The newly elected administration of Zambia’s Government will soon be unveiling their detailed economic agenda for the country following the inauguration of President Hakainde Hichilema on 24th August 2021.
In the run up to the elections of 12th August, the UPND released their manifesto which served as a guiding principle of how the new Government would steer the country back to economic prosperity.
This article is the first in a series that seeks to decode some of the nuances in the UPND manifesto that intends to inform internal (entrepreneurs & established businesses in Zambia) and external (International stakeholders ranging from prospective investors) stakeholders on the economic agenda moving forward.
To start with, the new Government has acknowledged that the country is in financial and economic destress. Covid and Debt burdens (owed to both east and western countries) have weighed heavily on the country. The proposed solution has been to break down the process of recovery into three (3) stages as they seek to deliver on the country’s aspirations of becoming a real middle-income economy.
According to the manifesto that will serve as the blueprint of the coming policies, “The Government seeks to realise Zambia’s aspiration of becoming a prosperous middle-income Country through three main phases: Recovery and Stabilization; Steady Growth; and Takeoff”.
Recovery
Before any “medicine” can be applied to the chronic patient that needs to be healed, controlling the aliments that that make it difficult to cure the patient must be addressed. “In 2021, we will firmly implement credible policies to lower the fiscal deficit, restore market confidence, bring stability to the economy, enable a speedy recovery in economic growth, and ensure debt management and sustainability”.
Fiscal deficit has been a challenge for the outgoing administration and raised huge concerns from international investors. The IMF, who have been engaging with the country, understands this and hence why, during the discussions with the Ministry of Finance, they prescribed measures that would see to the implementation of “fiscal structure” intended to pave the way for the award of an Extended Credit Facility (The IMF e-wallet) whose intention is to assist in the deficit (in part).
Market confidence rides on perception. For months, the argument of whether Zambia would have peaceful elections was under scrutiny. On 24 August 2021, negative perception was overturn as a “new dawn” was upon the country that many international observers were doubtful of following the successful transition of power.
A stable economy is the bedrock of any society that seeks to advance. Stability comes in the form of predictable policies. President HH has indicated that there will be stability in this area. The proof will be in the pudding as the economic agenda is unveiled and the critical policies that have impacted sectors such as mining come under the microscope of investors.
Key to bringing stability to the economy will depend on two dimensions of the Zambian Economy – Fiscus and Monetary Policy. With the promise of inclusiveness in the country’s economic agenda, the duopoly approach may see the unheard voice of private sector playing a roll. In his inauguration speech, President HH called them out…”ZACCI, Mine Workers Union, Manufacturing Association of Zambia etc” as key stakeholders. This is a signal that private sector WILL have a seat at the table.
A speedy recovery will be walk rather than a sprint to the finish line. That is because there are policies to be developed, operationalized and a culture to be developed.
During first phase, debt management and sustainability have been identified as priorities. A look at the 2022 budget will be the first tangible signal of how the new Government will seek to address the issue of debt going forward. In the coming weeks, the incoming Finance Minister will have many late nights crafting a new hope budget that will seek to commence the road to recovery.
All the aforementioned can not be achieved without investing in the electorate. This is why Human Capital and Strategy deployment will be key to implementation success. “Under a climate of steady growth, we shall deepen investments in human capital, strategic economic sectors and export promotion” according to the new Government’s agenda.