Information and Communications Technology Bill 2009

A number of new bills have been enacted into law, covering some quite important areas we have covered on Zambian Economist. Unfortunately the Legislature is extremely poor at ensuring that the Zambian public are sufficiently plugged in between the time the Executive tables the bill and final enactment. Often we only find out about the bill when it has been passed! That said, I think there's still some merit in discussing some of the already enacted legislation, if only to see where a more reasonable Legislature than the present one may consider further refinements. Also part of the mission of the Zambian Economist is to encourage all Zambians to read and understand the laws that are being passed and how they affect us. So I hope it will encourage all of us to read these lengthy documents, which defines many of our freedoms without our input. In the next couple of posts I'll highlight very briefly some of main provisions in new bills from the Third Session of the Tenth Assembly.

Our first take is the Information and Communications Technologies (ICT) Bill 2009. This bill essentially builds on the bootleg version we discussed back in 2007., with a now non-existent URL linking to the document (CAZ removed the document). The ICT Bill 2009 repeals the Telecommunications Act 1994 and Radio Communications Act 1994. Its therefore a very important piece of legislation.

The Positive

There are certainly some important developments in the latest bill beyond changing CAZ's name to the Zambia Information and Communication Technology Authority (ZICTA). ZICTA is now an Economic Regulator with power to regulate tariffs for "dominant" players and agreements on interconnections. We have previously voiced concern over ZAIN's rising dominance, as well as the ability of ZAMTEL to restrict competition through interconnection and access agreements. A particular important point is the idea of "cost reflective tariffs" for dominant players in both interconnection agreements and internal tariffs. This will go some way to helping consumers. Cross subsidies and discounts are also now effectively eliminated - so no longer will ZAMTEL be able to maintain CELL-Z by making the profits from interconnection agreements with ZAIN and MTN (currently their customers effectively prop an inefficient ZAMTEL).

The Fog

ZICTA is now autonomous, but that clearly has been qualified with significant room for Ministers to dictate many areas that remain undefined and those provided by various sections of the Act.

A key area relates to "access agreements" clearly drafted with the International Gateway (IGW) in mind. The Act clearly implies that although ZICTA would regulate these sorts of infrastructure, how the appropriate gateway tariffs are determined may be dictated by statutory instruments issued by Ministers : "The Minister may, by statutory instrument, prescribe matters and other particulars for inclusion in access agreement". In short not only will how much is charged by ZAMTEL for the IGW largely be dictated by Ministers but also fees to anyone wishing to build another IGW would also be dictated by Ministers. No surprise therefore that while can speak of ZICTA pushing for greater competition and cost reflective tariffs in the area of interconnection and "other dominant" arrangements, with access agreement the wording is full of waffle - some musings about "reasonableness" and "non-discriminatory access".

Linked to the above, is the important point of how fees are set for various radiocommunications and electronic licences. It is part of ZICTA's remit to issue licenses but who determines the scope and levels of fees is not clearly defined. Again this appears to be an area where Ministerial influence may yet play significant role. Incidentally, there's no suggestion that further consultation would be necessary in this area with the public.

Another interesting proposal is the Universal Access and Service Fund which is designed, as the name suggests, for financing of universal access and service. The idea is to promote widespread availability and usage of electronic communications in "under-served" or remote areas. The Fund will be administered by ZICTA but unfortunately the Act does not specify just how it shall be funded! All it says is that the Minister, on recommendation by ZICTA, shall provide regulations which may include "the sources of funding and the manner in which the Fund will be paid" and "the annual contributions payable by any licencee to the Fund, shall not exceed the amount prescribed by the Minister...".

One hopes that Ministers would take the idea of asking licencees to contribute too seriously. I have a natural preference for using the the tax system to raise funds, instead of asking companies to pay more on top of taxes. Either we tax these licensees properly with enough revenue available for the sort of fund in question or we don't bother at all. I am yet to be persuade of the reason for such parallel arrangements (unless we are correcting specific market failures, which is not the case here), which only serve to bring yet more fog to the table.

The Bizarre

Perhaps, the most bizarre element in the Act is the proposed composition of th ZICTA Board. If you have ever doubted the chief lobbyists in Zambia with significant sway on the powers that be, one only needs to look at the proposed representative on the ZICTA Board. Can anyone honestly tell me why an act of Parliament needs to specify current national associations like Farmers Union and Law Association of Zambia (LAZ) to have atleast one representative on the ZICTA Board? What about other associations, present and future? What makes LAZ more qualified to sit on the ZICTA Board than say Economics Association of Zambia or Women for Change or Disabled Association of Zambia? It is foolish to prescribe specific associations to take seats on regulatory boards, at worst it is a clear sign of a corrupt Legislature that panders to lobbyists. Another criterion should have been found. In fact there's no clear discussion of how those Board Members will be vetted once chosen by associations, apart from the Minister agreeing to names or asking for another name! I know the concern was to make the Board sufficiently independent, but we also must guard against the pre-eminence of certain associations in legislation.

Going Forward

In general, the Act does represent a positive step beyond the status quo, especially with respect to economic regulation. But then again, we are starting from a very low base. Whether the provisions of the Act translates in tangible improvement in the sector depends on bigger questions - how robust will the board be? will ZICTA have sufficient resources (it will be funded from fines, license fees and GRZ pot)? how will the IGW question be resolved? how will the Zambia Competition Commission (ZCC) relate to ZICTA's new functions? Will ZICTA have enough courage to impose itself sufficiently, in regulating a Government owned company like ZAMTEL, when itself it is subject to Government Ministerial directions? Much will also depend on the quality of the personnel within ZICTA, and that is related to funding!

In Government's Palm

"As for me, I would be happy if the government controlled media also publish about me that I have stolen and not to hide"

Minister Tetamashimba confessing that indeed the Daily Mail and Times of Zambia are controlled by Government. Presumably Zambians are very comfortable with the fact that tax payers money is wasted on institutions that only serves the purposes of the ruling party. When are we as a people ever going wake up ? In these modern times there's absolutely no reason for Government ownership of newspapers, let alone one fully controlled by it.

A question to GRZ Journalists :

I really want to know from journalists at the Daily Mail and Times of Zambia (I know they read this blog, but probably not anymore after this). How do you sleep at night, knowing your whole careers are built on acting as spin for Government? Do you just see it simply as a job like any other? Is it lack of alternative employment which has helped you park your moral consciousness? Or have you convinced yourself that you are independent of government? Is it a sort of stockholm syndrome? What is it? I really want to know and I am mean in no way to sound disparaging. Its just that money is wasted on employing organisations such as yours and when I read garbage daily it gets to me a bit. I don't want my grandmother in Mwansabombwe paying taxes just to prop you up without end product.

Update :

I want to avoid confusion - for the avoidance of doubt, I don't think the issues I have raised above apply to the Post. I do not care about newspapers that are owned by the private sector. It is up to the market to deal with those issues through competition. Where market failures arise the Government can correct through legislation or other means e.g. laws on defamation, enacting independent complaints commissions, etc. So let us not make this discussion about The Post. My issue is specifically predicated on papers owned by tax payers. [Another reason might be the issue of the "fight against corruption" - see Corruption Wars - Part 3 (Corruption & The Press)]

Mercantilism Reconsidered

A new piece by Rodrik makes a case for more government direction of markets :

Mercantilism Reconsidered, Project Syndicate, Dani Rodrik, Commentary :

A businessman walks into a government minister's office and says he needs help. What should the minister do? Invite him in for a cup of coffee and ask how the government can be of help? Or throw him out, on the principle that government should not be handing out favors to business?

This question constitutes a Rorschach test for policymakers and economists. On one side are free-market enthusiasts and neo-classical economists, who believe in a stark separation between state and business. In their view, the government's role is to establish clear rules and regulations and then let businesses sink or swim on their own.

Public officials should hold private interests at arm's length and never cozy up to them. It is consumers, not producers, who are king.

This view reflects a venerable tradition that goes back to Adam Smith and continues a proud existence in today's economics textbooks. It is also the dominant perspective of governance in the United States, Britain, and other societies organized along Anglo-American lines - even though actual practice often deviates from idealized principles.

On the other side are what we may call corporatists or neo-mercantilists, who view an alliance between government and business as critical to good economic performance and social harmony. In this model, the economy needs a state that eagerly lends an ear to business, and, when necessary, greases the wheels of commerce by providing incentives, subsidies, and other discretionary benefits. Because investment and job creation ensure economic prosperity, the objective of government policy should be to make producers happy. Rigid rules and distant policymakers merely suffocate the animal spirits of the business class.

This view reflects an even older tradition that goes back to the mercantilist practices of the seventeenth century. Mercantilists believed in an active economic role for the state - to promote exports, discourage finished imports, and establish trade monopolies that would enrich business and the crown alike. This idea survives today in the practices of Asian export superpowers (most notably China).

Adam Smith and his followers decisively won the intellectual battle between these two models of capitalism. But the facts on the ground tell a more ambiguous story.

The growth champions of the past few decades - Japan in the 1950's and 1960's, South Korea from the 1960's to the 1980's, and China since the early 1980's - have all had activist governments collaborating closely with large business. All aggressively promoted investment and exports while discouraging (or remaining agnostic about) imports. China's pursuit of a high-saving, large-trade-surplus economy in recent years embodies mercantilist teachings.

Early mercantilism deserves a rethink too. It is doubtful that the great expansion of intercontinental trade in the sixteenth and seventeenth centuries would have been possible without the incentives that states provided, such as monopoly charters. As many economic historians argue, the trade networks and profits that mercantilism provided for Britain may have been critical in launching the country's industrial revolution around the middle of the eighteenth century.

None of this is to idealize mercantilist practices, whose harmful effects are easy to see. Governments can too easily end up in the pockets of business, resulting in cronyism and rent-seeking instead of economic growth.

Even when initially successful, government intervention in favor of business can outlive its usefulness and become ossified. The pursuit of trade surpluses inevitably triggers conflicts with trade partners, and the effectiveness of mercantilist policies depends in part on the absence of similar policies elsewhere.

Moreover, unilateral mercantilism is no guarantee of success. The Chinese-US trade relationship may have seemed like a marriage made in heaven - between practitioners of the mercantilist and liberal models, respectively - but in hindsight it is clear that it merely led to a blowup. As a result, China will have to make important changes to its economic strategy, a necessity for which it has yet to prepare itself.

Nonetheless, the mercantilist mindset provides policymakers with some important advantages: better feedback about the constraints and opportunities that private economic activity faces, and the ability to create a sense of national purpose around economic goals. There is much that liberals can learn from it.

Indeed, the inability to see the advantages of close state-business relations is the blind spot of modern economic liberalism. Just look at how the search for the causes of the financial crisis has played out in the US. Current conventional wisdom places the blame squarely on the close ties that developed between policymakers and the financial industry in recent decades. For textbook liberals, the state should have kept its distance, acting purely as Platonic guardians of consumer sovereignty.

But the problem is not that government listened too much to Wall Street; rather, the problem is that it didn't listen enough to Main Street, where the real producers and innovators were. That is how untested economic theories about efficient markets and self-regulation could substitute for common sense, enabling financial interests to gain hegemony, while leaving everyone else, including governments, to pick up the pieces.

An illegal Chief Justice?

The controversy over the Chief Justice appears to have stepped up a notch with the second front now being opened by the Patriotic Front President to the Judicial Service Commission (JSC), focusing on the nature of the contracts and the incalculable implications it may have for the President's own position :

"The Post newspaper edition dated Wednesday 15th July 2009 carried an article on the front page entitled "Chief Justice Sakala must go - Sangwa".

Firstly, I would like to know what role your commission has played in the award of the said contracts to these judges. If the commission were consulted by the President, why did Parliament not ratify the contracts to allow the people's representatives to question the candidates on their competence or otherwise to continue serving our people in such public positions?

"Secondly, it is my understanding that the fact that the contracts in question were not ratified by Parliament means that the process was incomplete and the appointments unconstitutional. If this is so, what is the position of the Chief Justice who purports to swear a President into office after elections when he is not supposed to be in office himself? What about the oath of office which the President took himself?"

"We cannot, therefore, gloss over these matters as a matter of convenience when the nation is spending colossal sums of money on a new constitution. The citizens need clear answers from all concerned and I demand that these answers be provided without delay"

The first front was opened by Sangwa in his letter to the Attorney General (AG), stating that that the Chief Justice Ernest Sakala and Justice Peter Chitengi have already passed their retirement age and are effectively illegal occupants of these important offices. All legal eyes are now firmly fixed at the AG and the JSC. Regardless of the motives of those bringing these issues forward, we all should applaud the renewed quest by Zambians to ensure that every letter of the law counts and is respected by everyone especially the Judiciary. There's simply no development without rule of law.

Internet Lift Off?

Zamnet has now connected to the South Atlantic 3/West Africa Submarine Cable (SAT-3 undersea cable) that runs on the west coast of Africa into Europe (see the visual map here). The link became operational on July 1, with the firm currently running trial internal tests before the services could be extended to its customers. The link set up in partnership with ZESCO and Telecom Namibia, is likely to result in lower end user cost of Internet, better access to multimedia and hosting contents, and use of newer technologies such as video conference. More detail via Xinhua Net .

Update : An important contribution on this at the Zedian on Tech - Internet via Optic Fibre Arrives in Zambia! (Guest Blog)

Update : ZAMNET Notice :

Internet Via Optic Fiber Arrives in Zambia

ZAMNET Communication Systems Limited, the pioneering Internet Service Provider in Zambia is proud to announce that it has successfully set up an Internet gateway into Europe using optic fibre end-to-end. This is the first such connection in Zambia and marks a milestone in the life of the Internet in Zambia.

The link became operational on 1st July 2009 and ZAMNET is currently running internal tests before the service becomes available to all ZAMNET customers. The bulk of ZAMNET Internet traffic is expected to be through fibre by 1st August 2009.

The link performance has been excellent so far. We have been running various tests and doing some optimization to ensure that when we come fully online, our customers will enjoy the Internet as it is meant to be

The Connection

This is an end-to-end optic fibre connection from ZAMNET’s server room to Europe. The link has been set up in partnership with ZESCO and Telecom Namibia through the South Atlantic 3/West Africa Submarine Cable commonly known as SAT-3 undersea cable that runs on the west coast of Africa into Europe. ZAMNET has leveraged on ZESCO’s Optical fibre infrastructure that has a cross-border interconnect with Telecom Nambia at Katimamulilo. Telecom Nambia is part of the SAT-3 consortium that enables them to gain easy access to this facility. They also have bought capacity in the new SEACOM cable that is expected to become functional before the end of this month.

State of Connectivity to the Internet in Zambia

Currently all Internet Service Providers (ISP) in Zambia connect to the core Internet backbone using satellite technology. Despite the inherent latency (delay) that is associated with this technology for Internet traffic, until now Satellite has been the only viable option available to Zambia. Over the last few years, there has been a reduction in the amount of satellite capacity over Africa resulting in the increase in the price of the little available capacity and ultimately contributing to the high cost of delivering Internet to your computers.

Fortunately, the last few years has seen increased activity in the area of building optic fibre infrastructure in Africa. A number of projects commenced to interconnect the African continent to the rest of the world using undersea cables. Countries are also building national backbones to interconnect different cities and towns. Further different initiatives have been launched to interconnect different parts of cities into what are being referred to as metropolitan fibre networks.

What does this new fibre connection mean for Zambia?

Since ZAMNET introduced the Internet in Zambia in 1994, the mode of connectivity to rest of the Internet community has been through Satellite communication which has an inherent latency, making the Internet experience sluggish compared to what is obtaining in other countries that are connected through cable. Some of the benefits that will result from this new connection include:

1. Improved access speeds to the Internet. Fibre has lower latency (or delay) compared to Satellite
2. Increased uplink and downlink capacities
3. Ultimately lower end user cost of Internet in Zambia
4. Better access to multimedia content
5. Better implementation of Virtual Private Networks (VPNs) beyond the borders
6. Better hosting of content
7. Use of newer technologies such as Video conferencing

The Inequality and Corruption Trade-Off

A new paper finds a robust trade-off between corruption and inequality, working from evidence in Latin America. The result confirms what is broadly accepted reduced corruption may increase income inequality where there is a large informal sector. The paper explains this likely trade-off as follows :

Institutional reform is likely to exacerbate inequality in countries where there is a large informal sector. Firms in this sector have low operating costs arising from their lack of compliance to rules and regulations. It is for this reason that the sector tends to employ the poorest members of society. Since compliance comes with institutional reform and corruption reducing measures, firms will incur rising costs. Furthermore, the actual process of reform requires better trained personnel and support infrastructure, necessitating new taxes. Higher costs of production, new taxes and more vigilant policing will have a direct impact on employment in the informal sector.

A second plausible explanation for the trade-off focuses on the impact of reform on redistributive measures. In many developing countries income redistribution policies are promoted by corrupt elements in society whose primary interest is political power. For example, “special government projects” designed to increase employment of the poor are promoted by particular groups who can benefit from such projects (e.g., construction of roads and housing development schemes). These projects employ manual labourers who would otherwise have been unemployed. As countries introduce institutional reform, rent seeking is reduced since “special government projects” are more stringently assessed and the tendering process becomes more competitive. Projects which would have been undertaken under a corrupt system are not undertaken now because they are not economically viable. Further, contracts which are in operation may be stopped or not renewed. It is also likely that projects are more capital intensive.

In search of independent judges..

Patrick Jabani continues a strange emerging trend of similar articles appearing in The Post and the Government owned papers, but with different headlines! The latest piece offers some interesting thoughts on the current weaknesses within the judicial system, largely related to the multiplicity of judicial roles and ineffective funding.

Independence of judiciary cardinal, Patrick Jabani, The Times & The Post, Commentary :

The independence of the judiciary is absolutely essential to democracy and the rule of law in any given country including Zambia. Of late there has been so much focus on the weaknesses of the judiciary and the inadequate separation of powers. Earlier, more criticism has been directed to the other two arms of Government, the executive and legislature. The independence of the judiciary has not been thoroughly analysed and applied in Zambia where judges can be appointed to carry out executive tasks such as heading investigative or electoral commissions.

The absence of any vigorous commitment to separation of powers has the potential to make Zambia’s Constitution weak. The Constitution must strengthen the principles of separation of powers of the three branches of Government namely legislature, executive and the judiciary.

The independence of the judiciary should guarantee that individual judges are free of the control of the executive and legislature. This would accord judges a high rating on the independence scale.

While extolling the virtues of judicial impartiality and independence, Zambia has done nothing to develop a policy on the use of judges. The right of the executive to use a judge outside his regular duties such as chairing commissions of investigations has not only depleted the number of judges but also compromised their contribution to the independence of the judiciary. Some of the enquiries in which judges have been appointed to head are of political nature.

The task of judges is to decide what the law is regarding justice and fair-play and not what social or political conditions are. It has always been thought that by the use of High Court judges, this would add greatly to the exposition of the executive’s cases while agreeing the work would not be wholly judicial in the ordinary sense.

The judiciary, in the exercise of its judicial and administrative functions must strictly be subject to the Constitution and law and should not be subject to the control or direction of any person or authority. No other person including any member of the executive or legislature should interfere with the judges or judiciary officers in the exercise of their judiciary powers. Instead, the executive, legislature and other State institutions should accord to the judiciary any assistance required to protect the independence, dignity and effectiveness of the judiciary. A person exercising judicial power should not be liable for any act or omission done or omitted to be done in the exercise of any judicial power. The independence of the judiciary should guarantee access to justice and rule of law for all citizens despite their social status and political affiliation.

The Constitution vests the judicial power of Zambia in the courts and sets out the jurisdiction of the courts. This principal law must place emphasis on the independence of the judiciary, including the immunity for judges and judicial officers in the exercise of their functions.

Elaborate measures must be put in the Constitution to establish and protect the independence of the judiciary. Such measures should include the financial independence of the judiciary making it a self-accounting institution which will prepare its own budget and deal directly with the responsible Finance minister. The judiciary should prepare and submit its annual budget estimates to the minister of Finance who, taking into consideration equitable sharing of the national resources shall determine the budget for the judiciary.

The judiciary should be adequately funded in any financial year to enable it to effectively carry out its mandate. This means that the judiciary shall become a self-accounting institution and shall deal directly with the ministry of Finance in matters relating to its finances. The expenses of the judiciary, including its emoluments payable to or in respect of a judge or judicial officer shall be a charge on the Consolidated Fund.

The Mungómba draft constitution has recommended the establishment of the Judicial Service Commission to review and submit recommendations for the emoluments and other conditions of service of judges to the Emoluments Commission. The Emoluments Commission shall, in turn, review recommendations from the Judicial Service Commission and make appropriate recommendations for the emoluments of judges for ratification by the National Assembly. The National Assembly shall enact legislation providing for the emoluments and other terms of condition of service for judges. The emoluments of a judge shall not be reduced to the disadvantage of the judge during his or her tenure of office.

The Constitution should also set out measures and procedures for appointment of judicial officers, including acting appointments. Such measures should ensure that judges are not answerable to any person or authority in the performance of their functions. This will also guarantee that judges or judicial officers shall not be removed at an individual’s will or pleasure.

It is proposed in the Mungómba draft constitution that the president of the Republic of Zambia shall in consultation with the new Judicial Service Commission and with ratification of the National Assembly appoint the Chief Justice and the Deputy Chief Justice as well as other judges of the High and Supreme courts. The Judicial Service Commission shall appoint such number of judicial officers as the Judicial Service Commission considers necessary for the proper functioning of the judiciary.

The independence of the judiciary is also closely linked to the security of tenure of office of judges and judicial officers. The causes of the removal of a judge from office must be investigated thoroughly and made known while the ultimate determination of the case should be made constitutionally.

The league of unsafe gentlemen..

Zambia appeared yesterday on the comprehensive EU airlines black list. The list bans "All air carriers certified by the authorities with responsibility for regulatory oversight of Zambia, including Zambezi Airlines Z/AOC/001/2009". Its a ban for future air carriers larger than Zambezi Airlines. No chance of that happening any time soon, but the downside is that it takes years to get yourself off the EU black list. Just as well then, we have British Airways as our national carrier into Europe!

Online Petition : Chansa Kabwela

A new petition in support of Chansa Kabwela and against the Government's oppression of independent journalists (and our women). Chansa bravely exposed the plight of a woman delivering a child on the streets following a strike by the health workers.

You can access the petition here.

Defending Mulongotism ?

Kenneth Mwenda has an Op’ed in the Government owned and policed Daily Mail where he weighs in on the current question being considered by the NCC - “whether the President must have at least a university degree or not?”. In many respects it is an attempt to put a more intelligent face to Minister Mulongoti's earlier sentiments which we dismissed on When Mulongotism met sakism, and much of what Prof Mwenda talks about is covered in the exchanges therein. Without rehashing previous arguments, I would simply say that none of Mwenda’s new arguments move me as they do not address the two fundamental flaws with the degree qualification proposal: the measure assumes Zambians are foolish to balance educational qualifications and other skills, so they need to be prescribed minimums (irrational assumptions); and, it tries to repair a broken electoral system through artificial restrictions on political players (poor diagnosis). I also think Mwenda’s assessment is deeply flawed by trying to draw parallels between presidential offices and private sector CEO requirements - being President is a right that should be afforded to all Zambians, whilst firms are corporate private clubs that are free to impose restrictions as they see fit. I’ll step aside and leave readers to reach their own conclusions:

Degree for President : To have or not to have, The Daily Mail, Kenneth Mwenda, Commentary :

That an individual’s formal university education alone is not, and must not be, the sole criterion for determining the individual’s leadership qualities is a settled view that requires no contest.

But to argue that illiteracy or semi-literacy, even in situations where such illiteracy or semi-literacy is devoid of wisdom and decency, are credible values that can propel an individual to the helm of political leadership is a totally misguided view.

If anything, the very constitutional argument imbedded in the Constitutions of many countries, stipulating that the Republican President should be at least of a certain age and should be a national of that particular country, does favour a certain kind of reverse discrimination against those individuals resident in a particular country that are below that constitutional age requirement and those that are not nationals of the said country, though having close ties to the country.

Against this background, to contest the merits of a proposal that the Republican Constitution should provide that a Republican President should have at least a university degree or some professional certification equivalent to a university Bachelors degree is a conundrum that is not free from illogical difficulties.

I am awake to the fact that some arguments have been advanced from certain quarters of society, postulating that championing such a proposal is tantamount to targeting a particular individual and thus discriminating against that individual.

To some extent, this view could be true, especially where the proposal is hijacked by opportunistic ‘politicisation.’
Sometimes, a well-meaning developmental goal can be hijacked by those with a self-interest political agenda. But then, what does experience teach us?

In Zambia’s political history, haven’t there been cases where individuals with decent academic credentials, and sometimes even PhDs from reputable international universities, after forming a political party, could not field a presidential candidate from amongst themselves partly because the majority of the party leadership was below the constitutional age requirement to contest the Republican Presidency?

But nobody ever cried foul that the Republican Constitution was discriminatory or should be amended to allow such young intellectuals to contest the Republican Presidency. Indeed, nobody complained that the age requirement in the Republican Constitution infringed the rights of these citizens.

It is therefore ironic that the issue of a university degree should appear so troublesome and burdensome to some. How different is this from the example of age restriction noted above? Even from a labour law or human resource management perspective, do we not see many companies spelling out specific job requirements for hiring, say, their chief executive officer or managing director?

Can we then challenge the constitutionality of these job adverts for specifying that the company is only looking for candidates who hold, inter alia, a university degree or a certain professional qualification that is equivalent to a university degree? Even in the public service, is it not acceptable practice that certain jobs require applicants to have attained a particular level education? By parity of reasoning, why all this fuss about the Republican Presidency?

Are people defending their own personal interests or what? And is presidency not just a job like any other job? Yes, presidents come and go. We have seen them come and go. So, what’s the big deal really? Even a priest must have some minimal levels of education no matter how well-anointed he or she is with the Holy Spirit.

Yet, nobody cries foul that there is discrimination against the already anointed when we send them to seminaries for years of training, with almost no prospect for a lucrative salary after they graduate.

By contrast, it is perfectly conceivable that there would be discrimination if the hiring of employees was done along tribal or ethnic lines because such criteria have no direct bearing, first, on an individual’s ability to perform effectively, and, secondly, on fostering meaningful competition to get the best candidate. It is in this vein that the use of educational levels as one of the basic requirements for an individual to aspire for public office should be embraced without hesitation.

This approach will help us identify and attract the right people into politics and positions of leadership. Experience alone, without grounded theory, is dangerous. There are some people who claim, and proudly too, to have many years of practical experience in doing the same thing over and over again, forgetting that they may have been doing that same thing wrongly much of their life.

Such human failings, predicated on robotic and dogmatic intuitions, are often a result of treating lightly, or paying insufficient attention to valuable and useful theories or ideas in a relevant discipline. Indeed, practice devoid of enlightenment is a good recipe for failure, as much as the carrying out of unintelligent repetitive tasks does not make one a genius.

There can be no substitute for erudition. Exceptions should only be permitted rarely, such as where an individual is of such unquestionable international stature, despite not having a formal university education. We have seen, for example, how Ghana has been heralded internationally as a success African story of good governance and economic growth.

President John Kufuor, an Oxford graduate, handed over the torch of leadership to Professor John Atta Mills, a former Associate Professor of Law at the University of Ghana Law Faculty. It was a peaceful transition, albeit the tightly contested presidential elections. But we are not saying Ghana is completely free of what obtains in many developing countries.

Ghana, like many West African countries, has experienced a troubled political past with routine military coups. But, in the modern age of technology, where a Republican President should be in a position to understand complex issues of globalisation that are so often juxtaposed between norms of international trade and finance as well as those of law and economics, surely we cannot remain glued to the old ways of tired politicians of the past.

A Republican President should not only have a reasonable understanding of quantitative analysis and logic, but he or she should also be computer literate so as to be able to send or receive email, including browsing the internet.

Indeed, a number of countries are moving away from the old era of mediocre leadership that was evidenced through military dictatorships, corrupt and compromised political leaderships, and the often less visionary governing classes. But then, as we have argued above, education alone is not enough. What about those wise elders in many an African traditional society, who presided over complex disputes, resolving these disputes without resort to theories of modern education, how did they succeed?
As a tool for effective leadership, education is only meaningfully functional if it is supported by qualities of high moral and ethical values. As noted above, education alone is not enough. So, then, how are we to determine an individual’s levels of ethical and moral standing?

A well-informed electorate in a society that is not easily susceptible to corruption can point us to some quality leadership. But, where hunger and poverty are overwhelming and have disenfranchised much of the electorate, some voters tend to be compromised. We are then left to look at what the Republican Constitution says.

As argued above, it is not discriminatory to enshrine in the Republican Constitution that a candidate for the Republican Presidency should have at least a university degree or some parallel professional qualification.

That said, we need to exercise caution here. There are a lot of diploma mills out there that award ‘fake’ degrees. Also, honorary degrees should never count as an earned degree. As a policy recommendation, the Supreme Court should be bestowed with powers to screen the eligibility of Presidential candidates in Zambia, consulting, where appropriate and necessary, any relevant institution in Zambia or abroad.

These include the University of Zambia, the Copperbelt University, the Law Association of Zambia, the Zambia Institute of Certified Accountants, the Medical Association of Zambia, the Institute of Directors, the Office of the President, the Anti-Corruption Commission, the Anti-Drug Commission, the Bank of Zambia, the Securities and Exchange Commission, the Pensions and Insurance Authority, and any line ministry or regulatory body within Zambia or abroad, on the eligibility of the candidates.

We have to move away from the culture of politics of the stomach which is currently endemic in Zambia. And the idea here is not to try and fix any particular individuals, but rather to fix those socio-economic problems that are rooted in mediocre leadership!

On Africa's Growth Prospects

Important reading from the Standard Chartered Global Research on growth prospects for Africa :

On growth, green shoots and stabilisation – recent themes in Africa, Standard Chartered Global Research (subscription), Razia Khan, Commentary :

As the market undergoes a reassessment of signs of green shoots elsewhere, African markets – which were perhaps late to benefit – have at least stabilised. While most were caught up in the volatility that gripped financial markets in Q4-2008, the picture that has since emerged on real GDP growth is not uniform.

Quarterly GDP data is not available everywhere, and issues of data quality persist. But informal indicators help to shed some light on underlying growth momentum. It is ironic that the countries that do report quarterly statistics are the ones that are most likely to experience an outright contraction in growth in 2009. Both South Africa and Botswana experienced negative growth in Q1-2009, with their external sectors deeply impacted by the global slowdown. The situation in South Africa was not helped by the concurrent downturn in its domestic economy. Although recovery in consumption should follow the aggressive monetary easing initiated by the SARB, the depth of the recessions experienced in mining and manufacturing – with recent record contractions in each sector – suggests that this will not be enough to lift growth entirely. Botswana’s non-mining economy should still experience buoyant growth – but the country’s narrow economic base, with mining accounting for one-third of GDP – suggests that an outright contraction in growth, driven by resources, will still dominate. Kenya also experienced negative q/q growth in Q1-2009, but the economy grew in y/y terms, helped by the weak base, reflecting Kenya’s post-election political crisis in early 2008.

Elsewhere growth appears to have been positive, with Nigerian Q1-2009 growth, provisionally estimated at 6.3% y/y by the National Bureau of Statistics, even surprising to the upside. (Nigerian growth has long been characterised by a contraction in the oil-sector, with non-oil growth sustaining overall momentum in the economy. Signs of a slowdown in the non-oil sector, driven by weaker statutory oil revenue allocations to the three tiers of government, and subdued credit growth are the new sources of concern.)

In other frontier African economies – Ghana, Tanzania, and Uganda – initial indications are that positive growth will be sustained, if somewhat more subdued.

FX market stabilisation does not match up with growth prospects

Real economies aside, a more uniform picture of stabilisation has emerged in FX markets. In some instances (South Africa) this has been helped by the bounce-back in risk appetite; and in the frontier space, by the relative stabilisation in commodity markets. The ZAR has been one of the best-performing currencies to date, at one point even prompting warnings by the SARB that it might “lean against the wind” in resisting further currency appreciation. (Recent examination of trends in South Africa’s FX reserves accumulation suggests, however, that this may have been an empty threat. While May reserves were boosted in part by the proceeds of foreign bond issuance by South Africa, June’s reserves – tellingly – displayed little sign of active market intervention by the SARB. The cost of sterilising any FX market intervention, at a time when the fiscal deficit is pressured, may make any significant FX market intervention improbable).

In Nigeria, however, a recovery in oil prices, and less pressure on existing FX reserves, has prompted FX market deregulation – with a reversal of the emergency measures instituted earlier this year. Elsewhere in African frontier markets, currency themes are more mixed, with more of a two-way trend emerging, as opposed to the clear depreciation trend that had set in from the end of last year. Only in Ghana, where the rise in inflation has been most dramatic (CPI now stands at over 20% y/y), has the currency continued to weaken on a sustained basis.

Could FX market trends offer a view on future growth prospects? This is still debatable. While it is clear that the most liquid markets have – other things being equal – gained the most, these markets are not necessarily the ones with the most favourable growth prospects. Near-term, the growth profiles of Africa’s non-resource-rich economies are likely to be more resilient. But recent FX market trends have largely benefited either the more liquid markets (which have benefited from recovery in risk appetite, but may be at risk of renewed outflows if risk appetite turns), or the commodity producers.

Gauging reform momentum: The IFIs are back; so is China

Over the course of the cycle, policy influences should also play an important role in determining growth. Africa’s recent upswing was closely associated with reform and the achievement of macroeconomic stabilisation. Therefore renewed policy deterioration could result in structural damage to future growth prospects. From this perspective, however, recent evidence is at least encouraging. International Financial Institutions (IFIs) are showing signs of renewed engagement in Africa. In recent months, the IMF has pledged new funding for Kenya, Tanzania, and Zambia; while Ghana has benefi ted from World Bank funding. Other institutions are also playing a more forceful role in helping to avert a deeper economic crisis in Africa. The African Development Bank recently lent US$ 1.5bn to Botswana; it is also looking to increase significantly its funding elsewhere, through the provision of an emergency liquidity facility for African countries that find themselves cut off from international capital markets, as well as through more financing for trade.

While there are some signs of the traditional conditionality focused on fiscal consolidation being relaxed, renewed IFI engagement has also helped to counter fears of a structural setback to the reform effort. (There appears to be a new acceptance that in the short term at least, a counter-cyclical fiscal response is needed. The focus is on maintaining a sound fiscal position over the course of the cycle.) This has already provided some reassurance to investors, that the gains of Africa’s recent reform will not be entirely lost in response to the current crisis. However, it is also clear that while the IFIs are back, they are not the only option for external financing open to African economies. Recent months have seen signs of equally strong engagement by China in a number of African countries, whether the flows have been official – or, as is increasingly common, on commercial terms – with bank financing available for longer-term infrastructure projects. The receipt of Chinese funding for a power sector project in Botswana for example, talk (as yet unsubstantiated) that economies such as Nigeria – which had planned to borrow from international capital markets – are considering Chinese funding instead, are indicative of longer-term trends that might replace traditional models of support post-crisis.

African fiscal deficits widen further, in general

The return of IFI engagement in Africa will not – in the short term – be sufficient to prevent fiscal deterioration. Across the continent, there is evidence of more expansionary fiscal policy being put in place. In South Africa, much of the deterioration in the budgetary position will stem from the shortfall in revenue collection, as a result of the economic downturn. South Africa’s new Finance Minister, Pravin Gordhan, recently spoke of a -ZAR 19bn shortfall in revenue in the first quarter of FY09-10. If extrapolated over the full year, this could result in a shortfall of as much as -ZAR 60bn for the current fiscal year, which, according to our rough calculations, may even signal a deficit of more than -6% of GDP. We do not, however, expect the economy to continue to contract at the same pace as it did between April and June 2009 – so there may be some upside to the estimates of revenue lost as a consequence of the downturn. Moreover, higher-than-expected inflation suggests that nominal GDP – which is what matters for revenue collection – may not perform as badly as the expectations for a contraction in real GDP would otherwise suggest.

Elsewhere in Africa, evidence of fiscal deterioration is more closely tied to the counter-cyclical policy effort – where there is room, governments are doing more to avert a deeper economic contraction. It is correct that they should do so, as this will help avert a deeper downturn over the coming year. Across East Africa, where budgets for FY09-10 were recently announced, stimulus packages were a key theme. Kenya is to run a deficit of -6.6% of GDP, but has already implemented measures to make domestic financing of this deficit easier (including mandating pension funds to invest in government securities, and rescheduling the auctions for short-term borrowing – the 91-day and 182-day T-bill auctions – to each consecutive week in order to encourage more flows into longer-term bonds). Even these numbers do not look alarming in comparison with Botswana’s predicted -18% of GDP fiscal deficit; but the hope is that this will be closed over the course of the cycle. Botswana’s government is also in the fortunate position of being able to afford such borrowing in the very short term, having operated fiscal surpluses over most of its recent history.

To date, it is only Ghana, where the deficit at the end of last year was already an estimated -15% of GDP, that there are signs of stress in deficit financing. Unsurprisingly, short-term interest rates have spiked higher, and the threat of a further rise in inflation dominates. For Ghana, the hope is that once oil production gets underway in 2011, the country will be structurally stronger. But ahead of that point, difficult economic decisions need to be taken to preserve macroeconomic stability and the gains of previous reform.

How will all of this play out in the growth profile? Although the situation in Africa varies by country, big-picture themes for the region are apparent. In our view, growth in 2009 will be subdued, and the extent of macroeconomic deterioration in response to the current crisis suggests it may be a while before trend growth resumes. Nonetheless, growth will be positive – an important differentiator from other regions. As our previous GDP forecasts demonstrates, even by 2011 we do not expect a resumption of recent trend growth, although we should certainly see an improvement from current levels. Only the oil producers, benefiting from potentially higher prices, will be in a position to benefit strongly. But against this bigger picture, it would be wrong to lose sight of the encouraging news from recent weeks. As the scale of the crisis becomes clear, governments across the region are showing signs of being more proactive in dealing with it. We think Africa will not see the worst of the fallout. Although it will be a while before the region recovers fully, positive momentum, at least, remains.

Photo of the day

The background to this photo can be found here, here and here.

Mine Watch (Luanshya)

Luanshya Copper Mines has hired up to 1,900 miners as it seeks to resume operations at the Baluba and Mulyanshi Copper projects. According to a Dow Jones Newswires interview with Oswel Munyembe, General Secretary of the Miners Union of Zambia, Chinese-owned NFCA Mining, which took over Luanshya last month has given workers a 6-month renewable contract. More detail via RBC Wealth Management.