REJOINDER TO PROF. EDGAR NG’OMA: STABILISATION WITHOUT PRODUCTION IS THE DANGEROUS ILLUSION
By Dr. Cosmas Musumali
30th October 2026
I thank Prof. Edgar Ng’oma for his response to my paper “The Dangerous Illusion”. He is right that I raise the gap between macro-numbers and household reality. Where we differ is what comes first, and who pays the cost of waiting.
*1. On the K14.6bn FRA debt: A bumper harvest does not excuse non-payment*
Prof. argues Government bought 1.2m tonnes against 600,000 budgeted to support farmers, and that payment will come through the K19.9bn supplementary.
My point was never why the debt was created, but what non-payment does to the rural economy.
A farmer in Monze who delivered in June and is not paid by October cannot buy fertilizer in October. The planting window argument of Nov 15-Dec 20 misses the point: fertilizer must be bought in October when prices are lower, land preparation happens in October, and transport is booked in October. An e-voucher for FISP input without cash from last season’s crop means the farmer plants but cannot eat while waiting, or cannot hire labour.
To say farmers should wait 8-10 weeks because it is shorter than 11 months in 2020 is not reassurance. The question is: if we had $6.1bn in reserves, why could we not pay farmers on time? Reserves are insurance, but insurance must pay when the shock hits the farmer, not only when it hits the Kwacha.
2. On 30 ministries: Focus does not require fragmentation
Prof. gives the example of Energy being split into Electricity and Petroleum, and Trade being split from Industry
I agree with strategic focus. I disagree that focus requires creating a whole new ministry with Permanent Secretary, directors, offices, vehicles, at K100m per year each.
ZESCO debt restructuring and fuel import negotiations stalled in 2023 not because one Minister handled both, but because decision-making was centralized and procurement was opaque. You can create two focused departments under one Ministry with two technocratic Permanent Secretaries and clear KPIs, without 30 ministers.
The example of Dr. Caroline Katotobwe for Trade & Exports proves my point: we need technocrats, not necessarily more ministries. We had technocrats before in a leaner structure. The cost is not just K100m x 5 new ministries = K500m. The real cost is coordination. When a honey exporter in Mwinilunga needs SPS certificate (Agriculture), export permit (Trade), and forex (Finance), he now has to visit three ministries instead of one One-Stop Shop.
Focus is good. Fragmentation is not focus.
*3. On crowding out: Excess liquidity does not mean cheap credit for SMEs*
Prof. argues banks have K28bn excess liquidity and private credit still grew 11.4%, so K18bn domestic borrowing does not crowd out SMEs.
This is textbook but incomplete. Banks hold excess liquidity _because_ they prefer lending to Government at 14% risk-free than to a farmer in Sinda at 28% risky. That IS crowding out, but not by quantity – by quality and price.
When Government takes K18bn domestically in 3 months, it sets the floor price for money. No bank will lend to an SME at below 24% when it can lend to Government at 14% with zero risk and zero collection cost. The SME advertised rate of 24-28% that Prof. mentions _is_ the crowding out – a small shop cannot grow paying 28%.
The supplementary budget may be global norm after climate shocks, but Zambia spent $600m on emergency power imports in 2024 because we did not invest in generation when reserves were being built. That is the illusion: we save dollars while we import power we should generate.
4. On IMF and reserves: Reserves must serve production
Prof. says reserves help keep Kwacha at K26.5 and fertilizer at K750 instead of K450, and unlock $1.2bn budget support for Free Education and CDF.
I agree reserves stabilize. My argument is that K26.5 stability that coexists with FRA debt of K14.6bn, load-shedding, and K18bn domestic borrowing is stability for creditors, not for producers.
Zimbabwe 2019 is an extreme example. A better example is Zambia 2006-2011: we had modest reserves but we paid farmers on time, fertilizer was available, and we grew 6-7%. Today we have record reserves but 70% of our rural households report eating one meal less per day according to recent household surveys. That is not sustainable stabilization.
Reserves are insurance, Prof. Ng’oma is right. But insurance that you never use for the house that is burning (rural economy) is not insurance – it is a trophy.
Conclusion: What is my alternative?
Prof. asks for alternative production targets and funding.
I have always proposed:
1. Pay farmers first – ring-fence K14.6bn from reserves as a revolving agriculture fund, not from supplementary borrowing.
2. Keep a lean 20-ministry structure with empowered technocratic departments and measurable production KPIs, not 30 political ministries.
3. Cap domestic borrowing at inflation target + real growth, and force banks holding excess liquidity to lend 20% to productive sectors at capped rates via Bank of Zambia incentives.
4. Use part of $6.1bn reserves to guarantee 3-year low-interest inputs for 10,000MW domestic generation – that reduces $600m annual power imports permanently.
My formula is: Produce -> Stabilise -> Distribute. Not Stabilise -> Hope to Produce.
I thank Prof. for the debate. This is how we must debate – with data and with the farmer in mind.
Dr. Cosmas Musumali
Lusaka