DEMOCRATIC UNION PRESIDENT ACKNIM NJOVU HAS DOWNPLAYED ZAMBIA’S REPORTED US$6.7 BILLION INTERNATIONAL RESERVES.
By Favourite K. Chisi
Opposition Democratic Union leader Ackim Njovu has downplayed the significance of Zambia’s reported US$6.7 billion in international reserves, arguing that the figure is too small for a country endowed with vast mineral resources and should not be celebrated as a major economic achievement.
Speaking in response to remarks attributed to President Hakainde Hichilema regarding the country’s foreign reserves, Mr. Njovu says Zambia should be aiming for substantially larger reserve holdings and questioned why national leaders are presenting the current figure as a milestone.
Mr. Njovu has rejected suggestions that only the current administration could safeguard the reserves, arguing that the assets are not physical cash stored in a vault but are held in different forms, including financial instruments and investments.
Mr. Njovu says the debate should not focus on who is capable of protecting the reserves, but rather on whether the country is maximizing the benefits of its mineral resources.
He has argued that international reserves are held in various forms, including financial assets and investments, and can be managed responsibly by any prudent and accountable government.
The opposition leader has maintained that safeguarding national assets is a responsibility that should be shared by all leaders regardless of political affiliation.
He has stated that future administrations would also be capable of managing and preserving the country’s resources through sound economic governance.
Mr. Njovu has further asserted that Zambia’s current reserve levels reflect a lack of ambition in national economic planning.
He is of the view, a country with Zambia’s mineral endowment should be targeting significantly larger reserve holdings running into tens of billions of dollars rather than celebrating what he described as a relatively small amount.
He says leaders should be setting more ambitious economic goals, suggesting that reserve levels of between US$50 billion and US$100 billion would be more consistent with the country’s resource base and long-term development aspirations.
The opposition leader has also raised concerns about the country’s gold holdings, referring to previous figures released by the Bank of Zambia indicating that gold reserves were valued at approximately US$300 million.
He says the figure was low for a nation with substantial gold deposits and suggested it reflected missed opportunities in the management and accumulation of strategic national assets.
Reserves are helpful to get you out of a bind, but what’s more important is your debt to GDP ratio. Zambia’s is at 70%, which is way too high because it means you can’t invest properly in your growth. Economists’ gold standard for reserves is that it should be 4% of GDP. Zambia’s GDP is currently $41.2 billion, so this is an excellent amount for reserves.
The real issue is financing debt, but having reserves is helpful in meeting real time obligations. Zambia, thanks to clowns who borrowed without thinking and stole without conscience, has way too much debt, but it’s clearly reducing that with current sound policies.
This guy, like all the negative idiots out there, knows nothing about economics if he thinks countries sit around with 100s of billions in reserves – they invest.
Thank you Sarah for this clarification. We had actually watched this gentleman on Prime TV news making a fool of himself belittling the USD 6.7 billion reserves. Who does that? Only the other day, he was displaying his qualification, but look at his party, he is struggling with no structures and followers, what with such campaign messages?!