When President Hichilema ‘weeps’ over an empty treasury: Don’t weep for him, weep for yourselves and for your children.

Edward Chisanga,

At His crucifixion, “A large number of people followed Him, including women who mourned and wailed for Him.” Jesus turned and said to them, “Daughters of Jerusalem, do not weep for me; weep for yourselves and for your children.”

When President Hichilema arrived at the Zambian political scene, he literally wept for Zambians, “We have inherited an empty treasury,” in reference to the shambles and wreckage of the economy left by Patriotic Front (FP)leaders. I’m not simply being unfairly prejudiced against PF leaders. If I were, I would be speaking without figures. But, in all my economic analysis, I have avoided yelling without figures. Figures are power. No wonder they say that they don’t lie.

Every time the Head of State makes statements about this subject, I perhaps weep more because I follow whatever he says and tries to interpret them with figures. It is one thing to listen to statements of a devasted economy, and quite another to actually follow it in figures. The President makes us aware that our economy is unwell. There are several ways to show this. One way is to understand the (i) The state and impact of eroding growth of GDP per capita and GDP; the other is the (ii) extent and impact of debt and, (as this is well covered by experts and the Head of State, it is not part of my coverage here): as well as the (iii) The state and impact of falling economic fundamentals such as manufacturing value added, as well as inward flow of foreign direct investment in the economy. There’re other economic indicators of course but are not under my coverage.

The state and impact of tottering growth of GDP per capita

My research findings revealed that prior to PF rule, that is before 2011, Zambia’s per capita GDP grew handsomely, from 2000 to reach perhaps its highest peak in history of 7.1% shown in Figure 1 below, under the rule of the Movement for Multi-Party Democracy (MMD) which had come into power in 1991. But, during PF’s rule, from 2011, GDP per capita growth began to totter and shrink and went perhaps to its highest downfall of minus 6% in 2020. Those who follow economic growth will know that often, diminishing growth of GDP leads to that of GDP per capita. It means that what we see in Figure 1 below is a similar trend that happened to Zambia GDP growth. In other words, just as GDP per capita has been eroding lamentably, so has GDP.

With this positive growth trajectory and trend fashioned by MMD leaders, any optimist would hardly be wrong to form a conjecture that if they had ruled the next ten years, perhaps growth would have continued and translated into some stronger purchasing power for Zambians and consequent reduction of poverty even if, marginally only. An equally important point is that the size of Zambia’s GDP per capita income is simply too low in terms of buying power. It is worse when, as alluded to earlier, growth of this per capita is diminishing. This in turn affects demand for goods and services which is likely to be low. The state of GDP per capita affects us all. When growth continues over the years, it is likely to lead to increased purchasing power. When not, the purchasing power is reduced.

The state and impact of tottering economic fundamentals

Economic fundaments such as manufacturing value added play an important role in driving the economy. In particular, for many years, successive government leaders have been trying to lead a value-added economy robust enough to rely on exports of manufactured goods. The UPND government emphasizes an economy led by export value addition. But export value addition is founded on robust manufacturing value added in the GDP. When this is decrepit, and in fact falling, chances are that export value addition will not occur.

Once upon a time, the share of Zambia’s manufacturing value added in GDP had reached its highest peak of about 36%r in 1992, during President Kaunda’s rule shown in Figure 2 below. It is not only 1992 but a whole range of years seen in the Figure when robust share was witnessed. The sad news is that these glorious years were swept to doom suddenly when the share of manufacturing value added in GDP slumped to 8% in 2020 or began to fall in previous years. Clearly, creating value addition will be a major challenge, given this devastatingly low performance of manufacturing in the economy. Related to this, dilapidated manufacturing contributes little or nothing to the overall economy. That is partly why President Hichilema was welcomed into leadership with an empty treasury.

Finally, export value addition is a product of foreign direct investment (FDI) when it is available. In Zambia it has been largely absent for many years. More seriously, as Figure 3 below shows, it has been eroding – from its highest peak of about 9% in 2008 to about 1% in 2020. To acquire export value addition, Zambia needs to magnificently attract productive FDI that has a multiplier effect of technology, skilled labor and skills transfer. In the last two decades, there has been no robust inward FDI into Zambia to propel the economy.

That certainly contributed to the empty treasury over the years. So, for the Zambian economy to recover and generate prosperity, many holes created by many years of devasting economic downturn will have to be filled. Economic recovery will not come simply by a rise in GDP or GDP per capita growth of one, two, three, four of five years. The past negative growths would have to be filled as a basis for embarking on actual growth and trajectory of recovery. That is why, When President Hichilema ‘weeps’ over an empty treasury: Don’t weep for him, weep for yourselves and for your children.