GOVERNMENT must take advantage of the loans with 3 percent interest rates currently being offered by the Export-Import Bank (Eximbank) of China to finance socio-economic sectors, instead of using more expensive and restrictive finances, says Private Sector Development Association (PSDA).
PSDA chairperson Yusuf Dodia said unlike going for Eurobonds which had high interest rates of about 7 percent, the rates from Eximbank were much lower. Mr Dodia said loans from the bank had a longer maturity period of between 15 and 20 years as compared to Eurobonds which could not go beyond 10 years.
“The current international bonds being issued by Zambia will demand the yield rate above 7 percent, meaning that we will have to pay 7 percent for those bonds and they are likely to be 10-year bonds and not more than 10 years old which means that we will have to pay them back.
“But from the Eximbank of China we are likely to have the 3 percent which is much lower and the borrowing from the bank will be on a longer period between 15 and 20 years. So definitely going for the Eximbank of China financing facility is the way to go for Zambia,” he said.
He said the advantages of borrowing from the Eximbank included low interest rates and the ability to renegotiate the facility depending on how the economy progressed over time whereas with the Eurobond, there was no negotiation.
“I think that as long as we are focussed and borrow the money for proper investment in social-economic areas, then we cannot go wrong,” he said. But Economics Association of Zambia (EAZ) president Chrispin Mphuka said borrowing from the bank would depend on the conditionality which came with the loans. Dr. Mphuka, however, said at the moment Zambia did not have the capacity to contract more debt.
“Does Zambia even have the capacity to contact more debts? I do not think it has because the cost will be just unmanageable,” he said. He also called for more than 30 percent fund allocation to developmental projects and social services such as health and education.
“This has been a long standing development problem in Zambia for a very long time, we have had very little to spend on projects and programmes and too much on wages. That is indeed a concern,” he said.
Dr. Mphuka, however, said the 52 percent of the national Budget spent on civil service emoluments attracted human resource in social sectors.
“It does not mean that when you spend on people and wages you are not doing development because there are sectors that are purely dependent on human resource like the health sector. “For you to attract expertise and to deliver good services, it is not just about building a hospital. It is about having the drugs and human personnel,” he said.
This mindset is simply retrogrossive…surely how do you as a country benefit from these Exim Bank loans when its country giving the loan that uses its people; no skills transfer just casual jobs for the locals.
How about no loans at all work hard and soend within your means.
Really this mentality of always performing thru loans shud be kept minimal. Very few develop thru excessive loans cos the lender is also in business so much of the profit u gain from investing the loans is mostly transferred to the lender.
Don’t argue! How many loans did fossil Minister Of. Finance contract for Zambia? How many loans did Kasonde, Penza, Nawakwi & Katele contract? They were signing loans daily but we are steal reeling in poverty.
At least under Levy & RB there was a decline in borrowing when Magande & Musotwane were Ministers Of Finance cos of their prudence.
Better to start small & be prudent & build on to something big than remain contracted to loans in perpetuity!
@Neutral: that’s the way to think about debt. Instead of wanting more, more, we should be asking what for and why? There’s a lot to be said for being prudent. And are the China Eximbank loans new such that Alexander Chikanda had never heard of them? Why has Dodia just woken up to Chinese loans? Where was he in 2012 when PF were going nuts with Eurobonds?
Why can’t the local wealthy Zambians come forward and bail the country out? We have very successful people in this Land. Please this is your opportunity to put your money were your month is. WHAT EVER YOU DO,DON’T SIGN THE IMF DEAL….That is ASSISTED SUICIDE… There has to be another way…. This EXIM BANK LOANS IS ALSO THE YOUNG BROTHER OF IMF. Its Time to look for TANGIBLE SOLUTIONS.
Dont you Zambians see that you are on the way to Colonalism again???????????
Clearly colonialism never went away. It turned from the ‘age of exploration 1600-1880, colonialism (1880-1965), neocolonialism (1965-1989/94), globalisation (1995-today).
The same family/bank that created De Beers in 1887 before it became the world’s global diamond trading monopolist, also invented the Eurobonds. They have a long history of making large loans to states. In fact, the British taxpayer is still paying off the Southsea Bubble Loan, the Abolition of Slavery Loan, the Irish Famine Loan, the Crimean War Loan, the WWI Loans.
What is the difference between Colonialism and Tribalism?
Tribalism just means that you have new black masters ie. Bembas. Otherwise there’s no difference. You are now required to speak Bemba in govt offices,while during colonial times it was English.
Too many loans is not healthy for the nation. Our loans are usually used on third grade infra-structure which will need repairs just soon after being completed. Those repairs will demand we get more loans so the vicious circle of loans continues. Lets make prudent decisions. Lets buy oil from within the neighbourhood for the price to cut to half its current cost. That means building a pipeline to Luanda/Cabinda. Lets sponsor our university students to research on the alternative economy and local farming implements. Lets develop our steel industry
Here is a no-brainer: the IMF and World Bank have never developed a single country in their long history. It is telling that the IMF always has a western white President while they leave the UN to non-white regions. PF have screwed up Zambia’s credit rating to a basket case that now needs a bailout from western sharks.
PF use real economists to help u think for the benefit of Z and not the party. Zambians ar watching very quietly but hungry, fomented, frustrated, regretting & may not even vote in 2021. Let personal gains b put aside coz we are fed up of all this rubbish. Too much ukulyamo!
Our economy is gusping& stressed wt inflation. Why? Does it mean there are no capable people to forecast the economic decisions taken by people who occupy offices using experience & not qualifications? Time for experience is gone. One needs to learn Principle, apply & relate. Let’s be sharp for Gods sake. Why shd same pipo come in black today& wen they put on white they change names and bcome different people wt different name. Its a pity
Jay Jay you have nothing god to say about Zambia so please keep quiet. This advice is great!
I say we also adopt Chinese way of dealing with corrupt officials committing financial fraud of public funds…..hanging, electric chair….er……hari-kiri(sp)!
But we borrowed from everywhere including the ChinaExim Bank! Doesn’t Dodia know that? Then also, I suspect people in power preferred Euro Bonds to China Exim loans since they had a chance to make “Commissions” when appointing a Bank to manage the process of marketing the bond etc which might not have been the case with China Exim Bank!