The Copperbelt University – CBU Economist Dr. Stephen Mpembele has charged that Zambia is likely to end up with a reduce debt capacity if its Gross Domestic Product – GDP is not rebased and remains low as the capacity to borrow is dependent on how much GDP the country is generating.
Dr. Mpembele told the Zambian Business Times – ZBT in an exclusive interview that failure by government to quicken the process of rebasing GDP will disadvantage the country from borrowing beyond the threshold of its current GDP, hence has urged those in authority to expedite the process if growth is to be recorded.
He said, given the change experienced in certain economic sectors, it is paramount to measure what’s currently taking place in the country as doing so will enable capture every economic activity including those that did not exist at the time the last GDP update was done.
“For example, if our GDP is at US$26 billion, you can only borrow up to a certain proportion of that, but when you capture certain activities which were not there, you’re adding growth to your country, and if it was to be done now it, and it reaches say about US$50 billion, it would qualify the country to borrow more and government income will also go up,” He said.
He added that for instance, the adoption of financial technology which has enabled mobile banking is one of the recent economic developments that has recorded phenomenal growth. The previous GDP measures or computations in the banking and financial services sector were only dependent on commercial banks.
But look at the contribution that mobile banking has brought on onboard, and the annual growth rates it has continued to record. Hence the need to include mobile banking activities in the GDP computation which have in the past shown tremendous growth in terms of revenues and financial inclusion. Its a sector that would also add more to the overall GDP numbers.
Dr. Mpembele said rebasing the GDP gives a fresh start to the economy and gives a clear understanding of the value of goods and services in a country thereby opening up doors for investors in the country.
He noted that GDP rebasing is an expensive undertaking which requires a lot of money but the value derived from rebasing far outweighs the costs, hence has asked government to find ways of sourcing for funds from both the treasury and from its corporation partners to ensure the exercise is executed as soon as possible. Its an important exercise that needs to be given due and timely consideration.
The Zambian Statistical agency had in 2019 projected that rebasing the GDP would cost about US$5 million. Some analysts have called for the national census exercise to not only be restricted to population and housing stats, but also include collection of economic data that could be utilized for economic planning purposes and possible GDP rebasing every decade.
