Zed Econ Observer

NAPSA – GIVE US KA PARTIAL WITHDRAWAL!!!
There have been a lot of conversations on the proposed partial NAPSA withdrawal. In this commentary, I offer my 2 Pence by answering the following brief questions:

[1] Will this not expose people to the risk of being vulnerable in old age? Yes, this is the risk for those who are [already] reckless in their financial management but the flip side question is equally important, doesn't the current act disadvantage players who are diligent with financial management? The answer is a big yes. Therefore, to split the plate, it aught to be made partial with a few appropriate conditionalities to help incentivise good behaviour. And in the long run, the hope is that ‘player behaviour’ will be skewed towards that which brings a higher return at both the individual and the macro levels.

[2] Could this be a catalyst for enhanced product variety for pension funds management? Absolutely!!! Theoretically, it is possible for one to partially access their funds and deposit them with another provider who offers a relatively better return. The wider financial market can innovate around this move. It's a potential business opportunity for service providers. Likewise, the partial withdrawal approach can act as an incentive [wakeup call] for NAPSA to creatively improve on its offering to reduce the number of client partial withdrawals if the argument is that the act will adversely affect their portfolio.

[3] Don't we already practice this in our daily lives? We do practice a form of this balancing act. Our wage is split into two, consumption and investment. We mainly invest in things like education, property, small businesses, etc. And now there is a growing number starting to invest in financial assets such as government bonds and treasury bills. The main constraint on investment has been a lack of sufficient disposable income, hence, the consumption side outweighs the investment. Otherwise, on average people have the appetite to invest. Therefore, this move will fall on some already modelled practice by consumers and will hopefully help in improving the investment side.

[4] Could this lead to inflationary pressure? The chance is slim because this is money already in circulation. However, we need a thriving real sector, and the move can be argued to contribute towards improving the performance of the real sector.

[5] Should we use this generation to pilot how pension funds can be best managed in Zambia? Absolutely the right thing to do. Appropriate refinements can be done to the approach upon its rollout and implementation of M&E processes.

[6] What will be some of the key ENABLERS: Financial literacy will be key; variety of financial products; appropriate conditionalities from the regulator; enabling environment for entrepreneurial initiatives.

[7] On a lighter note: I can’t wait to test the ka ‘always busy’ feeling of HILUX drivers [hehehe]. When you know…you know….

WHICHEVER WAY YOU THINK ABOUT IT, PARTIAL WITHDRAWAL ‘NICHITU CHAMBWINO MANIGI’!!!

John Musantu, PhD

PASSION-EARN-CONTRIBUTE MODEL OF INNOVATION AND GROWTH (PEC-IG): MY CURRENT ACADEMIC WORKING PAPER......

In my PEC-IG Matrix, I argue that innovation and sustainable growth of society are anchored on the ability of society to allocate players [individuals] passions [talents and abilities] in the appropriate sectors. In other words, the pull factors [incentives] in different sectors of society should be conducive for individuals to evenly self-select into areas that best meet their profile. The argument is that, in areas where we are passionate [talented, possess the most ability., etc.], we do things seamlessly, hence, facilitating ease of innovation, and ultimately moving society. Two key pull factors that influence appropriate self-selection into a sector are enumeration [revenue earning/wage] and a conducive environment.

The key argument in the PEC-IG Matrix is that differences in the level of innovation and ultimately economic growth amongst countries will be determined by the degree to which incentives in the different sectors of society in the respective countries are evenly spread, and the degree to which player’s [individual’s] passions are matched to appropriate sectors in society.

To achieve this, there should be no systematic skewness in the distribution of incentives [e.g., earnings and enabling environment] in the different sectors of society. There can be outliers of sectors with a relatively higher level of incentives, but this should not be widely spread. There is a need to have a relatively even spread in the return on work/service in the various sectors of the economy.

“People should work in areas where they are passionate [possess most ability/talent] in, earn a living from there, and ultimately contribute towards moving society forward”.

PEC-IG Matrix Assumptions:
 All sectors in society are relatively rewarded for their service
 Players can clearly identify their passion [talents]
 Passions [talents] are relatively time-invariant
 The education system covers all sectors [areas of passion] in society
 Innovation is vertical (progressive)
 Availability of information [e.g., remuneration, opportunities]
 Players choose the sectors to be in
 Players possess a variety of passions [talents]

PEC-IG Matrix Recommendation:
 Encourage players [individuals] to go after their passion [talent/abilities]
 Society [households] should provide platforms that allow young people to fail, discover their talents and reinvent themselves. This means providing 'safety nets' such as inter-generational wealth that affords them the luxury of risk and not living to survive.
 The role of government is to facilitate the realisation of an evenly spread level of incentives in the different sectors of society

John Musantu, PhD
Economist || Lecturer | Consultant

THE 2023 BUDGET IS “A SOCIAL EXCELLENT AND AN ECONOMIC POTENTIAL”

I finished reading the 2023 Budget a few weeks ago. My take alway is that the social sector initiatives are on POINT. The financial allocations and pronouncements on this sub-sector are very PROGRESSIVE. Some of the key changes/pronouncements include: increase in the number of people on social cash transfer; recruitment of teachers and health workers; reintroduction of meal allowance [I'm a former beneficiary] and a few other direct initiatives. Reading the Budget, my conclusion was that the government direction on the social sector is EXCELLENT with tangible targets.

On the economic front, the budget was designed with so much potential and 'piloting'. The cast of the Budget is towards piloting what ideas can potentially help with expanding the economy. We have no clear anchor sector that can be said to be the ideological path to economic expansion [with granted success]. The following pronouncements/ideas have the potential but still in pilot phase: CDF [which was increased]; incentives to the mining sector [e.g., in exploration]; investing in farming blocks; and a few others.

The main question on the economic front is where will significant numbers of private sector jobs come from? The public sector can only employ so many of our youth, at which point, the private sector should take over. With high levels of population growth which are translating in high numbers of graduates from our colleges and universities, we need a very high economic growth [ideally above the population growth] to prevent high levels of unemployment and poverty. At the core of the said economic expansion should be the private sector.

Given the context in which the budget was presented; high levels of debt, low economic growth, low production in the mining sector, global shocks and a few other inherited challenges, the current path taken in the budget is a more plausible one, of course, with a few exceptions/refinements. The 'break or make' budget for the current government will be the next one [the 2024 Budget], in my opinion. That is the budget that this government will fully own. That budget [2024] aught to be more expansionary in orientation.

Conclusion: in the social sector, the government should be commended for the bold and progressive steps taken. On the economic front, data collection and evaluation of the initiatives will be key. Most of the initiatives on the economic front are pilot oriented, therefore, the government and stakeholders should invest in timely data collection and evaluation of key initiatives to ensure informed decision, and refinement of the implementation strategy.

"We have so much work to do but we are certainly not static as a country"

John Musantu, PhD
Economist || Lecturer | Consultant

“All they will see one day is what you’ll become and not what you were. Therefore, embrace your humble beginning, it will give birth to your next chapter” John Musantu, PhD

"Not everyone should know your plan [vision], others just need to see the results [outcome]". " Wisdom is in the choice of who should know"

IMF ECF APPROVED: TIME FOR MULTIPLE CHOICE IS DONE, IT’S NOW TIME FOR ‘SHOW YOUR WORK’

Waking up to some GREAT NEWS!!! Multiple choice section [will Zambia get the IMF facility? yes/no] is done. It’s now time for ‘show your work’ hehehe. The government need to demonstrate dividends of this IMF path.

[NEVER AGAIN!!!] And indeed, the level of recklessness that led us to this level of indebtedness should never show its ugly face again, we need proper safeguards against it. Decisions of a few should never again bring the economy to its knees and burden the future generation with high debt.

Next step is for the country to come up with a proper investment and revenue generation strategy that will enable us smoothly pay the restructured repayment as there is still a debt to be repaid, at least as it stands. The idea of a ‘sinking fund’ that was considered but never implemented in the previous government is a great idea to revisit.

Potential immediate IMPACT pathways: approval of the IMF Extended Credit Facility (ECF) is likely to have an impact on the stability of the Kwacha and might lead to a further currency appreciation. Further, if the breather the country will get from this is properly utilised [by prioritising revenue generating initiatives and minimising wastage], a combination of this and other sound policies will certainly lead to economic growth in the long term.

WELL DONE to the government and involved stakeholders on the HUGE achievement. This was the more feasible pathway and hopefully it will turn out to be so by realising tangible benefits for ordinary Zambians.

THE ECONOMY IS A WINNER THIS WEEK: Kwacha seemingly stabilising, announcement on downward adjustment in fuel prices, IMF ECF approval, and the launch of the 8th NDP is here.

John Musantu, PhD
Economist || Lecturer | Consultant

*RESHARING THIS AS MOST SCHOLARSHIP APPLICATIONS OPEN

WHAT DO I NEED TO BE AN ATTRACTIVE SCHOLARSHIP APPLICANT?

1. Academic scholarships have had a huge impact on increasing the levels of tertiary education in Africa, especially at master’s and PhD levels. In this regard, I would like to applaud all the scholarship bodies that offer awards to our beloved continent.

2. In my experience and from information gathered from colleagues that have gone through the scholarship process, the following are some of the tips on how you can make yourself an attractive applicant.

3. You need to have a personal story that connects with the bigger country or global vision. This need not be anything out of this world but just a meaningful and genuine connection between what you see yourself doing as a career and how it might positively impact society. It does not have to be the ‘I used to walk 30 kilometers to school without shoes’ (hehehe).

4. Gather some work experience (at least 2 years). Experience is part of the attributes that make you attractive to the panel. I know with limited job opportunities this might be tricky for some but you can go around this by involving yourself in voluntary work and consider even doing unpaid internships for the exposure and future use in your case during the scholarship process. Please start thinking about these things way ahead.

5. Your story should be consistent. Do not give someone to write the application for you. Draft it yourself and be able to speak to it in the interview. Have some self-belief, own your story and let it be told in your own style. Writing your own application is the best way of preparing for the interview and it will offer you a moment to pause and think about your future career path. After putting the application draft together, you can have a second eye review it, but make sure the story is told on your own terms and using your lens.

6. Think about the potential universities and start the application process before applying for the scholarship. Again, make sure your programme of choice and the story of your career path are a match. This will signal to the panel that you have thought about this journey you are pitching for, and that you are a serious candidate who they should highly consider.

7. Do not take yourself too seriously, talk about a passion that you might be interested in once in the respective country. This will add a human face to the conversation making it easy for the panel to connect with you.

8. Once you are a match, the scholarship will be all yours. The scholarship processes for front-runner institutions are very transparent and competitive. Steps and eligibility criteria are outlined on their websites. Please note that sometimes you might need several attempts before your application is successful – NEVER GIVE UP!



John Musantu, PhD
Economist || Consultant | Lecturer

Today’s and tomorrow’s experiences are not homogeneous

TEMPERATURE OF THE ZAMBIAN ECONOMY - IMPLICATION OF RECENT KEY ECONOMIC STATS

Exchange Rate: The Zambian Kwacha has in the recent past been appreciating against major currencies. Some of the factors causing this are the announcement of the eminent IMF package, BoZ gains on reserves, and the recent flow of investments in the country. There have been questions on whether this sharp appreciation is good and should keep a further downward movement. To answer this, we should be quick to appreciate that the appreciation of a currency certainly makes local goods (exports) expensive with the opposite being true for imports. Given that Zambia is still a net importer, the appreciation is more beneficial to the economy, especially the cost of living which is relatively high for an ordinary Zambian. Therefore, the Kwacha can follow a further depreciation provided the gains are sustained for a significant period.

Inflation Rate: The country has been on the path of achieving the projected single-digit inflation rate. The recent stats indicate a marginal upward movement of the rate (from 9.7 to 9.9 percent) but with the current stats on the exchange rate and other gains, it is highly likely that we are going to witness a downward movement in the rate at the next announcement. The question one might ask is how does this benefit me? Stability in this rate has long-term benefits for the country in terms of planning and attracting investments. Therefore, at the macro level, it is an excellent attribute to possess as an economy. At an individual level, it means the rate at which the strength of income is deteriorating is relatively low. This equally helps us in planning and negotiations with capital. To strengthen the impact that comes with this, the economy needs to bring more people into the economic space. A good inflation rate is just as good as the levels of economically active people in the economy.

Projection on GDP: With the recent developments; announcements and actual investments, eminent IMF package, potential improvements in the rollout of CDF after initial teething problems, potential enhanced private sector participation, and transparency in policy direction as evidenced through timely communication by the M*F, it is anticipated that the economy shall make gains on growth next fiscal year. However, the distribution of these potential gains is important. Economic growth is misleading when the distribution of wealth is extremely uneven as is in our case and in many developing nations.

Monetary and Fiscal policy: the hand of monetary policy has been in the recent past very well measured given the global and local challenges (COVID-19, distortion in fuel supply chains, etc) the country has been witnessing. Given the recent gains and good potential trajectory that the economy faces, it is advisable to have a minimal adjustment of monetary parameters such as the monetary policy rate to allow for the current combination to work out unless we witness a major shock. On the fiscal side, the supplementary budget is a good action and will certainly together with the newly employed 41,000 plus civil servants help in raising the much-needed demand for goods and services in the economy.

With the above discussion, my rating of the economy is a flashing amber with a few moments to entering the light green zone (a zone of pick up). To move to the next step, we need to sustain the exchange rate and other current gains, ensure continued gains in private sector participation, address the short-term issue of the cost of living and continue on the path of empowering the youth and women who are the most vulnerable in our society but yet great potential torch bearers in our quest for economic prosperity.

“They that master the balancing dance between today’s needs against tomorrow’s demands are one step into success for it is a dance that requires vision, sacrifice, discipline, wisdom and hard work”

John Musantu, PhD
Economist || Consultant | Lecturer

ATTRIBUTES OF A PROGRESSIVE NATIONAL EDUCATION SYSTEM - CELEBRATING THE 30K-PLUS TEACHERS

A functional education system is critical in the development agenda of a country. There is a significant body of extant economic literature that argues that modern day differences in economic growth will be explained for by technological advancement in individual countries. This entails that, nations with advanced educational systems, and thereby, advanced technological progress will lead on this front.

With this in mind, my key attributes of a progressive national education system are:

1. Well motivated workforce
2. Good trainer-to-learner ratio
3. Good infrastructure
3. Inclusiveness (affordability + sponsorship programmes)
4. Teaching content that is relevant in solving societal challenges (innovation/research)
5. Well trained workforce (theory + practical)
6. Enabling environment (putting a premium/incentive on education)
7. Internal sustainability of the sector

In the recent week, we made gains on number 2 (at least in primary & secondary edu). More work is certainly required but gains scored are a great baseline and show of commitment. Congratulations to the newly employed 30K-plus teachers!!! Yours is to offer a service to the best of your ability despite the challenges you may face. You're in one of the most fulfilling jobs; shaping the next generation of innovators, leaders, fathers and mothers, and torch bearers of our GREAT republic.

"We have seen beyond our childhood horizon because we stood on a teacher's shoulders"

John Musantu, PhD
Economist || Consultant | Lecturer

BEING A LOW INCOME COUNTRY WILL NEVER BE AN ADVANTAGE - ZAMBIA'S ECONOMIC RECLASSIFICATION

1. No one will ever pray to be poor to qualify for free handouts. If it happens it's because it is beyond their reach, and moreover, everyone keeps fighting for a better day. The downgrade in our classification as a country is a bad development. We need to fight to go back and even get to a better category.

2. In the past few days, I have seen commentary that is partially making the downgrade to a 'low income' country as an advantage to our cause relative to the previous position of a 'lower-middle income'.

3. There should be no BUT "we will qualify for concessional funds, etc", that's a beggars mentality. "Working towards excellence is not an option but the standard for any ambitious people".

4. Additionally, as we seek to increase our GNI Per Capita, the index used in the classification in question, let's also work on income distribution as a country. GNI Per Capita is a misleading index as it assumes an hypothetical state of an even distribution of national income. However, our income distribution as measured by the Gini-coefficient is very poor for our country.

John Musantu, PhD
Economist || Consultant | Lecturer

THE BANK OF ZAMBIA IS SPOT ON!!!

The Bank has maintained the policy rate at 9%. This is the correct call by the Bank of Zambia given the recent gains in lowering the inflationary pressures in the country. Hiking the rate would have further contracted liquidity in the economy which is detrimental to the spinning of the economic engine.

Eyes now turn to the fiscal side of things, specifically the debt structuring discussions. This is key in unlocking the country's finances. Recently, in financing its quarter 1 deficit, the government was engaging in the domestic market an action which if sustained due to pressure from debt repayment has the adverse effect of crowding out the much-needed private investment. Should the debt restructuring deal go well, it will address this potential risk amongst many other that come with high debt.

It is my view that “A good monetary policy is just as good as your fiscal policy”. Without a matching fiscal policy, a good monetary policy is ineffective in achieving and maintaining a sound real economic sector.

There is also a lingering question about the inflation rate and prices on the market. Most people are asking why prices are still high despite the pronouncements on the declining inflation rate. One of the reasons behind this is that the rate of inflation just measures the ‘speed’ at which prices are 'changing'. Therefore, a decline in this rate does not imply/grantee a sudden decline in prices. Additionally, the market is full of lags, therefore, gains in the economy lag in terms of being felt on the ‘kitchen table’.

Hopefully, better days are ahead.

John Musantu, PhD
Economist || Consultant| Lecturer

"We start not because we are ready but because the journey will make us ready" John Musantu, PhD

Wishing you a productive week!!!

A present from Beijing and a show of Chinese prominence in African economic affairs
_______________________________

There has been some great news on Zambia's debt restructuring journey as one of the key stakeholders (in China) has agreed to join the conversation.

We need the restructuring negotiations to go very well, and in good time, as it is currently the only viable option out of the debt trap. Other solutions can complement this path. We await to see how the conversation unfolds. STAYING POSITIVE!!!

As we receive this good news, we need to reflect and ask ourselves the following questions:

> What is the maximum level of compromise the creditors are willing to swallow?
> What is the cost of the debt restructuring path? Remember, this path is not a free pass in the park (at least as things currently stand), we need to pay
> How long will it take the country to settle the restructured debt? I guess we will find out once the negotiations are done.
> How will we ensure it is settled in good time and not end up being a mere ‘kick of the cane’ along the road
> How do we prevent an occurrence of this sort in future? There is a bit of deja vu as this feels like a dwarf HIPC experience - the state of our economy and well-being is in the hands of external forces.

Away from the topic, this move from the Chinese really shows how prominent they have become in African economic affairs. They have become such a major player over time. I guess this is no occurrence of luck but a result of deliberate planning and follow up from them.

Let the long table conversations begin!!!

John Musantu, PhD
Economist || Consultant | Lecturer

Big few days in Livingstone: What next after the colourful events?

1. We have been following the developments in Livingstone with high interest. There are so many benefits of African countries working together that have not been fully explored, at a bilateral and continental level. Therefore, the signed Livingstone MoUs between Zambia and Rwanda are some GREAT news.

2. The announced themes of the MoUs are anchored around: trade and investment cooperation; cross-border trade, industry and private sector; agriculture research development, extension and technology transfer; fisheries and livestock development; development and manufacturing of animal feed; health; and revenue collection. Based on these themes, it seems to us that they are very strategic and important. We highly recommend the two governments for the initiative of collaboration and show of commitment through the state visit.

3. The choice of Livingstone as the location for the state visit was also very strategic in promoting our tourism which has great potential as a source of much-needed forex.

4. What next after the signing? This question is one single important question beyond the colourful signing. The operationalisation of the MoUs is what will affirm the seriousness that was attached to the process. Relevant ministries and government agencies should identify specific projects and interventions that will support economic agents (firms, individuals, agencies, etc.) in exploring the potential benefits of the various articles. These interventions should be both short and long-term. Void of this, the Livingstone events will just be an ‘expensive greeting’.

5. Across all sectors, we can learn from Rwanda on different models and approaches they have employed in achieving impressive macroeconomic indicators.

6. The stakes are high, at the end of the day, an ordinary Zambian gets to compare which governance approach offers more benefits, between the seemingly 'professional-centric' and the one that was deemed 'cadre-centric'.

“We wish for the best outcome”

John Musantu, PhD
Economist || Consultant | Lecturer

What do I need to be an attractive scholarship applicant?

1. Academic scholarships have had a huge impact on increasing the levels of tertiary education in Africa, especially at master’s and PhD levels. In this regard, I would like to applaud all the scholarship bodies that offer awards to our beloved continent.

2. In my experience and from information gathered from colleagues that have gone through the scholarship process, the following are some of the tips on how you can make yourself an attractive applicant.

3. You need to have a personal story that connects with the bigger country or global vision. This need not be anything out of this world but just a meaningful and genuine connection between what you see yourself doing as a career and how it might positively impact society. It does not have to be the ‘I used to walk 30 kilometers to school without shoes’ (hehehe).

4. Gather some work experience (at least 2 years). Experience is part of the attributes that make you attractive to the panel. I know with limited job opportunities this might be tricky for some but you can go around this by involving yourself in voluntary work and consider even doing unpaid internships for the exposure and future use in your case during the scholarship process. Please start thinking about these things way ahead.

5. Your story should be consistent. Do not give someone to write the application for you. Draft it yourself and be able to speak to it in the interview. Have some self-belief, own your story and let it be told in your own style. Writing your own application is the best way of preparing for the interview and it will offer you a moment to pause and think about your future career path. After putting the application draft together, you can have a second eye review it, but make sure the story is told on your own terms and using your lens.

6. Think about the potential universities and start the application process before applying for the scholarship. Again, make sure your programme of choice and the story of your career path are a match. This will signal to the panel that you have thought about this journey you are pitching for, and that you are a serious candidate who they should highly consider.

7. Do not take yourself too seriously, talk about a passion that you might be interested in once in the respective country. This will add a human face to the conversation making it easy for the panel to connect with you.

8. Once you are a match, the scholarship will be all yours. The scholarship processes for front-runner institutions are very transparent and competitive. Steps and eligibility criteria are outlined on their websites. Please note that sometimes you might need several attempts before your application is successful – NEVER GIVE UP!



John Musantu, PhD
Economist || Consultant | Lecturer

When should I do my master’s? Is there an ideal time?

1. For many of us who are yet to upgrade our qualifications, the question that runs through our head is, when should I do my master’s? From the onset, I should say that there is no such thing as the ideal time to do your master’s. The timing is usually influenced by so many circumstances. Therefore, the recommendations here might not work for everyone.

2. There are two main options that can be followed. The first one is doing your master’s immediately after school. This can be done while working or on a full-time basis. And the second option is doing it after some work experience (at least two years).

3. My recommendation is that you should consider the second path (do your masters after some work experience). This path will help you discover your career interests and give you a rough window into your potential career path; hence, you will be able to align your master’s programme with your career path. Additionally, this option will also afford you time to pick a dissertation topic that is interesting, practical, and impactful in your field. An excellent dissertation paper can be turned into a publication and can be a good platform for introducing yourself to the market. If you are interested in going as far as PhD, this can later be used as a basis for your topic selection. Therefore, your master’s dissertation should be taken seriously.

4. In terms of funding for your studies, the second option can also be helpful in both personal and external funding processes. This option can enable you to mobilise personal funding through savings and in the external funding process; it can offer you the much-needed experience that scholarship bodies look for in an applicant.

5. Having had said this, I recognise that these things are not a 'one size fits all', depending on the situation the second option might not be the right path. Therefore, judgment must be made given your prevailing circumstances.

6. In my next write-up, I will comment on attributes that you need to be an attractive candidate for an academic scholarship.

’spursueexcellence

John Musantu, PhD
Economist || Consultant | Lecturer