Happy New Year - 2013

Kwacha Economics wishes you all a Happy New Year. May we move together in the New Year and hopefully be better than 2012.

::: HAPPY NEW YEAR - 2013 :::

Customs Duty Suspension - Sports Euipment and Articles

I have always wondered if people really pay attention to changes to the law especially after the budget is presented. I know everyone has figures of how much they will pay in terms of Pay As You Earn (PAYE), but do we take time to look at other issues as we may have benefits that we miss out. Do tourism enterprises for example know about the suspension on articles for their business? 

I will be doing some highlighting of some important legal changes so that you can benefit from these changes. Let me start with this one.

S.I. No. 94 of 2012 was published on Friday 28th December. This particular S.I. suspends customs duty on sports equipment and articles used in sports. I thought I should look at this one to promote interest of "health" nation. The suspension is from 1st January, 2013 to 31st December, 2016. That's three (3) years of suspension.

This makes it cheaper as when you import these articles, you wont pay customs duty (but will pay for VAT or Excise duty if its applicable). So take time and look for the S.I. and invest in good physical exercise equipment. It is unfortunately that this country has retailers who benefit and will maintain the prices while not paying the customs duty. But if you are informed you can benefit from this little exercise.

New Kwacha

So all the talk about the new Kwacha has slowly died with everyone wondering how it will look, feel and change our economy.

There was that talk about ZMK 100.00 looking exactly like ZMW 100.00 (or if our simplified language K100.00 looking like KR 100.00). The alarm arising because one is useless and the other is the most power note ever!

Well, sadly for con men and women, it will be hard to pass one for the other unless one has not seen them both. Which could be a worry.

Kwacha economics is probably the only blog in love with our currency and should live up to expectations by making sure you see these before you can touch them. 

So here is to the new Kwacha.... a new dawn in Zambian economics. Proudly brought to you by Kwacha Economics:

This is an opportunity to start afresh with fresh notes new political regime (hopefully without primitive cadre mentality).

See the colours adding a value to our money? Thats what is needed to this economy. New notes, fresh ideas and a zeal to progress and be important economically.

I have deliberately removed the serial numbers and made sure all have bands to make sure these are used for the simple purpose of educating each other and not funny ideas.

You will notice that the KR 100.00 is different from the one people are used to and have been piling up for funny activities. Tough luck if we spread the word about the notes

Last Day To Withdraw Money (30th December, 2012)

Today is the last day that ATMs will be working. So if you have no cash, you can only get it on New Year's day.

Bank Holiday on the 31st of December, 2012. No banks or financial institution (including ATMs) will be operating. No ATMs, only cash will be used mailo.

Bank Holiday Pt. 2: Banks, ATMs will be closed

Bank Holiday

December 31st, 2012 has been declared a Bank Holiday. I have heard a lot of people missing this point and some think it is just an intention.

The holiday was declared and a statutory instrument issued to that effect. Moreover, the Re-domination of Currency Bill, was passed in Parliament and is now an Act. So the day is a holiday.

What to Expect on 31st December, 2012

All banks, ATMs and Other financial institutions will remain closed to the public. There will be of course their staff working as the day was declared a holiday for the transition to the new Kwacha (the Re-based Kwacha). All software need to be installed and launched will be done on that day and any short-comings rectified before 1st January, 2013.

So you wont use the ATMs. Of course strategic places like International Airports, Border points will have working ATMs and some banks, but the rest of the country will not. So if you will need money for the usual New Year Eve running around, make sure you have it in cash. For emergencies, run to the Airport! All ATMs will be loaded with the new notes (ZMW and not ZMK) in readiness for 1st January, 2013.

I'm not sure about swiping. You may have to find out on that issue. 

The good news at the moment is that most banks have already started implementing the new Kwacha (ZMW). What is interesting is that some banks (wont mention them) did not plan well on the issue and did not implement critical issues related to the change. Most businesses also did not know that this would actually cost them money to upgrade not only infrastructure but software as well. So the new Kwacha is here, but are we ready to start working with it just now? Coins, new kwacha scent, etc

Do counters have places to place the coins? Do you have machines to count the new notes? Do we have places to get vending machines from? 

Welcome come the new year with the new Kwacha! Kwachaecon will be there for the first notes and will upload as soon as it comes in.

Happy kwacha economy.

Robbed Twice

Zambia's wealth was stolen during the colonial times. Unfortunately, thats not the only time. We have been robbed once before, and are being robbed right now!

Robbed Once

The colocinal masters came with one agenda - get all the minerals they can and any way that they can. They succeeded and got all the mineral wealth when they ruled over Zambia (then Northern Rhodesia). The result has been a totally poor country and the wealth developed Zimbabwe where a small portion was used by the settlers to develop the land they lived in.

But to all that can see what this country has got, will realize that at the time, it was impossible to fight the big guns with bow and arrows. The red Indians tried it and were almost wiped out of a land now called United States of America. We had to fight differently and in 1964, we won a great battle and got our independence. 

We must always remember what we got from this fight. They stole every piece of mineral they saw and gave nothing in return. The greed with which they came with was exhibited in all that they did and could only "leave" when there was nothing else to do. The truth is they never left.

I sometimes ask God why my people had to suffer all this while and yet we had the wealth that every one thinks and dreams about. I subscribed to the Paradox of Plenty to try and explain the inequality that has resulted from Zambia's copper and mineral wealth, it does not comfort me.

Our own people sold the mineral wealth in many forms. The stories of the Litunga and BRE selling all the mineral wealth and got paid for every extraction is a story Zambians should be familiar with. How it happens and the noise that results every year is because the people who benefited from that wealth want a bigger chunk still. None of the other paramount chiefs ever got what the Litunga got for the minerals in form of "salary" or income at one point reaching 8000 pounds a month. That was a direct benefit of stolen wealth by the way. 

They actually have used this as a point of pride here:

The concession entitled Lewanika to receive the payment of £200 annually and 4% on all minerals and precious stones mined in his territory for a period of twenty years.

I don't care if that happened with the agreement of the people. If it just included their own area would be fine to him as king. But they later wanted to increase the land in order to benefit from the same wealth that lay in other people's areas. Just like the greed of colonialists, they also learnt to steal what is not theirs. This is discussed in length here.

The point I want to bring out here is: every time we talk about colonialists robbing our country's wealth and mineral resources we should be honest enough and admit that our very own people aid and guide them on how to do it. In the colonial times, it was chiefs and people around them. They would sign anything as long as it brought something for them in the pocket the deal was done!

Sadly thats the truth.

Second Robbing

We have to know what kind of problems we are facing in the world as Zambia. We still have abundant wealth. We are very rich, sadly we are very very poor.

We have moved to midlle income country - on the few items that have been accounted for. Not accounted for in this country, but whenever some one got wind of what was collected from Zambia. So the wealth and result of that income is economic fiction to you and I. What is sad, is that people who get this wealth will actually declare it somewhere else proudly and share it amongst themselves with pride. Because they declare it there, the taxes are low. We can't see it here and we try to get a little from the stealing by raising taxes, they justify the none declaring of such undertakings as a result of high taxes. Surely there must be honour even among thieves!

Every Zambia in the colonial era knew where and what London was. People even now line up to visit the place. Nowadays, every Zambia should know about Ruschlikon, is a village in Switzerland. Because what this place receives, would change the very face of every Zambia. More so, the pocket of all Zambians. Our taxes would be low if only we got a share of what this village receives. My inspiration is here.

This is interesting as the robbing of our country's wealth is happening at the very time that I am writing this. Again this is aided by our people. Unlike Lewanika, the aiding now is from someone people voted for. I can say it as the London judgement can not be erased. Chiluba facilitated this in many ways. They actually lied about the status of the mines in order to sell it at a lose. But even that, the actual "dirt" from the mines was worth more than the mine was sold for. Least we forget:

"The judge concluded that though Mr. Chiluba had a salary of only about $10,000 a year during his decade in office, he spent more than $500,000 in a single shop, Boutique Basile, in Geneva. The shop owner, Antonio Basile, testified in 2008 that payment for the clothes sometimes arrived in suitcases stuffed with cash.

The goods are now stored in battered metal trunks by Zambia's anticorruption task force. There are piles of designer suits, monogrammed dress shirts and elegant ties, silk pajamas and dressing gowns. But most remarkable are the more than 100 pairs of size 6 shoes, many affixed with Mr. Chiluba's initials in brass. He is just a little over five feet tall, and each pair has heels close to two inches high." Its all here.

Mwanawasa tried to get something out, but died too soon. Conspiracies go here, but I never subscribed to any. Then Rupiah came on the scene and everything died a natural death. Thank God the situation was arrested and he only ruled for 3 years some say. But what happened in those 3 years?

Again, aided by our own people I should repeat.

Case for Nationalisation?

It is always strange to find an economist who subscribes to nationalization. I actually do in this case. We have to realize that mines and mienarl wealth that they bring at such levels call for serious re-thinking. We had the mines in the hands of Government, and now they are in the hands of the private sector. The two bring out one thing I would like all of us to know and think about. The returns from the mines were actually greater when the copper prices were down that when the prices are currently high. If a $10 million return came when the copper prices are low and only $2 million when they are high, it only makes sense as to get them back. After all, at a high copper price, $360 million is paid as taxes in some village in Europe. Thats one fact you have to agree with. But take that with a sharp head, not like the political rhetoric of Julius Malema. You have to get back on a footing that works better for every Zambian.

Regardless of how we do it, there is clear cheating and business conducted with parent company yet a claim of "at arm's length" in Glencore. Did you actually see how our own person laboured to defend a country he works for? I felt ashamed. He was caught unaware.

So if this was to continue, we will get nothing until the mines are declared unfit to mine anything from them. We nationalize, we get enough resources to plough back into the economy and we may actually get more benefits from this resource. America nationalized when the going was tough. We should not adopt economic policies that will not bring anything to the country when we all know how it should be done.

No economics is better than the economics that brings food on the table for all us and not the thieves. 

I believe there is a legitimate call for nationalization in the wake of transfer pricing, hedging and all manner of bad economics at play. Whilst doing that, we should cancel double taxation agreements that favour the west and disadvantage us. Actually, I think double taxation agreements which led to taxes being paid anywhere else apart from Zambia should not only be illegal but never signed and those signed canceled. We should make it a standing order that any shares exchanged on a company in Zambia should be taxed here at the rate applicable. Failure to pay those taxes should automatically trigger Government sanctions.

Moreover, we should setup mechanisms that will monitor and follow all transactions involving Zambia's mineral or other produce.

But nationalization is and will always be the cheaper option as long as we put in place a structure that will run the national resource company prudently and as a full time business.

Glencore

When many Zambians watch this documentary, here, they blood boils with hate. We end up hating the people benefiting from our wealth and the money that is generating. Not that we want to be selfish, but we want our fair share of the profits. 

Glencore has done a lot of harm. Unfortunately like many sad stories out of Africa. Our very own people are involved and at the middle of all this. Look at the man defending Glencore when his own children or grand children will have to ask him twice to what his contribution to this country was when he worked for Glencore.

But one thing we must see from Glencore, is how they used what we called a president to get what they wanted. In return he got hundreds of shoes, jackets, suits and shoes. African fools we end up being!

I have no favour for names like Glencore. I hope to live long enough to see fairness applied on that company. And the link to Bill Clinton makes sad reading that he even said there was no crime committed.

Godfrey Chitalu Vs Lionel Messi

This really looks like an issue for football fans. But think about it. Messi holds the European record now. Chitalu holds the world and probably there is some one who gets closer.

The only difference is the fact that the European media would blow anything that links to them and ignore the other records around the world. Now we have the proof and have provided the evidence. The issue now, is... will they be bold and set the record or ignore it as they always do on matters from non-European countries. We, as Zambia, are not claiming recognition on this matter. We have been looking at this issue long before Messi came on the scene. Records have been collected to prove that fact. We have the name in our heads ringing "ucar" as he was popularly know. He is still regarded as the best player to ever grace the CECAFA tournament and still, that number of goals (yes 107 in one calendar year) has been mentioned. I even remembered an article on the issue in 2010 found here. That's a Uganda site which had the record plastered. Now we have the details we always wanted. Lucky enough they came at they came at the time the world wanted to honour someone else.

Just get that record and let the person who did wonders in Africa be honoured for it.

This is one thing that Zambians should always look at. We work hard, we produce results, no matter how big the obstacle we fight, the great works will be rewarded. We have our great not standing among the greats not because his achievements are easily beaten, but because we have no huge global media to scream on our behalf, 88 clearly looks greater than 107!!! The story has always been the same. Remember at the African Cup of Nations when no one (but a Zambian believed in us? We had to organise ourselves as Zambians to get rid of one member of Super Sport panel who clearly disrespected and insulted us. Only after the win did they see what we wanted to do and delivered that trophy to Lusaka

Now FIFA says it wont back anyone because they don't keep records! Ok we have our records and so does every country that has a claim to how many goals were scored, so lets start the counting my verifying these and see how it goes, maybe when one playing in Europe comes past 107 we will have FIFA backing of the records?

At Kwacha Economics, we feel proud to be Zambia and always will say what "ucar" did should make us know we can achieve the greatness if we put our mind to it. I hope one day, we will have a Kwacha economics story like Godfrey Chitalu's record on an economic achievement from Zambia. This is a local great and should be filed among the local greats.

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Our records have been buried in the achieves for a long time. But every Zambian knew of this record. People are asking why it has taken time and we have only come up with the records now after Messi "broke" the record. Seriously who knew of such a record in Zambia? We were just shocked to hear that Messi is about to break a record of most goals scored in a calendar year! The debate of getting Chitalu's goals recorded and presented to the world has been on going in Zambia since the 90s. The world has ignored this. But we have been talking about this for years. It is even on this blog in 2010! So we have not only made that claim, we have proved it.

So sad that a simple issue of verifying the numbers and setting the record straight has become a popularity contest. All because this is Africa and our records matter little in the world! I don't think so. FIFA should have come up and set the record straight. The western media is actually taking it the wrong way. Imagine if this record was held by a player in southern England! FIFA would have confirmed, named and medals presented. But because the story is coming from Zambia, Africa in a town called Kabwe and on official games, the results are not so official. So to avoid confirming that, it now a no-backing for either. 

I think the world need to come to terms with facts and stop discriminating on the basis of location. 

Godfrey "Ucar" Chitalu has a record that the world should see and keep. Until someone breaks it, we have to live with it. The idea of football those days was not as competitive as it is today is as silly an idea as to claim everyone those days would have invented a light bulb!

Honour those who need to be - and do it fairly.

Statutory Instrument No. 33 of 2012 Errors

There was a lot of talk about errors in the SI 33 of 2012. I know for  fact that the Act referred to was wrong, so this could be a typo or an over-sighted, but did little to disturb the spirit of the law.

Rumours have it that a new SI with amendments has been released. I can confirm that, though, I'm yet to have access to the new SI with the amendments or improvements for me to talk about. Hopefully this will be in a few days as I really need to see what changes came out. Or what modifications have been done.

So I can just confirm the rumours and my sources rarely let me down - hopefully not this time.

Bank Holiday - 31st Dec. 2012

With the re-basing of the Kwacha so close, there is need for strategic plans on the part of government and people/ organisations involved. Software has to be configured to enable the handling of the rebased currency. Coins have to be given special recognition as this has been missing from our economy for some time. All these calls for banks and other inancial institutions to be given time to run around and organise themselves.

Just imagine, if the rebase was to happen today, how many ATMs would cope? What currency would the ATM have? What will happen to the software in banks having to run with rebased and normal currency notes simultaneously?

These are critical questions to any rebasing and the banks and other financial institutions have a perspective which matters on this aspect. The bank system must be ready to handle all possible situations that may rise from rebasing. And that requires time. But then again, we seem not to have time.

So the government came with a statutory instruments to handle such a time that banks need. So 31st December is a full time bank holiday. No banks, ATMs or Financial institutions are supposed to open. They have to sort out their software, ATMs and any other matter that would make the rebasing a challenge. They can best do it without worrying about the clients in the bank or the ATMs. And by the time they finish, only rebased notes will be in the ATMs and that will be 2013!!!

So if you plan on having a good New Year's eve, please have your cash ready as no ATMs will serve you.

I think it is a great idea to make sure all things move smoothly. I know how unbearable things get when you are trying to sort out some items and some clients are on your neck. This should help with the rebasing and we could move smoothly to 2013 and ZMW currency!

Kwacha Redonomination (Rebasing)

The Committee stage of the RE-DENOMINATION OF CURRENCY BILL, 2012 (N.A.B. 8 of 2012) went through Committee Stage yesterday and will have Third Reading today 21st Nov. 2012.

So we can safely say, we have the ngwee to our Kwacha. Kwacha economics has taken another mile stone of maintaining the Ngwee part of it. As far as things look today, we have the ngwee coins in our pockets by 1st January, 2013.

What I like about this whole process is how much economic activity is expected as a result of rebasing. We are being given an opportunity to use the coin in various ways. The simple one coming to mind is the vending machines (typically, we could have been using the 'notes' only type), but I think the coin idea makes people feel comfortable and at ease on a vending machine than notes. But more so as a parking attendant.

What people excited about these prospects highlighted about forget is the economics of just that idea of vending machines - they cause unemployment! Why would a shop owner employ one more person to help with snacks and pay him minimum wage when he can plant a vending machine in the shop and attend to those customers doing other things not snacks? This point is unfortunately the evils of development. We reach a stage we do away with labour intensive Technics and employ machines. I actually think, it would be better to have machines in that way than shop attendants who bring inefficiency to getting a cold drink.

We have to guard against bad outcomes of this rebasing though. Many of our uninformed people will be cheated out of their hard earned kwacha through street "crook-dom". So education (not sensitization which is a word wrongly used in Zambia) has to be intense and to the point. People should know that the value of the kwacha is not touched. Just the face - make up so to say. Good make-up in this case.

So we need to prepare for the new notes and new activities in our economy. The Kwacha has taken a new face and new clothes.

Effects Of No Electric Power On The Economy

I have ignored confronting ZESCO on the issues on power and what they are doing to this economy. But I have noticed, the more we ignore the issue, the worse the situation turns out to be.

So no ignoring and I have put on my fighting gloves as this issue cannot be ignored any further.

Electricity As Power In The Economy

One thing is for sure, in our country Zambia, the issue of power is important as it is the only source of energy for feed our hungry needs for economy progress. Not even our phones would work without power for a week. My laptop cannot be on without power for over two hours - maybe thats why I'm thinking of Asus Transformer with the potential of over 10hrs of no power!

I have bought a laptop charger for my car as I can buy fuel and charge whilst driving. That handles my problem - but only temporarily. The main problem is ZESCO. And since we are not doing anything about, it stays the same.

ZESCO Company or Baby Fed!

I have always wondered what is so special about ZESCO that makes it take us for a ride this long. Then I ask myself, if this company is a public enterprise, it should respect us as the owners and provide the necessary things or we may sell or shut it down. That it exactly what it means. Zambian people own it! So they should control it.

There are two things which shock me about how we handle business in Zambia. And until we find a way to stop this behavior, we will always be in trouble. 

Why? Just look at this:

• We negotiate taxes! We negotiate the birth right of being a nation so we can give people or foreign companies "incentives". The mere fact that this country is peacful and welcomes the investor is an incentive enough. But we go ahead and give then even the little we could have got from them. We need to stop this and move on progressively.
• We spoon feed a company (like ZESCO). It ends up depending so much on government. It gets loans with no plan of how it will repay them. And the debt is stuck on government. Because of that, it over charges the people while companies like mines get "favourable" rates. It may make sense to you but, it does not to me! If this was a company setup logically, it would put rates that make sense from the mines and not hammer the people.
  
  The sad part of this is that, mines get favourable treatment from all over, when they needed to be paying their equal share of the taxes. So you and I pay not only our taxes, but the mines' taxes and the salaries for ZESCO employees. Then power is taken away from our homes and put in the mines for the mines to rip even more wealth. Is this fair?

In doing the above, we have ended up being a failed generation. There is little we can show our children the positive contributions we made to the country. Zambia is in the state it is today because we don't do anything about it.

ZESCO's Tax Contribution

Do we know the tax contribution of ZESCO? I think we should know. We should also know how much loans they contract as we end up paying for this. I don't think it is too much to ask. We own the company. We should know how much taxes it pays, the dividends, then the amount of foregone customs and taxes that ZESCO enjoys. Then we should look at how much we are paying the workers. Its just fair and right for us owners.

Economy Effects
Without power, we can't power up our laptops and make reasonable income. We can't run servers from our houses to power up net-stations in Zambia. So we end up paying for server space in Europe or Asia. This is an out-flow of resources to other countries. Will government get taxes from that money? No way my friend. So we are probably the only country in the world without a ".com" community. And thats just 12-20 volts of power for our PCs and laptops. That partly explains why South Africa has almost every company with .co.za and in Zambia even government institutional websites have".com", ".org" or ".net". e.g. www.zambianconstitution.org (surely we are not even proud of .org.zm.

That is the cost of such critical elements in Zambia's economy like electricity and so on.

Computers people are all over the country. But have no means to be supported. All great .com companies are run and start from homes as it is cheaper and will give you time to start the busines, see the mistakes and then go on a full time scale. With ZESCO in existence, you will be in sane to even think of running your PC without a power backup system. All my websites are hosted in Asia. When they ask me why, I give excuses about not having time to configure and manage them all day. Truth - no there is now way I can run them here without paying through my nose to ZICTA and which ever of our 13 service providers - not sure who many actually host from the 13!

So my .com dream died when I looked at the cost of doing anything in that direction in this country with such power and expenses which favour foreigners and the rich.

Now imagine those with ideas of electronic inventions. Or manufacturing items. We are killed before we even start. Thats is the real effect of such power nonsense.

These are issues that should come into play for every company that receives such unwarranted favorable treatment. I know we all want this to happen to the mines, but surely, why not to every company that seems to know be doing the right thing.

I think we should be given a platform to do this. Not all of us can be politicians in order to put in place favorable business environments for our business. So we need to be looked at as well.

I am a Zambian I deserve Better! And ZESCO is not helping in any way. It should be made to do this just like all mines that feel taxes should not be paid coz they invested in the mines. Yes, but I am a Zambian, I own the minerals. You own the means to extract. If we disagree, you go with your means, I look for someone or I do it myself. But will you find the mineral I own? No! So I deserve better.

I am a Zambian, I Deserve Better!

2013 budget briefs

I will, from time to time, be using my mobile phone to blog as I only seem free on the phone (android phone's blogger app works wonders). My first blog starts with what I consider three best thing to come to the Zambian economy.

Many will talk about what the budget has not addressed for their political needs, but I'll look at what it has and what these mean for the economy.

1. Duty Free for Capital Goods and Equipment
2. Development of Water Ways
3. Revenue Collection of Statutory Bodies

Duty Free for Capital Goods and Equipment
No country can ever talk about development without investing in capital goods and equipment. I believe this is the rationale used to come up with such a move. Therefore, it is expected that the country is aiming at repositioning itself as a manufacturing and industrial nation. There is great belief in investment in manufacturing. I believe this year's budget will address some of the things I have been complaining about all this time. The need to move from a "mall" oriented country to an industrial base ready to produce whatever the country desires and more. So the removal of duty on capital goods and equipment will bring re-energized approach at manufacturing - at least thats what I expect.
 
Truly, thats one thing that has been lacking for some time in Zambia. We need to focus on development ideas that put manufacturing in the fore front. We can't expect job creation from gov, but we can push the private sector in implementing desirable outcomes in job creation.

I strongly believe this is a measure that has come timely for this country to pick up on developmental side of our economy.

Development of Water Ways
How bad is our water ways? Have you ever seen how people using rivers and lakes for transportation purposes?

I think Government's initiative to look at water ways is welcome. I actually want to be able to move in yacht with no worries, not those banana boats that are all over. I actually look at using that in the same way as bunji jumping! Its for dare devils!

Seriously, this is an opportunity for those involved in tourism and live in areas close to lakes and water bodies to invest in boats and yachts so that value addition is brought to our water ways and a livelihood created for people through tourism activities on our water bodies. after all, we have the largest chunk of fresh water bodies in SADC. Its about time we used them to bring money and jobs for our people.

So we can now all go out there and get the gear for some water fun.

Revenue Collection of Statutory Bodies
No one single matter has been on my mind for a long time like this one. I always think its better for a family with four salaries to utilize better use for its income to budget together so they can contribute little from the three. when however, one contributes and the rest choose how to use the money, that is actually far from planning. 

But that's how things were in government. You have people making money and hiking their pay while the rest of Government has to share the little money they had. We ended up with massive buildings for a board, when Ministries don't even have a coat of paint on their walls. What kind of government would allow that?

We should harmonize this situation and allow government to run effectively. You can't expect government officials to operate effectively when they are paid low and an authority under them has officers getting over K70million, more than 10 times more than their principle officers. That is a recipe for not only corruption, but failure of the system.

This measure as far as I'm concerned, will make this government produce better than expected results.

Conclusion
Overall budget proposals so far are great. I think, with proper implementation of this, we expect changes in our economy in years to come. We just need to organize our manufacturing sector and develop water ways to improve people's livelihood and encourage tourism.

Budget Debate Delays

I never thought we would reach a time when a Budget for the following year is actually delayed on the basis of silly issues which cost us time and money.

I have never blogged about Parliament debates, basically because I expect the people debating have an understanding of what they are debating about. But today I was shocked at what delayed debates. One simple issue of mathematically calculations.

The budget is done in ABB and the Yellow Book is produced with rounded off figures as the figures are huge. Now imagine what delayed it. 

Here is a simple example that I have produced.

Now the Yellow Book will seem to have a bad calculation which has produced a fictitious amount. But when the figures are compared with the original inputs, the result stand and is explained. This is what Mathematics does. Now the person claiming to have experience in this field will know this only happens to numbers in decimal of the first digits. But that Maths seems complex.

We delay proceedings on such a matter when all the calculations are mathematically straight. Can we understand issues before we bring them out as errors. Decimal mathematics is not error when you fail to explain it.

I wish Parliament would bring people experienced in issues to clarify when the problem is huge. I think Zambia needs to find a common ground on matters that are technical and need technical input.

Anyway, that's just me thinking out loud as I hate delays on trivial issues which can be sorted with the use of chalk and a black board. Or maybe we should demand some maths to be done before the debates on budget issues is undertaken.

PS. At least the debate has resumed and will allow consultations so that the rounding off issue can be sorted out.

Zambian Independence Joke

Here is a Zambian joke going around the internet - whatsapp and blackberry.

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Once upon a time in the kingdom of Heaven , the angels did not see God for six days. Eventually, St. Peter Happy independence!Once upon a time in the kingdom of Heaven , the angels did not see God for six days. Eventually, St. Peter came across Michael the archangel on the seventh day.

He inquired of God and Archangel Michael explained to him what God had been upto. He pointed downwards through the clouds, "Look, Peter. Look what God has made!"

Peter puzzled and said, "What is it?" 

"It's a planet," replied angel Michael, "and he has put Life on it. Hez going to call it Earth and it's going to be a great place of balance." 

"Balance?" inquired Peter, still confused. 

Michael explained, pointing to different parts of earth. "For example, northern Europe will be a place of great opportunity and wealth while southern Europe is going to be poor. Over there he has placed a continent of white people and over there is a continent of black people," 

He continued to explain pointing to different countries. "This one will be extremely hot while this one will be very cold and covered in ice." 

Angel Peter, impressed by God's work, then pointed to a land in the southern part of Africa and said, "What's that one?"

"Ah," said Archangel Michael. "That's Zambia the most glorious place on earth. There are beautiful savannas, mountains, streams, hills, and water falls.

The people from Zambia are going to be very handsome/beautiful, peaceful, modest, intelligent and humorous and they are going to be found traveling the world holding good jobs. 

They will be extremely sociable, hardworking and high-achieving, and they will be known throughout the world as diplomats and carriers of peace, they'll play football and win boxing medals." Peter gasped in wonder and admiration but then proclaimed, "What about balance, Michael? You said there would be balance!!!" 

Michael replied wisely, "Wait until you see their kind of politicians."

Happy 48th Birthday, Zed - The Real Africa!!!

::: Happy Independence Day Zambia :::

24th October 1964, marked the birth of a great nation.... Zambia.

Today marks 48years of independence of this beautiful land. Notably, it is at this time that we can look back and say we helped Southern Africa be liberated. And since all parts of this part of Africa are free, we need to look at our own liberation! 

We need that economic independence that will make us move on! I always think the hardest fight from now will be economic path as we have the whole world with selfish aims that will make our fight a great battle.

So lets start by emancipating our selves from mental slavery, believe we can achieve all the greatness that we desire, and over come our problems.

Be blessed Zambia and stand proud and free!!

Zambia National Anthem

Stand and sing of Zambia, proud and free,
Land of work and joy in unity,
Victors in the struggle for the right,
We have won freedom's fight.
All one, strong and free.

Africa is our own motherland,
Fashion'd with and blessed by God's good hand,
Let us all her people join as one,
Brothers under the sun.
All one, strong and free.

One land and one nation is our cry,
Dignity and peace 'neath Zambia's sky,
Like our noble eagle in its flight,
Zambia, praise to thee.
All one, strong and free.

(Chorus)
Praise be to God.
Praise be, praise be, praise be,
Bless our great nation, Zambia, Zambia, Zambia.
Free men we stand Under the flag of our land.
Zambia, praise to thee! All one, strong and free.

Statutory Instrument No. 33 of 2012 - Yipppiiiieeee!!!!

The introduction of Statutory Instrument No. 33 of 2012 by the Bank of Zambia is a welcome move for any one interested in making our country Zambia better economically. I find this, an action worth celebrating over.

For starters, it was not making sense to have Kwacha which is ignored in most transactions within the republic as people preferred to trade in US Dollar. The fact that we have a legal tender, we should use it. Why should rental for housing be in US dollars and yet that house is in Zambia, in Zambian economy? There is no problem with one basing the rent on US Dollar, but that must be a good reason to do so. This action undermined kwacha and made it useless as everything was being backed by the dollar.

Dollarisation

This is a term used when citizens of a country use foreign currency (a US Dollar in this case) in parallel to or instead of the domestic currency as a medium of exchange within the domestic economy. So Zambia using any other currency to quote for prices or to demand payment of any services or goods is dollarisation.

Zambia was one country you could quote your goods and services in any currency with no shame. If there was a visit from Congo, they could have even bought in Congo currency.

But this brought with it many problems which are so severe in most cases it can even be damaging to the economy. A stop to this measure was not only needed, but was needed fast!

Benefits of S.I. 33 of 2012
There are so many positive effects that have been mentioned when issues are refered to the S.I. in question. But all in alll, I think there is only one positive effect that can be linked to this measure and the rest are merely as a result of this. This is the issue of controlling monetary policy of a country by the authorities that may be. There is no point in having monetary policy if at the end of the day, the monetary policy in the country is actually controlled from outside the country.

Zambia has a legal tender of Kwacha. So the authorities will defend and protect the Kwacha as it is the sole currency of the economy. Use of dollar or rand, will mean we tie our economic activities to another monetary authority and can even do away with some functions of the central bank. This is only useful in a country which is in a crisis.

So economic players should actually look at this measure and the great benefit it will come with.

Mis-Understandings
One common mis-understanding of the S.I. has been on the international trade. Most people expect the S.I. to block international trade and has thus brought an imbalance in the economy. Some "wise" people went as far as claiming we can't have the S.I. when Zambia is an importing country.

• Domestic trade is supposed to be conducted in the legal tender of the country. You can never go to the USA and expect to rent a house or buy a TV in Euros or Rands! But you expect this to be done in Zambia? But the problem has been that this dollarisation was left unchecked! So the S.I. simply reminds you of what currency you will use to trade in. It was shameful to walk into these "Real Estate" companies from South Africa even quoting in rands but never in Kwacha!
• International trade can continue and be conducted in any currency you wish. The only thing one needs to know is that the Kwacha is a convertible currency. That said, you can then simply pay even in Rupees as long as you use the bank system to send your money. They will in turn get your kwacha but send rupees. Simple like all other countries do.
• The bank system use will make sure the monetary authorities have control over the transactions and enable citizens buy things from anywhere in the world at no cost to our currency! Thats why when you travel out of the country, you get your usual ATM but with draw dollars or rands depending on which country you are in. The system is able to handle all transactions.
• We have a duty to protect our country and that starts with the currency. Parallel monetary policy has not helped the country at all. (Parallel in the sense that although we have our own monetary policy, it is controlled by currencies that have an embedded monetary policy of the country they come from. We had houses being sold and quoted in dollars leading to the weakening of the Kwacha every single day. Now we can concentrate on making Kwacha strong and viable in the world trade. That starts by making sure it is a legal tender for this country. I don't think I can go buy a car in South Africa with a Kwacha, why should we make possible for anyone else to come and use their currency in our country? 

This is one of the positive issues that economic players in the country should be happy about. After all, the benefits are for all the people around.

I think this measure has been one that has taken too long to be implemented and I'm one of those that think we can do a lot more to help the country prosper!

Well done for S.I. 33 of 2012!


I have heard talk about the problems of the S.I. Basically, the only "errors" the first "errors" I saw was reference to the wrong Act (the typo of year), but that would not injure the spirit of a good law. So we just need to correct that typo and a problematic paragraph and we are good to go. We need such progressive directions in this country to get something out.

Economical Progress in Africa

I have always taken a different view when you look at African Economic progress. Most problems that stem from Africa have never been Economic problems, they have been political.

If the problems where economic, we would simply educate the technocrats and produce economic progress. However, these problems are political! And you can't take politicians to school and educate them in politics. What has made be wonder with awe, is not the top political leadership that lets Africa down, it has been the advisors or some small political muscles that pull strings and lead the country to disaster.

Now this blog is not about politics, I would condemn so many things about politics not just in Zambia but in all African countries. My aim on this matter is try to reconcile the political problems and the failure to move economically - that totally comes from political problems.

Can Economics Cure Political Problems

I would love the answer to be yes to that. I really do! But it always lead to one conclusion which always even leads people into insulting politicians as to why that problem can not be solved.

Look at Zambia now, the politicians have changed, has the economics changed? The sad answer is no! The politicians has one disease which they never learn to cure all the time and in circles and in leads to many failing to have great political life - they ignore technocrats!

The most interesting result has been the usually labeling of technocrats as opposition cadres! One thing is for sure. The same people were labeled as following the current policies when the MMD was in power. It was common when one politician's desires are meant with proper and sound advice to turn and say these chaps are PF! Now the same PF would look at the technocrats as MMD!

Its a never-ending blame game. The only solution is to learn what technocrats do and then follow things through.

I Know It All

This has been the greatest problem in economics. By definition, an economist will read, research, find solutions and recommend to the powers that be. The usual activity among many countries in Africa has been to reject what you are told and issue your own solutions on the matter as you know it all!

Any educated follow of politics will always sight that problem and fun enough, very few politicians ever learn what to do. So the same problems you blame one government, is the same problem you will bring about. What is interesting is always reconciling what is said to former leaders and the new crop of leaders. The day, this trend will be repaired, is the day we will see progress.

What I'm sure about and have seen it growing is that, every country that performs well, avoids rent-seeking behaviour. And believe me, the same people who backed and were "darlings" of one government and led to its fall, will be "darlings" of the party that is now leading and was in opposition. The technocrats see this and they wonder why politicians are so blind.

Hope Out There

The economics to make a country progress is out there. In the same offices that the former ruling party was controlling and is now in the hands of the new government. I can assure you, the first thing they will do is remove the people they think made the other government unpopular, bring in new stuff. But treat them the same way the other party treated people he had. There is no progress. New bosses but the behavior is the same the advise is also thrown out the window in the same manner.

I will give you an example. Zambia has a problem of funds to invest in sectors that will generate economic activity and lead to backward and forward linkages in all sectors in process lead to demand creation and economic progress. Simple.

What is needed? Each economic player contributing his fair share of investment, responsibility and hard work. Any government that takes that as religion will bring more good to the people than any known foreign investment. All of us paying our share of taxes, anyone in the position of power using the power to ensure the resources are directed at intended targets, and companies tasked to do their part of economic activity sticking to that role.

But Our Problems:

1. The government of the day will negotiate with companies of what they should not pay! So the next person will now wonder why he should pay when government has chosen some "angels" not to pay. Then the role of rent-seekers is cut in stone. Each company will come and see a minister or a president and when they fail, there is always the deputy minister! And they feel power to shout at any technocrat who "delays" the granting of incentives. Labels them "opposition!" and wonders how the country could develop! What is funny is that the same incentive may have been drafted by the same technocrat that is now considered an enemy of the government.
2. Lack of appreciating the system. One government comes in, condemns the whole technocratic system spoils the little progress made in the past, and then sets in to develop a better system with no idea what was bad in the previous system. The only people with access to both systems are the technocrats who can be a useful resource of knowledge and progressivity.
3. Then the technocrat is thought of being a fool, when in actual fact only the technocrat knows who the fool is. Why not take the system, study it and improve on it? The one thing our brothers in the Western world have so wonderfully done.

So now with this problems highlighted, can our new government prevent politics into disturbing economics?

Landlocked - Hub Ingredient!

We always view land-locked as an obstacle to technology due to no access to the sea. True, but that's just failing to think out of the box! The opposite can be true - unless you need sea- water to develop.

Zambia has always used that excuse to say we cannot do a lot as we are cut off the sea. But every day I see all these vehicles and unbelievable quality of cars on the road. They are not made here, and maybe they flew in but most of these came in through the sea. So what's the problem? 

We need to think about what we have and use it and not be crying about what we don't have. I worked with computers a lot so examples here may make sense to people in IT better than those completely hidden from the IT age!

To start with, a router need not be at every end of the network, but the starting point. So one located in the centre would actually mean greater reach to all end points. Economics of location also has a similar idea in location theory (which covers both economics and geography). Harrod Hotelling's (1929) location model is based on this idea. The model  demonstrates the relationship between location and pricing behavior of a firm. In the crudest possible way, if firms produce an identical product and charge the same price, location of the firm to the customer will matter! You prefer buying from the closest shop than spend extra on transportation or time to reach a far-off shop. Therefore, our location of being in the middle of Southern Africa should be used to our advantage. It would be easier (and cheaper) for someone going to China or Australia to get to Lusaka's KK international airport from Malawi on or Angola than going to Johannesburg's OR Tambo airport. It automatically makes sense for us to think of creating an airport hub in Lusaka. Develop the current one and allow more airlines to land and connect from here than miss this opportunity. That's why we have a lot of airlines establishing presence in Lusaka! We just don't see that!

So my development agenda in the aviation industry in Zambia would be, to start with an idea of development airport infrastructure in Lusaka. This would allow development of the sector which has trickle down effects to industry, employment, technology, engineering, fuel sector, transportation, accommodation, tourism, etc. And looking at the investment - return ratio, this would be a very good approach as it would inject in all sectors from a single investment. Marketing of the country for tourism would be half-done! People would be in the country even for connecting flights! The second phase would then be to develop the local aviation sector by promoting establishing of budget airlines to move people from one part of the country to the next. This would push local private sector to then develop lodges, motels, hotels for tourist centres. This is a better approach than zero-rating accommodation in Livingstone! We benefit from aviation regardless of how far the sea is! No landlocked economics in that area.

The next arena, is technology! We are nicely placed in the centre of activity. We may not have a direct cable to the sea, but we can use our location. A fibre connectivity across the SADC region would gain more with a technological hub in Lusaka! Besides we have plenty of land such that if we setup server farms and have direct connection to two sea cable connections in South Africa and in Kenya, the whole region would be place in our hands for e-commerce and server farms. The only need to be reliable. The one single issue which I complain about Zambian companies. Imagine how productive Zamtel would be with reliable internet service to all parts of the major cities. They have a land-line network. The single investment of lines need to just be converted to ADSL network supply. They need little effort in making people realise how expensive other service providers are. We all know how much we spend on air-time credit on our mobile phones. Zamtel should not be chasing shadows to catch up with other mobile services, they need to use the resources that they have and beat them all. The Zamtel mobile service will simply be an icing on the cake. In other countries, most small service providers simply rent ADSL servers and do the marketing in order to get a share of the "cake" with the likes of Zamtel. Many will realise this when they visit South Africa and are greeted with "ADSL! you only need a Telkom line". So the investment cost is shared.

If ZESCO ran for half a year without a blackout, I think the development of our economy would jump in double digit percentage! We have put up so many measures as we expect the power to be out any time. So there is un-necessary investment in backup power generators, invertors, etc. A development of the electricity supply would put this country on a good path to achieving greater things. Not only would the stability ensure continuous supply of electricity to industry and encourage production, it would lead to good returns and reliable exports of this.  

Those are sample issues that would bring in some perspectives not addressed by people looking at the landlocked status of the country. There is so much we can do with our status and current infrastructure. We need to think out of the box for any progress to come to this country. We don't need a lot of searching around. Most of these issues need a will on the part of decision makers to make head way. 

Point of great interest has always been on the way most Zambia companies rely on rent seeking for their business to move. The worst possible way to develop. This has led to unreliable decisions from political leaders. Why would a company need to meet the minister? What can they possibly present to him which would not make sense to technocrats who deal with issues on a daily basis? Rent-seeking and all forms of corruption need to be kicked out of business environment in Zambia for any meaningful progress. Alstom's bribery on people in political office should not be seen as an isolated act. We need to  seal all holes that lead to bribery and rent-seeking. That is important. The political leaders need to look at their business, not take up the technocrats area of operation. If they don't want to do that, maybe they need to join the civil service and be technocrats.

There is a lot of expectations on the people of Zambia. We need to work on formulas that will ensure the country moves in the direction that will please - regardless of their political standing. Development is the only key that will get us all moving united together. We need to start thinking outside the box. We can do what we want if only we work on it.

The Case of Gay-Aid Economics

Poverty and Aid show an interesting aspect of slave and master relationship. The west has always used aid to get what they want from the poor. This is the case in point of what I will call Gay-Aid!

Gay-Aid is western aid tied to homosexuality in the recipient countries. It is fully endorsed by the USA that is, President Obama and David Cameron, the Prime Minister of Britain. 

"Gay rights appear to have become a new frontier in diplomatic relations between Western powers and African governments, with the US and UK warning they would use foreign aid to push for homosexuality to be decriminalised on the socially conservative continent.(Gay rights: Africa, the new frontier)" 

The idea is, countries needing aid, will need to support gay 'rights' to receive that aid. A simple do this to get this. The bate here being aid. To me thats a typical slave-master relationship.

This is clearly an indication that one needs to lose their ability to decide on issues of their 'being' and ask the master for a way forward. And I think this is what we need as Africa. To see that Aid really does nothing for the well-being of our nations. Its an investment from a partner who may never mean well at times. The way out is to look at the issues that affect our poor performance in an economy that rely on aid which maybe Gay-Aid or dead-Aid! Imagine trading off the Gay-Aid for good taxes in the mines! That in place will see nations that can decide their future and can decide on what they think is right or wrong. Though this looks more a political issue that an economic one, the moment you allow someone to dictate what is right or wrong for your nation or economy, you lose your destiny. 

Aid has little contribution to Africa's development. This is a tool used to make Africa states dependent on the West for them to use it any time to impose their values and beliefs. This is the only thing that can make great nations go down on their knees and beg for them to implement what the West want.

Why I hate Aid

There is a saying "A beggar is not a chooser". When you beg, the person giving help will determine what you do and how you do it. Ban Ki Moon went to Africa Summit and told the leaders to respect gay rights.(here). He clearly did not care who was there and what belief they hold on the issue. He is the secretary General. Would he do the same at an Arab summit? No! They have wealth as countries and that black gold - oil. They determine their destiny. Africa had almost all leaders on Aid payroll, they dare not react to such statements, the master was talking. That's why I hate aid - it makes you a slave!

The gay rights issue has problems in the USA, some states are fighting for it. Others are not even thinking about it. Does Obama wake up and say the Federal government will not provide services in those states? Of course not! But when it comes to giving aid to poor nations, it is "Central to the United States’ commitment to promoting human rights".

Be Rich and Control

Central to this Aid issue is not of a helping hand, but control. No wonder every one (except a few of us) hate China. The west has painted such a bad picture on China because they can't control it. It has money and hence power to decide what it wants. If those are transferred to Africa, the west loses grip on everything they have been trying to bring to Africa to continuously step on Africa. That is the big issue.

Africa now needs to work on the issues that continuously disadvantage it (aid included). They need to work on multinationals that steal from Africa through not paying due taxes (they actually declare loses but profits are declared in tax havens). They should demand what is due to them, if need be, nationalizing some of the companies would actually make some countries better off! I know a lot refuse that, but has anyone looked at China? If a country is only getting 10% of the returns on natural resources in foreign hands, it would be good to run it on a state level if that company will bring in 20% after a poor investment from an African government. Besides, all returns will be in the country and not sent to their countries.

You can't have all companies run by multi-nations and their governments say bring gay-rights to receive aid and you think you decide your destiny! That is the tool of control you can only avoid by being rich enough to live without aid or multi-nationals running your economy.

What Democracy on Economy?

There is a cry for democracy in everything that is done. If that democracy means doing away with gay-rights, you are not "democratic", but if you ahve oil and oppress women you are a friend to the west, then what is democracy? I have noticed on matters of economic importance, the west will ignore issues of democracy if it will lead to what they like. Unfortunately, there is no control on this issue as it even affects the UN. It will not protect the people if the returns will not amount to anything for the west. Countries that have stood up to such forces, have grown by following their independent paths. China and Russia are a good example. They don't care what the west does now as they have power to define their destiny.

If oil will be gotten through regime change, it will be supported and even leadership made to pay for refusing change. But if it will come through the current regime, people's deaths will not matter. Economics does! Libya and Syria are cases in point. and the key element was the oil.

Economics Matters, Rights Don't!

Gay-Aid is tied to 'rights' for gays! Regardless of the people's beliefs or stance on the issue (like colonial masters deciding for the village). But women in some Arab countries can't even drive a car. Have you ever heard Ban Ki Moon talk about them? He talks about gay-rights. I have not even heard him address Syria. There is oil there!

Africa's New Fight - Economical

The new fight for Africa should be economical, not political. Africa must unite and fight all aspects of the oppressor. If it means leaving the UN, you may have to. What has it done for the continent economically? It would be easier to make Africa stand economically if the UN supported its cause. Do you think Africa has a chance to fight Gay-Aid being promoted by USA and UK backed by Ban Ki Moon? Which nation will stand and say, we are Africans and don't believe in this. Mugabe did, where is he on the economic map? Malawi's economy is a sorry sight - Mutharika spoke about the displeasure of gay activities and the court sentenced some people.

We need to get rid of this Aid issues in Africa and believe we can do it without the west. We can do it. The problem is that we are constantly blocked in our thinking by the west through schemes like aid, human rights grants, etc.

Like Marcus Garvey said:

We are going to emancipate ourselves from mental slavery because whilst others might free the body, none but ourselves can free the mind. Mind is your only ruler, sovereign. The man who is not able to develop and use his mind is bound to be the slave of the other man who uses his mind ..

I end saying...

Africa, Emancipate yourself from mental slavery, None but ourselves can free our minds