Maravi

Letters - The IMF's Definition Of Success

Explaining Zambia's economic boom
By Imasiku Chanda
Saturday May 31, 2008 [04:00]

The macroeconomic fundamentals point to the fact that Zambia, as a country, is doing fairly well economically. The Gross Domestic Product (GDP) is about six per cent, and is growing; the kwacha is standing its ground against major world currencies; inflation has been contained to manageable levels (until recently, it was in single-digits); high copper prices are translating into trade surpluses; the stock market is booming; the list goes on and on.

Economists are ecstatic about these statistics, but they are not telling the whole story. Looking at the flip-side, the ordinary citizen still struggles to have a decent breakfast (the sugar prices doubled overnight), mealie-meal prices are soaring. And in trying to grab a piece of the 'Zambian Dream' by building himself a house, the ordinary Zambian on the main street is unable to continue building because the cement price has gotten out of reach.

He also has to grapple with the never-ending bills, and, while his trade union is still squabbling with the government over a pay rise, he has to figure out how to supplement the income of his two intelligent children at the University of Zambia who are on government bursary, but whose meal allowances will not be increased. So where is this economic boom people like Chibamba Kanyama so passionately talk about?

The answer is, they are not explaining the full picture. They are not telling us that GDP in Zambia is measured from the 'production side', they are not telling us what is happening on the 'income side'.

The economists need to follow that production and tell us how it is being distributed, then we will understand why we are not having any piece of that goody-goody economic pie. They should also explain to us how we can have a 100 per cent price hike on sugar in a week.

The Central Statistical Office, in their monthly bulletin for April 2008, reported that the income distribution is still unevenly distributed in Zambia.

The report says that the bottom 80 per cent of the population in terms of earnings were reported to have acquired only 31 per cent of the total income, while the top 20 per cent of the population claimed 69 per cent of the total income. So even if the government is claiming to fight poverty, which currently stands at 64 per cent, they will not win the fight as long as the income distribution remains as lop-sided as it is.

I have not even talked about the money being externalised by the multinational companies running our now-vibrant mines!

So the next time our able economists go on a platform to explain the economic boom, they need to tell us why we, the bottom 80 per cent, are not 'seeing' it. They need to explain to us how the income is being distributed, and what my disposable income is, if any. A good economic analyst should always look at the two sides of the coin.

I implore the Economic Association of Zambia (EAZ) to give us a regular economic outlook, similar to the Central Bank governor's quarterly briefing. Unlike the governor's address which focusses on macroeconomic issues, the EAZ should talk about the Microeconomic issues such as when the price of sugar is going to come down, the cost of feeding a university student, the poverty datum line, why the disposable income of Zambians remains so low despite the economic 'boom'.

Labels: EAZ, ECONOMY, IMF, MACROECONOMICS, POVERTY

posted by MrK @ 3:22 PM