A financial expert has charged that the delay and failure to significantly liquidate arrears owned to local suppliers and contractors by government has led to the current reduction in the flow of money (no money in circulation) in the Zambian economy.
Speaking in an exclusive interview with the Zambian Business Times – ZBT, Financial expert Bright Chizondwe said government has not liquidated most of the arrears owed to most of the local suppliers, which has effectively locked the financial flows locally.
When asked on the amount which Konkola Copper Mines – KCM has released for local suppliers, the financial economist has however said the $2 million set aside by Konkola Copper Mine KCM to dismantle debt owed to contractors and local suppliers, will help improve the cashflow and liquidity on the Copperbelt in the short term.
He said that if released, the $2 million will help the companies to pay back the loans which they might have gotten from the banks in order for them to survive. Some of the companies have even defaulted The Financial economist said this does not however mean that the country should cerebrate as the money was owed to these companies and is not enough to significantly clear the backlog.
“So it is not something that we should be excited about per say, because this is actually money owed to these companies and they were supposed to pay these funds a long time ago, but it is good that they have decided to set aside some money and to clear off some of the arrears.” He said.
He explained that the amount will not have a significant impact on the economy as it is a small amount for the growing economy like for Zambia. The minister of Finance has announced the appointment of auditors to verify the local debt while no audit or verification had been done for foreign debt.
Most local businesses and those in the informal sector have told ZBT that there is general dampened demand for products as well complaints of no money in circulation, resulting in businesses posting low revenues. Moreover, fuel price increases which are now done on a monthly basis has further exacerbated the harsh economic environment.
