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You know how it is most times when your predictions come true … others seem to wink an eye. We at the Zambian Chronicle warned about how the current financial crisis could affect the Zambian Enterprise when the times were great, the boom was on the rise and no one saw it (the crisis) coming.

 

In our weekly memo over a year ago we warned the Zambian government against this as we encouraged them to take stock of the commodities boom looking at it as a short-medium term opportunity while putting in place other measures for an upcoming burst.

 

It was on September 24, 2007 and we wrote Zambia’s Short To Medium Term Outlook – Extremely Encouraging, But … In that memo we went on to say the following …

 

“The challenge now is for countries like Zambia that are dependent on commodity exports to properly “manage” the commodity boom.

If we respect the truth, then we need to admit that commodity boom phases have not been managed well in the past, and we are at risk of making the same mistakes again. The main factors underpinning commodity prices were strong demand for platinum in devices that cut pollution in cars and rising demand in China and other emerging markets.

Still, commodity prices might drop, hurting growth in some African countries. To assume that current prices and the current boom phase reflects a permanent shift, rather than a temporary opportunity, would be a naive and risky approach to adopt.

If our analysis is correct, then the slump will come and it will bring with it a significant decline in commodity prices but prudent asset management now would help governments that are diversified enough to transition into manufacturing, construction and service sectors.”

While we can safely say that the Mwanawasa Administration really paid attention to most of the economic forecasts we put out there because our own info gathering and general feedback supports the notion, sometimes measures were not in place to fully implement them.

 

Our highly qualified team at the Zambian Chronicle takes time to look at all the data, crunch the numbers and analyze facts. By the sheer nature of the economic enterprise, booms and burst are a common place and it is not pessimistic but prudent to critically look at “what if scenarios”.

 

In another memo entitled National Development Corner: Barj Dubai – World’s Tallest Building Is Now In Dubai … we stated that the United Arab Emirates were in a hurry to develop and diversify because they understood the importance of turning current booms into diversification for future utility; we wrote the following below then …

 

“The United Arab Emirates (Dubai) is the fastest growing enterprise in the world per capita growth. Its own population is only one-eight compared to that of temporary immigrant workers from around the world working inside Dubai, for instance. It is no wonder some of the world’s Fortune 500 corporations are relocating their headquarters there.

 

The incentives are incomparable in many ways, from zero to marginal taxation to free trade zones, Dubai now houses the world’s tallest hotel, the world’s largest man-made port, the world’s largest shopping mall, the world’s largest man-made islands called “The World”, and the list is endless.

 

What is amazing though is that the Emirates are forward thinkers and planners such that their own Sheiks are at the center of the storm as they transform their nation into a premier world destination. Theirs will be an enterprise to reckon with nevertheless. One of the world’s most profitable airlines is called the Emirates.”

 

How does the above relate to individuals, corporations and governments alike? One might ask. Well for individuals, the scenarios are basic … you too will have good times in your life. There will be times when everything seems just right. That will be your personal financial and or micro-economic boom.

 

You income will right where you want it to be if not more. I have had those myself and even wondered whether I really deserved to be paid that kind of money for the same number of hours worked as Joe across me who earned far less. In most cases it was because I was more qualified than Joe while in others I was a better performer but the facts were I was having an individual economic boom.

 

Such are not times to squander your earnings but to build reserves for a rainy day, college fund for your kids and or retirement. You plan now, you rest tomorrow otherwise if you rest today you would be destitute tomorrow … if you fail to plan, you are planning to fail.

 

For corporations, those which don’t turn their reserves into marketable securities end up with cash crunches when the times are hard, end up winding operations and or filing for bankruptcy.  The process can have a devastating impact on the overall going concern.

 

Most times though, forward thinking enterprises pay dearly for forecasting tools and such things as cutting edge Management & Executive Information Systems they neither are nor usually caught unaware because Daily Statistical Reports (DSR) reveal and recommend mitigating resolutions.

 

For governments, those without foresight end up not finding ways to stimulate their economies and help citizens with unemployment benefits just as when  Luanshya Copper Mine halts operations … all 1,740 employees would be laid off and the Zambian government can do dimly squat.

 

An adverse economic reversal in Zambia would take more time for a turn around. What the government needs do is to come up with a Neo-Keynesianism approach right away as we suggested in the memo, “No Election Honeymoon For RB; The World Economy Is In Shambles, So Will Zambia’s …

 

The smart people of the Zambian Enterprise deserve better and the incoming government needs to take a critical look at mitigating circumstances – because Zambia is greater than any single one of us.

 

What we are experiencing is just the tip of the iceberg, the world economic crisis has approximately another twelve months to run its course but now time is of the essence.

 

Compliments of the Season, Live Long & Prosper; that’s this week’s memo from us at the Zambian Chronicle … thanks a trillion.

 

Brainwave R Mumba, Sr.

CEO  & President – Zambian Chronicle 

 

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