The Economics Association of Zambia (EAZ) says investors will hold off in the short term until there is stability in the country.
Asked if the invocation of Article 31 would have an impact on the economy on ZNBC’s Kwacha Good Morning Zambia programme yesterday, EAZ National Secretary Herryman Moono replied in the affirmative, saying people were skeptical at the moment.
“It certainly will because at this point, people who are skeptical about what might happen moving forward, any investor in the short term will hold off until there is stability in the country. I guess this invocation is aimed at bring back stability in the country so in the interim, expect economic activity to scale back as people hold back and wait and see until the situation is restored,” Moono said.
“I think like I mentioned earlier, enhanced security is important in order to cartel such activities you want to make sure that the country is secured. I think that that is what led to the President to declare what he has declared to ensure that security is enhanced. Firstly, you want to make sure that the people responsible are brought to book and send a message that the government is working that security is restored in the country so enhanced security is important.”
He said the Association regretted the damage to public institutions because such occurrences could have an impact on Foreign Direct Investments.
“We have to understand the importance of security in economic development. Security of a nation provides confidence for economic actors to transact and thereby create wealth and ultimately growth for the country. If I give you an example, the market is the single most important economic institution because it allows for supply to beat demand and trade to take place. The market is an important institution that must be protected and allowed to flourish and therefore create wealth through trade. Once a market is distorted, it distorts the supply side and also distorts the demand side therefore consumers can’t have access to the goods they need from the supply side and that the lives of the people are destroyed,” he said.
“On the overall, security also impacts positively or negatively depending on the nature to FDI. Foreign development expenditure cannot come directly into a country that is insecure because investors will have to question will their property, their investment be secure if the security investment in the country is not controlled then that sends negative signals to the international investors and that will reduce foreign direct investment in any country. So security is important and must be maintained and that is why I think the recent happenings have raised a lot of concern and we have seen, for example, what happened at city market lots of goods were distorted, the lives of people were destroyed.”
Moono said it was important to restore security as it was an important engine for growth.
“City market is mostly where informal activity takes place in the country and we know that Zambia 80 per cent of employment is in the informal sector and so we need to stress that it [the fire] destroyed not only goods, the market value of goods but also the lives of people; employment has been lost as a result and it is important therefore to ensure that security is restored because that is the single most important engine for growth and development,” Moono said.
He said he hoped the Social Protection Bill which was being drafted by government would ensure that informal businesses were insured.
“One of the things that comes out of that is that there is need for some kind of insurance in the future. What we saw is that most of the people who lost their goods were not covered by any form of insurance because they are in the informal sector. I think there is an opportunity where the government is drafting the Social Protection Bill and we are hoping that there will be some insurance products that will target the informal sector so that such things are prevented in the future. Also, there will be need for further investment in final rescue services for example and enhanced security so that such things never happen in the future,” said Moono.
“Obviously one who does that does not love the country…ultimately, the people who are responsible for that should really be made to pay and an example must be set for the future of this country lies with the people and the love they have for the fellow citizens. Destruction of private and public property, for whatever reason, is not the right way of dealing with whatever grievances they may have.”