ZAMBIAN HOME ECONOMICS

A number of articles that appeared recently in the Zambian media point out quite rightly that the present economic challenges Zambia is going through at the moment are both natural and man-made and require intelligent intervention by the political leadership and policy-makers.

This crisis has brought increased social and political tension despite the national prayers and attempts at reconciliation, as ordinary Zambians try to earn a dignified living. The overwhelming human suffering by the majority of the Zambian people needs to be addressed and reversed. The most obvious problem for many is the frightening increase in the cost of living and the majority of the population are failing to cope, as the cost of even basic food and services are becoming beyond their reach.

Many working men and women are losing their jobs as a result of the harsh economic conditions that the country is experiencing. This distressing loss of jobs needs honest and genuine dialogue between government and employers. With the falling exchange rate and weakening of the Kwacha, practical policy interventions are needed to halt or stabilise it.

Another related area of concern is that increased government borrowing will doom future generations to a form debt slavery to the international monetary markets. Borrowing to cover current government expenditure, instead of investing in infrastructure is seen as frivolous and a worry to many.

The constitution has still not been endorsed by the people in the promised referendum, but selective and selected articles are being pushed through the National Assembly in a piece-meal fashion. 

To help see how this plays out using figures, the Central Statistical Office last month reported an increase in inflation of 6.6%. October’s inflation rate is 14.3% , almost doubling in a month from September’s 7.7%. This has been laid fairly and squarely at the door of the depreciating Kwacha. This merely confirmed what many Zambians knew from their own pockets and their experience of rising prices.

The Jesuit Centre for Theological Reflection (JCTR) has published its October Basic Needs Basket for a family of five living in Lusaka which has increased by K302.1 from K3, 957.46 in September to K4, 249.56. 12 out of 15 items of food rose in price; kapenta(dried fresh- water white-bait) rising by a massive K50.

The Lusaka October 2014 BNB  stood at K3, 635.83 and over the year has risen more than K600 (16.8% increase). A cause for concern is that the Lusaka Basic Needs Basket has broken the K4, 000 barrier and on top of this, there are the rolling power cuts of 8 hours every day and the retrenchments and resultant job losses stemming from the fall in productivity, promise to make life even more difficult for many.

 

In light of rising inflation the Bank of Zambia has raised the interest rate from 12.5% t to 15.5%  in an attempt to keep yearly inflation below 10%; adding substantially to the cost of doing business in a period of declining productivity. A way needs to be found to sustain productivity and keep inflation low so that people with loans and mortgages are not too badly hit.

The wisdom of off-loading precious forex reserves to prop up the Kwacha is also being questioned. It is suggested it might be put to better use in investment, to diversify the economy so that our mostly primary products and resources can have value added here by growing our manufacturing industry.