Zambia close to bankruptcy – high risk of increasing hunger

Zambia can’t pay its foreign debt and is about to be declared Africa’s first economy to default during the coronavirus pandemic. Small-scale farmers and people’s access to food are significantly impacted.

Zambia’s external debt has surged to nearly $12 billion this year. The debt is a result of many factors, but the ultimate problem this year has been increasing expenses to deal with the corona pandemic. An underlying issue is that the government have been forced to spend money on interest payments, rather than national development. Agriculture is one of the sectors which is significantly impacted.

“The close to no investments in the sector has a long-term impact on the economic and social well-being of Zambian farmers, especially the small-scale farmers” said Faides Nsofu, country manager for We Effect in Zambia.

An increased tax burden has led to higher prices for agriculture inputs and this is hitting small-scale farmers hard. Other factors that influence the price is the exchange rate of the local currency kwacha.

“The pressure on the kwacha will lead to less investment in the agriculture sector. The government will try to cushion this by increasing and introducing taxes on most of the commodities, including agriculture commodities. ” said Faides Nsofu.

High inflation rates and decreased value of the kwacha will increase prices. This will lead to delayed access to inputs for farmers and less participation of the private sector.

As a result, small-scale farmers, already vulnerable and impacted by restrictions following covid-19 and climate change, might fail to produce enough crops to harvest and sell, and ultimately leading to increased poverty and hunger.

“We expect increased poverty and reduced access to food, critical to this assumption is the increased food insecurity exacerbated with climate change and covid-19. It´s a really dire situation” said Faides Nsofu.

According to World Food Programme, half of the population in Zambia are unable to meet their minimum calorie requirements. Faides Nsofu points out that long-term investments in small-scale farmers is key for the future of the country.

“Small-scale farmers are crucial for Zambia’s economy, however they are among the ones impacted the hardest by this situation” said Faides Nsofu.

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Written by

Marcus Lundstedt