By Isaac Zulu
Private Sector Development Association chairperson Yusuf Dodia says the impending removal of subsidies on electricity and rise in fuel will negatively impact domestic growth
In an interview with Daily Revelation, Dodia described as ambitious the task to attain four per cent economic growth, as being projected by the UPND government, when the country is still highly indebted.
He said that it is important to take into account that Zambia’s current external debt stands at US$17 billion with a domestic debt of K200 billion while the country’s debt servicing rate is about US$5.2 billion per annum.
He said that it is also imperative to note that Zambia has been downgraded to a low income status while the $1.3 billion International Monetary Fund bail out package and the recent grant from the World Bank will be channeled towards social services support and governance structures.
“There is no crime in being ambitious as a country. I think it is quite an ambitious task to attain four per cent economic growth in a scenario where we have $17 billion foreign debt, the country has K200 billion domestic debt and we are debt servicing at the rate of K78 billion per year, which is about $5.2 billion. Remember also that we have downgraded from a low middle income nation to a low income status,” Dodia explained. “We are receiving support from the IMF, including the grant from the World Bank, which is targeted at social services structure support and also governance structures.”
He noted that the impending removal of subsidies on electricity tariffs and subsequent increase in fuel pump prices would negatively impact on the growth of domestic industries.
Dodia said that in the event that such measures are implemented, manufacturing companies are likely to transform into distribution hubs for goods and services, saying this will lead to job losses.
“The question is how can we grow the GDP of the country, given that it is anticipated that government has indicated that they will remove subsidies on electricity tariffs and fuel? It is expected that prices will go up and those in the manufacturing, those that employ people to manufacture products will say: ‘We cannot afford.’ And manufacturing companies will transform into distributors,” Dodia said. “They will just be importing and selling using their warehouses. This will lead to loss of employment in the manufacturing sector… the growth of domestic industries will be negatively affected. It will also impact negatively on the country’s productivity because trade is the best to grow an economy.”
He also said that there is need for stakeholder engagement in the formulation of a strategic programme that would guide how the country would achieve a four per cent economic growth.
“In order for us to achieve some of these goals, we need to have a strategic programme that can be shared amongst all stakeholders in the nation that is going to indicate the path we are going to use in order for us to achieve the four per cent economic growth,” said Dodia. “Yes, the opening of two nikel mines in Southern Province and Kalumbila can add to the statistics of economic growth. But how is this going to impact on the 20 million Zambians? Those are the statistics we need on the social and economic status of the country.”
