Choncholinomics: Discussing Zambia’s relationship with China and its implications

Filed under: Business,Special Comments |

By Alexander Nkosi

When you are in a boat and you run out of water, it is not wise to drill a hole at the base of the boat so as to get water. You may temporarily solve the water problem but create a bigger problem.

China has reserves in excess of $3 trillion and its industries are over producing and have reached a point where if demand is not created somewhere, it may lead to a crisis with possible loss of gains recorded over the years. To solve this problem, the Chinese government developed the one belt, one road project which essentially focusses on infrastructural development support to targeted regions. This mainly includes: airports, roads, railway systems and ports. China is like a man who lends you money to buy food, then comes to eat the food with you and expects you to pay back failure to which you lose some of your treasures. We are going to get small grants and interest free loans but the major loans won’t come with such conditions. China will not build a rival in Zambia. They will not give us big loans for agriculture and manufacturing but will fund roads, railway systems and airports which will facilitate the flow of Chinese goods into Zambia and raw materials from Zambia to China. These projects will be undertaken by Chinese firms using materials produced in China. As we open up to Chinese goods, the competition in Zambia will be between Chinese goods and South Africa goods, leaving Zambian firms way behind if not dead. Given this scenario, how are we going to increase exports if our local firms are squeezed out of production? How are we going to pay back the loans?

When Hon Felix Mutati took over as Finance minister he clearly identified huge expenditure on capital projects as the cause of economic challenges we had. He went on to develop the economic recovery initiative. On the contrary, there hasn’t been any change in the pattern of expenditure. We have been seeing more loans going to roads at the expense of other sectors. It is like giving a cholera patient contaminated water to take medicine. Some roads already need repair even before we pay back the loans and since we don’t have money, we have to borrow. Transport infrastructure is very important for development but only if other sectors receive the required level of investment to fully benefit from improved transport. While roads open up markets for farm produce and agro inputs, farmers cannot afford the expensive inputs and the prices for their produce are too low. The policies are clearly inconsistent. My vehicle needs good tyres for me to drive to my village in Lundazi but if it also urgently needs servicing, borrowing money to buy tyres without servicing will not help the situation. China will give you money for transport infrastructure which will facilitate easy transportation of Chinese products to all corners of the country. It will also open up our country for easy exploration of mineral resources by the Chinese. Their money will come to work for them here.

We have to get our priorities right. What if the $2.3b meant for Chipata – Serenje railway project went to mass irrigation dams and agricultural processing industrial yards? What if $400m meant for Mulungushi International Conference Centre (MICC) went to an agro inputs production plant? We are ready to spend $400m on MICC and yet Nitrogen Chemicals of Zambia has only received $4m in over two decades and we spend around $200m importing fertiliser every year?

We can do with less costly but quality projects. What if we spend $600m on dual carriageway and use the other $600m to support value chains across various sectors? Creating supply and demand through value chains development is vital for the growth of SMEs.

What if we conducted a thorough and transparent minerals audit to ensure we get value from our resources other than over taxing citizens? With copper going above $6000 and cobalt going around $80,000 per tonne, we should be taking advantage of these favourable prices to get enough money to invest in economic diversification. You don’t start thinking about diversification when things go bad.

What if we throw away the box and venture into marijuana state farms under ZNS for a start? What if we export mukula in a transparent manner and invest the proceeds in biofuels, reforestation, livestock and aquaculture?

For as long as our wage bill remains high, our problems will persist. What if we close some foreign missions and only remain with regional missions? What if we drop District Commissioners, reassign the qualified and deserving ones and allow council secretaries do the work? What is the need of having so many ministries when civil servants in the provinces and districts go for many months without funding? To improve efficiency? Efficiency in not having much to do due to lack of funding? The civil service needs a thorough clean up.


Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.