Economic Happenings in Zambia

MPC Decision. What is Monetary Policy Between February 13th-14th the Monetary Policy Committee of the Bank of Zambia met to set the direction for Monetary Policy in the near term. Here, it was decided to raise the Monetary Policy Rate by 25 basis points from 9% to 9.25%. This marks the first alteration to the MPR by the UNPD government. Let me begin by defining monetary policy. The term refers to tools the Central Bank uses to control money supply in an economy. These tools refer primarily to the interest rate, the Monetary Policy Rate (MPR), and the reserve ratio (SRR). The MPR is the rate at which the Central Bank loans money to commercial banks, whereas the reserve ratio is the mandated percentage of deposits which banks are to keep at the Central Bank. Hawkish The stance by the Bank of Zambia in the recent meeting reflects a largely contractionary monetary policy. What this signifies is simply an attempt to reduce money supply. This approach is most often adopted during times of in...

  By Michelo Maunga In beginning my forecast for the year 2023, allow me to draw your attention to the perils of 2022. What many hoped would be the year that the global economy arose entirely from the doldrums of COVID, presented a successive and almost as equally disruptive shock to economies around the world. Early in the year Putin invaded Ukraine and set in motion price hikes in energy and food markets. And so, with this in mind, forecasters and economists world over projected the lingering effects of this latest shock would take its toll on the economics of 2023. Many analysts predicted an outright recession in this year. Sentiment seems to be changing, however. Analysts now foresee a more favourable outlook, with the envisaged “soft landing” seemingly more tenable. A soft landing is defined as reducing runaway inflation without causing an economic meltdown. These improving prospects are being driven by more than one factor. The first of these is the reopening of the Chine...

  By Michelo Maunga Introduction Zambia is grappling with an unemployment crisis amongst its young people. Institutions of higher learning and in general the education sector are churning out graduates, only to roam the streets owing to inadequate opportunities. The situation makes for sad viewing. Young, vibrant, enterprising and hardworking young people are left with no income and no opportunity to exercise their skills. Many have to accept being underemployed. Personally, I had to work as a taxi driver for year with my Economics degree from UNZA, something I did with the same enthusiasm I would as an economist at the Ministry of Finance. The Facts Without trying to point figures, the buck ultimately ends with government. It is the responsibility of the state to create a conducive economic environment that provides job opportunities. When the economy is growing, jobs for young people and all other age groups are created. It is interesting to note much of talk on youth une...

  The Common Framework: Guiding principle to Zambia’s debt treatment By Michelo Maunga Introduction Followers of the Zambian economy’s debt engagements will have read or heard reference to the G20 Common framework. The arrangement serves as the guiding principle to the Group of 20, who are the 20 largest economies in the world, in dealing with debt crises in poorer nations. A relatively new initiative, launched in the latter stages of 2020, Zambia is one of the first countries to apply for debt treatment under its auspices, the only other two being Chad and Ethiopia. Little, however, is known of the specificities of the framework. This together with teething issues in its implementation has led to several critiques of its efficacy in as far as expeditiously addressing debt distress. What is this framework?   The framework was designed with a view to coordinate negotiations between debt distressed debtors and their creditors. It allows for harmonization of debt treatm...

By Michelo Maunga Introduction The climate crisis is amongst the most pressing issues of our time, confronting global leaders and communities particularly those in Sub-Saharan Africa. The effects are, nevertheless, not confined to this part of the world. Across nations people are experiencing erratic weather patterns, spanning persistent droughts, floods, extreme heat and other weather-related calamities. Climate Crisis, Around the Globe Recently, Nigeria faced severe floods that left much destruction, displacing 1.4 million people and killing over 600, with close to 100,000 houses destroyed and over 300,000 hectares of land affected. Floods are also being recorded in parts of South Asia, where in 2022 monsoons took the lives of over 3,700 people. China, on the other hand, recorded record temperatures with attendant dry spells in the third quarter.   The height of which saw, the water levels in the second largest water body in the country, Poyang Lake, dwindle by over 150...

Music. The language of the soul. Its beauty lies in many things. However, what stands out to me is how it slows things down. Without question what a song will say in a minute will be much briefer than what one can say in the same time. Heavenly, If I am to get religious. The bible talks of singing in heaven. It would not be too much of a stretch to posit that song is embedded in the culture of heaven. It would also not be too much of a stretch to claim when we engage in song, be it listening, performing, producing, we are exercising something divine. Human beings, are an emotional species, in writing this I do concede that nearly every species created by God is emotive, nevertheless, in the workmanship of God, we without doubt posses the most complex emotional repertoire. You may ask why I am talking about emotions. Don’t worry I have not gone off tangent; we are still on music. Music and emotions are intertwined. I am of the view this is why we enjoy or for some love it. It moves some...

Late last year, the Ministry of Finance announced the removal of subsidies on petroleum products, a decision that has engendered diverse reactions. On the one hand, the movement to cost reflective energy has increased inflationary pressure, whilst on the other it has freed up resources for an already constrained treasury. Advocates of the subsidizing of fuel and electricity have argued the recent price hikes have taken necessities out of the reach of ordinary Zambians, with some going as far as claiming the UPND is not pro-poor. However, economists, often point out that removal of subsidies has improved Zambia’s chances of securing IMF board approval for the extended credit facility, which the country so badly needs. Let us begin by defining what a subsidy is. The World Trade Organization defines a subsidy as a grant given by the state to a particular industry with a view to keep prices artificially low (WTO, 2006). We cannot talk of subsidies without alluding to the Free Market System...