The Centre for Trade Policy and Development (CTPD) has observed that the decision by government to reintroduce Zambia Airways is a wrong move which will pressurise the country’s fiscal position.
CTPD executive director Isaac Mwaipopo told journalists at a media briefing yesterday that the decision to revamp the national airline was a good idea but that the timing was wrong because of the financial challenges that the country was currently facing.
And Mwaipopo said investing in a national airline was only likely to further lead to more debt accumulation and increase the public wage bill, resulting into lesser funds for poverty reduction initiatives in the country.
“Being an institution that is interested in trade and investment, CTPD wishes to state that the decision by government to reintroduce Zambia Airways is a wrong move. Given the current economic outlook of the country and based on the announcement made by the Minister of Transport and Communications Honourable Brain Mushimba in September, 2017 to revamp the national airline, we are of the view that while the idea is good the timing is wrong and will put pressure on Zambia’s fiscal position,” he said.
“While we appreciate the potential benefits that government has cited such as the gains in the tourism industry, potential increase in non traditional exports and employment creation, there is risk that the potential costs of owning an airline may outweigh the benefits especially at this time when the country is already grappling with so may problems.”
Mwaipopo further said investing in a national airline was against the already high and escalating debt levels.
“Going by the announcement made by the Honourable minister, the Zambian government will own majority of shares at 55 per cent, with this ownership structure, the government is expected to continuously channel a significant revenue towards the project. The investment is against the backdrop of the high escalating debt levels which is already more than half of our GDP. But beside that, there is also high fiscal debt deficits and we also have high poverty levels in this country, challenges in the agriculture and health sector, to mention but a few. The government has highly inflated wage bill [according to] an analysis conducted by the World Bank. The investment is only likely to further lead to more debt accumulation and increase in the public wage bill leading to lesser funds for poverty reduction initiatives in the country,” he said.
And Mwaipopo regretted that the national airline might just be another one of the many loss making parastatals that the country had.
“While CTPD thinks that it is important for government to invest in projects with potentially high economic returns and the pressure the country has to repay its accumulated debt stock, this particular investment risks being another loss making parastatal. A simple analysis of the already existing state owned enterprises reveals that most of them are not doing so well. For instance we have the likes of ZAMTEL which only about four years ago was renationalised, and Zesco. Others include state owned media houses like ZNBC which has now gone into partnership with institutions like Topstar, we also have institutions like Times of Zambia and Zambia Daily mail where there has been reports of workers going for months without pay,” Mwaipopo observed.
“We also have institutions like Zambia Railways that have not performed well even after the company received massive capital injection from the recently acquired Euro bonds, we are therefore of the view that government should prioritize the finalization of infrastructure projects which they had already commissioned. Government should also pay attention to challenges facing the social sector of our economy as well as position themselves to meet the challenges that may emanate from foreseeable crop failure due to the poor rainfall patterns.”
Mwaipopo added that: “CTPD has further observed that there are a number of challenges in key economic sectors which need urgent attention, for instance, the University of Zambia and the Copperbelt University which have continued to grapple with a number of challenges and we’ve seen a number of students actually talking to the streets to demand to be paid money for things like project fees, which is not supposed to be the case. If you go to the health sector, we are all aware that the cholera crisis has had a huge bearing on government expenditure, of which pending total costs spent towards dealing with the outbreak of cholera are still not known.”