Analysis: PETER SICHINSAMBWE
ZAMBIA’S creditworthiness had deteriorated in recent years because we had lived beyond our means. Shocks such as corruption, electricity shortages, drought and political instability were the biggest causes.
The country’s economy is now showing resilience in the first quarter of 2018 with a positive economic outlook and growth rate posed at five percent and inflation in the range of six to eight percent in 2018. This has been driven by the increased activity in the manufacturing, construction, financial and mining sectors and good governance. The country’s credit rating stands at B with stable outlook.
The government has played a critical role in stabilising this dire situation. More fiscal consolidation initiatives were announced in the 2018 budget to limit fiscal deficit, diversification of the economy, job creation, reducing poverty and vulnerability, reducing development inequalities, enhancing human development and creating conducive governance environment and inclusive economy.
The government is working hard to create a favourable business environment, attract foreign direct investment, strengthening regulations and systems aimed at increasing tax revenues, reduce poverty, job creation, better health care in building a better Zambia and there are signs that fiscal and monetary policies are beginning to bear fruit.
The Political & economic consequences of Impeachment
Initiating the Impeachment moto based on what is considered spurious allegations charges will have severe economic consequences. The government has managed the economy well and perceived to be the champion of progressive, pro-poor fiscal prudence by the international community. The extent to which this impeachment is managed in an untidy manner could impact on the economy and undo all the hard work and making Zambia less creditworthy and more susceptible to a ratings downgrade.
The general elections held in August 2016 were held under a new constitution enacted in January 2016 which brought changes to the electoral process. For the first time, the President was elected by a 50 percent plus one vote system. Mayors were also elected for the first time. Although elections were regarded as peaceful and credible, observers noted imbalanced media coverage and an atmosphere of violence during the 90-day campaign. President Lungu, won 50.4 percent of the vote, securing a narrow victory and his Patriotic Front party attained a 53.6 percent majority in Parliament and the opposition accrued 47.6 percent.
The voting patterns showed strong polarisation, with four of the 10 provinces voting mainly for the opposition party. The opposition identified what was perceived as irregularities in the electoral process. This resulted in the contesting of several seats including an appeal against the constitutional court decision to uphold the election. The opposition’s bid to have the election nullified in the courts failed on a technicality. This impasse spawned residual and latent discontent on the political arena.
The impeachment motion has severe implications to country democracy, security, unity and economic performances of the country.
Firstly, the Kwacha could depreciate against US dollar and other major currencies, placing renewed upward pressure on an inflation profile that was beginning to point to a better 2018. This could in turn reignite the Reserve Bank hiking cycle.
Secondly, the cost of government borrowing could rise even more, placing further pressure on the cost of servicing government debt. That means less money to spend on education, healthcare and infrastructure.
Thirdly, already fragile business and consumer confidence would decline further and hurt consumer and private fixed investment spending along with economic and employment growth prospects.
Creditworthiness is determined by the ability and willingness to pay debt. The decision to impeach the President who is leading a concerted fiscal consolidation effort could hurt the economy and undo all the hard work.
The impeachment motion could severely affect investment, consumption and savings cycle in the country and the net losers will be the Zambian people.
The impeachment motion is not the solution for addressing national issues. Rather, dialogue should be encouraged. We are one people, one nation. If the opposition continue with this route, it will be seen by the electorate as further evidence that the opposition parties do not have the interest of the Zambian people at heart.
President Lungu has pledged to develop the entire country, regardless of voter affiliation and he has delivered on his promises to the Zambian people so far. Government has further plans to review and amend contentious parts of the constitution. The government is open to dialogue with the opposition parties, civil society organisations and international partners. We have at least seen this with the current engagement with the Commonwealth envoy engaging Government and the opposition to dialogue and this should be supported by all Zambians.
My prayer is to the opposition to take heart and wait for 2021 general elections. If the ruling politicians are failing the people, it is their responsibility to step in, in a credible, robust, articulate, clear and coherent manner, to provide alternative policy options on how to deal with the challenges that confront the country.
They should offer their alternative policy and explain to the people how they would do things differently. In other words, they should explain their policy alternatives for education, healthcare, unemployment, poverty, agriculture, and so on.
If the right decisions are made to foster national unity, 2018 could be a year of real progress and steer the country on a path of sustainable development and inclusive economic growth.
All Zambians should be advocates of democracy and national unity.
God bless this great country Zambia and its leadership.
The author economist/ chartered accountant.
Analysis: PETER SICHINSAMBWE