Debt and Covid are a double whammy for Zambia

For days, Mildred Mwenya didn’t see as much as the shadow of a customer in her pharmacy in the Zambian capital Lusaka.

Today his stomach was as empty as his premises. She hadn’t been able to afford breakfast before coming to open the store.

She is among a growing number of victims in Zambia of a double blow – a macroeconomic crisis combined with the coronavirus pandemic.

“When we come to work, we have no customers and not even food to eat for the morning,” says Mwenya, behind her counter.

“When you order goods and the prices go up the next day, business is bad,” she explains.

“Those who use transport are affected and we also have to pay the rent for the store.”

A landlocked country in southern Africa and the world’s second largest producer of copper, Zambia has been hit by falling commodity prices.

Deprived of income, the government announced in mid-November that the country would no longer pay its creditors – and commodity prices began to rise.

Debt spiral

The nation of 17 million people has an estimated foreign debt of nearly $ 12 billion, half of which comes from private creditors. We owe a lot to China.

In mid-October, Zambia missed the deadline to honor a $ 42.5 million payment owed on a bond worth $ 750 million that matures in 2022.

The global rating agency Standard & Poor’s has relegated the country to the “selective default” category.

Once classified as in default, a country faces sanctions that further increase the cost of servicing its debts, economist Mambo Hamaundu said.

“You won’t have money to buy medicine in hospitals, chalk for our schools, because more money would have been evacuated from the treasury,” Hamaundu says. “If there is no money in the treasury, ordinary citizens will suffer.”

“This will mean sectors like health, agriculture and education will be affected,” said Nalucha Ziba, national director of the charity ActionAid.

‘Eat once a day’

This warning is confirmed by the evidence on the streets of Lusaka.

Zambia was hit by poor harvests in 2018 and 2019 – nearly half of its population is unable to meet minimum caloric requirements, according to the UN. By Guillem Sartorio (AFP)

In some stores, the price of maize flour used to prepare the “midday meal,” a porridge that is Zambia’s staple food, has risen by more than 12 percent in three weeks – a bag of 25 kilograms (55 pounds) now costs 141 kwacha (5.45 euros, $ 6.66).

Esther Kalaba, a widowed mother with three children who lives in Lusaka, says life has become extremely expensive.

“I resorted to eating once a day,” she says.

Employed as a housekeeper with a monthly salary of just under 750 kwacha, Kalaba has to produce a rent of 500 kwacha per month.

She has the equivalent of about $ 10 a month left to keep her family alive. For comparison, this is less than the price of three kilograms of potatoes, the price of which has increased by 30 percent.

Some drugs started to run out and “taking care of yourself became expensive,” says Bright Mapiki, who runs a pharmacy in Lusaka.

In the slum of Chazanga in the north of the city, Martin Mooya can no longer afford his children’s school fees. Everything he earns in a small store is swallowed up by the daily shopping bill.

“I’m having a hard time making ends meet and the situation has been made worse by our government’s debt default,” he said.

“Come next year, I vote this government.”