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Saturday, 22 December 2007

Quote of the week (Justine Chisulo)

“With due respect to the Minister of Finance, what we are saying is, he should convert what he owes these companies [parastatals] into dividends for himself rather than asking for dividends from them....Just look at Zesco, the government owes them in excess of about US $78 million in unpaid bills, so why not turn that into dividends for the government. As ZACCI, we feel that is the simplified way of doing things...Just look at the amounts Zesco is borrowing for its rehabilitation projects, it is somewhere around US$30 million, US$20 million, so if the government paid back about US$78 million (K3 billion) it owes it, there will be no need for some of these loans”

- Justine Chisulo (The Post 21/10/2007)

Zambia Chamber of Commerce and Industry (ZACCI) chief executive officer Justine Chisulo urging Finance Minister Ng’andu Magande to convert the huge debt the government owes parastatals into dividends for the treasury. Mr Magande had earlier challenged government parastatals such as Zesco, Zamtel and Zambia State Insurance Corporation to declare dividends to the government. It appears Magande forgot that government inability to pay back its debt that has kept most of these companies from moving forward. Indeed this has been Zamtel's perfect excuse for its poor performance.

4 comments:

  1. ....Just look at Zesco, the government owes them in excess of about US $78 million in unpaid bills, so why not turn that into dividends for the government.

    If I understand it correctly as presented, that sounds like an excellent idea. Depending on how many shares the government owns, and how much dividen payments it would get from them, of course.

    It also sounds like a good way for the government to pay back it's debt to other companies. They have to own the shares first, of course.

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  2. I think the problem is that government does not see the problem as "debt". It considers it as a forced "early advance". May be it should be the other way round. Government gets power for free but NO divends! But that is a poor way to run big companies!!!!

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  3. Again the Minister for Finance is confused. While there is no denying that the likes of Zesco have a responsibility to shareholders this should not be a short term view. Zesco should be using all the spare cash it has (which the government has not 'borrowed' to pay housing allowances etc to teachers 7 nurses in the Copperbelt) in upgrading the national grid. Which we all know is going to collapse very soon.
    Another good illustration of why Zambia is not developing........

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  4. Zesco should be using all the spare cash it has (which the government has not 'borrowed' to pay housing allowances etc to teachers 7 nurses in the Copperbelt) in upgrading the national grid. Which we all know is going to collapse very soon.

    I noticed that calling in.

    The irony is that the government has more than enough access to cash, without borrowing a cent.

    If they created a lean central government and bolstered local government, and if they made sure that the mining companies provide more than their fair share of the revenues, none of this would be an issue.

    So the question is - what is the MMD waiting for?

    ReplyDelete

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