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Wednesday, 11 November 2009

A dead national budget?

Yes. According to MMD aspiring presidential candidate Clive Chirwa in a detailed attack on the 2010 national budget. A couple of good (obvious) points on prioritising infrastructure, but questionable obsession with having a national airline. The attack on agriculture is also bizarre when one considers that the real budget in this sector has reduced. In general, although this is an assessment that is heavy on diagnosis and short on real solutions, Clive Chirwa must be applauded for being the only political player to have attempted a critique :

Autopsy of 2010 national budget, Clive Chirwa, The Post, Commentary

I have now for the third time read the complete 2010 Budget speech delivered to Parliament by His Honourable The Minister of Finance Dr Musokotwane. Every time I read it, I tried to search for the big picture, the vision, the route to prosperity, the signature for jobs creation and poverty eradication, the so called diversification, the real fruit that will ripe in 2010 and beyond.

To my profound disappointment, what I found were traps, to be specific, ditches into which Zambia was sinking into as the economic drivers to prosperity are not followed to the book and as a result enforced retardation which is taking us to medieval existence is thrown into our faces. Surely Zambia is better than this. What are we being exposed to and fed? Surely not this economic “twaddle”, which has missed the ethos of developing a balanced national budget that is progressive and not suicidal.

This can be acceptable to those who are against Zambia’s development and to those who want to continue with the chaos of economic malaise that gives them room for corruption. To me, despite this being from my Party that is in government, I find this short-changed presentation of information that has not used the enormous library of research output in economics available around the world difficult to swallow.

I do not want to make this personal as I know Dr Musokotwane as a good economist who can really make a change to Zambia. But I am amazed at how he is missing the most fundamental principles in economics.

He is re-writing the rules of economics to profess defunct ideas that will not, even in a single iota move Zambia to the promised land where poverty is eradicated, education is there to propel and underpin the labour force, health is championed to protect the nation, job creation is enforced and in the end improve productivity, and GDP. Many of these elements apart from education have been somehow deliberately abandoned in the 2010 budget or so it reads.

How can we rectify this? Before we do that, let us locate the inefficiencies and the so-called good bits of the budget. First and foremost, I should stress that agriculture and tourism are extremely vital for our national development in the sense that we need abundant food not to starve and we need forex input from the visitors to Zambia.

To deliver these, executive decisions must be made as to how we are going to achieve the goals in creating food mountains and attracting tourists. The current budget 2010 has not got the tools to deliver despite the money being thrown at the two activities. planning for the future must be done now when our economy and that of our external markets are in the downturn. Zambia is a country that has a great future, if only strategic planning of the country’s endeavours are formulated for real national change and not for personal gains.

In some of my previous writings, I have shown based on statistical evidence, economic proficiency and enormous library of knowledge from both developed and developing countries that the only way to take Zambia from the brink of extinction is to build an industrialised nation propped by manufacturing. Why I have been adamant for the government to create prime industries and let the supply chain be private is for the simple reason of dictating our own development.

Read my lips once more and now a hundred times “No investor will bring money to this country for Zambia’s development, but for profits”. As a capitalist, this tells me that investors will always choose quick-buck-return enterprises with little complications and fast exist in case the investments go sour. We have already experienced this in the current economic downturn, where Zambians have been unceremoniously dumped on unemployment tip.

The current 2010 national budget does not give any solutions to the job losses let it be in mid or long term. Money has been invested in tourism and agriculture but without a plan.

To be blunt, these two are not big job creators as I will show in a minute. My government has taken the eyes off the ball and we know the consequences thereof – increased poverty, uneducated and unhealthy nation, and above all we are seeing with our own eyes a rapid back move to medieval times when agriculture was the main source of national income. Sometimes we as people must rise above politics for the sake of all Zambians. Let us build a better life for all. To do that we as people must first and fore most create real wealth through industrial revolution and then through tourism and agriculture fibres which are second and third in line of development in many countries.

Let us now look at tourism. This can be a good source of income but it is passive. That means you sit and wait for your next client, hence you have no control over direct planning. But if properly planned can be a formidable money spinner for Zambia. However, the 2010 budget does not address the income generation part tourism can bring. By just pumping money into it without a clear outcome planning is the same as throwing money on fire.

The simple question I have to the people who decided to put money in tourism is why invest in new tourist centres when the mother Zambia icon – the mighty Victoria Falls – is just 0.9 per cent developed. If you are an entrepreneur and your main business has developed less than 1 per cent, surely you cannot start using the meagre finances you have into developing new businesses. This is suicidal. What you will do is to find out how you can realise the full potential of your business and tap into the 99 per cent which is still unexplored.

For me the development of the North circuit is ill advised and has started at a wrong time because of the natural attractions being so spaced and expensive to develop the infrastructure. Livingstone town and its attraction to foreign visitors is a magnet. However, it is currently a tourist destination by name only and not by deeds. Indeed, Livingstone area and the Lake Kariba can be linked to form a superb tourist zone that will bring us money now not tomorrow. Livingstone as a town is too dilapidated and has no facilities to become the first choice for visitors with money and it has no tourist facade. If the status quo is maintained, the town will remain a destination for back-packers who trickle from the South African circuit and spend very little money.

For us to bring Livingstone to high standards enjoyed by our competitors, we need to build entertainment centres such as casinos, playgrounds and many more. The Victoria Falls and the surroundings must be made welcomed with improvements in the paths/roads that allow the rich tourists in suits/dresses to walk like on the promenade without getting dirty. These improvements will bring tourists in large numbers and will create a colossal number of jobs in the mid-term and long term. The government must drive this not wait until it gets elephants donated from South Africa. Where are our elephants? This is a disgrace. About 2010 World Cup in South Africa initiative, we might have lost it.

I have been for the past two years calling on this. But the begging from South Africa for an exhibition booth at the 2010 World Cup season has shocked me in the sense that it might be too late for those participating spending some of their money in Zambia. Those who are heavily advertising worldwide such as Angola, Namibia and Mozambique will be the biggest earners followed by Swaziland, Lesotho and Botswana. Zimbabwe will not have many visitors because of its own cooking, and Zambia will get a trickle in fact far much less than Kenya that is a long distance away from the action because Kenya can afford to freight in its tourists using its own national airlines. For Zambia, this is bad planning.

Yes, the 2010 budget has failed us because it has not tackled the most fundamentals in Zambia’s tourist industry. That is as long as we do not have the infrastructure and appropriate transport people with money will never come to Zambia in droves. The airline is perhaps the biggest problem that does not help. I have travelled worldwide on business and as a tourist on holiday. When booking my next holiday, I go on the internet and book a flight and a holiday destination. Since there are no direct flights to Zambia, it immediately drops down the list of preferences. A large number of tourists will feel and do the same. We need a national airlines urgently to maximise our tourist potential. By going to the North circuit without proper airways and railways is catastrophic and not the route that will turn our economy round as claimed.

Agriculture is the other commended area the 2010 budget thinks will save the Zambian people from extinction. This is rubbish. Economists, farmers and governments around the world will tell you that agriculture is the least of the industries to develop a country in modern age. Agriculture is good for food production of the nation but not for earning outside income needed for development. This sector is not a bumper job creator, indeed the world around us has shown for instance that Great Britain and America each has 1 per cent and 3 per cent respectively of their total population employed in agriculture and they feed 65 million and 260 million people respectively.

As you can see agriculture is not a job creation sector, indeed what we want is to mechanise our agriculture and make it more efficient so that we are able to have two if not three harvests of maize, wheat and other farming products per year plus boost our livestock/fishery through better husbandry techniques.


Again the 2010 budget has missed the point on agriculture. The fundamentals have not been addressed and hence beef will never be the new copper unless you live in coo-coo land. Added value in manufacturing of our natural resources will be the new copper, nothing else.

Our country has lost 8500 jobs although my figures show up to twice that as many of the unemployed worked under casualisation and were not fully accounted for. How can you, with a good frame of mind say agriculture will create these jobs?

Is this playing too clever or being just dumb stupid. Whatever it is, the families who have lost these jobs will never go to agriculture, which is where they came from as their villages gave them education to better themselves and work in heavy and light industries. Indeed the only sector that can create such numbers of jobs is steel, coal, mining industries on the heavy side and manufacturing on the light side. A million jobs can be created within 5 years with a good plan. Honourable, industrial revolution propped by manufacturing is your only diversification plan. Not a Mickey Mouse strategy of the so-called turning beef into new copper. This politicking is meant for those who have never been exposed to reality and should never be part of a national budget.

For the sake of argument, let us see if it is true we can really turn beef into new copper. Perhaps we have not explored all the avenues. In industrialised countries such as those in America and Europe where beef is sold at premium, a cow/bull goes for $1000. While on average a ton of copper is about $3000 to be conservative. I do not have to be a rocket scientist to see that I will need three cows to make the price of a ton of copper.

The benefit to the nation is that hundreds of people will be employed to make that ton of copper, while a man and a dog will have the three cows and contributes nothing to the state revenues. But he will feed a few villages and the people around him. While the ton of copper turned into finished products with value addition will feed a province for months, pay for education and health, build infrastructure and will increase the State revenues. How many years will it take to really make beef into the new copper so that the revenue from it supports the Zambian economy? I do not want to go into that because I believe it will never. The whole idea is retarded and rubbish.

I do not see how beef is diversification en par with copper. Indeed, remember that Americans and Europeans, have over 50 per cent in subsidies. The South Africans have a lean production cost because of mechanisation. Zambia has none of those and has poor veterinary facilities. Therefore, our beef given a good bill of health will not be competitive and we will always sell it at a fraction of the price. This to me is no diversification but premeditated murder of a nation. Waky waky, this is our Kwacha (dawn) we must move forward and not going through a path to feudalism which our forefathers abandoned so that we can live like human beings.

At present we need a lot of steel to move forward in our industrialisation. Our railway tracks are in urgent need of replacement, otherwise a terrible accident is just around the corner. We need steel for our tractors, machinery, transport, construction which has grown 10 per cent and many more. I refuse to take Zambia back 1000 years when feudalism was the key to existence. Indeed our forefathers will be turning in their graves upon seeing that we are still using a hoe 1000 years down the line and we cannot even make the iron they made in Mwalusaka region. This is a disgrace and we must stop playing politics and really move this country forward.

I agree with the fact that the government has assigned ZDA to look for investors in manufacturing. What I do not agree on with the government, is the fact that it has sent ZDA into the lion’s den without the weapons to shout down prospective investors and bring them to Zambia to help us in our development. In a real world, the President of a nation will be the one running around making presentations, mingling with the people that matter in order to bring good investors and not speculators.

Assigning a “QUANGO” (Quasi Non Governmental Organisation) to drive such an important task for a nation and for the people of Zambia is folly. Look at what Brazil, Singapore, South Korea, and now Georgia’s Presidents did and continue to do as they pump up the volume and make good noises that attract investments. This is not a criticism but good advice that His Excellency must get on his bike literally with a plan that will constitute the making of four big industries in the near future. These will be to build a steel plant in Maamba region, to bring oil from Angola and refine it in North Western Province, to re-build the national airlines and to build new railways. After that manufacturing will follow swiftly as intermediate primes in value addition of copper, nickel and cobalt are created. Then after that, private entrepreneurs will build up supply and converter chains.

Remember, Zambia has to invest a bigger chunk because no investor wants to see returns 50 years later. Once the main building blocks have been put in place then a “QUANGO” can take over to complete the deals. A President’s face in investor attraction means a lot especially if you are in Africa where instability and corruption is the name of the game. A President will reassure prospective investors that their investments are under guard, while a “QUANGO” will not have the power to be respected.

We must come out of our current position where we are pre-occupied in selling assets instead of thinking of how we can improve the deliverables from those assets. Learn from the UK that privatising nearly everything is not a solution but a burden that has destroyed the foundation of the economy built over centuries through manufacturing and industrialisation at large.

Prioritising speculative practices such as commodity markets and currency has shown not to be good as the country has been left with nothing to sell, while its competitors, France and Germany have come out of recession through manufacturing. Selling assets for the sake of it is not recommended. These actions will in the near future haunt those who are professing them. Zambians should know that manufacturing is the only way to our promised land. It is well established that the sector is superior in economies of scale and spurring all-round linkages. May God Bless Zambia.

1 comment:

  1. Really informative post by you. i appreciate it keep it up.

    ReplyDelete

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