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Haabazoka urges prudence in K10bn spending

By BENNIE MUNDANDO
THERE is need for prudence in the K10 billion set aside by the Bank of Zambia to enhance liquidity in the economy so that the money reaches the intended Small and Medium Scale Enterprises (SMEs), Lubinda Haabazoka has said.
Dr. Haabazoka, who is Economic Association of Zambia (EAZ) president, yesterday told the Daily Nation that it was important that in light of the stimulus package devised, banks should lend mostly to SMEs in an effort to boost liquidity.
He said in an effort to boost liquidity in the economy, certain pertinent issues must be addressed so that the country did not create another problem in the midst of challenges exacerbated by the Coronavirus spread.
“The questions are; will that money trickle down to the right SMEs? Looking at the current cost of capital, which sane business owner will borrow at prevailing interest rates in this period of uncertainty? Won’t K10 billion add more pressure to the exchange rate since its purpose is to enhance liquidity and liquidity mostly increases demand for forex?
“What measures have been set aside to strengthen the Kwacha because by logic, the depreciation of the Zambian Kwacha has rendered Zesco tariff increment useless because in dollar terms tariffs are back to square one?” Dr. Haabazoka asked.
He wondered what post-COVID-19 measures were being put in place to ensure that the Kwacha gained because employee salaries had fallen in dollar terms by 50 percent in the last two years.
Dr. Haabazoka e also wondered what measures had been put in place to ensure that quasi-Government employee salaries were paid on time at least during the corona period to be able to afford preventive materials such as sanitisers.
“These and a lot more questions needed answers instead of questioning proposed amnesty of forex and Kwacha cash, the economy really needs to keep moving. We need to stop behaving as if we don’t live in Zambia and pay a blind eye to the real issues in our informal economy.
“When regulators pay a blind eye to inefficiencies in the formal economy, the informal economy thrives rendering official figures and consequently official interventions useless,” he said.
Dr. Haabazoka said to solve some problems, egos were supposed to be set aside and “outside-the-box” thinking adopted, failure to which people would begin to lose confidence and become more agitated when they survive without salaries and nothing seemed to be done about it.

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