By Maxwell L. Chisala, contributor
A country’s true character is revealed not by the challenges it faces, but by how it reacts to failure or responds to its inability to solve the problems confronting it—Samuel Huntington in The Modest Meaning of Democracy (1989)
The forex freebies we dole out, unabated, to soothe local social forces and appease local constituencies are costing the economy the much-needed (and hard-earned) forex while generating none, to the detriment of the economy.
They are freebies because the activities they are provided for have no capacity to generate the much-needed (and hard-earned) forex they consume and are prioritized solely for garnering sizable patronage attention.
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It is the direct forex expended on importation and the indirect forex expended on fuel for transportation to local distribution nodes. They include the much-touted farming input subsidies for the ‘non-propertied masses’, large-scale (mega) farming projects, emergency relief items and pre-owned imports (kaunjika wa magalimoto ndi zobvala).
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Forex freebies are estimated to consume between a third and two-fifth of the country’s forex earnings. Our esteemed experts will not tell the nation state patronage machinery binging on scarce forex is ‘inconceivably unsustainable’ if the patronage activities have no capacity to generate the forex they consume.
If a patronage activity requires scarce forex but cannot earn any of its own, it cannot add value to the economy and therefore imprudent to prioritize it for forex provision; let the private sector provide this and shoulder the risk(s) and, if necessary, government leverage local, rather than foreign-denominated, funds for its provision.
Although a wasteful amount of state patronage accompanies most government spending, patronage-based state interaction with the economy is generally harmful to economic performance because it does not produce any value of its own.
State patronage activities never encourage productivity or add value to society as a whole or the larger marketplace; experience has shown it is hard to move a society away from such unproductive behavior, even in the worst of situations as our country finds itself in.
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Common sense would suggest the best way to improve the situation may be to shrink the size of government (or dismantling its own support base) but this is difficult when the government turns patronage activities into a political tool to reward loyalists, win votes, finance political networks and a center-piece for maintaining political stability, social and political power; a regime’s survival toolkit.
Our country will, however, need to tangibly address this larger-than-life patronage politics-driven-demand side of forex which pressures the government into expanding its much-needed (and hard-earned) forex on patronage activities that will never in the conceivable future become foreign exchange earners.
Egenco is reporting failing to import critical spare parts needed to repair the Nkula B hydropower station and facing challenges to run diesel-powered backup generators in Kanengo and Luwinga because of acute foreign exchange scarcity, leaving power needs unmet to critical sectors with the capacity to earn the country forex. Should our country not have prioritized our 2025-2026 forex earnings on this rather than activities that garnered sizable patronage attention but were not foreign exchange earners?
Forex scarcity is crippling water provision in our major cities (because Waterboards lack forex to procure treatment chemicals, maintenance tools and electrical components for water pumps; leading to frequent breakdowns and urban water shortages). Should our country have ‘freebied’ its hard-earned forex on activities without the capacity to earn our country any forex but garner sizable patronage attention?
Critical capital-intensive projects are stalling because of lack of foreign denominated funds to pay international contractors and purchase materials. You would think these crises would be enough to stop our leaders from being subverted by patronage pressures to divert the little forex the country generates into private reward networks. Unfortunately, not so for us.
Regardless, it is only the best-advantage-use of the little forex we generate that will fetch long-term respite from our perennial forex woes and realize, for our country, marked improvement in forex availability and a hopeful economy— but will require hitherto unrevealed legislative resolve to ring-fence the little forex we generate with a ‘zero forex freebies’ policy.
