Forum for Democracy and Development (FDD) leader Edith Nawakwi has joined calls by various stakeholders for Bank of Zambia Governor Mike Gondwe to resign.
Ms. Nawakwi said that Dr. Gondwe has lamentably mismanaged the country’s economy as evidenced by the Kwacha’s poor performance against major currencies.
Speaking during a Media briefing, Ms. Nawakwi who is former Finance Minister said it is plain truth that Governor Gondwe lacks the basic understanding of the economic matrix and how the financial market operates.
And Ms. Nawakwi has predicted that the decision by the Energy Regulation Board to give ZESCO a go ahead to increase electricity tariffs by 24% will result in hikes of prices of fuel and eventually worsen the poverty situation many households are living in.
The FDD President has also called on the PF government to reverse the Wage Freeze which it imposed on public service workers that has resulted in 10 public service workers’ unions to declaring a dispute with the government.
And Ms. Nawakwi says the government through President Michael Sata and the Zambia Revenue Authority to back date the debt that KCM owes Zambia as revealed by its major Shareholder Anil Agarwal that it makes huge profits from the mine which it got at a low price.
Below is the full statement…
2nd June, 2014
PRESS STATEMENT
Members of the press, fellow citizens, I wish to welcome you all to this press briefing. I have been compelled to address the nation today due to the grave economic situation obtaining in our country which is actually a threat to our political stability.
THE CONTINUED DEPRECIATION OF THE KWACHA
The continued depreciation of the kwacha against the major convertible currencies is adversely impacting on the lives of the majority of our people as the prices of essential goods and services such as mealie meal, water, electricity, transport and housing have kept on rising beyond the reach of the majority of our people. Just yesterday, the Energy Regulation Board gave ZESCO the go ahead to increase electricity tariffs by 24%. At the rate we are moving, we expect the prices of fuel to go up soon. And that will worsen the poverty situation many households are living in.
Last week, The Bank of Zambia told the nation that the kwacha is depreciating because of speculative behavior among players. The Central Bank said people should desist from speculating with the Kwacha to halt the current free fall of the local currency. This is the latest of the many cheap excuses this government has been giving us since the kwacha started its downward spiral. First they told us that the Kwacha was losing value due to the falling copper prices, and then they changed the story and said the Kwacha was depreciating due to their ill-timed Statutory Instruments No. 33 and No. 55.
Then the story changed yet again that the Kwacha was losing its value due to the so called capital projects which the government was undertaking. As if that was not enough the government invented another excuse saying the Kwacha was depreciating because of some imaginary cartel. And now the story has changed yet again. Today the Governor is blaming the so called speculators for the depreciation of the Kwacha.
Surely, it is clear to all of us that the Kwacha has continued to lose its value due to the lack of sound fiscal and monetary policy by the PF Government coupled with the ill prepared individuals who are managing our economy. Dr Michael Gondwe, our Central Bank Governor is a lawyer by profession and is therefore the wrong person to have as Governor of the Central Bank.
Can the Governor tell us why the opening rate of the Kwacha each morning is higher than the closing rate of the previous evening? Does he know that the money market does not sleep? Does he know that his commercial banks are taking foreign positions using the few dollars that he has been pumping in the financial market? Does he even know how much foreign currency, trading outposts such as Shoprite, Game Stores, the mines and such foreign firms are taking outside the local money market?
It is plain to all of us that our Governor lacks the basic understanding of the economic matrix, let alone how the financial market operates. It is for this reason that we are hereby requesting Dr. Michael Gondwe to immediately step down as Governor of the Central Bank of Zambia because we as a people no longer require his poor services.
If the depreciation of the Kwacha is not quickly arrested, we will find ourselves in the Zimbabwe or Greek situation because the purchasing power of our currency is evaporating with each day that passes. This is putting pressure on business houses especially small businesses such as car dealers, hardware dealers, fruit traders, cross border traders ( the Tamanga dot com friends) and the like who heavily rely on imported goods. This increased cost of doing business is beyond the reach of many small businesses. Many such businesses are failing to pay their workers or to operate normally hence many are closing or folding up.
LABOUR DISPUTES
For the first time in the history of this great nation, all ten public service workers’ unions have declared a dispute with the government for unilaterally imposing a wage freeze and refusing to improve the salaries and conditions of our workers.
If this labour dispute is not quickly resolved it may result into countrywide strikes. The consequences of such industrial unrest are too ghastly to contemplate. The escalating prices of essential goods and services that have been triggered by the depreciation of the Kwacha are eroding the value of the salaries of our workers due to the diminishing purchasing power of the Kwacha.
It is for these reasons that we are calling upon the government to immediately lift the wage freeze and honour the 2013 Collective Agreement. We equally urge the government to learn to consult all relevant stockholders and embrace the spirit of give and take before making major policy pronouncements to avoid backlashes. This government has to learn that we are in a democracy and not an autocracy. The government has to learn to deal with our workers in an open and honest manner.We urge the government to deal with these labour challenges with a sober and level headed approach and not the heavy handed approach. We do not want to see what happened with the nurses to repeat itself because the ultimate losers are the poor Zambians who have continued to lack the services of the fired nurses.
As a Party, we fully appreciate the numerous challenges our workers are enduring. The bulk of our public service workers are what may be termed as the working poor. Low wages and poor conditions of service have become the norm for most of our public service workers. Paying for basic needs such as food, shelter and transport is a real struggle for them. Low wages are forcing most of our workers to resort to kaloba and all sorts of loans just to make ends meet.
It is Important to stress that our workers are the engine and backbone of the economy. It is therefore extremely important that the workers are `properly motivated and properly taken care of in order to increase their productivity. However, we want to caution that even if we increase the salaries of the public service workers it will not positively impact on their lives if we do not deal with the falling Kwacha and the general economic mismanagement currently obtaining in our country because the purchasing power of the Kwacha is diminishing daily. We need to seriously work on the fundamentals of our economy which are currently very weak due to lack of sound economic policies and sheer incompetency on the part of some individuals who have been charged with the responsibility of managing our economy.
Thank you.
Prepared and issued by:
Edith Z Nawakwi
FDD President
madam edith is very shallow minded and very negative. The issues she has brought up are minor. We were born with a depreciating cureency to start with. Its not logical fo any one to dream of a strike when pf has made civil servants the best paid in the history of this country. This govt has hearvily invested in infrastructure development. Why are u pipo so ungreatfu?
Edith is pathetic. You missed your chance to elevate Zambia, bamayo. Freaking armchair critic!
I don’t know why women are jealous of each other.
Nawakwi is clean, I stop here before I sin.
its like saying , we were born poor my children lets continue living like this. and also telling your children, i have a bought a TV and have invested alot in this machine. THE ‘ other side’, you are really on the OTHER SIDE, LOL
Gondwe only does what Sata tells him directly or through the board appointed by Sata led by Yamba (Sata’s brother in law). So strike where the source of the problem lies ; Sata.
Fish starts rotting from the head…. get rid of that thing in statehouse and the markets will respond
Is it the same thing that has turned Pyjamas into business suits ? Yes that thingy is useless.
I think Edith is right – Economy naiGONDWA under ba Gondwe!!! but who knows, may be he’s never listened to…
@Salamat
Correct. We all know the source of the problem, it’s not Gondwe, Alex, Kabimba, GBM, Msiska or ulya kateka atukile ulusele in public ati chisushi, I forget his name. His excellency Katongo and his PF is the obstacle to Zambia’s progress.
The issue is two fold.
we are paying interest plus capital on the bond
The contracts are given to chinese
with all this money going out you expect the kwacha to be weak.
Ba Edith is shallow .
Best paid? Are you sure?
The real flop is Michael Sata. The man is not of sound mind. He is the one we should be calling to step down first.
And this is where Nawakwi played the fo.o.l In a bid to protect Sata and further push the agenda of the M’membe-Sata henious diversionary tactic of extricating the creator of the economic chaos (Sata-Chikwanda) which is being played out in a shiety xchange rate, she offers Gondwe on a platter Herodian style. Crap. Gondwe works at the beck and call of the Minister of Finance (BOZ Act. Section 10, President appoints/disappoints Governor and deputies ) The one who is responsible for whatever happens at BOZ is the President since according to the BOZ Act, The Minister of Finance is empowered by law to issue instructions to the
Governor relating to Government policies and affecting the affairs of the Bank and the Bank is obliged to implement those policies.
madam edith peace be upon you, tell us, was the kwacha stable when u were minister? If the answer is no, then keep queit.
At least Nawakwi did a much better job than the current clueless chimbwis!
Edith uletina bamukabene.
You did nothing as minister of Finance
Honestly,even if you brought the best governor from U.S.A but as long as there is a thug on top who can’t even address the nation,no sound investor can risk his money.there is political risk in zed. Stop blaming asibweni Gondwe. Do you expect a better economy when a party in power only believe in infrastructure development while ignoring other sectors,if gondwe advises sata to reduce his cabnet can sata heed?let alone aimless borrowing,is it gondwe who brought rebasing which contributed in killing kwacha? Think madam!
@ganja
…good contribution….But on the other side there is what we call INTEGRITY….You may be right, may be Dr. Gondwe has brilliant ideas which are never supported by his colleagues and bosses…..in such a situation the best honourable thing to do is to RESIGN…..Levy resigned as VP when he realised that his cry and advise on corruption fell on deaf ears of his boss(FTJ). Despite his few flaws here and there(KCM sale), Levy died a respected person and is still regarded by many as the best head of state Zambia has ever had so far……
So it will just do good for Gondwe to disembark from the band wagon now….tho I would prefer ABC to be FIRED instead of resigning….
Don’t go far @ Scruti… You don’t resign in PF, it is a great insult to Sata to resign from PF. Look at GBM the once beloved brother turned enemy after resigning. @ gangr farmer I agree with you on this one.
@mann
..sorry, I overlooked that fact….as Nigerians would say…then ‘we are finished’. May be let him just request for re-deployment. The other fact is to do with the remunerations which go with that post….the only position whose salary beats that of a head of state…It would be f00lish of me to relinquish the seat whatever the circumstance….oh shit, why did I not think of that….?…thanks Mann
Amazing…really amazing. How can someone with a head on top of his shoulders really say the issues Edith is raising are ‘minor’? To say we’ve always lived with a depreciating kwacha is fatalistic and childish. MMD left pf with a strong Kwacha. No govt in the history of Zambia has made the Kwacha currency so useless as has done the now infamous Donchi Govt. It would be good for both Gondwe and archaic Alex Chikwanda to step down and save their faces!
Mr Gondwe,Sata and Chikwanda need to go – they are like poison gas planets seriously out of their orbit and will never align with the very demanding economy.
It is clear that in Mr. Sata’s administration, if you are a confidant, you are neither incompetent, obsolete nor irreplaceable. Though I wonder if the President is even aware of the state of the currency. If you seems only concerned with how fat his ministers are, I feel that he continues to miss the mark of addressing pressing issues. As Africans, we are never at fault whenever power is at stark….
It seems that most Zambians who post here including Ms Nawakwi do not fully understand the economic fundamentals of Zambia. 1). Zambia imports everything – even where there are substitutes produced locally. I am not sure that there is another country on earth that imports bread; Zambia does. Most inputs in agriculture, manufacturing and mining are imported. All these are paid for in foreign currency. Our export base is narrow, so we do not bring in alot of Forex. 2). Investors in Zambia are uncertain of the political landscape; to protect their investments, they do not hold on to the Kwacha rather, they convert their revenues into other currencies – usually out of the country only keeping the minimum kwacha requirements for their operations. 3). Reduced budget support by external agencies
Manlove there is more to it than just importing and less export.Lets take the case of MMD under chiluba and mwanawasa.The Kwacha stabilised under Mwanawasa despite imports.Zambians open yo eyes widely,Huge amounts of money is being syphoned out of the country to offshore bank accounts and buying luxury real estates.This is done by thoes you have intrasted to run the affairs of yo country.Agony iswhen a parent starts to sale,get credits (kaloba) and then hide money from the family and spends it on beer or prostitutes just because he or she suspects he or she has AIDs and will die soon.
ctd. depressed copper prices and narrow export base result in the country borrowing to bridge the forex gap. Borrowing from local markets for capital projects has the effect of expanding the amount of kwacha in circulation in the short to medium term. This money ends up in pockets of large contractors (foreign) who promptly externalise these moneys or convert them in a convertible currency. In summary, this is about supply and demand – the demand side has been growing while the supply side has been declining; getting rid of Gondwe or ABC will not increase the supply of foreign currency. In my opinion, to arrest the sliding kwacha in the short term, policy decisions are needed to curb the expansionary economic policies as well as managing the demand side through some import controls.
5). Pay restraint can help reduce the amount of money in circulation as well as limiting the disposible income. Given our propesity to consume imported goods it becomes essential that at this time, employees excercise restraint. Excessive pay settlements will only lead to further devaluation of the kwacha. Ms Nawakwi is asking the government to award massive pay rises, but these will only deflate the kwach further; people will go and spend the money in Shoprite and Game and these companies will externalise the money!! Others will swich from drinking mosi to heineken!
Thumbs up Manlove, you have hit the nail on its head. This is the type of debate we need on such platforms, bringing up valid points and analysis instead of insults and tribalism. As Zambians, we have to change our attitudes of expecting govt to solve all our problems, we must start finding solutions for ourselves- necessity is the mother of all invention.
Bitterpill so yu are.who else should we blame if not goverment.Government was elected by pipo to sort out their social and economic problem.Thats why we hold NRCs as Zambians,we have the right to demand for better services from government because we are stake holders.If those we have elected to save us have failed,then they should pave way for those with better plans and ideas to run government.so dont call us bitterpill but zambians who want the Zambian government to address this economic plunder.
madam u are so dull,tryin to protect sata,leave gondwe along and go 4 the cobra
Targeting missiles at the wrong person. In as much as Gondwe is not qualified, he is not source. The problem is the whole of PF government. The have zero idea on what to do, despite the fact that they have caused the problems that the country is facing.
First you should understand the root cause of the problem. Foreign exchange for a country does not fall free like manna from heaven. You have to work had. Zambia relies to much on copper, it is a sad stuation after 50 years of independence relying on one commodity. Gondwe is not the problem infact he is trying had. The problem is with all Zambians for failure to drift from copper as a major source of forex. Look at Kenya, Tanzania, Chile, Brazil
Musonda its its not all zambians but PF government which has failed stop misleadinding pipo.Yu cant intrust the government to school drop out leaving out Economic managers and jump on anti hill and say all Zambians are to blame.when we talk we are bitter.lets call a spade, a spade.
vote for me people
Manlove mudala (9,10,11), you offered a very interesting, factual and mature posting. Possibly among the best I have read on Lusakatimes on the free-fall of the kwacha. Will forward you observations to the government, maybe someone, just someone may listen.
Adios
@manlove it’s true there is imbalances between supply and demand of our currency and it’s the same reason Edith asking the Governor to resign because he does not undrestand economics. The monetary and Fiscal policies need to change. The Bank of Zambia needs a road map to plan what it wants to achieve. They need policies that will create jobs for the unemployed and at the same time reducing inflation rate. Interested rate must be cut to below 5% to encourage business to borrow and the long run these businesses will create jobs. Overnight depository rate must be cut too.
Sata and Chikwanda are suppose to resign but people with regional/tribal minds find the name Gondwe easier to sort out.
Honourable Nawakwi’s views are spot on but whilst I agree with most of her observations, it is also important for her not to spare all those members of parliament on both sides of the house who ratified the appointment of Dr. Gondwe as BOZ boss. Are we saying that the entire National Assembly did not look at his credentials for them not to know that the Man is not an economist but a lawyer? Lets be serious bane!
Yaba, Nawakwi has got very good cheeks. I can kiss her to death.
Nawakwi.I completely agreeee with her
I don’t think a Lawyer should head a bank? Gondwe was president Comesa Bank and even there he was a failure. Who has ever heard of Comesa Bank? That’s how mediocre Gondwe is. Chikwanda only knows archaic economics. He had possibly most courses in social sciences such as sociology and history. He has no understading of money and public finance. This man is not fit to be Minister of Finance. As for Yamba, Secretary to the Treasury, he trained in the Eastern block. He cannot man a Finance Ministry. Ladies and Gentleman, Zambia has been had. We have wrong people running our economy!
Lol. Christine Lagarde, the current IMF Director is a lawyer. Prior to heading the IMF she was Minister of Finance, the first woman ever in charge of economic policy in France.
William McChesney Martin the LONGEST-SERVING Chairman of the U.S. Federal Reserve Bank (1951 to 1970) studied English and Latin. The world’s largest economy was headed by an English major! As for Gondwe, he served PTA Bank since its 1st day of inception & is credited for bringing it to highest development bank ratings when he was its president.
This is just a tiny sample that runs counter to assumptions that the one heading an institution must have some fixed qualifications. Leadership & how to work with the team that scores is the key, not one person steering the wheel just because he got a certain…
Nawakwi knows where to focus –where it’s safe to play politics without rousing the giants who pull the shots. What change will that make though?
Has ANYONE thought of it this way: it is possible the Sata regime actually prefers depreciation of the currency. Remember they have a huge civil service bill, plus labour intensive road construction/rehabilitation projects. The funds they’ve borrowed are in dollars and thus they’ll be able to spend less dollars as the currency depreciates.
The Kwacha is likely to continue falling due to many factors surrounding it – including the fact that it was rebased (historically rebased currencies have faced steeper depreciation because governments can better afford to print more money than when a currency has more digits), etc. Plus copper price…
Think-tank, thanks for trying to defend Gondwe and the PF. You say the current IMF Director is a lawyer. Are you saying she is a performer? The title of IMF is International Monetary Fund, surely it would make much more sense to have someone who studied money matters. As for your theory that the Zambian economy is the way it is because of the re based kwacha. Why rebase if that would result in a hit of immerse proportions? MMD saw the light and never re based. Come Chikwanda and Gondwe, people with questionable qualifications and they jump on the rebasing band wagon. That my friend is what makes bad planning. To me Gondwe has failed to offer proper direction to the economy. HE MUST GO! Lawyer or no lawyer, he is a failure. And the man is from Malawi too. No love for Zambia.
Big mistake I made in seeking a constructive dialogue over PF, Gondwe & our nation in general. I saw a U.S. flag next to someone I thought has enough education with that privilege of being in an advanced nation, or someone with at least a global worldview on matters facing our nation. Only to hear mere rants and rage. Thank you for wasting my time.