Haabazoka Calls On Govt To Act Fast On Failing Economy
Economics Association of Zambia president Dr Lubinda Haabazoka has advised the government and the Bank of Zambia to quickly act appropriately to arrest the current economy challenges in the country
by employing workable tactics.
Dr Haabazoka, who has been quiet for some time, posted on his Facebook page that the central bank and Ministry of Finance should not use old tactics to react to worsening macroeconomic fundamentals like exchange
rates or inflation.
“Surely how can we increase overnight lending rates as a solution to inflation? In 2019? If you want workable solutions that will boost the economy, go to countries that have gone through similar problems but have managed to come out. Zambia is going through textbook problems and the solutions are in the same textbook at the back of the book. But you need to read the correct textbook. I remember at the just ended Russia Africa Summit,” stated Dr Haabazoka who started his statement by explaining that his silence on economic problems is because he wants to concentrate on wealth creation. “The President of Congo DR tells Putin that in Congo, mine investors don’t pay tax and that all monies are externalized. Putin immediately answers to say that Russia had the same problems in the 90s and now they are goneafter being solved. In fact, solving those problems contributed to
Russia’s repayment of all IMF, World Bank, Paris Club and other debtsyears before those debts were due. After that, Russia created a stabilization fund that could be surpassed by a few in the world. I expected the Congolese President to make a follow up question on how Russia did that? Alas, it never came. I expected those that monitor
foreign news in Zambia for Zambia’s economic development to be interested and follow up but that never happened.”
He stated that it would unwise for Zambia to use the same tactics since independence to deal with the economy.
“The inflation we have now is exchange rate driven because we don’t have enough forex to meet our forex demands. So the solution is not increasing overnight lending. The solution is getting forex and first of all from the mines! I know majority of economists in Zambia were taught by the same lecturers but can we please look at experiences
from elsewhere? The IMF is a very good partner but can be very useful without getting their money… (if you know what I mean and please don’t argue with me because I warned about Eurobonds at the time even the IMF commended us for issuing them!),” Dr Haabazoka stated.
“One mine has invested over $2bn in a mine in Panama. Imagine if that money passed through BOZ. Some of these problems can be sorted out without causing conflicts. Kabwalala ngabamwikata pakuboko, alanakilila! That’s the intelligent approach we should take. Ba FIC show relevance by chasing after the big boys and not our small
accounts in Natsave. Your friends are trailing money world wide but you are busy bringing down your brothers and sisters for receiving unexplained $300 yet you are quiet on the Panama mine. Typical African
PhD syndrome! Arrest a thief who steals a loaf of bread but glorify a person who runs away from $1bn for example! I am still in a state of shock that overnight interest rate increase can be a monetary policy
solution.”
He recalled that in September, he warned about the effect of power importation on forex rates.
“Imagine if we started importing in September, the kwacha would have been at K20 per dollar now. I was insulted left, right and center by intelligent people’ yet yesterday, my comrade Chibamba Kanyama told us through Radio Phoenix that the kwacha has lost value in the recent past due to importation of power,” Dr Haabazoka stated.
“Economics is not always about econometrics which the BOZ put much emphasis on. Fundamental analysis has weaknesses in an economy where behavior is increasingly influencing economic development. When
quantitative economics was a champion, big companies had assets and products that determined their values. Today, companies like dotcom companies can only own one building but be worth over $50bn. It’s all about perceptions. Behavioral finance at its best now. Anyway, Behavioral Finance only gained prominence in the early 2000s and it’s
yet to be offered by major universities in Zambia. Maybe that’s where the problem is? Sorry colleagues but sometimes we need to shake you up because the only thing us people from the outside can do is to talk.
But one day we can reach a point where we shall just be looking and you shall be asking why we are quiet…”