FORMER Bank of Zambia (BOZ) governor Dr Caleb Fundanga says government’s decision to purchase shares in Marcopolo Tiles Company Limited cannot be justified and it’s quite worrisome.
And Dr Fundanga says it is shocking that some politicians are making huge donations on a daily basis when the country is defaulting on debt.
Meanwhile, Dr Fundanga says government has created more debt by purchasing Mopani Copper Mines.
In an interview, Dr Fundanga said government’s role was to grow the economy, not to buy things.
“…Another worrying thing is that we seem to be going back to the parastatals. Some of the things which are happening are quite intriguing. For instance, the private sector, did this palm project in Mpika at the time we hailed it as a good initiative, but we were shocked that government through the IDC wanted to buy it. So in a similar vein, we have seen spending of money in parastatal sectors which cannot be justified in an economy under serious difficulties like we are. Sometimes we hear the government is buying certain investments from the private sector. A clear case recently was the issue of Marcopolo. You ask, if the private sector made a very good investment, why should the government want to buy it from the private sector? Why can’t you find another investment since we don’t have money in this country?,” Dr Fundanga asked.
“But you are just recycling the limited money in the entities which are already existing. If that money had gone into another new economic investment, perhaps we will create more jobs. You cannot justify that this is profitable. Government’s role is to grow the economy, not to buy things. Are we fighting against the private sector? That is worrisome. I must say that out of the mischief now, it is coming from some financial institutions in the country. Perhaps if the government doesn’t want to do something, they go to the NAPSAs of this world. And the NAPSAs just go and spend because they are not controlled. So those are worrisome.”
He tipped government on how to earn more taxes rather than buying dubious companies.
“I have been noticing some of the things in the gold sector where we have gold but now when some private individuals take steps, the next move is to have the public sector to buy them out. The role of the government should be to regulate. If they can regulate properly, the private sector is quite capable of mining the gold. And so we can earn taxes which can go into more inceptive regulations rather than going to buy some companies which are evidently dubious,” he said.
And Dr Fundanga wondered where some politicians were getting money to make huge donations when the country was broke.
“I know one of the biggest problems are the coming elections. Perhaps a successful debt workout might be difficult because expenditure during elections is going to be high in order to facilitate for the elections. That is understandable but ordinarily, that should have been budgeted for in the current running budget. But what is particularly very worrisome is the behaviour of politicians where they are giving, almost everyday, we are reading that someone was donating K300,000, somebody was donating desks and these are being done by politicians already in office and these have not yet been re-elected and the question that everybody is asking is where is this coming from this country which is even failing to procure certain things for the health sector?” Dr Fundanga asked.
“Obviously, those are the dynamics of elections, people want to get elected but where they are getting the money from, people need to know. I don’t even know whether moving which such quantities of money is the right thing to do. But we are saying this country doesn’t have money. So many things have been donated it is unbelievable. This is not to mention the fact that people will be bringing in vehicles for facilitations, already thousands of bicycles have been donated, they will be needing chitenges, t-shirts. This money if put to proper use will do a lot of good for the country. In such instances, there will be rushed implementation of certain projects which have not been completed in time. I can bet you after the elections probably that rushed plan will come to an end and again the project will standstill.”
He said there might not be a favourable outcome from talks with the IMF if government was seen to be doing things which were not favourably looked at.
“By now, we should have had a plan for dealing with the debt but instead, we are defaulting and we are creating more indebtedness and we wanted the International Monetary Fund to come to our rescue. We haven’t heard anything for quite some time. Sometimes you just hear rumours that they are talking but when you are talking and doing certain things which may not be looked at favourably by the people you are negotiating with, it may not lead to a very successful conclusion,” he said.
Meanwhile, Dr Fundanga said the purchase of Mopani had created more debt.
“The purchasing of the mine is creating more debt and yet our outstanding debt is so high. And we have defaulted I think twice now on interest payments and this is serious because it obviously means that a lot of institutions are downgrading Zambia. And when a country is downgraded, there are consequences. For instance, if some entities want to go and borrow, they will have to go and borrow at higher interest rates. So it is just making the cost of running business much higher. The Macroeconomic performance has been poor. Many of the country’s production has gone mainly because the inflation has gone up. We are doing certain things we should not be doing. If you cannot put the macroeconomy in a good position, our situation will continue to worsen,” Dr Fundanga said.
“Let us look at the situation now, the copper prices are high which would mean that perhaps if we were doing certain things right, we probably could have been able to benefit more but unfortunately in Zambia right now, there have been a lot of problems in the copper industry. KCM has been taken over. We don’t know maybe they could have been doing better if we didn’t have problems at KCM. If you look at Mopani, we have bought it but we have borrowed money from the same Glencore or the payments will be paid at debt arrangement. Now, these are issues coming from the key sector, how much have we suffered from the fact that we have had these problems in the mining industry? In my view, when you are in a crisis and then you have problems with key economic sectors, that smells trouble.”
He urged people running for higher office to state their economic plans.
“Whoever is contesting, they need to tell us their economic plans. We have had a lot of disappointments in the agriculture sector. We are producing a lot more maize. But there are a lot of other things we should be doing for which the weather is favourable but we are not doing it. Sometimes certain positive things are coming out like production of rice but they have been done on a smaller scale. We have textiles, Zambia should be producing a lot of cotton now. Eastern Province was a major cotton producer and I don’t know if it still is. There was even a plan to grow cotton under irrigation but these are projects which have stalled,” he said.
Meanwhile, Dr Fundanga observed that there was a lack of coordination among SADC countries in fight against the COVID-19 pandemic.
“We have problems, there is little coordination. If you saw for instance what was happening during the festive period, people crossing the borders. Some countries closed their borders, others are open and these kind of confusion. We also had a situation where some countries failed to recognize that there is COVID. So this certainly has not been a uniform approach. Obviously, something more organized could have happened on the borders but this did not happen,” said Dr Fundanga.