Our latest statement argues that to tackle the Kwacha’s fall we need to be proactive not purely reactive:
The Kwacha has taken another beating in the past week. It now stands at almost half its value against the dollar compared to January this year.
Over the course of the past 9 months, and even before then, you have heard the UPND speak on how we need to better manage the economy through a combined focus on creating a stable and predictable environment for business and investment; providing incentives for diversification and value-add industries; and, delivering high quality education and training initiatives to up-skill our workforce and business leaders of the future. We stand by these policy prescriptions and continue to champion them.
Following the latest fall in the Kwacha we are keen to stress three particular points of advice for President Lungu and his team:
1. Be proactive not just reactive
We can’t only be reactive; we have to be proactive in addressing our economic challenges. This means starting with a vision and then detailing the concrete steps government will take to realise it, along with a timeline for implementation, not just reacting to events as and when they happen. It is naïve to continue to throw our hands in the air each time the Kwacha takes a nosedive or there is another credit rating downgrade.
A purely reactive approach leaves us constantly on the back foot and at the mercy of events elsewhere. However, a proactive approach can rally confidence in the short-run, avoiding panic buying, and in the medium to long-term it will reduce the vulnerability of the Kwacha through improving the economic fundamentals.
2. Confident, concerted and decisive action is required
The PF Government has still failed to win the confidence of the markets. This is because they only take action once pushed and even then reluctantly. Their failure to engage in continuous open dialogue with those who can give them great insight if they are humble enough to listen, such as our academics, business leaders and employees, leaves them scrambling for solutions and subject to regular changes of opinion. This is in large part because their energies are elsewhere, namely fundraising and by elections.
In the opposition we are taking the initiative to develop and flesh out our policy proposals through consulting various persons, including business leaders through our on going UPND Business Consultation Survey.
3. Match words with actions
Finally, statements will only have a small impact if not accompanied by supporting actions. Each time government reacts to another fall in the Kwacha with a generic call for calm but does not follow up with decisive action, the impact in reassuring business and consumers alike is lessened. Even the latest statement issued by Amos Chanda which admits the important role of prudent fiscal management does not seem to fit with the activities of the administration which in the last ten days alone has moved to create five new government ministries and undertaken great expense to send a large delegation to the US for activities which also included fundraising for the PF 2016 election campaign.
When Zambia issued its first Eurobond in 2012 it was oversubscribed with a yield rate of 5.375%. Just 3 years later we have issued a bond at a yield rate of 8.97%, making it the most expensive dollar debt issuance for an African government to date. While there are various external factors that have impacted the economic situation we find ourselves in now, the PF Government could not have played our hand any worse.
Despite all this the UPND is not a party of doomsayers. We continue to believe in and champion Zambia’s potential. We know that being honest about the challenges we are facing and confronting them head on is the first step towards unlocking the benefits for all Zambians. As such we hope this advice is accepted in the constructive manner it is intended.
Issued by: UPND National Campaign Centre, Lusaka