COMMENT
We’ve lost sovereignty of our money!
The challenge of leadership is to “Be strong, but not rude; Be kind, but not weak; Be bold, but not bully; Be thoughtful, but not lazy; Be humble, but not timid; be proud, but not arrogant; Have humour, but without folly”, so said Jim Rohn.
While Amilcar Cabral guided that, “Hide nothing from the masses of our people. Tell no lies. Expose lies whenever they are told. Mask no difficulties, mistakes, failures. Claim no easy victories.”
This is what we expected from the new dawn.
And it is good that even President Hakainde Hichilema understands as he put it that, “Zambians voted for the UPND to deliver change and not lawlessness, and therefore, as party functionaries and especially as citizens that endured pain for several years, we have to do better and deliver development.”
Citizens expected better from the UPND given the menu of hope and high expectations they were fed. Hakainde and his ministers are quick to praise themselves at a slight victory. We all remember how they made noise about getting the IMF Extended Credit Facility and reaching a debt restructuring agreement with the Official Creditor Committee, even before a memorandum was inked! Then we had a turn of events with bondholders, with IMF and OCC putting spanners; and back home the kwacha and inflation are out of control, forcing the Bank of Zambia to intervene by increasing the statutory reserve ratio to 17 per cent and monetary policy rate to 11 per cent.
While Hakainde and his ministers are good at claiming easy victories, they hibernate and mask difficulties, mistakes, failures! When you consider the silence from central government about these strong measures the central bank has introduced, one can’t help but argue that BoZ is protecting the financial form of wealth of Zambia’s tiny rich class and its foreign associates.
But the kwacha cannot be and must not be expected to be strong with the current disastrous national unemployment, extremely low productivity on farms, in mines, construction, factory and other real sites of economic production. The true value of any national currency is also a reflection of the quantity and quality of national employment of economic factors of production! The Zambian kwacha needs, urgently, to have its value measured and determined by levels of employment of our national factors of production, not some abstract IMF, debtor and donor determined monetary and financial
variables! We cannot continue to have a central bank which is divorced from the fundamental question of national employment of the means of production – human and non-human – in our country! This is a recipe for costly long term national chaos and disaster, as we are experiencing, now.
BoZ must measure the value of its policies and actions on the basis of how much employment is triggered and sustained in the country by their work, not the artificially manipulated false value of the kwacha to major foreign currencies. This way, they will quickly discover that it is not the actual mathematical value of the kwacha to other currencies which matters: it is what this value does to production and productivity in Zambia which matters! This of course means a shift by BoZ from protecting the monetary value of the wealth of a tiny section of Zambians and their foreign associates to rooting their work in enhancing and advancing full nation employment and therefore promoting full production and higher productivity of all our national factors of production. This way, in synchronicity with all our economic players, BoZ can formulate and apply truly meaningful and genuinely national measures to protect our money, our kwacha, and its value. This is the essence of national sovereignty over monetary policy!
But currently, BoZ is chasing artificial externally imposed and fixed targets for the value of the kwacha. We have lost sovereignty of our money just like we have artificially and externally fixed inflation targets and other key economic variables including how much raw copper per year we must aim that foreign miners in Zambia export. This is a recipe for long term economic, social and political disaster. We have two countries in one. One tiny but rich which is dominated by
government and government policy, and the other, large and majority, on the periphery of government and government policies, generally viewed as a cost to government and foreign money. And BoZ fixates on the monetary needs of the smaller tiny Zambia. In simple terms, these fellows are working with variables that have very little to do with firming up the kwacha: managing monetary policy to stimulate full employment of the key factors of production in Zambia, including human labour! They are instead tinkering with the effects of internal extremely low employment of our economic factors! They are not focusing on monetary policies and variables which promote higher productivity on farm, in mines, in factory and other sites of production in Zambia. They are instead too sensitive to the value of the kwacha with respect to major foreign currencies! They cannot succeed to “defend” the leachate this way even for Zambians who hold their assets in financial form! It is suicidal in a country with extreme human unemployment levels to fixate on protecting the interests of a tiny minority’s financial wealth by wasting valuable foreign currencies, the way BoZ in a very chaotic and untargeted way is squandering our forex earnings from mining and a few exporters.
More than at any time in our political and economic history as an independent country, BoZ and all state institutions tasked to protect the value of our money need to target human employment, higher labour absorbing productivity on farms, in mines and factories, for both local consumption and exports, rather than their current pathological fixation on protecting the leachate from its inevitable free fall with respect to major foreign currencies.- The Mast