How to End Zambia’s Poverty

Journalist and Human Rights activist Laura Miti recently wrote about some unfortunate experiences her newly established small restaurant has faced with the police. In relating her infuriating ordeal, she also touched on the heavy cost of doing business in Zambia. “Take Ipesheni [the restaurant],” she wrote on her popular Facebook page, “we have made sure we have paid the crazily expensive fees a business needs to be fully compliant in Lusaka.”

At the end of her post, she re-emphasizes that painful point: “I will say it again – it is very difficult to make honest money in Zambia. The legal requirements to operate are already laborious and, as said above, punishingly costly. Then we must add the police being random. I’m sure other establishments suffer other authorities.”

Politicians and technocrats keep coming up with all kinds of convoluted “national development plans” that they sincerely think will one day cure Zambia’s chronically ailing economy. Zambia is now on the 8th national development plan, with absolutely nothing to show for it, because these “plans” are actually useless, if not destructive. We have been doing them since the time of Kenneth Kaunda when he copied them from the former communist Soviet Union, without stopping to ask whether they ever produced any meaningful improvements in people’s livelihood.

The only real secret to “development” has always been hidden in plain sight: reduce the costs of doing business and the economy will boom. That’s all. It doesn’t matter if it’s small businesses or big businesses, the government must not make business harder than it already is by having so many costly regulations, fees and taxes. On top of this, they even decide to add other random costs like irrational policing of these small companies that are trying hard to just stay afloat. It’s almost as if they are trying hard to keep the country poor!

President Hichilima, as a businessman, already knows these things, so we were hoping he would do better than his predecessors. So why has he not aggressively implemented an environment that is pro-business?

All our politicians fall into the same trap once they get into power: they start trying to directly help people, instead of doing it indirectly by letting businesses grow so that they can be the ones to employ them and improve their lives. A small restaurant might not employ too many people, but if the owner sees that they are making a lot of money, they will be motivated to open another one, and then another one, or at least to grow the size of the restaurant by introducing more ideas to win new customers. Whether they are mainly doing this for profit or because they just enjoy serving people, it will result in more and more people getting jobs – real jobs that actually make money in the economy. The suppliers they are buying their vegetables and chickens from will also make more money, and end up hiring more people to help them. That’s the only formula for true economic growth.

This is a much more effective way than trying to give people government jobs. You can keep boasting about hiring 10 thousand new teachers or nurses when the economy could have produced 1 million jobs if you had just allowed businesses to operate freely and cheaply.

Many people feel guilty when they oppose government programs that give people free government jobs or “social cash transfer” or “CDF” or “cash for work” or “cash for pregnancy” or many other economically useless programs. You feel guilty opposing such programs because you sound like you don’t care for the suffering people. And yet those same policies of expensive expenditures are the ones that keep the same people poor. To fund those programs you need to keep the taxes (or “fees”) high. And by keeping taxation high, you are just making it more impossible for more people to become employed.

Abolish all these harmful “social” programs and unleash the businesses to be the ones to solve the problem of poverty, by unburdening them from all the unnecessary costs, including the invisible tax of impetuous policing.

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The author, Chanda Chisala, is the Founder of Zambia Online and Khama Institute. He is formerly a John S. Knight Fellow at Stanford University and Visiting Scholar to the Hoover Institution, a policy think tank at Stanford. You can follow him on X @chandachisala.