WHEN we hear politicians claim that they are working tirelessly to return the country back on a path of economic recovery, we feel they are ignoring the most fundamental cause of the downturn. To us, almost all the problems that are facing SMEs cannot be traced to the high cost of electricity.
Zesco needs to be taken to task so that they can explain to consumers how they are calculating their electricity tariffs. We say this because, nowadays, it’s like the Zesco metre just keeps beeping. You load units in the morning, same day in the evening it starts beeping again. This is what SMEs and consumers in the compounds are experiencing.
Now, we wonder how our politicians hope to restore economic growth without addressing the energy crisis that the country is experiencing. In a situation where you are now under recession and you are hitting negative growth, and the electricity tariff is the major contributing factor, you need to first restore affordability to consumers. That’s a decision you make if you want to stimulate economic activity. It’s common knowledge that economic productivity is dependent on energy. Now, if in this recession, the cost of energy is as high as it is, it goes without saying that it inhibits productivity.
How can you fix the economy without first fixing load shedding? If people only have electricity at around 18:00 hours and when they wake up, load shedding is already in effect, what productivity can you record? That means your economy is shrinking, and even those sectors that are supposed to be stimulating growth like agriculture and the value addition industry cannot operate. If they device back up plans, there can never be economic growth because the cost of production also goes up.
We wonder why the President is shying away from this energy crisis issue. He is the chairman of the Industrial development Corporation. He must know that with these tariffs, there is no industrial development that can happen.
In our view, is there is anyone who needs to be fire, it’s the IDC board chairman. IDC was not created to buy as many companies as it can lay hands on, it was created to revamp loss-making parastatal companies and turn them into profitable ventures. How may existing parastatals can IDC claim to have turned into profitable companies since it was established? Zero, as far as we can count.
Under Lungu’s IDC, the dying companies have continued on their path towards oblivion. Those that were poor at service delivery like Zesco have become even more pathetic now. People can’t afford to buy electricity as they were before IDC took over Zesco. Look at Nitrogen Chemicals! How has IDC improved that plant? What about Times of Zambia? How has IDC helped? The only news you get from State Owned Enterprises, such as Indeni, ZAFFICO, and others is that of intention to sale. They are selling companies which they were created to revamp and buying loss making ones. Where is the logic?
It should worry all of us as citizens that IDC’s impact to the economy is next to zero if not negative. Look at Zambia Airways. How much dollars have they been paying to the foreign CEO who is presiding over an airline that doesn’t even have a launch date anymore? Is that a prudent use of scares resources?
You can’t expect the economy to grow with such leadership, with such high cost of doing business slapped on local entrepreneurs. If you look at other countries who are trying to manage this Covid-10-imposed recession, apart from giving tax incentives to local business during this period, they are lowering and subsidising the cost of energy. There is no way you can expect to recover in such an environment where people are not generating income.
Someone in IDC has to think and ask questions why these chain stores are exiting Zambia. It doesn’t require an economist to explain. The supermarkets have seen that Zambians have now become too broke that they can’t afford to buy products from the malls anymore. So the supermarkets cannot continue maintaining cold rooms at a high cost and importing goods that end up expiring on the shelves. They have to leave.
This is where a sober leadership should move in and start making sound decision for economic recovery. We need brain in government to create a favourable environment for business growth, and this starts with making energy affordable. It’s not just about firing people using your mouth to grow the economy.