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Monday, October 25, 2021

Zambia should focus on growing the economy from own resources-Sinkamba

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Green Party President Peter Sinkamba says the austerity reforms which Government plans to embark on should not focus on foreign saviours but growing the economy from own resources.

Speaking to the press in Kitwe this morning on the planned trip by ministers and other government officials to China to renegotiate Chinese loans, Mr. Sinkamba said the move is good except the timing is wrong and therefore is unlikely to yield desirable results.

He cited the on-going trade wars between China and the US which in the short to long-term appears to be hurting the Chinese economy seriously and may increase as the war escalates.

“The tariffs so far imposed account for about 0.1% of the global GDP. This is a massive loss on either side. Both sides are grieving. I am sure either side must be busy trying to search elsewhere in the world where they could generate money to fill up the void created by the trade war. To make matters worse, the tit-for-tat trade war is unrelenting and escalating because both sides are stubborn and equal to the task. So, to ask for rebates from China at this moment in time, on probably non-performing loans, maybe like adding salt to an injury,” Mr. Sinkamba said.

On June 15, Trump declared that the US would impose a 25% tariff on $50 billion of Chinese exports. Tariffs worth $34 billion came into force on July 6, with a further $16 billion to begin at a later date. The United States has also stated that it would impose additional 10% tariffs on another $200 billion worth of Chinese imports. China has also reiterated with a $50 billion tariffs.

Mr. Sinkamba said if he were in the saddle, he would have called off the trip stating that the timing is wrong.

“The timing is wrong. It is like going to ask for salt and sugar from a neighbour who is hosting a funeral. That doesn’t auger well. If it were me in the driver’s seat, I would have called off the trip to focus on local economic matrices,” he said.

“The other important issue to be mindful about is the fact that China would want to fill up the void created by the on-going trade war. So, they may employ a shrewd give-and-take strategy whereby they may concede to reduce interest rates on the loans and in return demand that Government guarantees them even more and more loans and big contracts. I think that would be even more harmful to the economy than the status quo,” Mr. Sinkamba said.

Mr. Sinkamba has since advised the government to focus on tangible local economic matrices.

“For example, last year, Zambia exported US$8.1 billion worth of goods around the globe. Of this figure, copper contributed US$6.1 billion, accounting to 75.7% of total exports. Other base metals such as cobalt generated US$124.5 million, which is 1.5% of the global worth, while gems and precious metals generated US$101.6 million, which 1.3%. Sulphuric acid from the mines generated US$246 million, which 3% while cement contributed US$157.4 million, which is 1.9%.

“When you aggregate these figures, you will note that the mining sector contributed more than US$6 billion towards. Ask me how much of that money hit the accounts in Zambia and you will be shocked. Less than a billion hit the accounts here at home,” he said.

He suggested that as an austerity reform measure, Government could venture into renegotiating minerals sale agreements in order to make all auction of minerals to take place in Zambia as is sometimes done with gemstones. He said by so doing, Government would move closer to seeing the true value of its mineral wealth.

“Such a move would not only boost tangibility of the country’s austerity reforms but also help the secondary metal trading while simultaneously bring about transparency to the sector,” he said.

He said the measures could be such that the company’s traditional buyers could be allowed to access uninterrupted supply of minerals from the mines provided they competed favourably on the trading floor in Zambia.

He added that such a deal could be fair to Zambia because, for the first time, the country will have direct access to the market.

“ZCCM-IH could be allowed to sell between 10 and 20 percent of minerals production independently from the mining companies, depending on its shareholding in respective companies,” he said.

He also said such a move will allow the country to judge the market and get better value for its produce.

Since privatization of the mines in 2000, mining companies sell their produce exclusively to their clients. Government and ZCCM-IH play no hand in the sale.

“The current market trends are that Government, ZCCM-IH and emerging metal producers are getting low values from their produce in markets abroad that include Switzerland, India, China, Singapore and others.

“We need a monumental development which should now enable mineral buyers to purchase their minerals from Zambia and initiate the much-needed critical mass for secondary mineral trading, for example, in Kitwe,” the Greens leader said.

“We need to give our people direct access to the market which we believe should, among other things facilitate the development of upstream and downstream metal and gem industry in Zambia,” he added.

He said Zambia needs agreements that provide government with an independent sales channel as well as an opportunity to develop an independent price verification system and gain wider understanding of the metal and gem business.

source: lusakatimes

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