The on-going election campaigns are empty with regard to economic content. The level of debate on economic policy is extremely shallow. It is tragic for our country that its political leaders continue to ignore acquisition of basic knowledge about economic theory and policy. It is apparent from the campaign that the average Zambian politician today, whether in government or opposition, is far from undertaking serious efforts towards grasping the ABC of economics and let alone the dynamics of the Zambian economy.
Yet these are the leaders that are determining or will eventually determine the economic survival of our homeland. I do not expect every politician to have a degree in economics; that is if a degree is at all a good measure of one’s knowledge! World over, we have graduate economists that never touch a book after leaving university and overtime degenerate to “common sense levels” of understanding. Even without a degree, but with significant interest and time effort in the subject, a good grasp of the subject is possible. And every serious political actor requires this basic understanding. Without such knowledge, politicians will continue causing irreparable damage to our economy regardless of the class interest they represent.
The economy is the foundation upon which every other sphere of our life is built. Economics as a subject cannot therefore be a preserve for economists. I would argue that every citizen should be well acquitted with the fundamentals of economics – at least in the specific domain of ones livelihood. It is important for the Zambian worker to grasp the movements in inflation, wage rate, salary taxation bands and pension arrangements. Similarly, a peasant farmer has at least to know his production costs, product prices, seasonal variations in demand and inflation.
For the politicians, it is a crime and irresponsible if the critical issues of the Zambian economy are not understood. A basic fact of the Zambian economy is that it has one of the world’s highest levels of income inequality (measured by net Gini coefficient). Inequality in education and health outcomes, in gender, access to credit, investments in physical capital, and information all add up to explain the structural conditions that perpetuate income inequality and mass poverty in our country. This also explains why the economy was able to grow at an average of 6% for a decade without lowering the stubbornly high poverty level of 60.5%. Incidentally, this is one of the highest poverty levels world-over!
Yes, an economy has to grow, but that growth has to be sustainable and must contribute to poverty eradication. This is only possible if economic growth is anchored on the removal of structural constraints that enslave the productive potential of the masses of our people. As things stand today, inequality is holding back the growth potential of the Zambian masses. Our people are poor not due to lack of growth, but rather due to exclusion in the growth process.
Another basic fact is that for over 51 years, we have failed to diversify our external economy. The extractive industry and its periodic, cyclical ups and downs continues to exert undue pressure on the country ability to earn foreign exchange and sustainably manage its external balances. One would therefore expect some significant debates on how to diversify the country’s international trade as well as on the use of fiscal and monetary policy instruments in tackling the current crisis. Resorting to borrowing to finance budget and current account deficits – and worse still to prop up a weakening Kwacha – does not make economic sense. At least not in an economy that is largely dependent on a single export commodity and whose price is uncertain in the short and medium term! It is a huge risk that the PF leadership took. It is a terrible and painful gamble that narrows down Zambia’s future macro-economic policy space.
Similarly, the excessive use of monetary policy under such circumstances is misinformed. Being largely dependent on a primary commodity and amidst a relatively crude financial sector and capital market, monetary policy is a blunt instrument relative to fiscal policy. But what we continue to see is gross impunity in not undertaking the appropriate fiscal measures. The explanation being that these would be unpopular with the masses during an election year!
Actually it is the complete opposite. The masses would applaud the government if the blatant theft of public resources was stopped, excessive international travel curtailed, the workshops costing billions each year were stopped, and some sanity brought into the management of public resources. The truth is that appropriate fiscal policy would have worked against the class interests and political ambitions of the PF leadership – and therefore the heavy reliance on monetary policy. Pure survival instincts therefore defied economic logic and produced policy decisions that will continue to haunt this country for decades to come. The irresponsible policy makers will not be there to bear the consequences of their misinformed policies and greed.
Similarly, election campaign promises being made in the areas of agriculture, tourism, energy, manufacturing and mining are mostly without much economic cohesion and rationale. Our politicians have not done their homework. For the Zambian voters looking forward to insightful economic analyses and contributions from those vying to manage the affairs of this economy, the 2016 election campaigns are going to be very disappointing – to say the least.