Curbing The Zambian Economic Leakage

By Kasuluba Mashonga

What is leakage?

Borrowing from the Keynesian economic theory, it refers to capital or income that exits a system(economy) as opposed to remaining within it. Wikipedia asserts that leakages are the non-consumption uses of income, including saving, taxes, and imports, yet other scholars simply postulate that leakage occurs when money leaves an economy. In other words, when funds are not used for their initial intended purposes or money is pushed out of a closed cash flow cycle, leakages are created.

If a pipe were to describe the Zambian economy and water being money, then a hole in that pipe causing water to ooze out would be a practical representation of leakage in that, a lot of water would constantly be lost if the pipe were not mended.

Effects of leakage

It is imperative to note that leakage is very common in almost all economies globally not only Zambia and does not necessarily hinge on bad governance. A leakage causes the exiting of money from an economy and results in a gap between the supply and demand chain. In the retail sector for instance, this would mean consumers spending money outside the local market, forcing businesses within such an economy to find other ways of drumming up revenue just so that they may avoid incurring losses and this may prove difficult.

Causes of leakage

There are several reasons that lead to leakage but only a few are going to be discussed. Firstly, capital that leaves an economy or system as opposed to remaining within results into leakage. This happens when proceeds from a Zambian or local investment venture are removed from the economy by investing in say real estate, supermarkets or other foreign projects.

In addition, money spent outside an economy for purposes of tourism, export funds that are not used within the area of their initial production or money spent out of the local market are all deemed to be leaked. This topic is broad, and it is vital to make mention that even funds that are saved for too long result into leakage. This is because if that money has no velocity within the economic system (no movement), there will be a shortage of funds in the country.

Compensation for leakage

In dealing with the problem that is detrimental to many systems such as the Zambian economy, a few suggestions will be provided by this literature based on research. As a depiction from the circular flow model of economic activity, the Zambian government might stimulate its economy through injecting cash into the financial system when leakage affects the flow or circulation of money.

However, injection does not entail borrowing from foreign financial institutions or other countries in the wake of austerity measures(reduction of money spent in the country by the government). That being the case we still cannot completely do away with borrowing. Hence, local financial institutions would be the best sources of extra funds because that money is still going to be kept within the Zambian economic system.

As narrated by one of the Oversees Development Institutes’ articles, they argue to say about 75% of tourism proceeds are taken out of the host nation. This is because international tour operators are paid huge sums of money which they spend in their native countries. For this reason, they propose that tourist destinations should invest in home grown tour operators, thereby keeping money locally.

The other solution to dealing with leakage lies in what USA and the UK do which is paying attention to little denominations of currency. These and other big economies have come up with ways to ensure that Cents and Pennies, respectively are in constant circulation and it has proven to be very beneficial.

These forms of currency are used when people visit rooms of convenience (Toilets), purchasing of refreshments and other foods via vending machines, including the other advantages being that they keep prices low and are depended upon by charity organisations. Zambia should also ensure that smaller denominations of currency such as 5 and 10 Ngwees are ploughed back into circulation. By so doing, this activates the multiplier effect leading to increased money by the central bank, which would then be injected back into the economy in the long run.

CONCLUSION

In a nutshell, it is quite impracticable to eliminate leakage completely but measures can still be taken to reduce it to the lowest possible level, if the measures discussed or even more are taken into consideration.

Zambian Investigative Reporter Dies In Mysterious Circumstances

By Paul Shalala

Humphrey Nkonde

A 42 year old Zambian investigative reporter who has been writing on sensitive topics has been found dead, 10 days after he went missing.

Humphrey Nkonde, an Assistant Editor at the Catholic-run Mission Press in the northern town of Ndola went missing on 22 September, a day before he was scheduled to fly to Germany for the Global Investigative Journalism Conference.

Nkonde, whose last stories in the Icengelo magazine focused on the escalating mealie meal and fuel prices, was found floating in a lake in the rural district of Masaiti.

Police confirmed picking the body on 26 September and subsequently buried it in Ndola at Kantolomba Cemetery in the absence of his family or employers.

This act by Police has led media bodies to question the speed at which the journalist was buried.

“How did the Police bury without anyone witnessing? Why did the Police claim it was unidentified body when they themselves revealed that he had his passport in his pocket? The Police must answer these questions,” said Clinton Masumba, the Secretary for the Northern Region Media Club.

Other media bodies put the blame on the Police.

“The Police must come out clean on this matter, we want conclusive investigations into the death of our colleague. His death is a big blow to the Ndola Press Club,” said Ndola Press Club President Chishala Musonda.

On October 5, Police officers exhumed Nkonde’s in order for a Pathologist to conduct a postmortem.

The procedure was completed after two hours and the body was reburied.

The Police pathologist, who came from Lusaka, carried samples from the journalist’s body to Lusaka for analysis.

According to Police sources, the results of the postmortem will be released in the coming days.

But Humphrey’s employer is suspicious over his death.

“There are too many versions surrounding Nkonde’s death. The family is insisting that its suicide. For us, we want conclusive investigations before we can believe anything,” said Mission Press Director Fr. Ferena Lambe.

The clergyman, who was close to the late journalist, says Nkonde was fearless.

“He was a courageous journalist who we promoted to Assistant Editor in June this year. He used to write sensitive and political stories. His last story was too sensitive, could it be the reason he is dead today?” asked Fr. Lambe.

Initially, the family objected to a postmortem but management at Mission Press insisted on it being done to find the cause of death.

Family members told the media that a day before he disappeared, he appeared was doing suspicious things like hugging his children and talking to himself.

They claimed he was being led by a demon.

However, in the 10 days Nkonde was missing, non of the family members reported the matter to the Police.

But his employers are not buying that story. 

Nkonde interviewing former President Kaunda

“On the evening of 22 September, he came home to say bye because the following day he was scheduled to fly to Germany for a journalism conference. He was in a good mood, he wasn’t confused as his family is claiming. I even suggested to him that when he is back, we will hold a workshop for Zambian journalists to learn from his investigatory skills,” said Mission Press Human Resources Manager Honorius Chilufya.

His fellow workers at Mission Press are devastated.

“He was a close friend of mine. I knew him decades ago before he joined us at Mission Press. If a reporter can work at the Times of Zambia, Zambia Daily Mail and now Mission Press, it just shows you how hardworking he is,” said Danny Chiyesu a Graphic Artist for Icengelo magazine.

Chiyesu reveals that Nkonde was in the process of writing a book on Zambia’s founding President Kenneth Kaunda and the project had advanced.

He adds that the book was supposed to focus on Dr. Kaunda’s life from his time in State House to his role in society after leaving office.

In November, Nkonde was scheduled to travel to The Netherlands to take a three weeks course in Investigative journalism at the Radio Netherlands Training Center which is located in the Dutch city of Hilversum.

Through out his career, Nkonde practiced investigative journalism and attended various workshops and conferences at home and abroad to perfect his skills.

Apart from his fulltime work at Mission Press, he was also a correspondent for several international publications specialized in aviation and business. 

A Look At Zambia's Quest For Alternative Energy

Mr Nkhuwa (middle) at the site

By Kanchele Kanchele

Zambia's over dependence on hydro electricity has in the recent past been a catalyst for the slowed down economic growth and as the effects associated with climate change hits the country, the energy sector suffers immensely.

The first signs that the country needed to find quick solutions to its over dependence on hydro electricity came to the fore in July of 2015. The Kariba Dam, the largest man made water reservoir in the world was hit by low water levels as the country received less than normal rainfall. The Kariba Dam is where the country generates over 80% of its power supply for both industrial and domestic use.

 To manage the crisis, the power utility embarked on power rationing of up 12 hours, a move never seen before in a country with a history of abundance of energy. When the rains were normal in 2016 and the Dam returned its normal water levels, the sense of urgency to find solutions to the crisis seen in yesteryears was somewhat shelved as it became business as usual for those charged with the responsibility to find other energy sources.

Fast forward to 2019, the country is faced with the same crisis and it's back to square one as government officials try to fix the situation by rationing power by 12 or more hours. Unfortunately,  the reduced hydro power generation and the rationing of power provision has led to an unprecedented wanton cutting of trees for charcoal production and hence worsening the climatic change impacts.

Adding to this fact is the ever increasing demand for energy at both domestic and industrial levels. At domestic level, the number of houses connected to the main grid has drastically increased as more and more households get connected including the growing number of small scale businesses such as metal fabrication and barbershops. Just recently, the power utility celebrated the milestone of reaching its 1 millionth customer with a celebratory cocktail party.

In the background of all this, is a company working to be part of the solution to future energy challenges to a country with a growing demand for energy at both industrial and household level. While most of the country's stakeholders view the current situation as a challenge, Kalahari Geo Energy has seen this as an opportunity to stamp its mark on the country's energy sector and has quietly been working on a lasting solution.

The company has gone in an unfamiliar territory with regards the country's energy sector. It has gone into the rare field of Geothermal Energy and has quietly done its homework on the possibilities of having such a rare source of energy in the country, the first of its kind in the southern half of the continent and second only to Kenya in the continent.

Geothermal energy is not only a rare source of energy in the continent but it fits well with the current trends world over of producing environmentally friendly, clean, renewable and eco-friendly energy in order to mitigate the production of greenhouse gases as the world tries to contain climate change.

 Browsing the internet, the quickest way to research shows that Geothermal power plants emit close to zero greenhouse gases in the world's atmosphere and are extremely eco-friendly. Geothermal energy is ranked among some of the most efficient in cooling and heating systems available today. Further Geothermal energy is generally considered environmentally friendly and does not cause significant amounts of pollution. Harnessing geothermal energy does not involve any fuels, which means less cost fluctuations and stable electricity prices.

Zambia's Energy Minister Mr Mathew Nkhuwa became the first Cabinet Minister to visit Bweengwa Geothermal project when he toured the project site in September 2019.

Explaining the project to Mr. Nkhuwa, Kalahari Geo Energy Director Dr Moses Banda said the Bweengwa River Geothermal Resource Area contains compelling evidence of the three key elements required for hosting a hydrothermal system: temperature, permeability and water.

He adds "evidence for minimum reservoir temperatures of 130 Degrees Celsius is provided by both fluid chemistry and already-drilled temperature gradient holes. Permeability is confirmed by the discharge of the hot springs along the regional bounding fault and the associated geologic structures. The reservoir is in fractured basement rocks within or adjacent to the basin-bounding fault. The source of water is local meteoric water that is plentiful."

Further Dr Banda explained that so far the company has reached temperatures of  has reached temperature of 110 degrees Celsius and is hopeful that it will reach the anticipated 130 to 150 degrees Celsius temperatures before the onset of the rains as they break off due to the weather which does not allow them to continue drilling as the area is a mush land.

"We have spent in excess of $7.5 million so far and that amount will increase to $10million by the time we set up a pilot plant. We are projecting that we would be able to set up a pilot power generation plant by next year and that will lead us in to completing the project in 2021."

Asked to state the amount of power which will be produced at the plant, Dr Banda explained that the answer will only be certain when drilling is completed but that he can only give a projection of around 15-90MW.

Geothermal energy generation comes with benefits to areas closer to the power generation plant. In this case Bweengwa in Monze District will greatly benefit from the direct applications which will come with the power generation plant.

Dr Banda told the Minister’s delegation that whilst his company will concentrate on power generation it will endeavor to support other interested parties in the development and usage of the geothermal direct applications and that to that end it has engaged the Zambia Development Agency with a view of establishing an Industrial Park, as an instrument, which could maximize the accrual of benefits to the surrounding communities.

Impressed with the project, Mr Nkhuwa could not wait to ask for a quick completion of the project.

He noted the importance of the project to the country in its quest to reduce the power shortages as well as to the people of Monze who stands to directly benefit from the project’s direct applications which is envisaged to create hundreds of jobs.