Business

Poverty, debt hindering growth

MINISTRY of General Education Permanent Secretary Felix Phiri (left) handing over textbooks to Chief Sipatunyana of Kalomo during a visit to Siamoono Primary School in Zimba. Looking on is World Bank Africa Group executive director Anne Kabagambe (centre). PICTURE: ANGELA MWANDU

NANCY MWAPE, Lusaka
DESPITE the number of people living in extreme poverty around the world declining in the past 25 years, from 36 percent to 10 percent, the pace of progress is a concern to the World Bank.
In Zambia, Government is not sitting idle in ensuring that poverty is significantly reduced. Currently, those living in abject poverty are at about 54.4 percent.
Notably, Government is making positive strides in this area as enshrined in the seventh national development plan (7NDP), whose key outcomes include economic diversification and job creation, poverty and vulnerability reduction, and reduced developmental inequalities.
Other areas are to improve human development, and enhance governance environment for a diversified and inclusive economy.
In the 7NDP, Government wants to create a diversified and resilient economy for sustained growth and socio-economic transformation driven, among others, by agriculture, tourism, manufacturing and mining.
A fortnight ago, Zambia was in the spotlight as the World Bank’s International Development Association (IDA) opted to hold the 18 high-level mid-term review meeting in Livingstone.
World Bank has been instrumental in ensuring member countries like Zambia move towards a middle-income status by 2030.
In her opening remarks, World Bank Group chief executive officer Kristalina Georgieva was categorical to bring out the Bretton Wood institution’s concerns and that the concentration of poverty is high in sub-Saharan Africa and conflict-affected countries.
“So, how effective is the global community in helping the poorest countries? And how should we step up our efforts to meet new challenges?
“Over the next decade, the war on poverty is going to be won or lost in Africa. The root causes of poverty, however, remain a persistent threat,” Ms Georgieva said.
Undisputedly, IDA is an important arm of the bank that provides the largest single source of development assistance to the world’s 75 poorest countries, and 39 of which are in Africa.
Thus, the three-day board meeting could have not come at an opportune time and place, to not only look at general overview of the continent but also zoom in on the host country, Zambia.
It is its important nature that captured President Edgar Lungu to officially open the event that was attended by senior bank officials, a combination of IDA deputies, representing donor countries and borrower member states.
For Zambia, the World Bank is a huge important global development partner that has played a significant role in its development agenda since the 1950s.
As one of Zambia’s long-term development partners, the global bank has financed 250 projects through concessional IDA credits and grants with a cumulative value of US$4.6 billion over the years.
With such enthusiasm by the World Bank Group, member countries, and Zambia in particular, need to be armed to fight the war of poverty while on the other side, IDA must become more responsive and effective in addressing various challenges.
Climate impacts and natural disasters, ongoing conflict, bad governance and rapid population growth continue hampering efforts of tackling such challenges.
In recent years, for instance, droughts in southern Africa have significantly reduced the electrical output of Zambia’s hydro-power plants, leaving many citizens in the dark.
Power shortages and forced rationing have negatively impacted on the national economy, pushing Government to buy 600 megawatts (MW) of solar photovoltaic power, targeted at increasing electricity generation to 6,000MW by 2030 from the current 2,800MW of installed electricity generation capacity, of which 85 percent is hydro-based.
Acknowledging the efforts that the group is making, Ministry of Finance Permanent Secretary Mukuli Chikuba notes that Zambia’s IDA portfolio is about US$1.2 billion supporting 21 key projects.
Projects supported include irrigation development, scaling solar, climate resilience, improved connectivity, livestock development, girls and women empowerment and regional projects.
“It is important that we get resources under IDA because these are long-dated financing arrangement with 10 years grace period and 30 years repayment.
“It is also good for our debt profile – we want to lean more towards concessional financing because it takes us long to repay,” Mr Chikuba said.
The need to successfully implement IDA-funded projects cannot be over-emphasised, especially that most of the developing countries are increasingly facing the threat of high debt levels and reduced access to cheaper financing.
Zambia being one of the countries facing high debt, President Lungu reaffirms Government’s receptiveness to sound advice and support from co-operating partners, commitment to improving transparency, debt management and reporting.
He implored the World Bank to urgently put in place measures to address the issue of debt by, among others, increasing support to debt management, improving the efficiency in public investment, and enhancing domestic resources mobilisation, as well as addressing illicit financial flows.
“Zambia remains steadfast in ensuring that our debt remains sustainable and does not compromise our sovereignty in any way whatsoever. The country is implementing bold measures to ensure that we achieve debt and fiscal sustainability,” President Lungu said.
Debt situation does not only require urgent and appropriate policy responses, but also affordable financing mechanisms, especially for countries grappling with the issues of migration and refugee support, as well as jobs and economic transformation.
Bringing the issue of migration is not just timely, but a topical one that the world is urgently working on as no country is an island – emerging refugee crisis remains a source of concern for all countries.
For instance, Zambia has recorded a surge in the number of refugees from neighbouring Democratic Republic of Congo because of instability and Bank of Zambia Governor Denny Kalyalya says; “Countries are struggling with their own development challenges and additional people that come in form of refugees is a strain on resources.
“Refugees add to the demand on resources for receiving countries. If there is support, it should be in the form of grants rather than loans.”
The platform gave Zambia an opportunity to offload its various challenges and how best they could be addressed, and also to showcase delegates the successful IDA-funded projects, impact on local communities and the economy at large.
Delegates visited projects in Zimba and Kazungula district, focusing on climate resilience, agriculture and education sectors.
To echo Minister of Finance Margaret Mwanakatwe’s sentiment, the IDA 18 package responds well to calls by the international community for the World Bank to innovate and assist in meeting the objectives of the 2030 agenda – one of the most critical implementation agents.
Through the assessment of the progress made in the first half of IDA 18, it is hoped that more resources would be availed under the IDA 19, not only for Zambia, but also all eligible countries to effectively address hurdles that hinder the fight against poverty.

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