A postcard from Lusaka
Zambia, a whole country rich in minerals, is flat broke. Our hospitals are short of everything from gloves to insulin; and our ambulances are often out of fuel. Public sector salaries are paid late, sometimes not at all. Services are falling apart. The currency is collapsing and inflation is in the spiral upwards.
But rejoice! We have not defaulted on our debt,” thunders our ever-thirsty finances minister Margaret Mwanakatwe, as we edge ever closer to the precipice; indeed, banks in Europe and beyond are still ready to lend us even more.
President Edgar Chagwa Lungu, who promised to stop the national self-harm of unsustainable debt, last month agreed to borrow another 100m Euros from a private Italian bank to help finances a deal for that priority area in public policy: er, military jets. Our gap-toothed saviour liked his planes, travelling in style in the white leather seats of a top-of-the-range Gulfstream G650 executive jet, bought for twice its list price at $130m with an Israeli loan last year. Not for Lungu the shabby Cessna rental planes in which his predecessors would do their official travel.
Nurses, teachers and postal workers, meanwhile, have fared less well. “It is normal not to pay salaries on time,” declared the erstwhile presidential spokesperson Amon Chanda blithely. Ridiculed for such gems as “the Kwacha is not depreciating, it is the dollar that is appreciating” and his determination to blame all Zambia’s ills on the media that reports them rather than the government that creates them.
Alas, Chanda was to catch himself out with his own mediocrity, marked by his sudden resignation a month ago. Surely it was only the jealousy of rivals that explains rumours that Chanda told Konkola Copper Mines he could persuade Lungu no to order the company’s liquidation - for a fee. But the mine went under and a Chinese company seems to be the first in the line to take over KCM’s assets. Despite the government’s justifications, it smacks of asset seizure. Investors are increasingly skittish, and the rating agencies now have Zambia firmly in junk territory.
Despite the risks, Zambia has secured a speedy stream of loans. Lenders have been spurred on in part by the enormous fees they stand to gain - as much as 3 per cent on deals worth hundreds of millions of dollars. China is centre stage, with its financing of curiously expensive airports and roads, but Israeli banks have also quietly lent more than $1bn, largely for surveillance equipment, and Standard Chartered, Credit Suisse and Investec have all done well out of lending for infrastructure.
Given the dire state of our economy, how much of this has been for the public good is questionable. Outrage over the borrowing bonanza is growing, prompting Lungu to turn from denial to vague reassurances that his equally vague “global connections” will stabilise the economy. It’s a mystery what these are, but should they fail to come through, perhaps our God-fearing leader can blame divine destiny.
Originally from Private Eye