Find us on Google+

Monday, 1 October 2007

Twins or distant relatives?

A fascinanting debate in the Sunday Times on the similarities / differences between Zambia and Zimbabwe. The debate has been prompted by President Mwanawasa latest unflinching support for Zimbabwe's leader Robert Mugabe. Rod Riddle opened the shot last last week with "Why pick on Mugabe when Africa is teeming with tyrants?" [Sept 23rd] pointing out that Zambia is not that different from Zimbabwe in terms of governance and electoral malpractice:

There’s a bit of truth, too, in the allegation that the prime minister [Gordon Brown] has attempted to “multilateralise” our problems with Zimbabwe and has unfairly singled Mugabe out for special opprobrium.

This point has been made by the president of neighbouring Zambia, Levy Mwanawasa, and he knows well of what he speaks. His own “election” to high office in 2002 was, of course, rigged, according to independent observers. His party – called, hilariously, the Movement for Multiparty Democracy – apparently used vast sums of state cash in its electioneering and happily tampered with the ballot boxes.

Since the election, Amnesty International report that there is “widespread harassment and intimidation of people perceived to be critical of the government” as well as continual and flagrant abuses of human rights, opposition leaders peremptorily locked up and plenty of beatings from the police for anyone who steps out of line.

Meanwhile, some 75% of Levy’s benighted subjects live in what the United Nations describes as “absolute poverty”, on less than a dollar per day. Cheated in elections, beaten by the police and starved. You can understand Mwanawasa’s genuine puzzlement: just what is it, exactly, that Mugabe is doing that’s so wrong?

Indeed, according to Amnesty International, Zimbabwe does not figure in the top 10 of African countries for what it calls “horrendous” human rights abuses; it comes instead towards the top of the second division for unlawful detentions, beatings, torture and executions. According to Amnesty, there are at least 24 other African countries in which, like Zimbabwe, freedom of expression simply does not exist and there are none at all where it is entirely free and untrammelled.
Lord Turbull, UK Cabinet Secretary (2002-2005) has responded with "African leaders aren’t all the same" [Sept 30th] arguing that Zambia is on a different and infinitely positive economic trajectory:

Rod Liddle put forward the proposition that it was illogical for Gordon Brown to refuse to meet President Robert Mugabe while continuing to meet allegedly equally despicable leaders such as President Levy Mwanawasa of Zambia. This attempt to establish some equivalence between the two presidents is a travesty.

There are legitimate criticisms which can be made about the Mwanawasa government, but the situation in the two countries is totally different. The Zambian economy is growing; agricultural output is increasing; inflation is below 10% (7,000% in Zimbabwe); the exchange rate has, if anything, been kept too strong. Zambia’s elections in 2006 were judged peaceful and genuinely competitive by international observers.

Under its three presidents Zambia has enjoyed peace and no tribal group has been able to oppress the others. It is a country to which refugees from neighbouring countries flee to find safety; white farmers are not being bullied off their farms –indeed white farmers from Zimbabwe have been allowed to settle in Zambia.

The homes and businesses of the urban poor have not been bulldozed as a reprisal for voting for the opposition. Foreign investment is not being expropriated – indeed, the criticism is that the concessions made to foreign mining companies are too generous.

Update: Mr Liddle does have some support beyond the few contributors on the Sunday Times website. Here is a short extract from MrK's Dear Rod Liddle.

Dear Rod Liddle,

Thank you so much for touching on this subject, a subject that has been swept under the rug by Western and African elites alike. The problem is that everything is ok, as long as western interests are not threatened - aid keeps flowing, budgets are made up to a great extent of 'donor' money. As long as no one questions western land ownership in Africa, or the ownership of Africa's mines and corporations by the West.

And this situation is of course beneficial to the West. My guess is that every year, Africa exports a trillion dollars ($1,000,000,000,000) in raw materials - from which of course not even it's corrupt leaders see much of anything. The profits go into the pockets of western corporations - that is the setup.

Africa should be rich - it after all produces 90% of the world's diamonds, 60% of the world's gold, Zambia exported 25% of all of the world's copper, the same for cobalt, platinum, and all kinds of obscure but valuable metals and gemstones. Nigeria alone exports 10% of the world's oil, with new finds in the Sudan and Zambia, as well as huge uranium deposits being found in Zambia's famous Copperbelt province, which is part of the massive mining area, most of which is the DRC's Katanga/Shaba province.

If Africa was payed international market value for it's materials, there would be no poverty on the continent. There would be no famine, there would be no need for 'donor money' or aid at all. Donor money ($600 million to Zambia in 2004) isn't about charity, it is about control.

So who benefits from this setup? The primary beneficiaries are the mining companies, and woe to anyone who stands up to them - Patrice Lumumba is a prime example. Secondary beneficiaries are the political elites - anyone who manages to get him or herself elected, so they can get their snouts in the national trough. Keep in mind, they are 'paid' by taking bribes when signing away their country's heritage, and sometimes (rarely) exploit minor mines themselves, considering they are a uniquely talentless bunch. Their expertise is restricted to politics and bribe taking, at which they are very good.

And this is where we come to the heart of the matter in undeveloped countries. The absence of systems - systems of procurement, systems of land allocation, systems of economic development. Anything, that would make the ordinary processes of business and finance (and politics) objective, and transparant will eliminate corruption, because they eliminate the opportunity for corruption.

So why do political elites refuse to implement them? And what is more, why do western 'donor' countries refuse to demand them? It is because, to borrow a phrase, in chaos they can steal. No ends of state revenues seem to disappear and re-appear. Recently Zambia's finance minister Ngandu Magande 'found' $250,000,000.- of government revenues idling in domestic accounts. It seems the government had been borrowing it's own money, at hugely inflated interest rates. Hmm... There is tremendous corruption in government contracts, where they are paid for upfront, and then either are carried out in a sloppy manner, or not at all. Hmm... Land allocation - recently president Mwanawasa set up a commission to look into allocation of land by the Ministry of Lands; it turns out his own daughter had jumped the que.

And Zambia of course is no exception - this is what happens in countries that have no established, objective ways of dealing with these domestic issues - Malawi, Tanzania, Kenya, etc. have exactly the same problems. And the people don't like it at all. But it is sanctemonious to single out Zimbabwe. If this is an opportunity to make sure this changes, it would be fantastic.

However, this is what Lord Turnbull sees fit to defend. When he states about Zambia's Mwanawasa that "the criticism is that the concessions made to foreign mining companies are too generous.", this is not a good thing. It goes to underline that THIS LEADERSHIP DOES NOT REPRESENT THE INTEREST OF IT'S OWN ELECTORATE. The present bunch of neoliberal leadership (Zambia, Malawi, Tanzania) are shameless about this. They will trump foreign interests over their own people's interests any time of the day, even to the point of patronizing their own electorate. In fact, they do not care about their electorates at all, which is why elections are never about issues, but about personalities. However, even the well meaning old nationalist leadership could be and was co-opted, through the West's massive economic power, which they used to force leaders to 'privatise', or force them to have multiparty elections which put into power neoliberals (Kaunda in 1991).

They are there as gatekeepers for Western interests. Combined with the fact that 1/3 of their budget comes from 'donor money' (Zambia in 2004), it is completely comprehensible why nothing changes in Africa. They are bought and paid for, and they know better than to stand up to western interests. They know they will end up like Patrice Lumumba, or like Robert Mugabe.

17 comments:

  1. So, I have been dropping the knowledge on Rod Liddle. He used to be Labour, so maybe his is a willing ear.

    http://maravi.blogspot.com/2007/10/dear-rod-liddle.html

    ReplyDelete
  2. Rod liddle's lazily researched and cliched article should be seen in the context of his paper's persistant negative reports about Zimbabwe in particular and Africa in general.

    (By the way, anyone familiar with the British meadia would know that Liddle is not held in very high esteem, with his much publised personal indescritions- which we won't go into on this respectable forum!).

    His paper have always run an insideous anti-african agenda. Its the paper that predictted a 'racial and economic implosion' at the beginig of black rule in south Africa,bands around unsubsistiated Hiv/aids statistics and even talks about 3000 people leaving Zimbabwe everyday, since 2000.With stats like these there must be no people left in Zimbabwe!

    The article itself tells us nothing new, it is full of the usaul diatribe: 'less the dollar a day' 'rigged elections' 'harrassment' and a qoute from Amnesty internation to give it a bit substantace.

    However my main corncen is not Liddle's poor jounarlism or his personal attack on Mwanawasa but the damage that his comment could do to the 'ZAMBIAN BRAND'.

    Perception is everything,I don't think that we should allow lazy and incompetent journalism to ruin our national brand by confusing Zambia with other nations.I wellcome Lord Turbil's well mearsured risposte( although i am ideologically oppossed to everything Turbill stands for).

    ReplyDelete
  3. as a zambian one thing i have always hated is how we embarass ourselves by looking respectable but begging with PRIDE.this has only given these chaps armoury to say anything bad about us.

    do you guys ever watch pictures of our wives,mothers and children being shown carruing dirty water as for drinking and squalor apartments.

    if you ever wondered why someone like rod liddle could be find the guts to say such,i think look again at the message below the begging bowl.

    LETS BE POSITIVE MINDED PEOPLE AND SPEAK ONLY FIRMLY OF WHAT WE BELIEVE NOT FOR PLEASING OUR DONORS.

    if you listened to the shadow chancellor o'sbourne,he blames the former chancellor for the mess at northern rock.

    ReplyDelete
  4. Pandawe,

    However my main corncen is not Liddle's poor jounarlism or his personal attack on Mwanawasa but the damage that his comment could do to the 'ZAMBIAN BRAND'.

    I am not concerned with false perceptions - I just want criticism to be factual and precise, so it can be useful.

    Most of the corruption we see today cannot stand the light of day.

    I would love to give worldwide exposure to the mining agreements. The information is online, but people simply don't read it. The same with ZDERA.

    ReplyDelete
  5. And one more thing...

    When are the mining development agreements going to come under close scrutiny?

    Zambia is losing billions, because the mines are not contributing in any way shape or form, like even the most modest official Zambian owned business is.

    Cowardly arguments of 'we have to look at our international competitive advantage' cannot move away from the facts that the mines are Zambia's most outstanding international competitive advantage.

    The massive copper and cobalt reserves are the one thing Zambia has and can do, that very few countries in the world can replicate. The mines are Zambia's competitive advantage, at least until the country develops further - which is not going to happen, without the massive flow of money created by mining.

    Everyone should drop everything they are doing, and start pressuring the government into first of all complete openness in how these agreements were reached, and secondly renegotiating these mines in the favour of Zambia. That means

    - Profit Sharing (state share ownership)
    - Taxation (full disclosure of all the profits)
    - Costs Must Be Spend With Zambian Suppliers

    These are not private issues, that can be between mining management and the finance minister.

    It is intolerable that there is no openness in parliament and the press about this issue.

    If necessary, there should be an amnesty for everyone who took a bribe and gave the nation such a raw deal - but the situation must change and change soon.

    ReplyDelete
  6. Liddle used made up statistics,barely consilled prejudices and a contemptteous tone throughout his piece about Zambia/Zimbabwe.Some Zambians may not be bothered about this and I respect that... BUT I AM CORCERNED.

    Now, Liddle is no intellectual heavyweight nor African studies expert, he is more like a guy in the pub, drink in hand sprouting on about matters he has read about but has not fully grapssed.

    However,his paper, the sunday Times is respected and sales 3 million coppies per week , It matters to me when someboby uses their previleged position to spread falsehoods about MY COUNTRY.It is quite feasible that his article may put off potential investors and tourist to our country.( to the dertriment of our economy)In other words he lied and paints a picture of Zambia that is coloured by his prejudices

    I am not suggesting that we should hide our failures as a nation or that we should not accept critisism.Personally, I will not accept ignorant rantings from a "drunk".(see Private eye) who just happens to be a Times columist.But we should carefully exaimine the source of those that criticize us and indeed those that flatter us with false praises.

    My final point is that there is nothing new in defending and promoting the national brand.Eg South africa is spending millions on its image, so does the UK.I know that Zambia has its faults, but to paint Zambia with the same brush as Mugabe's Zimbabwe is prejudiced and illinformed nonsense.

    ReplyDelete
  7. Pandawe,

    This is my one and only objective - what is going to change the attitude to 'investment' by this government? I don't want Zambia to be attractive for exploitation.

    Even today, Mwanawasa was in The Times, pimping (yes, pimping) Zambia as a destination for 'investors'.

    There has been no disclosure whatsoever of the mining deals. There is no indication whatsoever from this government, that they will take any different kind of approach than they have taken so far on 'foreign investment' - in other words, Zambia will be exploited again and again.

    There is no benefit to foreign investment that anyone can see, when it does not include full participation by local people or the state.

    From "Zambia safe, come - Levy" in The Times:

    "I therefore look forward to investments from American businessmen and women to take advantage of the excellent business climate that we have established" he said.

    How is this going to help Zambia? Does Mwanawasa think that Zambia can live off the scraps left over by 'foreign investors'?

    Until they show remorse for giving away the mines, they will simply continue giving not only Zambia's resources, but also the business opportunities that rightfully belong to Zambian entrepeneurs.

    On agriculture, he said some 56 per cent of the total landmass of arable land was still available for agricultural production.

    He said the abundant available land was complimented with good climate and plenty of water resources creating a huge irrigation potential.


    Why isn't he making the same pitch to Zambian farmers? Does any Zambian really want Zambia's unused arable land owned by a bunch of Americans?? Is this the result of Mwanawasa's western education?


    Earlier, Mr Mutati assured the investors that if they set up businesses in Zambia, they would be assured of freely remitting their profits and dividends.

    He stressed that Zambia needed serious partners who would help translate the prudent investment policy into reality by way of increasing job opportunities for the local people.


    Job opportunities...

    Remember, this is a government that does not enforce it's labour laws when it comes to foreign investors. Minimum wage, labour conditions... out of the window. This is the 'benefit' from foreign investment they envision.

    This is the same Felix Mutati, whose idea of involving 'diaspora' Zambians was that: Commerce Trade and Industry minister, Felix Mutati said Zambians abroad should consider cutting down on food consumption so they could remit at least $1,000 or more to their relatives.

    Excuse me, but this is a government with nothing but contempt for it's own people.

    He stressed that Zambia needed serious partners who would help translate the prudent investment policy into reality by way of increasing job opportunities for the local people.

    Doesn't he care about state revenues? Or is he content that the only revenues the state receives from foreign investment, is income tax from workers?????

    In other words, the objective is the exploitation of workers by the state. Isn't this a new kind of slavery? Let's take the worker's wages, they can't complain. Hey, we can even put them in prison if they don't pay. But 'foreign investors'... no taxes, no profit sharing, no obligation to use local suppliers, or even local employees.

    The fact that they want this bloated government to run on the labour of Zambian workers only, should fill everyone with outrage.

    Real investment starts at home, and I have seen this government make absolutely no strides on that.

    Or give an explanation why they only want to see foreign businesses make money in Zambia.

    And let us not forget - when you attract foreign money to Zambia, it only comes to buy future cash flows from enterprises in Zambia. In other words, for every 1 dollar of foreign investment, expect 10 dollars (or much more) to leave Zambia in the future.

    Essentially, investors buy into future cash flows, which they can be relied upon to expatriate to where they live. And as this government keeps reminding them, there are no restrictions on capital.

    What the MMD is setting up, is a future Zambian economy that may have some of the trappings of development, but that will be foreign owned. Zambians are to be wage slaves in their own country. There will be no place for Zambian businesses, because of all the market distorting advantages that are given to foreign businesses.

    What this and any government should be doing, is to focus on developing the SMEs and subsistence farmers it already has. That way, Zambia's economy will benefit Zambia, not pad corporate accounts in London and New York.

    The government must invest in and develop it's own people. That is what it comes down to.

    ReplyDelete
  8. Giving credit where credit is due, I can't pass up mentioning this:

    He said deliberate steps were also being taken to dismantle unnecessary red- tape against business development by way of reducing to one day the company registration process.

    And that is a good thing.

    Now let's see the government making the same rapid strides in involving local businesses, and I'd be all for Mwanawasa and the MMD. :)

    ReplyDelete
  9. Ok, I was too fast with my praise.

    Apparently, the one day registration is specifically only for FOREIGN businesses.

    From Daily Mail:

    In a statement issued in Lusaka yesterday by chief analyst for press and public relations, David Kombe, Dr Mwanawasa said registration of foreign investors’ companies would now be done within a day and the period for value added tax registration had been reduced from 21 days to three days.

    Zambia will never develop until it develops it's own already existing farms and businesses.

    ReplyDelete
  10. And another thing.

    If this garbage, this blatant discriination against Zambian businesses occurred in the UK or US, we would call it racial discrimination?

    I don't understand how a so-called Zambian government can get away with blatantly advantaging foreign businesses over domestic businesses.

    This highlights a clear crisis of legitmacy on behalf of the Mwanawasa government. Because who are they really representing here?

    Certainly not the people of Zambia, who are delegated to second class status in their own country.

    ReplyDelete
  11. MrK,

    Its a strange statement indeed.
    I fail to see why foreign businesses should have their registration quicker.

    I'll reserve my comment until I know how the registration actually works now. But what he is saying appears to be racial profiling.

    ReplyDelete
  12. Mrk,
    There is little to disagree with in your take on foreign investment in Zambia.

    My belief however is that, Zambia is part of the global economy, We NEED to attract foreign capital in certain areas of our economy. It is not prudent or realistic to expect government (or a largely poor populace) to lead investment in all areas of our economy. Even developed economies such as the UK and USA offer incentives to multinational investors to locate businesses in their countries.

    What Zambia needs is a deeper appreciation of what we have to offer e.g. land , People, Peace, Minerals etc(to avoid mistakes such as the recent giveaway of mines!).

    I have pointed out the need of a strong national brand or self-perception in earlier posts. How can we negotiate confidently with investors (or anyone for that matter) if we belittle the value of what we have? Why is Rwanda attracting blue-chip investment i.e. Microsoft, Google etc (Time magazine) while Zambia continues to attract third rate investors?

    It is obvious that the Zambian government needs to put in place transparent trade and business policy/legislation(striking a fine balance between profits for investors and benefits to the country) reduce red-tape, corruption and of course it has DUTY to encourage and support local business.

    To me foreign investment is not a dirty word, carefully managed; it can bring huge benefits to our country. India, South Africa and even China offer models where strong foreign investment is COUPLED with indigenous business to produce benefits to the local economy. I don’t see why we cannot copy from these successful models.
    By the way, I am no apologist for the Mwanawasa government (there are many people that do a better job of putting this government to task!) I just happen to have more passion for the Zambian people and their welfare.

    ReplyDelete
  13. Cho,

    Its a strange statement indeed. I fail to see why foreign businesses should have their registration quicker.

    I would have also treated it as a typo or an error by the reporter, if I didn't know that exactly the same kind of discrimination had taken place during the privatisation process. The ZPA specifically spelled out that only foreign firms were to bid on certain parastatals.

    There is no excuse for not extending all the benefits given to foreign firms to Zambian firms.



    Pandawe,

    To me foreign investment is not a dirty word, carefully managed; it can bring huge benefits to our country.

    Any investment could have it's place, but there is an overwhelming imbalance in the MMD's approach, where local businesses are disadvantaged at every turn, and foreign investment is not given any of the conditions that would make their presence beneficial to the economy.

    Government joint ventures would be a good place to start. Tax them the same way local businesses are taxed, with the incentive for lower taxation if they train up or use local suppliers.

    An excellent example is ARAMCO, which is the Saudi state owned company - now the name is SAUDI ARAMCO, and 100% of the shares are now owned by the state.

    For instance, the government could start out with 25% share ownership, with the option to buy up more shares at a low price, in the future.

    However, we have all seen some of the development agreements, and there is no share ownership by the state, all kinds of exemptions to the company to pay taxes and properly declare it's profits, and no requirement to use local suppliers at all. So what the MMD does, is tax Zambian workers an outrageous percentage of their incomes, and this is how the mines are supposed to help the economy and the state? It is the clear and cowardly exploitation of the Zambian worker, because this government doesn't have the guts to stand up to foreign investment - or they have been bribed, with the same result.

    By the way, I am no apologist for the Mwanawasa government (there are many people that do a better job of putting this government to task!) I just happen to have more passion for the Zambian people and their welfare.

    Then we're starting out at the same place. What I want to see, is a fully developed Zambian economy, that is based on full participation in the economic life of the country by every citizen. The problem is that the likes of the MMD think that they can develop an elite, with ordinary people working for next to nothing. A replacement of one colonial elite by an economic elite - and that is a recipe for social instability, as well as being unethical and unfair.

    I would like to see a society where 90% or more of the population has some stake in the economy, because they own a house, or a piece of land, a car, or practice a (semi-) skilled profession.

    This is the only way forward. Just doing the math, there is no way that 99% of the population will be employed by 1% of the population. In contrast, the United States, probably the world's most economically developed country, has a GDP of which 2/3 comes from it's consumers, and 80% of trade is from Americans exchanging goods and services with other Americans.

    This is why developing the domestic economy is so necessary. The country cannot develop if this is not done. This is why the emphasis on foreign investors is so infuriating. Instead, the MMD seem to be obsessed with the trappings of development, without considering how wealth is distributed or generated. Every dollar of foreign investment, without involvement (share ownership, re-investment) by the state, is simply future lost revenue. There is no point in money passing through Zambia, no matter how pretty the roads are that carry it's products abroad.

    The key to wealth creation is continuous re-investment.

    This is true for countries and neighborhoods. In practical terms, that means that at least some profits go to the state, that companies pay taxes, and that they use or train up local suppliers, so that their costs are spent locally. That is the only kind of foreign investment I could be satisfied with.

    Obviously, that is not happening in the present situation. And the Mwanawasa government no longer has the excuse of having their arms twisted by the IMF.

    And I think they owe the country an explanation.

    ReplyDelete
  14. I read Rod Liddles article on the Times Website. I did make some contributions on the comments section. For reasons best known to the moderators my observations were not published. I pointed out three things:

    1. It is not true that 75% of Zambia's budget is donor funded.
    2. Zimbabwe's inflation rate is indeed an exception and not the norm on the continent as Liddle would like his readers in the Times to believe. There's no other country in Africa with an inflation rate with 7500% or thereabouts. The country with the second highest rate of inflation is Guinea at 25%. 25 other African countries have a rate below 5%. Liddle is just a prejudiced columnist. This is a guy who is in the same stable of media outlets such as The Sun and Fox News Channel. Objectivity is not in their menu!

    ReplyDelete
  15. "25 other African countries have a rate below 5%" - Anonymous

    Source please!!

    I know that a number of countries are in signle digits but 25 below 5%?

    ReplyDelete
  16. Anonymous,

    1. It is not true that 75% of Zambia's budget is donor funded.

    It was about 35% in 2004. (About $1100 million from revenues, and $600 million from 'donor funding'.)


    Cho,

    Check out Nation Master, which has lots of official (so I don't know how accurate they are) statistics inlucuding on inflation.

    http://www.nationmaster.com/graph/eco_inf_rat_con_pri-economy-inflation-rate-consumer-prices

    They mention (consumer product inflation below 5%): Cape Verde, Tunisia, Mali, Chad, Burkina Faso, Central African Republic, Lybia, Djibouti, Algeria, Morocco, Togo, Republic of the Congo, Cameroon, Gabon, Senegal, Sierra Leone, Niger.

    So that is 18, not 25. However...

    What is telling, is that this also proves that there is no correlation between low inflation and wealth or economic health - low inflation being the alleged precondition for a healthy economy according to the present neoliberal IMF/WB thinking.

    I have said it before, but inflation is merely a measuring device to understand the balance or imbalance between the supply and demand of goods and services versus the amount of cash that is sloshing around in the economy.

    ReplyDelete
  17. MrK,

    The nation master data must be outdated. Check Standard Chartered Africa Focus for September. You can access it here.

    South Africa and Botswana are above 5%.

    ReplyDelete

All contributors should follow the basic principles of a productive dialogue: communicate their perspective, ask, comment, respond,and share information and knowledge, but do all this with a positive approach.

This is a friendly website. However, if you feel compelled to comment 'anonymously', you are strongly encouraged to state your location / adopt a unique nick name so that other commentators/readers do not confuse your comments with other individuals also commenting anonymously.