A DETAILED COMPARISON BETWEEN THE ECONOMIC ORDER PROPOSED BY BRIAN MUNDUBILE AND THAT IMPLEMENTED BY PRESIDENT HAKAINDE HICHILEMA IN THE PAST 5 YEARS- Sean Tembo

A DETAILED COMPARISON BETWEEN THE ECONOMIC ORDER PROPOSED BY BRIAN MUNDUBILE AND THAT IMPLEMENTED BY PRESIDENT HAKAINDE HICHILEMA IN THE PAST 5 YEARS

By Sean Tembo – Roma Constituency Aspiring Independent MP & Brian Mundubile Presidential Campaign Team Member

1. In the past 5 years, the economic performance of President Hakainde Hichilema’s administration has largely been two-faced, with each face sharply contradicting the other. One face, which I prefer to call the “external face” is the international community’s point of view regarding Zambia’s economic performance. The second face, which I prefer to call the “domestic face” is the country’s economic performance from the point of view of the Zambian people. The majority of the international community believes that President Hakainde Hichilema’s administration has performed well, regarding the economy, in the past 5 years. On the other hand, the majority of Zambians believe he has not performed well. So, which is which? Is President Hakainde Hichilema’s economic performance in the past 5 years, good or bad? Let us delve into this matter in greater detail.

2. When President Hakainde Hichilema was sworn into office on 24th August 2021, his economic agenda was largely premised on three objectives. Firstly, to increase investor confidence following the country’s default on the Euro bond, that happened at the peak of the pandemic outbreak in 2020, largely by putting the country on an IMF program. Secondly, to restructure the country’s foreign debt, so as to avoid future defaults, and thirdly, to reform the country’s tax system so as to attract greater investment, especially in the mining sector, where he targeted to increase copper production to 3 million metric tonnes within 3 years.

3. Regarding his first economic agenda, the President managed to put the country on an IMF program by March 2022, and also proceeded to obtain an IMF bailout loan of $1.7 billion. In the eyes of the international community, this was a major milestone and achievement by President Hakainde Hichilema. However, from the point of view of the Zambian people, the IMF program brought misery in more ways than one. To start with, by putting the country on an IMF program, it meant that any economic policies that the country tried to pursue, first had to be vetted and approved by the IMF. This included the formulation of the National Budget, as well as tax policy. This arrangement created an inherent conflict because the IMF does not have an adequate understanding of the needs of the Zambian people.

Among the first budgetary allocations that the IMF scrapped was the Farmer Input Support Program (FISP). This resulted in subsistence farmers in 2022, having their allocation of fertilizer reduced from 6 bags under the PF administration, to sharing one bag among 5 people, using the so-called “medas”. Other IMF engineered policies include the export of electricity at the expense of the local economy thereby creating prolonged loadshedding, under the lame argument that the country needs to earn more forex. So, the IMF program, while seen as very successful by the international community, was seen as a disaster by the majority of the Zambian people.

4. Regarding President Hakainde Hichilema’s second major economic agenda of debt restructuring, this actually turned out to be a protracted show-down with creditors. When you talk about debt restructuring, in simple terms, this is essentially asking your creditors to modify the terms of the debt and make them less stringent so as to allow you to service the debt in a more favourable way. Therefore, debt restructuring can mean partial write-off of the debt, extending the repayment period, reducing applicable interest rates, writing off accumulated interest or a combination of all of the above. At this point, it is difficult to determine whether this exercise was a success or not, because the Debt Restructuring Agreement which government signed with creditors, remains a top secret document, despite calls by opposition leaders and civil society organizations for the Minister of Finance to publish the said Debt Restructuring Agreement, in the interest of transparency. Since we cannot analyze the actual terms of the debt restructuring, we can only speculate. From my standpoint, I believe that there was significant debt substitution during the restructuring process, whereby foreign debt was replaced with domestic debt. I say so because during this period, there was a sharp unexplained increase in Government domestic borrowing through Treasury Bills and Government bonds, from about K93 billion in 2021 to about K260 billion at present. In other words, it appears that Government borrowed from the local economy in order to pay some foreign creditors, as part of the debt restructuring arrangements.

5. On any day of the week, substituting foreign debt with domestic debt is a terribly bad idea. That is because when Government sharply increases domestic debt, it wipes out most of the liquidity in the economy. Without liquidity, the economic cannot grow, and economic growth is the ultimate economic goal, after everything is said and done. On any day of the week, local financial institutions such as banks, insurance companies, pension funds etcetera, would rather lend to the Government, than lend to the private sector. Therefore, if a Government always has high appetite to borrow, the private sector will always be crowded out and remain stagnant. Without a thriving and prosperous private sector, you can forget about employment creation. There are millions of unemployed Zambians out there. Only the private sector has capacity, if well enabled, to create millions of jobs per year, and therefore end unemployment. The 43,000 jobs that President Hakainde Hichilema claims to have created in the public sector in the past 5 years, and which he often boasts about, while appreciated, is insignificant in the context of reducing unemployment. Therefore, while the President’s second major economic agenda of debt restructuring has been applauded by the international community as successful, it has created hardships on the Zambian people by suffocating the local private sector and consequently hindering employment creation.

6. President Hakainde Hichilema’s third major economic agenda of reforming the country’s tax system, so as to attract greater foreign investment, especially in the mining sector, has seen the country extending tax holidays amounting to $3.2 billion to the mines, in the 2022 National Budget. Other favourable tax reforms for the mines included making withholding tax a deductible expense for income tax purposes. In simple terms, withholding tax was abolished for the mines. Whatever is paid, under the guise of withholding tax, is essentially advance tax on income tax. And we all know that the mines generally do not pay income tax because they perpetually declare tax losses, which are carried forward for decades. That means withholding tax was the main sure tax revenue stream for Government. And it was shut down. As a result of this reduced tax pool, President Hakainde Hichilema and his Government have been struggling to meet basic financial obligations. For example, Government would allocate money to buy maize from farmers, in the National Budget, but when the day to pay farmers comes, they find that they have no money, and have to go and borrow from commercial banks, after delaying farmers for 7 months. The question is: what happened to the allocation in the National Budget? That is why you have seen domestic arrears (money which Government owes to suppliers of goods and services) increase from about K18 billion in 2021, to about K104 billion at present.

For a small economy like ours, when Government owes K104 billion to the private sector, the economy literally comes to a standstill. There is no liquidity. That is why people commonly say “ndalama zavuta, sizioneka”. They’re basically saying there’s no liquidity, and without liquidity, forget about private sector growth. Without private sector growth, forget about employment creation. Without employment creation, forget about alleviating the poverty of the Zambian people. Therefore, in as much as President Hakainde Hichilema’s third major economic agenda of tax reforms, might be seen as a huge success by the international community, it is a major failure here at home. It is worth mentioning that the 3 million metric tonnes copper production target that the President had promised will be achieved in 3 years, after giving the $3.2 billion tax holiday to the mines, has by far not been achieved. In fact, 2026 copper production is projected at less than 700,000 metric tonnes, which is lower than the 821,000 metric tonnes produced in 2021 when the UPND ascended to office.

7. But what is Brian Mundubile saying about the economy? How does he intend to turnaround the economic fortunes of this nation? Is his proposed economic agenda feasible or it is a pie in the sky?

8. According to his manifesto and public pronouncements, Brian Mundubile’s economic turnaround argument can be summarized as two-fold. Firstly, he is saying that the Zambian people will be at the center of his economic agenda, and that he will not pursue any economic goal that has the potential to injure the Zambian people. This is a direct contrast with the economic agenda of President Hakainde Hichilema in the past 5 years, which has pleased and overjoyed the international community, but has injured the majority of the Zambian people here at home, in more ways than one. If Brian Mundubile becomes President next month, and if he, indeed pursues his economic agenda of putting the welfare of the Zambian people first, then our citizens might enjoy some reprieve from the hardships that they have suffered in the past 5 years.

9. The second major take away from Brian Mundubile’s proposed economic agenda is that the domestic private sector will be the key driver of the country’s economic transformation, and that his Government’s main job will be to create a conducive business environment for the private sector to thrive and prosper. If diligently pursued and implemented, Brian Mundubile’s proposed economic agenda has the potential to totally transform the face of this country in a major positive way. Personally, I have never believed that a Government can effectively substitute the role of the private sector, either in terms of employment creation or establishment of profit-seeking public enterprises. I am a firm believer in late President Fredrick Titus Jacob Chiluba’s pronouncement that “it is not the business of Government to be in business”. The role of Government must be to facilitate the smooth running of business in the private sector, by formulating laws and policies that create a conducive business environment. Of course there can be limited Government participation in certain commercial activities in certain strategic industries, but to think that Government can be a major driver of employment creation by employing teachers and nurses, is lacking wisdom.

10. I have no doubt in my mind that only the private sector, if well enabled, has the capacity to employ the millions of unemployed Zambians out there. According to Brian Mundubile, our local private sector will be capacitated with access to affordable finance, favourable tax policies, an elimination of suffocate regulations and onerous levies, rates and license fees, stable electricity and fuel supply and pricing and timely payment for goods and services supplied to Government. Therefore, I fully subscribe to Brian Mundubile’s proposed economic turnaround plan. I think it is tenable. I think it is sound.

I think it has the potential to transform our country into a major economic powerhouse in the next 5 to 10 years. I also believe it is a humane approach to leadership. I mean, of what value are international accolades when your people back at home are being made to suffer due to the same policies that are earning you international accolades? And yet, when election time comes, you are seeking votes, not from the international community where you delivered, but from the local citizens where you failed to deliver. And since you do not have anything tangible that you have delivered to the citizens, from whom you now seek a vote, all you can say is “Salt Sana”.

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SET 19.07.2026