TOUGH ECONOMIC DECISIONS
By Alexander Nkosi
We are caught between a rock and a hard place. We are in a difficult situation where we have to choose between two equally unpleasant courses of action. To turn the economy around and deliver people-focused outcomes (change people’s lives), we need to support locals to produce more, profitably. Some of the biggest challenges they face include – high cost of production and high cost of borrowing. Not long ago, BOZ increased policy rate and decided to maintain it today. A good move in keeping inflation low but bad in the sense that lending rates will remain high.
Fuel and electricity are key inputs in production. They increase both your production and consumption budgets. They increase both the cost of production and cost of living. Bad as it is, our debt is too high for us to borrow heavily to subsidise fuel. ZESCO owes USD 3.5 billion (IPPs are owed USD 1.1 billion), this has to be paid back and it also needs to invest in improvements. This money should come from somewhere. This is why fees are being increased and most likely tariffs will also be adjusted upwards.
Based on this, we need:
1. An updated economic recovery plan. We need to accelerate dialogue on this with key economic players and think tanks.
2. Detailed sectoral plans showing clear road maps on how each sector intends to navigate these challenges and contribute to economic growth and development.
3. An analysis of the projected impact of high cost of fuel and electricity on production.
4. An analysis of the impact of high lending rates on private sector growth and job creation. How would inflation affect them if not controlled?
5. Analysis of the impact of the dry spell and floods on 2022 budget.
6. A robust communication strategy to ensure people are informed on key decisions being made well in advance.
In this delicate situation, we need all government departments to be at their best. I would encourage the President to ring changes if he is not satisfied with the performance of some individuals and organs of government, he has the full support of Zambians.
We all need to work together and work very hard!
Thank you.