CHARLES CHISALA, Lusaka
IN ALMOST every district in Zambia today, there are two common features one is likely to see: men and women in work suits and overalls, and all kinds of road construction equipment.
These are workers and machinery belonging to local and foreign contractors engaged by the government to work on infrastructure development projects.
Besides the new districts, there are the Link Zambia 8000, Lusaka 400 and Pave Zambia 200 road projects, the construction of 650 health posts and district hospitals, over 80 new secondary schools and about 100 maize storage sheds countrywide.
Such projects require colossal amounts of money, and it is the government that has to find it. This is the reason government has consistently explained that it is necessary to borrow money on the global market to supplement domestic revenue.
And so far it has issued three Eurobonds in the sums of US$750 million, US$1 billion and US$1.25 billion since 2012.
A week ago, Secretary to the Treasury Fredson Yamba said the latest Eurobond (US$1.25bn) is meant for financing the ongoing infrastructure development projects in various growth and social sectors of the economy.
“As the nation may be aware, Zambia successfully issued its third Eurobond on July 30, 2015. The bond issue amounted to US$1.25 billion at a coupon rate of 8.97 percent,” Mr Yamba said.
“It is worth noting that despite the strong interest from investors, the government only issued US$1.25 billion from the entire order book of US$2.5 billion.
“This was premised on the need for the government to subscribe only to those resources that were needed to finance the various infrastructure projects that the government is undertaking across the country, in the transport, energy and social sectors.”
The outcome of the latest Cabinet meeting buttresses this policy position and represents the Patriotic Front’s (PF’s) economic focus for the next five years.
Shortly after the meeting on Monday, August 24, 2015, government spokesperson Chishimba Kambwili announced that the government will use the 2016 national budget to complete critical infrastructure development projects currently underway.
Minister of Finance Alexander Chikwanda is expected to announce the 2016 national budget in October this year.
Mr Kambwili was addressing a post-Cabinet meeting press briefing at State House.
“Government is seeking to consolidate the macroeconomic stability, but it will take decisions to fund only critical infrastructure projects in the health, education and social sectors,” he said.
He said the 2016 budget’s emphasis will include roads, bridges, building of universities, schools, clinics, rural health centres and hospitals.
In short, the government has not shifted from using infrastructure to lay a solid foundation for multi-sectoral, inclusive national development.
The opposition and some sections of civil society have been accusing the government of lacking focus, blaming it for the economic challenges the country is experiencing.
But Lusaka-based economist and businessman Peter Sandala says from what came out of that Cabinet meeting, it is clear to see that the PF knows what it is doing and what it is expected to do for the people who put it in power.
“I am not a politician, but I can see that these guys know what they want to do for the people of Zambia. Their focus is on using infrastructure as the spine for poverty reduction and growth-focused national development that does not exclude rural areas,” Mr Sandala said.
Worth noting is the government’s desire to promote increased participation of the private sector in infrastructure development.
Mr Kambwili said Cabinet has approved the implementation of capital projects through public private partnerships (PPPs).
For example, developers will pump their own money into road construction and put up toll gates to recover their investment.
This is important because it will attract private capital into the infrastructure projects.
Cabinet’s position is a reflection of President Lungu’s desire to continue with the projects he inherited from his predecessor, late President Michael Sata, in a flexible manner that gives him latitude for adjustment and continuous innovation.
Despite the incessant barrages of criticism from opposition parties and pockets of the civil society, President Lungu and his government are demonstrating that nothing will distract them from doing what the people of Zambia voted the PF into government for.
The rallying points for the government’s detractors have been the depreciation of the Kwacha and the rationing of electricity by Zesco Limited.
Both are, however, dead horses which do not need any further flogging. Does one really have to be an economist to understand that the turbulence that the Kwacha is experiencing is not peculiar to Zambia?
The world’s second largest economy, China, has recorded the worst plunge in the stock index in 13 years in the last few days despite direct intervention by the government.
On Wednesday, the BBC reported that Chinese shares had closed lower despite a fresh rate cut by the central bank.
“The mainland’s benchmark Shanghai Composite fell 1.27 percent to 2,927.29, after veering in and out of negative territory. It had fallen about 16 percent this week, rocking global markets,” the BBC reported.
“On Tuesday, China’s central bank cut its key lending rate by 0.25 percentage points to 4.6 percent in a bid to calm stock markets after the past days’ turmoil.”
The dramatic losses and volatility in China have shattered investor confidence and led to sharp falls in Asia and the United States (US) in the last days.
European markets were down by about one percent in morning trading on Wednesday, after rallying on Tuesday.
The problems besetting the Chinese economy have also thrown the South African rand in throes.
According to the Business Report, the rand was sent nose-diving to a record low of R14.0682 against the US dollar in early trade on Tuesday, August 25, 2015.
“There are fears that China is going to slow down more than people initially expected. If there is a hard landing in China, there is every reason to be worried because the Chinese will devalue their currency,” the Business Report reported, quoting director and chief economist at Econometrix, Azar Jammine.
It would, therefore, be hypocrisy of the cheapest kind to blame the weakening of the Kwacha on the government.
As for the rationing of electricity (load shedding) by Zesco Limited, the recent heads of state and government summit of the Southern African Development Community (SADC) in Botswana revealed that the crisis has been caused by natural phenomena, and that it has affected the entire region.