CUTS advise govt on debt crisis
By Staff Reporter
The Consumer Unit Trust Society (CUTS) International Zambia chapter has observed the need to address Zambia’s debt crisis as it can adversely affect the economy.
CUTS International Zambia assistant policy analyst Kangwa Muyumba said the debt situation needed to be addressed as it may lead to hard economic times for all Zambians now and in the future.
Muyumba said the alarming rate at which debt had been rising was impacted the economy negatively, contributing to the Kwacha depreciating and increasing inflation.
She said that this ultimately impacts consumers and contributes to slow economic growth.
She added that the implications trickle down to ordinary Zambians who end up being taxed more while public service provision declines.
Muyumba stated that businesses and employees also feel the burden as the cost of doing business increases and could potentially lead to job losses or businesses closing down.
“The situation needs to be addressed as it could lead to hard economic times for all Zambians now and also in the future. This article will explore some of the ways the Government can tackle the debt situation, which will influence the way Zambia’s economic future plays out over the coming years,” she said.
“By far, the most important step toward getting the best deal for Zambia and reducing the impact of debt on the Zambian people, is to rebuild market confidence in our economy. There are several steps to doing this in the short, medium and long term, which will help put Zambia on a more sustainable trajectory.”
She has emphasized that there is no doubt that Zambia’s debt has been rising dramatically.
“In 2011, total debt was recorded at US$3.5 billion and as of March 2018, this has risen to US$14.4 billion. These debt levels are alarming: it has been almost one year since the IMF declared Zambia at high risk of debt distress, and during this time, debt has risen significantly. Zambia’s debt risk has also made international news, with The Economist running two articles on Zambia’s debt in a recent edition,” said Muyumba.
“However, more often than not, the people that talk about debt are economists. Talk of bond yields, debt to GDP ratio, foreign exchange reserves and exchange rate risk are important but can be confusing. But we all need to discuss debt as it affects individuals, businesses and public services. Over the next six weeks, CUTS will explore why Zambia’s debt should concern us all what it is and why it matters.”
She believes that Zambia may be on its way to a debt crisis, although it had time to avert it.
Meanwhile the Centre for Trade Policy and Development (CTPD) has also observed that debt servicing is reducing government investment in young people.
CTPD Executive Director Isaac Mwaipopo said his organization remains deeply concerned that social sector spending has been reducing as demonstrated by the relative low funding to tertiary compared to primary and secondary education.
Mwaipopo stated that Government should take note of research evidence which shows that tertiary education has a significantly higher impact on the growth in GDP in Africa than other levels of education.
“It makes sad reading that government is failing to pay lecturers on time. As we speak, there are lecturers who have stopped teaching as they are demanding to be paid their salaries,” he said.
“In light of challenges raised above, CTPD would like to urge government to join hands with young people in finding lasting solutions to the challenges they are facing.”
He said there is great need to move away from the old tradition of always addressing young people; but that Zambia needed time to listen to them.
Mwaipopo said that youths have ideas and solutions to most of the challenges they are facing.
He added that the increasing dropout rates, limited opportunities for University and College education, low funding to Institutions of higher learning, failure to harness the Entrepreneurial skills of Youths and many others, will conjointly create a population of disadvantaged youths.
“There is urgent need to address the rising public debt as this is a serious threat to the growth of this country. Zambia needs to invest in human capital development through ICT and innovative practices in the Agriculture and Manufacturing sectors in order to generate more employment opportunities,” he said.
“The current construction boom needs to be supported through reducing interest rates in order to support construction sector employment creation.
CTPD urged government to consider hosting a Jobs summit aimed at finding lasting solutions to employment challenges young people were facing.