Zambia’s Uphill Inflation Woes

 

By Mbuyoti Silimina

As Africa struggles to respond to the deadly third wave of COVID-19, its month on month inflation is ultimately worsening the already depressed economic fortunes on the continent.

The Zambia Statistics Agency (ZamStats) recently announced that annual inflation for June, 2021 increased to 24.6% from 23.2% in May 2021.

According to the agency’s monthly bulletin announced by interim Statistician General Mulenga Musepa on 24th June 2021, stated that on average, prices of goods and services increased by 24.6% between June 2020 and June 2021.

Interestingly, Zambia became the second country in the world to increase its benchmark interest rate this year as it seeks to bring down spiraling inflation that’s at a five-year high. In this context, the Bank of Zambia decided to maintain the monetary policy rate at 8.5%.

“The Monetary Policy Committee (MPC) noted that, although inflation is projected to remain above the upper bound of the 6-8% target range over the forecast horizon, inflationary pressures are projected to ease faster than earlier anticipated, particularly towards the end of the forecast horizon. This is in view of improved supply of food, particularly maize and wheat following a strong crop harvest, higher than anticipated copper prices and improved external sector support,” Bank of Zambia Governor Christopher Mvunga said recently during the MPC of the central bank at its May 17-18 2021 meeting.

However, the Centre for Trade Policy and Development (CTPD) has charged that the MPR alone cannot be seen as the silver bullet to address Zambia’s inflation dynamics. Rather, in addition to robust monetary policy interventions, correcting the fiscal situation is of prime importance.

Topping the African list of inflationary pressure is Zimbabwe with a rate of 194% year on year, followed by South Sudan (46.8%), Angola (24.8%), the Democratic Republic of Congo (DRC, 20.4%) Ethiopia (19.2%), Nigeria (18.1%), Guinea (12.3%), Sierra Leone (10.9%) and Liberia (10.5%), according to the Economist Intelligence Unit’s (EIU) latest country analysis.

Financial experts say the spiking inflation rate in Zambia is due to a combination of complex factors such as the rise in food prices and depreciation of the kwacha which has in due course gulped the life out of the local economy.

Historically, the Zambian kwacha reached an all-time high of K22.61/US$1 in June of 2021 and global financial analysts expectations estimate it to trade at K22.85/US$1 in 12 months’ time. This has garnered public interest given the exchange rates’ link to other economic variables such as inflation.

“When you look at the reports from ZamStats, they point to the fact that food inflation is one of the major factors meaning that the prices of food have gone up and this entails that it is becoming more expensive to produce this food and with an import-based economy like ours where, for instance, agricultural inputs such as fertilizer and chemicals are imported, it is obvious that will continue to induce inflationary pressures,” Lusaka-based economist Mambo Haamaundu told Nkwazi.

Haamaundu further hinted that for as long as the high cost of production, widening fiscal deficits, unsustainable debt levels, low forex reserves, and tight liquidity conditions among others are not rectified, inflation will accelerate further.

As to whether Zambia’s inflationary pressures will get better or get worse, Haamaundu predicted, “I don’t see the rate of inflation going down in the next one or two months even before the year ends for as long as the country’s deepening macro-economic challenges are not addressed.”

With inflation up by 1.4% from 23.2% in May to nearly 25% for June, Private Sector Development Association (PSMD) Chairperson Yusuf Dodia has also charged that Zambia’s high inflation is unacceptable.

Dodia lamented that since Zambia is a net importer of goods and services, a continuous rise in its month on month inflation rate is an indicator of a struggling economy as consumers will continue paying the price due to high cost of doing business.

“We really need to deal with inflation at its root cause and two clear areas that we need to look at is to increase production of goods as a nation so that we can export more and to ensure that export earnings are returned into the economy,” Dodia stated. “Right now with a US$ 10,000 per metric ton of copper price on the international market, we are not benefiting from this in any way as a nation because once the export of copper is done, earnings are being kept outside Zambia, a situation that ought to be changed by government policy.”

Meanwhile, the EIU’s further glimpse in the sub region revealed that another anchor for price trends down south is low inflation in South Africa whose central bank, the South African Reserve Bank (SARB) expects inflation to stay well within its 3-6% target-range, at 4.3% for the year.

“We expect even lower inflation, of 3.7% based on softer economic growth than the SARB is projecting for 2021 (at 2% versus 3.8%), which makes its record-low policy rate of 3.5% sustainable,” the EIU stated adding that as South Africa is a leading trade partner for Namibia, Botswana, Lesotho and Eswatini which all have currencies pegged at parity to the rand low price growth in South Africa is reflected in these countries and provides their respective central banks with space to remain accommodative over 2021 at least.

Interestingly, despite the COVID-19 outbreak, Ghana remains a shining example on the continent for having recorded lower inflation to a record low of 7.5% in May of 2021 from 8.5% in the previous month, below the middle of the central bank’s target range of 6-10%. Food inflation reached an all-time low of 5.4% (vs 6.5% in April). Also, non-food inflation declined (9.2% versus 10.2%), according to that country’s statistical service.

“We need a policy that will stimulate and facilitate competition in the economy without government interference in pricing mechanisms as well as the need to digitalise the economy by lowering taxation among ICT businesses especially during the COVID-19 pandemic,” Dodia highlighted.

In this context, with existing vulnerabilities in the local financial sector and fragile economic growth, Zambia’s quest to restore and anchor macroeconomic stability is scheduled to implement its fiscal adjustment measures in line with the Economic Recovery Programme (ERP) and understandings reached in discussions with the International Monetary Fund (IMF) over an economic bailout programme.

Zambia, which last year became Africa’s first pandemic-era sovereign defaulter on its Eurobond debt, will likely be able to finalise the IMF deal once the dust settles following a general election which took place in August of this year. An agreement with the fund is indeed crucial under the Group of 20’s so-called common framework for debt restructuring that Zambia will use to rework its more than US$12.7 billion in external debt.

It is also worth noting that at the time of writing Zambia had just voted in a new government in August 2021. We wait to see what effects this will have on the country’s inflation and overall economy.

Chinese Traditional Medical Therapy Brings Relief to Patients in Zambia

Feng Kehong in her clinic based in Zambia's capital, Lusaka- Picture by Derrick Silimina

By Derrick Silimina

Zambia is considering better utilization of its diverse medicinal plants, a worthwhile lesson learned from China.

Infertility can be stressful and frustrating for couples the world over; but in Zambia, there is also stigma attached to barrenness.

After trying for almost two years, Tamara Chiponge had given up hope that one day she would be able to bear a child of her own.

On the verge of reaching menopause, Chiponge became desperate for a child as she could no longer withstand the intense social stigma and pressure, especially coming from her close companions and family members.

“I used to put on a false smile to the public, but inside, I was hurting. I took care of other people's children [and it got to a] point where my mother-in-law forced me to adopt a two-year-old child,” she told ChinAfrica.

Infertility on the rise

Zambia's Health and Nutrition Communication and Advocacy Strategic Plan (2018-21) highlights that gauging from the prevalence of sexually transmission infections alone, it is estimated that both primary and secondary infertility rates in the country are of concern. Gynecologists' say infertility is actually a major public health concern because it affects one’s mental well-being, disrupts social bonding, lowers economic productivity and erodes self-confidence.

It is for this reason that Zambia's Health Minister Chitalu Chilufya recently said the situation calls for great investment in comprehensive reproductive health, including fertility services.

“Infertility accounts for 10 to 15 percent of outpatient gynecology's clinic attendance in Zambia, yet access to fertility services is seriously limited due to the high cost of services,” said Chilufya.

As in many other societies, in Zambia, the inability to conceive and bear a healthy child is considered to be the fault of the female partner rather than a problem of the couple. The lack of access to effective treatment causes much personal suffering, family discord and social disfunction.

Whyson Munga, Registrar of Department of Obstetrics and Gynaecology of University Teaching Hospital (UTH), recently noted that infertility is a huge problem in Zambia. Munga said that out of every 100 women that visit UTH seeking gynaecology services, about 30 of them have infertility problems.

Worldwide, both men and women do suffer from infertility, but culturally, infertile women are at risk of social stigma. Health experts say infertility refers to failure of a couple to establish pregnancy after one year of having unprotected and adequate sexual intercourse.

In developing countries such as Zambia, much as infertility is a health condition, it is also a social problem because from the perspective of the individual concerned, many unfruitful women consider that without children, their lives are hopeless.

Chiponge’s condition dates back to her mid-20s, when she had a severe ectopic pregnancy (a complication of pregnancy when a fertilized egg grows outside a woman's uterus) somewhere else in her belly, according to medical experts. They state that if left unchecked, the condition is life-threatening as excessive bleeding may lead to death, hence the need for urgent medical care. Consequently, her chances of falling pregnant were negligible, having only one fallopian tube - she lost the other tube after an operation.

As an old adage says, desperate situations call for desperate measures. Chiponge had tried all sorts of medication, not only conventional medicine, including fertility boosters, but also advanced infertility treatment called invitro fertilization treatment and African traditional herbs, in a bid to conceive. But all was in vain.

Acupuncture success

- A female acupuncture model with needles in the shoulder

In Zambia, fertility treatment is prohibitively expensive for most couples, with some people becoming destitute trying to pay for it.

Chiponge was first introduced to acupuncture therapy in 2009 by her younger sister, a friend of Dr. Feng Kehong, a Chinese medical practitioner who runs Zhong Yi Surgery in Lusaka's Roma suburb.

According to Acupuncture.com (a Chinese online medical platform), acupuncture is defined as an age-old healing technique of traditional Chinese medicine in which needles are inserted into energy points on the human body.

“It was in 2009 when I met Feng. Since I desperately wanted a baby, after having failed to conceive for more than 15 years of marriage, I was put on acupuncture therapy for three months and the following year [2010] I conceived,” she said, adding she was 46 years old at that time.

Having concerns about infertility in a world that needs vigorous control of population growth may seem odd, but it's a choice that many have no control over.

Nathan Mbewe, a Ndola based teacher, recently survived a protracted stroke because of the acupuncture therapy he got from Feng.

“I had a stroke for some time and might have died had it not been for Chinese specialized treatment I got here,” he said, adding that acupuncture worked wonders on him.

Mbewe said he has been recommending anyone with chronic illness to seek acupuncture treatment, and they have reported progressive results. A truck driver based in the Zambian capital of Lusaka is also impressed with acupuncture after having recovered from his swelling feet that almost rendered him jobless.

“Due to the long-distance driving, I used to have constant swelling in my feet,” said Andrew Mulenga. “This affected my work, until a colleague advised me to consult Feng to try Chinese medicine after an attempt at conventional medicine failed,” he said.

At first, Mulenga questioned whether acupuncture was real and doubted that pricking needles into his body would change anything. But, to his amazement, after a few sessions, his condition started improving.

Helping with needles

According to Feng, who has been in Zambia since 2001, initially working as a doctor in two of Zambia's general hospitals before opening her own clinic, she is delighted that a lot of people are being helped through acupuncture in Zambia.

To help her cope with the increase in patients, Feng has trained a local assistance, Nelly Banda, to work with the needles.

Despite Chiponge having reached menopause, she successfully gave birth naturally to a bouncy baby girl who is now a healthy nine-year-old.

Feng said some of the known diseases that she has treated successfully include hypertension, stroke, diabetes, infertility and sexually transmittable diseases.

Officially, acupuncture has the accreditation of Zambia’s medical council, as the Zambian Government recognizes traditional and complementary/alternative medicine.

Although there are no official regulatory measures for recognizing the qualifications of practitioners, the Traditional Health Practitioners Association of Zambia reviews and registers traditional practitioners for licensing and plans are under way to develop such regulations.

Reminiscing about the time when Chiponge, now 56 years of age, came to seek fertility services at her surgery despite her older age, Feng said she was hesitant to help.

“I was hesitant to work on Chiponge; but after recommending acupuncture therapy on her, within a few months, she came back so excited and informed me she was pregnant,” said Feng. “You see, a lot of diseases could be treated through acupuncture and I have seen this happen over the years to many patients that I have attended to.”

Derrick Silimina is an award-winning multimedia journalist based in Lusaka, Zambia. His work has appeared on many media outlets in Zambia and abroad.

Made in Chibombo

Nowadays

© stepmap.de

By Derrick Silimina

In the town of Chibombo in central Zambia about 100 km north of the capital Lusaka, an important part of Zambia’s industrial future is taking shape. 

On a 600 hectare plot here, a unit of China’s Jiangxi United Industrial Investment Ltd is building and starting to operate a multi-facility economic zone (MFEZ). 

When completed, the Jiangxi MFEZ will be a combination of industrial park, technical innovation centre and agricultural processing zone.

Jiangxi United has pledged to invest $ 600 million in the project, under China’s massive Belt and Road infrastructure Initiative. For Zambia, the Chibombo project is part of an effort to build up its manufacturing sector and diversify its economy away from dependence on agriculture and mining.

The Chibombo site will be fully operational by the end of 2021, according to General Manager Xu Jianfeng. So far, five Chinese companies have agreed to invest a total of $ 160 million there:

• Golden Eagle Tobacco is investing $ 100 million in tobacco planting and processing.
• V.L. Pharmaceutical is investing $ 30 million in a medical-equipment manufacturing.
• Jiangxi Xinhu Steel is building a $ 20 million steel processing plant.
• Sun Line International Logistics is setting up a $ 5 million in a logistics service centre.
• The Electric Porcelain Branch of the Jiangxi International Chamber of Commerce is building a $ 5 million electrical insulator factory.

The tobacco plantation and processing facility, as well as a concrete-making base, are already up and running, Xu says. In all, 500 jobs have been created so far at the site, and project managers expect that number to grow to 1,800 by the end of 2021 and to 6,000 by 2025.

While looking for additional investors, Jiangxi United has spent more than $ 40 million on infrastructure such as roads and plans to spend $ 60 million more on infrastructure over the next three years. The wider infrastructure plan includes building a job skills training institute, a service centre for small and mid-sized enterprises in the area, a medical clinic and a police station.

Generally, special economic zones such as an MFEZ benefit from relaxed tax and/or customs regulations to attract investors. Zambia’s Trade and Commerce Minister Christopher Yaluma toured the project in February and said the government will support the project with “incentives that will attract more investors”. He added: “This is one of the fastest-developing economic zones in the country.”

Similarly, Zambian Vice-President Inonge Wina toured the project in June 2021 and said it will boost the region’s industrial base. Apart from creating manufacturing jobs, the project will spur investment in other sectors, such as housing development, she said.

The Jiangxi MFEZ is only a small part of China’s investment in Africa. China pledged $ 60 billion for Africa at a summit in Beijing in September 2018. 

This has massively stimulated Chinese-African trade. By 2019, trade between China and Africa grew about 20-fold compared to the year 2000, reaching $ 209 billion. In the same year, Chinese foreign direct investment in Africa reached $ 49 billion, according to the Chinese government.

Derrick Silimina is a freelance journalist based in Lusaka. He focuses on Zambian agriculture and sustainability issues.
derricksilimina@gmail.com

Refuge in a storm

© stepmap.de

By Derrick Silimina

A home of 20 elderly people and 30 orphans, among them disabled, bedridden and mentally ill patients is comprised of residents that are admitted regardless of tribe or religion.

The Divine Providence Home in Chawama, a suburb of Zambia’s capital Lusaka, is a refuge for some of the country’s must vulnerable citizens. 

The home, founded more than three decades ago, is run by the Missionary Sisters of the Holy Family, a Catholic religious order. It survives mainly on donations from well-wishers. With the impact of Covid-19, however, the home faces growing difficulties. Contributions of food, clothing and medicines from Zambian charities and businesses have all but dried up, as donors face pandemic-related financial problems.

“Since the outbreak of Covid-19 it has been tough to provide for the basic needs of the people being taken care of here,” says Sister Judith Bozek, 78, a Polish nun who heads the home. “Everything is more expensive now; it is difficult to cope in this pandemic,” Sister Bozek says. “A few people still show up sometimes to donate food, medical supplies, clothes and diapers for the orphans, but the needs are great. But we thank God; He is with us for sure.”

Residents say the Sisters running the home have managed admirably in these difficult times. Teddy Chipili, 68, from Luapula Province in northern Zambia, has lived at the home for over two years. He says the Holy Family Sisters rescued him from homelessness. “I was admitted to a hospital for six months, and after my discharge I lost my income and could not pay my rent. I was stranded, and I thank Sister Bozek and her team for having considered my predicament.”

Esnart Kangwa, 62, also arrived destitute. She has chronic diabetes and hypertension and eventually her family was unable to pay her medical bills. “Without Sister Bozek I would be dead now,” she says.

The Divine Providence Home is not the only charity facing pandemic-related difficulties. The United Nations Children’s Fund (UNICEF) says the pandemic has had a devastating impact on all types of social services, particularly those for children. Many children, adolescents and elderly people in Zambia are vulnerable to poverty, violence, family separation, malnutrition and disease.

In an effort to close the gap between their needs and what charities can provide, Zambia’s government introduced the Service Efficiency and Effectiveness for Vulnerable Children and Adolescents initiative in 2017. The initiative combines social protection programmes and government cash transfers with case management. The aim is to increase access to services for households caring for vulnerable children and adolescents.

“The government is committed to addressing these vulnerabilities,” says Pamela Kabamba, permanent secretary of the Ministry of Community Development and Social Services. “The programme expands protection for the most marginalised Zambians.”

Derrick Silimina is a freelance journalist based in Lusaka. He focuses on Zambian agriculture and sustainability issues.
derricksilimina@gmail.com