculture.

With the abundant natural resources, there’s little doubt that Zambia can emerge as a bread basket for the region and beyond,” Ms Ezekwesili said.
The indaba, she said, presented an opportunity to rapidly transform the economy and that the attainment of Vision 2030 required both political will and leadership which did not thrive on populist decisions. Ms Ezekwesili urged Zambians to utilise the country’s geographical location by investing more in infrastructure to allow trade between countries in the region and across the continent.

It should be interesting to note that the Zambian Government did have some foresight and had already put in motion some mitigation measures along the same line as the recommendations passed at the indaba.

Prioritising agriculture

To underline Mr Banda’s commitment to ensuring that Zambia became self-sustaining and raised productivity in agriculture, the 2009 national Budget had allocated K1.1 trillion to the agriculture sector in a 37 per cent increase from the K800.5 billion provided in 2008.

Finance and National Planning Minister Situmbeko Musokotwane also announced the zero-rating of tax on major agricultural implements for value added tax (VAT) and the manufacturing of windmills and maize hauliers to encourage local manufacture of the equipment.

These measures, surely, can only come from a Government that is prepared to govern and knows why it is in office as opposed to the one that thrives on fire-fighting techniques.In fact, on Ms Ezekwesili’s advice on Zambia to use her geographical advantage to become the regional hub, Mr Banda did define this vision in his presidential inauguration speech on November 2, 2008, saying he wanted to make the country the nerve centre of inward investment, transport and tourism.”This vision is possible.

We are at the centre of southern Africa. We have immediate borders with no less than eight countries . . . Zambia is at the crossroads of southern Africa and we will take advantage of it.” One of the sectors that could make Zambia take advantage of her vantage position and accelerate the economic diversification programme is tourism which, in the 2009 national Budget, received a whopping K77.6 billion, up from the K26 billion allocated in 2008.

Saving jobs It cannot be denied, too, that the removal of windfall tax on copper incomes and retention of variable income tax were part of the cost reduction measures aimed at encouraging further investment in the mines and forestalling further job losses in the wake of the downturn.

The deferment of tax on copper concentrates was to ensure utilisation of the smelters at Mufulira, Nchanga and Chambishi in an effort to save jobs.The national Budget also did reflect a stimulus by widening to 1.8 per cent the GDP of domestic borrowing from 1.4 per cent last year, which has helped finance economic infrastructure. All these measures can only come from a caring Government that is prepared to tackle the economic crisis that has spared no country.

The crisis has brought to the fore President Banda’s undoubted ability to provide leadership in the midst of a crisis. History is replete with names of patriots who rose to the occasion when their countries were faced with crises, which their detractors thought were too hot to handle.

It must be mentioned here that the PF and UPND have missed a great platform to present their case before such an important gathering as an indaba and prove that they were truly governments-in-waiting. Again, President Banda has shown that he has what it takes to drive Zambia’s agenda forward.

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