Tuesday, 30 October 2012

Holier Than Thou Zedians

The Iris Kaingu’s story was making headlines, on most people’s lips, social media was abuzz and it was the topic of office gossip in the last week. The eventual conviction by the courts and the fact that Iris had to spend two nights behind bars as she waited her sentencing was received with polarising views. Some people rejoiced in jubilation at the presumed consequences of her actions while others cried foul at the injustice of being denied bail some blaming it on her politically vocal father. The case in which she was convicted was the making of obscene material tending to corrupt morals. When she was fined K10 million some thought it was not worth the crime. There were sections of society that were calling her all sorts of names and calling for her to feel the wrath of the law. How dare she defile a Christian nation like Zambia?

Zambia is a Christian nation and should not be associated with any manner of immorality such as the kind that Iris was involved in. Some were even saying that these are the end times and what on earth are Zambian children up to? Oh Lord help us. This is where I have an issue with some of the comments that were filtering through the published press and social media, we always pull out the Christian Nation card when it suits us. We find falling on the Christian Nation bandwagon as a default for everything else that does not conform to our own moral compasses.

I do not support whatever Iris did, neither am I writing this piece to judge her, that is not my duty. However, her case revealed many flaws in our society. It was very easy for us to judge her for her shortcomings because what she did was made public. Many of the people who were pointing fingers forgot to look at the long hard logs in their eyes. Some of the people who were calling for Iris’ head did not find anything wrong with the fornicator, adulterer or the people who are cohabiting. Simply because to them that could not be categorised under the same sentence as what Iris did. We choose to place a blind eye to our own shortcomings and pounce on others to draw the attention away from ourselves.

The amazing thing is that the people who are judging this girl some of them watched the video, did it make them any better than her. I was baffled that this girl had already suffered enough humiliation, ridicule and shame, still people found the need to drag her through the dirt. How is it that we find pleasure in someone’s down fall and wish them nothing but the worst in life? Very few people were offering advice on ways to help her, counsel her or even how to move past this. We all make mistakes in life. I have done some things in my life that I am not proud of and would wish to forget. I cannot even begin to imagine how it would feel like when every time I try to move forward someone keeps reminding me of my past. One person reminding me of my past would be a pain, now imagine a whole nation reminding you of your past that must be torture.

Allow me to delve a bit out of topic here, but I just felt that I have to say this. Where was the guy in all this? There was barely a mention of him. He still remains anonymous and even if he was known he would not have experienced the same barrage of insults that Iris has. In fact he would have been viewed as a hero and ‘A Real Man’. It is such attitudes in our society that find a man sleeping around ok, but for a woman it is an abomination. There is something seriously wrong here.

In my opinion, Zambia is a double standard Christian Nation. We choose to hide behind the blanket of it when it suits us. We choose to see our own sins far worse than others. People will not get to the streets to protest against the adulterers but are willing to lynch someone who makes an obscene video. We need to accept that people will make mistakes and we need not be quick to judge but instead find ways to assist people through their mistakes. We do not know what drives people to certain actions and maybe if we did take the time to know we could be more empathetic. Now may all those who have never made mistakes, who do not have an ugly past, and are the epitomes of perfection throw the first stone.

Tuesday, 23 October 2012

Diluted Independence Celebrations

We are at that time of the year again, the flags come out, ZNBC brings the people who were around during the independence struggle, the freedom statue has the spotlight and there is all this patriotism in the air. Every 24th October is supposed to evoke feelings of the price that was paid during the struggle for independence from the British colonialists.

The fact that I was not around to experience the injustices that Zambians faced during that era, I find it very difficult to relate to the independence celebrations in the way people want it to be celebrated. Perhaps I am just too detached and for me 24th October is another public holiday and time to wake up late in the morning. These sentiments are usually shared by people of my generation and those born after 1964 and did not witness the struggle.

Then you have sections of society who believe that we are not really independent. They claim that we are still in some economic bondage and until we are economically free, then we cannot be celebrating independence. Well, if this is the case then I will not be around long enough to see Zambia become truly independent.  The current political situation in Zambia, leads one to wonder what the freedom fighters would think of the present scenario. There are political leaders like Hakainde Hichilema who stated that he will not attend the Independence Day celebrations and there are reports that Barotseland will not partake in these celebrations too. They both have their reasons why they will not be part of the celebrations.

Zambia has been blessed to be peaceful for as long as it has been in existence. Part of this is attributed to the fact that we have been able to live together in harmony despite our differences. However, recent events are proving that we are not as tolerant as we used to be. Some African countries are only healing from the wounds of tribal divides that have scared their nations; here in Zambia this is when we want to begin the journey along that path. This was something that our founding father Kenneth Kaunda under the slogan, ‘One Zambia, One Nation’ was attempting to avoid.

However, it seems that each day that passes by there is some prejudiced tribal statement in the press that clusters a certain tribe into a group or train of thought. The fact that Hakainde Hichilema is not going to celebrate independence it would be utterly wrong to assume that every Tonga in this country thinks like him. In the same vein, because Barotseland may not take part in the independence celebration does it give anyone the right to cluster all Lozi’s as in agreement with them? I certainly do not think so. If it is not people who have their own agendas of dividing people along tribal lines, it is in political affiliation. There should be nothing wrong being United Party for National Development, Patriotic Front or Movement for Multiparty Development. It’s a choice that someone makes and they should not be victimised to belong to one of them. We should come to a point where UPND and PF can get together without fists and kicks being exchanged. Is it so hard to have discussions without bringing in personal issues and truck loads of emotions? I strongly believe we can and our leaders can be examples to show us.

I do not know if such thing as an independence wish exists, I will make one either way. My independence wish is that we may learn to respect different views. Let’s debate issues and not people. We should also not forget the peace tag we so proudly assign ourselves because it can so easily change. All you have to do is watch the news from around the world to know what I am talking about. Happy Independence, whatever it means to you.

Tuesday, 16 October 2012

And the Winners of the 2013 Budget Are...

The 2013 budget was presented by the Hon. Alexander B. Chikwanda, MP, Minister of Finance on 12 October 2012. Many media houses were claiming that this budget was highly anticipated because it was one that was purely prepared by the Patriotic Front (PF). I really did not have many expectations for this budget to be honest; my only concern was the tax free threshold for Pay As You Earn (PAYE). The reality is that budgets are full of promises and it is only the issues that we can really relate to that matter. So this time around I decided to read the budget and see if there was anything for me other than the PAYE in this budget. Therefore, I have attempted to summarise the budget as best as I could.
The minister stated that the theme for the 2013 budget was, ‘Delivering Inclusive Development and Social Justice’ and the primary focus was on the sectors of agriculture, energy and transport. Therefore, as expected these same sectors received the bulk of the budget expenditure.  Hon. Chikwanda also set the macro-economic objectives for 2013 which included a GDP growth of above 7.0%, inflation no more than 6.0% and create at least 200,000 decent jobs. Can’t wait for those jobs to be created.
The PF government seems to have a clear plan for where the jobs that they promised during their campaigns are going to come from and these are in agriculture, tourism, manufacturing and infrastructure. According to the minister these sectors are supposed to account for 550, 000 jobs in agriculture, 300, 000 in tourism, and 20,000 in infrastructure (road making), these respectively are to be created over a period of five years. In the same vein, the successful issue of the 10 year Eurobond of US$ 750 million which was one of the most successful in Sub-Saharan Africa for the first issue, is being channelled towards the selected sectors.
The budget is estimated to be K32.2 trillion. Of this, general public services receives 26.2%, economic affairs- 27.6%, education- 17.5%, health- 11.3%, defense- 6.3% and the rest split among social protection, housing, and public order and safety. Coming to the budgetary allocation, education received K5.6 trillion an increase of 15.5 % from 2012, health had a 40.7% increase over 2012 (K2.6 trillion to K3.6 trillion), there is also recruitment of 5, 000 and 2, 000 personnel respectively.  Based by these it can be assumed all those individuals who have qualifications for these respective fields should not have a no problem finding employment.
The budget then moved into the most interesting territory, well for me that is. This is the part where we get to know who will be getting the tax breaks or coughing up much more than they desired. The first announcement was that the tax free threshold of PAYE has been proposed to increase by 10% from the current exempt amount of K2 million to K2.2 million. This is slightly above the expected inflationary increase for the year. When I first heard this I threw a fit. I thought the increase was absolutely ridiculous because it was so insignificant. It had to take one of my tax pals to calm me down, when he said that the increase by 64.5% tax deduction for pension contributions to K255, 000 per month would probably make an estimated K300, 000 difference.
Further proposals are to remove tax on interest earned by individuals from savings and deposit accounts as well as medical levy in order to encourage the culture of saving. Well in my opinion, I doubt if the removal of tax on interest will encourage the culture of saving, what might encourage the culture of saving is if banks offered better interest rates to saving with them. Otherwise this will only make a significant difference to individuals who have billions of kwacha in the bank. This is one of those tax breaks that has nothing in it for me.  There is also a proposal to have zero rate on bread and wheat for VAT purposes. This is in an attempt to make bread cheaper. So I can expect cakes and doughnuts to be cheaper. However, despite this measure, I wonder how many bakeries will actually reduce their prices, it could only mean better profit margins for them.
With Zambia facing an energy deficit and the demand projected to increase in the future, the minister has proposed to remove customs duty on wind powered engines, gas stoves and electrical capacitors to counter electrical power. This is a good move though I still think that the best alternative for Zambia's energy deficit will perhaps be solar energy. Save for the winter period, this is generally a sunny country. The one proposal that I found ridiculous was the removal of exercise duty on carbonated drinks and packed water. I can understand the packed water but the carbonated drinks? In the first place carbonated drinks are not healthy and most health practitioners will advise staying clear of them. This incentive would have made much more sense if it was for fruit juices especially the ones that use local products. They are much healthier and are most likely to create more meaningful employment than carbonated drinks would.
There has also been the removal of customs duty on both motor cycles and ambulances. This move is perhaps to encourage the purchase of motor cycles instead of vehicles to decongest the roads. The use of motor cycles is popular in many Asian countries and African countries like Nigeria and Uganda have them in their thousands. The only concern would be ensuring that motor vehicle drivers accord the motor cycles the same respect on the road and convincing people that they are safe. I am shocked that ambulances were paying customs duty; it’s about time that it was scrapped. There has also been a 3-year suspension on equipment used for physical exercise, gymnastics, athletics and other sports. We should brace ourselves for gyms to open up on every corner and buffed up chaps strolling in the streets. This should have included all sporting equipment as well. This would have encouraged the development of other sports other than football.
Arguably one of the most commendable propositions in this budget has been the requirement for tax incentives to be granted only when the investor meets their obligations related to employment creation in Zambia. This is to ensure that we avoid investors who want to come and milk this nation and as soon they are done pack and leave. This proposal has been long overdue. We need investors who will actually come and make a profit but also make a positive difference. Hon. Chikwanda also proposed that in order to strengthen our local heritage and culture and support the growth and marketing of the domestic music and visual arts industry, he proposed to remove customs duty on charcoal drawing sticks, palette knives, mixers, microphones and magnetic tapes. As a writer I felt discriminated against by this proposal. There is nothing in it in this budget for writers. We have been constantly complaining that the cost of publishing in this country is too expensive but once again it seems those calls have fallen on deaf ears. Writers can also preserve culture, it is not only music. I think the minister should have encompassed all art forms and provided some form of tax breaks for materials related to the arts.
I have therefore, come to the conclusion of attempting to summarise a 19-paged budget into something that would not be a drain to read. I still do not know what to make of this budget. It has nothing out of the usual and neither is it a wow budget. It is slightly a more focussed budget with the emphasis on the social sectors and improvement on infrastructure. These are the areas that government believes will create the most employment and if they succeed will be the biggest score. This approach is slightly going back to the socialism days where government was responsible for creating jobs; I fear that this approach may not be sustainable. There is little in this budget to suggest that the enterprising spirit will be given wings to flourish. Apart from the increase in the turnover threshold for small and medium businesses, I failed to see anything else of promise. This budget was tailored towards uplifting living standards. Therefore, this is a good budget whether it turns up to be a great budget, the verdict would have to come in 2014 when we review how much it has accomplished.

What do you think should have been included in this budget?

Monday, 8 October 2012

'The Business Idea to Make You Rich'

My research paper in my final year at university was to find out whether graduating students would consider entrepreneurship upon graduating. The finding was that over 80% of graduating students did not consider entrepreneurship upon graduating but 90% thought of being involved in business in some form later in life. After the hardships Zambia faced in the 1990s, it forced almost everyone to be entrepreneurial minded. Whether these enterprising thoughts were acted upon is another question altogether. Almost everyone wishes to have a business that is flourishing so that they can finally quit the jobs they hate. Therefore, many people will work their minds up to have that killer business idea but end up with none.      

I do accept that we are all not at the same level of business knowledge. Some people have grown up in business families while others have not. Some people are generally risk takers while others are not. Therefore, even when someone begins to think of a business, the sort of questions that will cross their minds will be different. There is no hard-and-fast rule to the world of business, if someone tells you that they have a book or DVD called, '10 Ways to Become Rich', do not bother buying that book or DVD because they are lying. People who have excess cash or come across cash want to multiply it and the best way to do this is to start a business. The unfortunate part is that many people want to start a business before they are ready to do so. Asking what type of business you should start is one of the options someone has at their disposal. However, raising such questions is like asking someone what your favourite colour should be. I would tell you blue and another person would tell you red, the next person down the road would say green. We may not necessarily be wrong, and we would give you strong arguments why you should choose a specific colour. Nevertheless, it is only you who would ultimately decide, which is your favourite colour. It might end up being blue or even none of the suggested. 

The danger about asking people what business you should start is that many will give you what business they wish they could start provided, they had the money. They will give you all these numbers and paint such an opportunistic picture that if you are not too careful, you might fall for it. Some will even go further to give you the details and point out successful examples for you. Just because there is a glove, it does not mean that it will fit your hand. In the same vein, because there is a business idea around it does not mean that it is the appropriate one. You need to judge the ideas in the merit in which they are given and be honest with yourself whether you have the capabilities to turn the idea into reality. It goes back to the advice always given, start a business that you are passionate about, or you can find the resources to help you succeed at it.

One of the easiest ways to find out what you are passionate about is to discover what you can do very well that not every Jim and Jack can. It should be something that is nearly effortless to do, and you do not mind spending hours and even days on end until you are satisfied with your work. For example, it takes me about three days to put a blog together from the planning to the time it actually goes online. I will have to think of what to write about, type the draft, and edit it over and over until I feel it is worthy enough. I do it not because I’m forced to, it is because I enjoy and love it. I would want to be a singer but definitely God did not bless me with a voice. So you will not see me releasing any albums. However, someone out there has a golden voice I would pay to listen to. Others are good technicians even without having a degree when my laptop crashes I know they would do a splendid job. Once you have discovered the things you are gifted at, the appropriate question to ask then is, “How do I monetise this?” or if you have the money, “How do I make this a success?” These questions make it a whole lot easier to answer unlike an open ended one where someone wants to be spoon fed a business idea. 

Finally, if you have not come to a point where you already have a business idea, my best suggestion is that you put your money in the bank and get a good investment book like Rich Dad Poor Dad by Robert Kiyosaki or Think and Grow Rich by Napoleon Hill. These books will certainly put you in a right frame of mind to come up with a business idea and make a self-analysis, whether you are up for it. Starting up a business is all about risk taking. The idea might be brilliant but still end up failing because of other factors. However, even in the midst of that failure there are a lot of lessons to be learnt that perhaps no book would ever provide to you. My signing off advice to people who are going into business for the first time, invest money you are prepared to lose. All the best.

Monday, 1 October 2012

To Get a Loan OR Not to Get a Loan? That is the Question

This is one of those sensitive blogs that I need to start with a disclaimer before some self-proclaimed "financial guru" goes up in flames. So the views expressed in this blog are my humble opinions based on my average accounting knowledge, my father's wisdom, a number of financial books and friend's experiences. Now that we got that little bit out of the way we can get to the gist of things. There is no denying that the middle class in Zambia is growing by the day. These are a group of individuals who have a fairly good amount of disposable income in their accounts to spend on whatever they wish. Like any country with its population classified in the middle income, so does the need to access more cash arise. More often than not, loans are usually considered. The question that someone has to grapple with is whether to get a loan or not to get a loan?
Accessing loans almost two decades ago in Zambia was a sweat breaking battle that did not always bear fruit. One had to find a financial institution willing to take the risk and provide the loan. The individual had to put up collateral against the loan usually in the form of a house. On top of this they had to pay exorbitant interest rates well above 35%. This was all because Zambia was considered a high risk country when it came to defaulters on loans. Who could blame the banks anyway, with people in employment one day and the next day being a statistic of the unemployed millions, banks had to cover their backs. Meanwhile, developed countries were offering loans to their clients at interest rates within 3-10%. Something only imaginable in our dreams. With such cheap cost of capital, a large percentage of these countries populations had loans. 
  This is now 2012, the middle class is growing once again, banks have reduced their interest rates; collateral is no longer a requirement for permanent employees for some loans, and more banks are expected to flood the Zambian market in the future. Today, banks are literally begging people to get loans with constant advertisements of reduced interest rates and increased recruitment of direct sales representatives. We are so spoilt for choice if you ask me. These generous offers of loans have been well received by the working class. People have started going to the banks in order to finance all manner of activities, from buying land to purchasing a vehicle, starting a business to having a lavish wedding or even going on holiday to Dubai to buying new furniture for the house. Personally, I have not been overly excited by the banks reduced interest rates. I have been rather sceptical and have attempted to stay clear of them. I generally hate debt and always do my best to avoid it.
  I have always lived by the philosophy that only get a loan if it is going to add value or bring in income. If the reasons why I want to borrow does not fill this bill, then it is not worth getting the loan. In whichever way you look at it, a loan sucks money out of your pocket. Every month, you have an obligation to make repayments until such a time that you have repaid the loan with interest.
  The fact that someone is eligible to get a loan does not necessary mean that we have to get one. However, there is a common trend that is developing in Zambia, and that is 'Keeping Up with the Bandas'. Just because my colleague has bought a car, I should also feel compelled to buy one too. So what do I do, I go get a loan for a car without really factoring in the cost implication on my salary and other additional expenditure, I will have to incur. Few people are content with what they have; they always want what the other person has. Some have attached this to status and a symbol to the rest of the world that they are doing well. It is simply boosting and foolishness in all honesty.
Before I rush to get a loan, there are certain questions I ask myself:
·         Can I sustain a Loan?
When many of my peers were getting loans for a car, I was almost tempted to rush to the bank and get one myself. Thank God, I restrained, because in hindsight, my salary at the time (two years ago) could not sustain a loan. When I further, scrutinised the people who were getting these loans for cars, I discovered that they were either staying with their parents or in their parent's houses. Others had other streams of cash flow. These were none of the luxuries I had. I was paying rent and at the time my sole source of income was the salary. You can only imagine the financial stress I would have been under if stupid me decided to kick in and rush to the bank. I would have been living from hand to mouth with no savings whatsoever. Savings are a critical part of me and it is a habit that I have to save for when the well runs dry. Unsustainable loans know, no such foreign words as saving. I would have been definitely forced to borrow from friends to see me through some months; hence the spiral of debt would have tangled its wretched hand around my neck.
·         Will the Loan Add Value?
This is one of the fundamental issues that I seriously consider. Will I use the money that I get from the loan to add value to my life? Am I using the loan for a business, education, building a house or buying land? I have deliberately not included a car in the last sentence. This is because for some people getting a car is more of a liability than an asset. When I mentioned to a friend that I wanted to get a loan for a Toyota Corolla, his response was that I should get a better car like a BMW. Now I knew the exact frame of mind he was coming from while trying to convince me. Yes, I can get a loan to buy a BMW with all its German made aura and big headlights but what is the reason I want a car? At the moment, it is purely for transportation purposes only. I am constricted for time and with increased business ventures forthcoming a car is of the essence. Prestige and a double glance by the ladies is not my priority. If a Peugeot 504 was cheaper than a Corolla and could get me from A to Z, then that is a car I would get.
·         Do I Really Really need A Loan?
Many people have different reasons for getting a loan. I repeatedly chose to ask, do I really really need a loan. If the answer is no, then I will not consider it. Often times, a loan is not needed to finance all of the things people get loans for. They can make some sacrifices and save up for the financial need. However, some lack the discipline to save up but the banks can help with this by setting up fixed accounts and direct debits to this account once your salary is received. There are even some friends and family who are willing to provide the money without charging interest at all, as long you are good on your word. There are just some things that people should not even consider getting loans for, such as weddings (have a small wedding dammit, we will eat and drink and leave you with the loan), vacations (proper saving should be able to cover this), and anything else that has more to do with satisfying your ego than a need.
·         Interest Rates and the Finer Details
The interest rates that are dropping and are expected to drop further, most people may take this as an indication of cheap loans. It may be true, but it is still important to know how much you would have paid above the principle over the period of the loan. This might be a bigger amount than you imagined or are willing to part with. Many people are of the assumption that their salaries can only increase in the future. Optimism is good, but things do change. The world economy is a funny beast. Your salary may end up going in the wrong direction. I also like to know whether the interest rate is fixed or floating. By fixed, I mean that the amount that I agree upon today will not change despite external factors. So if the interest rates wasto increase or decrease I would still pay the interest rate agreed. A floating interest rate is one that varies according to the economic conditions. Furthermore, I find out the finer details that are in small print. What are the administration costs, or any other costs that I should be aware of.
While we can expect the middle class to grow, interest rates to drop, more banks to come into the country, we cannot allow ourselves to be ‘High Indebted Citizens’. It was like yesterday when as a country, we were fighting to remove the label of ‘Highly Indebted Poor Country’. My plea is that people should stop acting on impulses and make a critical assessment on whether they really need to get the loan or not. It does no harm having a second opinion from objective family and friends, people who you know will tell it to you as it is and not mere opportunists. It is you who will be repaying the loan mind you. More efforts need to be done by the communities, government and other related stakeholders in educating the public on the pros and cons of accessing loans. We cannot expect the banks and financial lending institutions to do this on our behalf after all they are in it for the profit. So this brings me back to the beginning, to get a loan or not to get a loan? That is the question and yours to answer.