Zambia’s Proposed Stabilization Fund a Welcome Move, Urges Quick Policy Backups – Economic Analyst
Economic analyst Kelvin Chisanga has praised Zambia’s proposed Stabilization Fund as a crucial step towards safeguarding the country’s economy, but stressed the need for swift policy implementation to ensure its effectiveness.
The fund, hinted at in recent budget announcements by the Minister of Finance and National Development, will be financed from fiscal surpluses and designed to cushion the impact of economic shocks and crises.
Mr. Chisanga highlighted the benefits of the fund, especially in the context of Zambia’s exposure to external shocks, including climate change, the economic fallout from COVID-19, and financial pressures affecting vital sectors such as health and education.
He noted that the fund would act as a critical safety net during times of financial strain and would also support long-term investments in key areas like agriculture, energy, and infrastructure.
Drawing parallels with Zimbabwe’s Mutapa Investment Fund, Mr. Chisanga emphasized how sovereign funds are being successfully used to mitigate economic risks.
He commended Zambia’s Industrial Development Corporation (IDC), whose CEO Cornwell Muleya expressed support for the initiative, saying that state-owned enterprises would contribute to the fund’s growth.
However, Mr. Chisanga urged the government to quickly establish a solid policy framework to ensure the fund’s success. “It is essential to align this proposed Sovereign Wealth Fund with statutory regulations to prevent financial leakages and potential misuse. We need clear policy guidelines and legal safeguards to protect the integrity of the fund and ensure its sustainable use,” he stated.
Mr. Chisanga believes that once the policy structures are in place, the fund will play a pivotal role in stabilizing Zambia’s economy during future turbulences, helping the country maintain economic health and development amidst external shocks.
