By Isaac Zulu
Patriots for Economic Progress (PeP) leader Sean Tembo has advised the government to reconsider the use of the Public Private Partnership (PPP) model in financing infrastructure development in the country.
Tembo has observed that the Public Private Partnership model to fund infrastructure development is putting pressure on the Zambian Kwacha, hence the continuous depreciation of the Kwacha against major convertible currencies, despite the interventions by the Bank of Zambia (BoZ) aimed at stabilising the local currency.
“As Patriots for Economic Progress (PeP), we wish to advise the UPND government to reconsider the use of the Public-Private-Partnership (PPP) model as a primary means of infrastructure development in Zambia, because of its adverse impact on the exchange rate between the Kwacha and major convertible currencies. When infrastructure such as roads are financed using the PPP model, the investors, who are mostly foreign, get a revenue share from toll-gates on a monthly basis, which is in Zambian Kwacha. Since these investors are mostly foreign, they have to convert their revenue share into foreign currency every month, in order to repatriate their money. Since this revenue share amounts to billions of Kwacha, it’s conversion to foreign currency puts a lot of pressure on the Kwacha resulting in its continuous depreciation,” Tembo explained in a statement. “That is one of the reasons why the interventions from the Bank of Zambia (BOZ) to reverse the depreciation of the Kwacha, only work for a few days, after which the Kwacha resumes its downward streak of depreciation. It is because the underlying issues such as the high use of the PPP model to develop infrastructure projects, are not addressed.”
He advised the UPND administration to consider funding infrastructure development projects using local resources, as opposed to resorting to the Public Private Partnership model.
“As Patriots for Economic Progress, we wish to advise the UPND government to consider funding infrastructure development using local resources, as opposed to always resorting to the PPP model as the preferred model for funding infrastructure projects. A reduction in the use of the PPP model will see some stabilization of the Kwacha exchange rate against major convertible currencies,” stated Tembo.
