ZAMBIA’S ECONOMY: THE DANGEROUS ILLUSION OF STABILITY AND THE PRICE OF KNEE-JERK GOVERNANCE
By Dr. Cosmas Musumali, General Secretary of the Socialist Party Zambia
When you listen to government officials today, you will hear a lot of self-praise about our economic health. They point proudly to our US$6.1 billion in gross international reserves and celebrate passing the IMF’s rigorous report cards. On paper, they project a booming economic growth rate of 5.6% for 2026 and tell us that annual inflation has stabilized nicely at 6.1%.
But an economy is not lived on paper. It is lived in the markets, on the farms, and in the pockets of ordinary citizens. If you pull back the curtain on these glossy statistics, you see a terrifying reality: Zambia’s economic engine is being run on short-term panic, unplanned spending, and structural contradictions that threaten our future. We are firefighting rather than building, and the pieces of this economic puzzle simply do not add up.
1. The El Niño Crisis: Playing Roulette with Our Food Security
The first sign of reactive management is the government’s treatment of our farmers. The Food Reserve Agency (FRA) owes local maize producers a staggering K14.6 billion. The government is currently boasting about high grain production numbers, but by holding onto this cash, they have effectively paralysed the rural economy.
Farming operates on strict natural timelines. We are at the dawn of an El Niño-predicted cultivation season, where rains are expected to be highly volatile. To survive an El Niño drought, farmers must buy specialised, climate-resilient seeds and fertiliser early to plant the moment the first raindrop hits the soil. By denying farmers their K14.6 billion during the vital planting window, the state has stripped them of input purchasing power. Even if the government clears this debt next month, the optimal planting window will have passed. The consequence? A guaranteed, policy-driven food shortage next year that will crush our current inflation achievements and send mealie-meal prices soaring.
1. The Bloated Bureaucracy: Asking Citizens to Fast While the State Feasts
While the government lectures the public on fiscal discipline and living within our means, its institutional actions tell a completely different story. The recent expansion of the state apparatus to 30 distinct ministries is a severe economic miscalculation
Every time you split a ministry – such as dividing electricity from petroleum, or separating industry from trade – you are not creating efficiency; you are creating expensive red tape. A new ministry means a new minister, new permanent secretaries, new luxury vehicle fleets, new allowances, and massive administrative overhead. This permanently locks Zambia into high, non-productive government spending. It exposes a complete lack of planning: the state is expanding its own luxury consumption while failing to satisfy its basic production debts to the very farmers who feed us.
1. The “Crowding-Out” Trap: Starving Local Business to Pay State Debts
To fix the massive financial hole caused by unpaid farmer debts and growing ministerial costs, the government has rushed to Parliament with a K19.9 billion supplementary budget. The most alarming detail is how they plan to fund it: K18 billion is being raised through new domestic borrowing.
When the government enters local commercial banks to borrow such a huge sum of money, ordinary citizens lose. Banks would much rather lend billions to the state through risk-free treasury bills than lend to a local entrepreneur trying to expand a shop or factory. This creates what economists call the “crowding-out” effect. Local businesses are starved of credit, bank interest rates will spike, and the private sector will contract. The state is systematically suffocating domestic businesses today just to pay for
past planning failures.
1. The IMF Trophy Paradox: Wealth in Washington, Poverty at Home
This brings us to the deepest contradiction of the current administration’s stewardship: the obsession with pleasing the International Monetary Fund (IMF). Our central bank proudly displays high foreign exchange reserves to prove to international lenders that we are stable and ready to service our restructured foreign debts.
But what is the point of keeping billions of dollars locked away in a foreign reserve chest to look good in Washington, while the local real economy is undergoing a massive liquidity drought? High forex reserves are an illusion of wealth if your local productive base – your farmers, builders, and traders – is being driven into bankruptcy by cash shortages.
Conclusion: Zambia Needs a Plan, Not a Fire Extinguisher
When we connect the dots, the picture is undeniable. The expansion of ministries creates immediate fiscal strain. The failure to pay farmers creates an agricultural emergency. The state then responds with an unplanned, massive domestic borrowing spree that chokes local businesses. All the while, they hide behind insulated foreign reserves to maintain the appearance of competence.
This is not economic stewardship; it is knee-jerk governance by a regime out of its depth. You cannot run a nation’s economy by jumping from one self-inflicted emergency to the next. For Zambia to break out of this fragile cycle, our leaders must abandon these reactive, market-driven experiments.
We need a deliberate, long-term plan that puts local production ahead of international approval, ensures credit goes to local businesses, and treats our agricultural sector as a priority, not an afterthought. Zambia’s economic future is far too precious to be left in the hands of managers who only act when the house is already on fire.