Tuesday, November 27, 2012

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!

Tuesday, November 20, 2012

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.



Friday, November 16, 2012

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.