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Friday, 6 July 2007

Infrastructural challenges...

Felix Mutati's announcement that Zambia’s trade surplus this year may reach over US$1.2billion is another positive sign that the economy is on an upward trajectory. What is is most encouraging is that this growth in trade is being fuelled by both the increase in mining activities and non-traditional exports. Critical to the non-traditional performance has certainly been the minimal impact that the growth in copper exports has had on the strength of the Kwacha. However, this needs watching as the copper exports continue to rise - dangers of the "dutch disease" are never too far away! Its also good that Mr Mutati recognises "weak infrastructural capacity in the country was hindering further growth in the country’s economy". However, I would go further by adding two more dimensions to the infrastructural problem.

First, Zambia can actually do more in some areas of infrastructure without spending money much money. A key example is air transport where more liberalisation can achieve wonders at minimal cost. As a land locked nation it is extremely important that we have good air connecting services and appropriate investment in airport infrastructure. We need to fully liberalise entry into the air transport sector and grant Fifth Freedom rights when requested by third countries as set out in the Yamoussoukro Decision (YD). In the past we have let South Africa influence us negatively, leading to us denying rights to foreign carriers requesting to pass through Zambia contrary to our economic needs and the YD. The recent example was a request by Kenya to fly Nairobi-Lusaka-Harare which was refused by the Government.

Secondly, Zambia is landlocked and therefore heavily dependent on our neighbours' infrastructure. The poor infrastructure in the surrounding regions like Angola, DRC and Tanzania is perhaps doing very little to get our goods and services moving. A brilliant infrastructure in Zambia will have a minimal impact on growth, unless these other countries improve their infrastructure to help move our goods. Its therefore critical that Government engages bilaterally with nations and through COMESA / SADC to help some of these nations to do what they can. A nation's growth is heavily dependent on the performance of its neighbours as well, especially if your natural resources are bit scare, which although is not strictly the case for Zambia, we are still getting to push the mines back to more sustainable levels. We need to do all we can to secure bilateral deals and especially access to ports. The ongoing discussions with Namibia and Angola would be critical in improving our infrastructure, as is the on-going work on the
Chembe bridge.

9 comments:

  1. Cho,

    Slightly off topic, but you are always talking about the role of culture in governance.

    Check out this text I found on a different system of (local) government. From dr. Fu-Kiau Bunseki.

    http://maravi.blogspot.com/2007/07/dr-kimbwandende-kia-bunseki-fu-kiau-and.html

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  2. I don't understand why any kind of regular flights in and out of Lusaka would be turned down. Is there a reason for this?

    The only reason I can think of would be if the current airlines flying into Lusaka don't want competition...

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  3. Surely, why should one go to Nairobi from Lusaka enroute to Kinshasa? Or indeed, fly to Amsterdam in Europe to connect to Tripoli in Libya? And someone thinks time is ripe for a U.S. of Africa.

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  4. MrK,

    Thanks for the link.
    Always interested in this issue. I'll follow it up with you on your blog!

    ReplyDelete
  5. error,Gersh

    Its a puzzling situation indeed.

    International air service is based on bilateral service agreements (BASAs) between countries. Zambia has about 72 of these, of which only 8 of these were use as of Dec 2006 (UK, SA, Angola, Kenya, Malawi, Zimbabwe, Ethiopia, and DRC).

    The problem is that South Africa is our most important bilateral partner and it wields considerable power on us as it seeks to protect its airlines from competition and so forth. South Africa has systematically rejected all fifth freedom rights for traffic stopping Lusaka. South Africa has even rejected a request for a designated cargo carrier to fly directly via a third country to J'burg to receive freight for the J'burg - Lusaka leg. Such a request (if no freight was unloaded in J'burg) would not even constitute a case of Fifth Freedom and should be granted.

    But we have noted its not just the South Africans, its us as well. Zamba has rejected requests for Fifth Freedom rights from Libya (hence Gershom's example), Ethiopia, Nigeria and Kenya. It is not in Zambia's interest to deny these rights because doing so just raises the cost of travel, with secondary effects on dependent sectors like tourism and horticulture.

    The problem also is that COMESA and SADC are actually weak. They have done little to advance the liberalisation of air travel agenda.

    The other problem I forget to mention on air travel was Jet Fuel Pricing. Jet fuel prices in Zambia are too high. British Airways say that they pay 40% more to refuel in Lusaka than in J'burg or Nairobi. IATA recently looked at Zambia's high fuel cost and called for a reduction.
    The reason for these high costs is just inefficiencies in refinery. Also we impose VAT tax of 17% and 5% import dutie. There's a case for reducing these for airlines if we are really serious about improving air travel.

    Zambia is landlocked - air travel is really important for us to get over that hurdle. These are simple things we can do.

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  6. its amazing that we are always trying to find ways to heat water.
    some suggest leaving in the sun,puting it on fire,rubing the container,etc.

    south africas economy is controlled by western influences that use it as a base for business in southern africa.

    our economy shows signs of improvement and people get excited.this is like inviting my uncle who is suffering HIV to switzerland for break of one year,by the third month this man will be happy and regaining his strentgh.what happens when he goes back?

    people will try and sort our problems,but if they don't look at why,then it's a waste of time.

    one thing i have come to realise is our own zambians are killing us by rhetoric/cynicizm we have brilliant people that are qualified.

    south africa imposed the 50/50 rule on investment because they knew that their economy was healthy and demand was there,it was the only way to give advantage to retaining some money in there economy.

    our economy is like us imigrants in foreign countries,making money and externalising.

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  7. arthur,

    capital flight of money leaving the economy is definitely one of those things are keeping us from growing further.

    the main reason is that we manufacture very little..
    if support was given to manufacturing industries, that would create more employment...but Zambia is competiting against the likes of China and other emerging economies....

    we need to look at areas where we have an advantage...that I think is agriculture and fishing....if we can expand these areas, we can compete with other nations...

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  8. Cho,

    we need to look at areas where we have an advantage...that I think is agriculture and fishing....if we can expand these areas, we can compete with other nations...

    It is surprising how many people talk about Zambia's competitive advantage, and then forget about the mines.

    Then, there is the 80% of arable land that is not under cultivation.

    Or the 6% or so of land that is under irrigation, even though Zambia owns 10% of Africa's fresh water resources.

    Tourism, yes, manufacturing, yes, but these are Zambia's real, obvious and undeveloped opportunities.

    And they can be exploited in a way that does not benefit foreign corporations, but the people themselves.

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  9. Yes I think on water we have definitely missed a trick.

    Aquaculture is also another area where potential exists but little has been done!

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