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Thursday, 27 March 2014

Thank You, Chikwanda!

I have been writing on economic issues relating to Zambia for many years now. And I can confidently say that this is the most exciting time to be a Zambian economist for more than a decade. Why do I say so?

After Mwanawasa crossed the HIPC completion point and secured debt relief the economic issues became largely "microeconomic". The analysis was mainly about the economics of reducing corruption, tackling local poverty, creating incentives, securing money from copper, and other micro issues. In fact china was just arriving on the continent, so the politics of foreign investment was not as amplified.

The Bank of Zambia had relative autonomy through personalities (not based on statute) and the macro picture was very stable, even boring!  Donors still contributed a lot to the budget (25% - 30%) but debate was around proper targeting of funds and securing more money from copper. We all remember the interesting debate / lobbying that led to the Mineral Development Act 2008.  And of course we went through the aid debate storm! 

When Banda came to power the macro picture under Dr Musokotwane did not really change, despite Banda's betrayal over the windfall tax. Yes Ngandu Magande was gone but Dr Musokotwane was a listening Finance Minister and very competent economist. I remember writing to him over ZAMTEL and freezing of Libyan assets following a UN resolution and got a very good response (via his iPad!). The big economic debates that time again were largely microeconomic. And of course the degree of privatisation. 

There was temporary macroeconomic sensation during the economic crisis. I remember doing a series "The Challenges facing Banda" as the credit crisis amplified. But even then the macro issues largely became microeconomic ones e.g. job creation. The reason was that Zambia was very prudent fiscally, FDI was still growing and the IMF SDR covering made the macro picture less of an exciting issue. Chinese of course became a large issue thanks to PF but again the issues  were largely regulatory. 

Since PF came to power all fields of economics have opened up for discussion. Institutional economics is in the game given PF's ongoing struggle to achieve stable economic and political institutions (e.g. the constitution is now in limbo). Macroeconomics is back because of the current ineptitude by Chikwanda to manage fiscal and monetary policy. And of course the micro and regulatory issues remain. We also remain poor in the midst of rising economic growth which has brought issues of inequality to the forefront. To make matters worse we are borrowing like there's no tomorrow!

PF has of course has made good progress in many areas, particularly infrastructure investment (especially transport, energy and education). Though the absence of cost benefit analysis remains a problem and is partly the reason why the macroeconomic picture continues to worsen. But it's pursuit of these areas are natural domains of my economic "loves" (transport and urban economics).  Even more analytical exciting is resource wealth taxation question remains unresolved. Mining economics is my passion! And as far as justice economics is concerned things have got worse with the rampant prisoner amnesties increase in crime. 

My point is that if you are an economist, now is the time to engage in debate. Write articles, attend talks and get thinking! Plenty of issues to think about. And please send a thank you memo to the hapless duo of Chikwanda and Gondwe. We couldn't write without them! 

Every cloud has a silver lining!

Chola Mukanga | Economist
Copyright © Zambian Economist 2014

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