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Friday, 30 August 2013

Random Thoughts, 5th Edition

Just in case you need more evidence of the financial shambles we are currently in. This letterrecently  shared by Zambia News Features seems to say it all.  We wont really get anything sensible truth out of the Ministry of Finance until the Budget 2014 comes in October. But it is obvious that Zambia'scurrent financial  situation is perilous due to poor decision making  at the Ministry of Finance. 

Talking of incompetence. Alexander Chikwanda recently said, “Yes there is a budget deficit but deficits are normal. It happens everywhere and there is nothing strange about it but what it is important is the measures that the treasury will devise to cut the deficit” Deficits are certainly normal. What is not normal is increasing your deficit from 4.3% of GDP to more than double. Effectively leaving a huge spending gap that can only be financed by more borrowing or heftier taxes. It is also not normal to create such a deficit by a unnecessary wage increases that previous Finance Ministers rightly rejected because they understood the economics of running a country.

Energy Minister Chris Yaluma recently claimed that ZESCO has been totally transformed : "The ZESCO of about nine months ago is totally different from the ZESCO is see today...Clearly the ZESCO of today is far much better than the ZESCO we had before. We have a focused management team and the fruits are beginning to show. The ZESCO I see today has totally changed in terms of customer service....You know the biggest problem [is that] you never know what ZESCO is doing until when you have load shedding but I know that these guys are busy planning on how to serve you better....ZESCO has ambitious programme, a basket of things, approved and not just a basket of wish list but approved projects to improve electricity supply.." Needless to say that shocked and annoyed  many of our Facebook readers!

The Supreme Court recently upheld the election of Lufwanyama MMD MP Anne Munshya. The losing PF candidate Christopher Kalenge had petitioned the election of Munshya in the High Court citing electoral malpractices. The High Court had dismissed the election petition with costs but Kalenge appealed to the Supreme Court where Justice Elizabeth Muyovwe upheld the High Court’s decision. The judgement is significant because it lends further credibility to the competent manner with which Justice Muyovwe has been handling the petitions. What of course is unsurprising is that this judgement has garnered little attention.

Chola Mukanga | Economist
Copyright © Zambian Economist 2013

Thursday, 29 August 2013

Financial problems at Mwanawasa Stadium

A recent Parliamentary report on Levy Mwanawasa Stadium (LMS) confirms previous reports that the stadium is cash strapped. LMS currently receives a grant of K84, 000 per month from GRZ while its total bills per month run at K173, 000. It is failing to narrow the gap and this will become harder as the facility ages.

In order to raise extra resources for the stadium, LMS management hires out the facility for weddings, kitchen parties and general meetings. It has 10 shops spaces which are yet to be leased out.

What is interesting that LMS lacks indoor sports facilities for basketball, volleyball or badminton. This means the stadium is rarely used as a general sports stadium. Most of the time it is just a white elephant as far as developing sports goes. Management wants to build these facilities but there's no money.

Wednesday, 28 August 2013

Quest for cheaper credit

The Commercial banks' real average lending rate (after accounting for inflation) fell significantly in 2012 from 17.6%in end-December 2011 to 6.0% at end-December 2012. Which is a positive development - as the chart below shows.

The fall in real lending rates is undoubtedly magnified by some rise in inflation. But it was essentially due to the introduction of the reduction of corporate tax for banks and the initial setting of the BoZ Policy Rate.

Tuesday, 27 August 2013

Poor turnout at by-elections

I finally got round to checking the turnout at recent Parliamentary bye-elections :

Mkushi North : 17%
Kafulafuta : 28%
Chipata : 30%
Solwezi East : 23%

The turnout is shocking. No improvement then since the Kapiri parliamentary bye-election in May were turnout was 15%. That meant 85% of people did not vote. This issue goes beyond party lines. In Ndola we recently saw two ward elections with 4% turn out. That is 96% of people did not turn out to vote. What is the point of such an election?

Monday, 26 August 2013

Is Chikwanda pushing Zambia into another debt trap?

Since PF came to power Zambia's external debt is nearly double what it was 2 years ago (The chart below is in fact an underestimate because it has no 2013 figures). In 2012 alone, Alexander Chikwanda borrowed a staggering 14 times abroad! We are paying nearly $300m annually in debt repayments, and that figure is rising everyday. 

For related discussions on Zambia's rising debt and what can be done  see here

Chola Mukanga | Economist
Copyright © Zambian Economist 2013

Friday, 23 August 2013

A Deficit in Health Capacity

Two graphics below show the scale of the challenge facing Government with respect to shortages of medical staff. Although progress was made in 2012 to recruit more people, we are still 24,000 short of meeting WHO recommended human resource support. The problem is acute across all areas. There's a long way to go because this sector has been overlooked for so many years.

Thursday, 22 August 2013

Solwezi Stadium Proposal

Government is considering building a stadium in Solwezi. According to Steven Masumba (Sports D Minister) Solwezi will be the next stadium after Livingstone and Mongu have been built. Government officials have already done preliminary studies in the area and drawn a strategic plan for the project.

The Sports Ministry believes North Western province has "undeniable potential for athletics" but lacks sports infrastructure to help harness the talent. It also has football potential with a "growing fan base" thanks to Division One North football clubs Bresmar United and Kansanshi Dynamos.

The Government's believes that building sports stadiums is an important way of "taking development to the people". The proposed stadiums are all in excess of US$50m each. Levy Mwanawasa and the new stadium cost around US$70m. The Chinese contributed to funding the Levy Stadium but the rest of the cost has been picked up by Zambian tax payers.

Wednesday, 21 August 2013

Corruption in Court, 2nd Edition

A Court Clerk at the Kalulushi Subordinate Court was recently arrested by the ACC for suspected corrupt practices involving K 1000. Coillard Lomba (37 years) is charged with corrupt practices by public officer contrary to the Anti-Corruption Act (2012).

It is alleged that Lomba last month corruptly solicited for and actually received cash gratification from a Able Chibwe as an inducement or reward for him to facilitate for a Stay of Execution in a court case involving Able Chibwe and Victoria Kapelekeshiku.

Tuesday, 20 August 2013

Zambia is Flying!

I said recently that Zambia is on the move on the roads. Well, we are also flying more and more. It is particularly good to see domestic air travel growing and air freight. And of course the surge of Proflight domestically is part of this story. The 24% growth in international aircraft movements within the context of falling tourism numbers over the same period is interesting! It shows that Zambia is becoming more connected and that the challenges being experienced in tourism is more to do with a poor tourism policy not the absence of a national airline

Question : What policies should government pursue to sustain the growth in aviation industry in Zambia? Share your thoughts and ideas below.

Chola Mukanga | Economist
Copyright © Zambian Economist 2013

Monday, 19 August 2013

Fire Fighting Services in Zambia

A recent Parliamentary Committee report concludes that Zambia's current fire fighting capacity is very poor. Other than the aviation industry, which appears well catered for in terms of fire appliances, in accordance with ICAO regulations, most local fire authorities in Zambia do not have fire tenders that match the existing risk categories.

The recommended number of fire tenders to an incident is 4 with water capacity of around 5, 000 to 10, 000 litres, a turntable ladder to provide access in case of high rise buildings and a rescue fire tender carrying all types of rescue equipment, including an ambulance. At the moment, no single fire brigade in Zambia has these appliances. The country continues to rely on donated old fire fighting vehicles, most of which are incompatible with the terrain in most of the communities in Zambia.

Friday, 16 August 2013

Zambia Living Conditions Monitoring Survey (2010)

I have been looking for this report for a while - so I figured you may have been looking for it as well. It a rather long report so don't attempt to print, in case the environmentalists knock on your door!

Chola Mukanga | Economist
Copyright © Zambian Economist 2013

Thursday, 15 August 2013

Is Zambia's Tourism Policy Broken?

2012 was a bad year for Zambian tourism. The chart below shows tourist arrivals in Zambia from other regions of the world. All major national parks suffered significant reduction. I doubt 2013 will be any better.

These substantial decline in arrivals shows how poorly positioned Zambia's tourism is. It is very susceptible to global economic forces (but the Eurozone crisis does not quite explain reduction in arrivals from North and South America).  Our tourism policy appears stagnant. Its progress is being impeded by lack of policy direction from the top, poor marketing and hotel infrastructure especially in Luapula and Northern Provinces. 

On going GRZ investment in transport infrastructure should reduce cost of doing tourism business provided the projects are properly delivered and maintained. But that wont make up for a non-existent tourism policy. And of course it is vital Zambia maintains a positive image to the world - as a peace and democratic state that is open for business.   

Question : what specific policies are needed to boost tourism?  Share in the comments below.

Chola Mukanga | Economist
Copyright © Zambian Economist 2013

Wednesday, 14 August 2013

Random Thoughts, 4th Edition

Justice Minister Wynter Kabimba recently updated his FB status with the words, "Comrades, We'll bring a law to give immunity to chiefs so they are not dragged to court by subjects. Its disrespectful. Chiefs need respect". Needless to his new followers on social media (he is also on Twitter) greeted that updated with dismay for obvious reasons. Zambians respect their chiefs but they also rightly recognise respect comes responsibility on the part of traditional leaders. More importantly,  we should be removing immunity from existing laws not adding new immune offices.

Tuesday, 13 August 2013

Is Press Freedom Falling in Zambia?

Think Africa Press has an interesting article, 'Zambia's Online Media: Under Attack and on the Attack'. Excerpt below :
There are journalists in Zambia – such as Voice of America correspondent Chanda Chimba – who say all this amounts to a massive regression in the country’s human rights profile, all at the hands of President Sata. But others describe a shifting set of frictions between government and media that changes shape and direction as different parties and presidents rise and fall from power.

Certainly, Sata and his Patriotic Front (PF) party did not invent press oppression in Zambia – even though he uses the country’s criminal code to attack opponents, and his supporters harass and intimidate reporters in the field. Indeed, RWB ranked Zambia 72 out of 179 for press freedom in 2013, up from 86 in 2012 and 104 a decade ago. CPJ and RWB keep archives detailing years of anti-media manoeuvres perpetrated by successive governments, and the litany is long.

Monday, 12 August 2013

Zambia's Internet Surge

Zambians are getting on the Internet in droves thanks to mobile Internet. As I recently said the march of free expression and information in our country is unstoppable.

Question :  is this momentum likely to be sustained or will it fall away? What impact is it likely to have have if it continues in the next five years?  Share in the comments below.

Chola Mukanga | Economist | Writer
Copyright © Zambian Economist 2013

Friday, 9 August 2013

A Bleak Future for Railways?

Clive Chirwa has written a full defence of his record where he suggests the future of Zambia Railways is very bleak because the company has no money and incurring huge losses :
At present moment Zambia Railways is losing too much money. While I was there we planned to carrying 90,000 tonnes of cargo a month, but in reality the company is carrying far much less and will not meet the target we set ourselves of carrying 1.1 million tonnes in this financial year.

On passenger part the company is losing much more a month and not US$70,000 which is publicised in the media. These losses are unsustainable and the crucifixion of the ZRL vision that I put in place means the only way for the company is to go down the pan rather than growth.

ZRL is currently making money based on the market I developed. There are no new major clients who have come on board. The only mining company that is working with ZRL is KCM whom I brought on board.

Thursday, 8 August 2013

Reversing domestic violence, 3rd Edition

The NGOCC has again called for the introduction of 'fast track courts' to deal with the rising number of domestic violence cases. According to the chairperson Beatrice Grillo the level of domestic violence has risen over the past two years.

There's a prevailing view among many people, especially women organisations that domestic violence has been on the rise for some years now. I don't doubt that there are more incidents of domestic violence being reported (and recorded). What is less clear is whether this is a genuine increase in acts of violence. It is not clear why domestic violence should be on the increase (or is there a plausible reason).

My guess is that it is probably the case of more women coming forward and being confident of reporting such violence. If, so the alleged increase may well have a silver lining. We certainly want detection to rise so that our women don't suffer in secret.

Wednesday, 7 August 2013

Zambia is on the move

Zambia is a country on the move. Literally. As the economy grows all categories of vehicles have witnessed a substantial boom as the figures in the chart below shows.  In fact the stock of vehicles has doubled over the last 5 years. More vehicles necessarily means more economic and social connectivity. But it also means more air quality, noise problems and road accidents. Going forward it certainly means more road congestion and therefore  more road investment. The big challenge for government is clearly how best to manage this rising demand for road use.  

Question :  How well is the government dealing with the rise in vehicles and general road usage? Share in the comments below. 

Chola Mukanga | Economist | Writer
Copyright © Zambian Economist 2013

Tuesday, 6 August 2013

Rising Beer Business

Zambian Breweries (ZB), a subsidiary of SABMiller Africa, is set to commence construction of a K110m (US$20m) Chibuku manufacturing plant in Lusaka. The construction of the one million hectolitre plant would be undertaken by Krones Contractors. The project is expected to be completed by the end of the year.

This is part of ZB's continuous expansion which has recently seen it officially open its new one million hectolitre plant at Ndola Brewery, following an investment of K500m (US$90m). It has also put up a new Chibuku Plant in Kitwe at a cost of K30m.

Monday, 5 August 2013

Poverty and agricultural subsidies

Agriculture expert Rhoda Mofya-Mukuka (Research Fellow at IAPRI) recently gave an interview to the Africa Research Institute where she discusses some of the reasons why agricultural subsidies in Zambia have not had the desired impact with regard to poverty reduction, productivity of smallholder farmers and commercialisation of the agricultural sector. Here is the answer to the hotly debated question - "Have the subsidies had the intended impact on poverty in rural areas?" :
We do not have the empirical data to answer this question with certainty. However, our studies at IAPRI have observed that poverty remains persistent in rural areas. About 80% of rural households live in poverty – unchanged since the early 2000s. The maize market is highly concentrated, with about 2-5% of small- to medium-scale farmers accounting for 50% of marketed surplus. Two-thirds of smallholders do not produce a surplus – and many them are net consumers. FISP targets “viable” farmers, leaving out those that cultivate less than one hectare. Therefore, better-off farmers have been the principal beneficiaries of agricultural subsidies. The poorest farmers have been neglected; hence the slight impact on poverty reduction.
You can read the rest of the fascinating interview via Africa Research Institute

Chola Mukanga | Economist | Writer
Copyright © Zambian Economist 2013

Friday, 2 August 2013

Comparison of PF and MMD Performance (Guest Blog)

I was amazed to read today’s comparison between attitudes to PF and MMD. Lately a breakdown of law and order has spread from the capital to much of the country, and especially to parts affected by bye-elections. I use ‘break-down’ to describe areas where PF ‘activists’, often carrying offensive weapons, including even guns, are free to act offensively against opposition political parties, with little or no control by the Zambia Police.

Some 2 months ago there was a well organized attack on a politically motivated meeting in a well-known church in Lusaka headed by Bishop Mambo. The Bishop and several of his colleagues were violently attacked with sticks, hoes etc. Several were injured, and the Bishop was admitted to hospital. No action was taken against the attackers, though some were reported by name to the police. Miles Sampa later offered Bishop Mambo several thousand kwacha compensation.

Thursday, 1 August 2013

A Portrait of Poverty, 3rd Edition

Most long time readers will know that Gesthmane Mwizabi is undoubtedly my favourite Zambian journalist (alongside the meticulous Doreen Nawa). I read everything Mwizabi writes! He has recently been writing in the Times of Zambia on the situation in my childhood town of Nchelenge and surrounding villages. Here is an excerpt from his piece on Kilwa Island (an isolated island on Lake Mweru) :
"...There are plenty of poor people in the world who would gladly make use of that food and clothes which you have discarded. A lot of them are not far away. They are right close to us.While the new generation is deeply engulfed in a “wow” culture with its brags obsessive idols of consumerism; chicken and chips, designer clothes and perfumes, latest cars and gadgets and so forth, a visit to Kilwa Island would break your heart in two.

There is no electricity or a single car on the island. What you find are snaking tracks that lead to grass thatched houses of a people who hardly have three meals a day. Scenes of innocent children and youths playing in ripped off clothes are a common sight. Goats, cats, dogs and chicken live in harmony. Compared to mainland Zambia, the island is 50 years behind..."