Former Finance Minister Dr Situmbeko Musokotwane says it is regrettable that the Economics Association of Zambia (EAZ) has reduced itself to being mere organizers of economic conferences instead of guiding the government on substantive economic issues.
Dr Musokotwane, who is now UPND chairman for finance and economics and Liuwa member of parliament, stated that the public expected to hear well-reasoned, professional and coherent statements from EAZ on key economic issues and wondered why the economic body was not standing in the same league as other professional associations.
He charged that EAZ was just as responsible as the current government for the country’s economic distress because the association was insincere in the way it rendered advice to the executive.
“When there are important legal issues in the land, the public look forward to statements from the Law Association of Zambia (LAZ) to give direction. Same for other institutions like the Press Association of Zambia (PAZA) for press issues, and the Engineering Institute of Zambia (EIZ), for engineering issues, etc. Sadly, it is that professionalism, the well-reasoned and coherent voice from EAZ on public economic issues, that I miss these days. To the contrary, some statements coming from EAZ are greatly disturbing. This is not to say that there should be no differences in opinions among economists. Those will be there and it is healthy that it is so. However, there are certain things where honest differences should be narrow, if they have to be there at all,” Dr Musokotwane explained.
“[There] are a few examples of positions taken by EAZ that have been troubling and, in my opinion, should not have led to differences in opinions from others. Since 2013 the economic fraternity has been cautioning the Zambian government against the pace at which the country was borrowing. They advised the government to slow down on borrowing, both from the external and the domestic sources. The fraternity giving cautionary advice included local economists. Advice also came from reputable international bodies like the International Monetary Fund, the World Bank and the African Development Bank, and indeed from the world financial media. Shockingly, EAZ was very loud in stating that it did not see anything wrong with the growing debt problem that the other economic groupings were seeing. EAZ told the government that its debt parameters were alright.”
He stated that EAZ was equally responsible for the country’s indebtedness because it was not sincere in rendering advice to government.
“Zambia’s indebtedness has now spiraled out of control, a development which has once again been confirmed by the Board of the IMF last week. Today, the heavy national indebtedness has become Zambia’s biggest national economic problem. The effects of the debt crisis in Zambia are now evident even to the non-economists. As more money has been used for debt service, less has remained in the country for other important uses. In fact, the only reason why the government has not defaulted on debt is because it is suppressing funding for national domestic priorities. Last week, Parliament approved supplementary budget for the year 2019 to the tune of K9.8 billion. Two thirds of this new spending will be utilized for servicing debt. Where will this money come from?” Dr Musokotwane asked.
“Not from new taxes revenues but from cutting expenditure lines across most ministries. The details of what will be cut are not available. But the general story from this supplementary budget therefore is that Ministerial and Provincial budgets are being cut to accommodate debt servicing. In many rural schools, children are failing to attain learning targets because there is no money to hire enough teachers. Government is failing to offer public sector workers sensible salary increments commensurate with the risen cost of living. Employees of some public institutions, including those from universities where ironically many members of EAZ are employed, are having to endure delays in the payment of their salaries…All this is because debt servicing is taking most of the government money, leaving too little for everything else. For all this, EAZ advised the government that the debt parameters were ok. It is reasonable to assume that part of the reason why the government continued to strongly borrow in spite of the contrary advice from many quarters was that it accepted the opinion of EAZ. If this was indeed the case, then EAZ would qualify to be an accomplice in bringing about our debt crisis and all its negative consequences.”
Meanwhile, Dr Musokotwane has questioned EAZ president Lubinda Habazoka’s suggestion that government needed to nationalise the assets at Konkola Copper Mines (KCM) when the country was still enticing investors to invest in the mine.
“Vedanta has had serious challenges endearing itself to its mining communities. Not surprisingly, it has had few, if any, to sympathize with it. But many people rightly worry about the approach the government is using in handling the affair; and whether the approach is robust enough to stand legal challenges from Vedanta. A procedural error in handling the stand-off has the potential to bring about huge costs in compensation, a result that could undo the financial benefits of the intended divorce with the company. Particularly worrying during this episode is a story attributed to the EAZ President. The report says ‘President of the Economics Association of Zambia Lubinda Habaazoka has suggested that Zambia should nationalize some mines without compensation. Dr. Habaazoka contended that nationalization of the country’s mining assets can lead to economic growth’ (Lusaka Times July 22, 2019). I have not seen any denial of the story, so I assume the statement is true,” stated Dr Musokotwane.
“The suggestion to nationalize mines without compensation when you are hosting a conference to attract investors is definitely a big contradiction that will undo one of the objectives of the conference. This is troubling because why bother to attract investors on one hand while threatening to national business assets without compensation on the other?”