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Friday, 31 August 2007

Speak out!

Good to see our New Zambia dialogue being noted in this week's review of African Blogs.

Thursday, 30 August 2007

China and Africa...

For keen readers on the China - Africa subject. Jian-Ye Wang's latest paper What is driving China's Growing Role in Africa? may be the most factual paper on the subject to date.

This paper differs from previous studies. By putting together merchandise trade, state supported trade credit, official development assistance, debt relief, FDI, and contract labor services, it paints a broader picture of Chinese-African economic relations and highlights the changing roles of China’s public and private sectors. In seeking to explain the recent rise in China-Africa trade and capital flows, the analysis hopes to contribute to a better understanding of the forces shaping China-Africa relations.

Lessons from Madagascar

A new World Bank article draws some interesting lessons from the work in Madagascar on fostering child health, that has read across to other areas:

…programs that attack extreme poverty should build a new social contract that allows those who endure it (and other excluded people) to take an active role in revamping the institutions that redistribute assets and contro ldecision making. Programs and projects will not work if people trapped in chronic poverty do not participate.

Wednesday, 29 August 2007

Economic supremacy beckons for Zambia?

The Times of Zambia reckons that Zambia is on verge of economic immortality. Read more here. Apparently its down to the new discoveries of uranium. Hollow optimism or genuine hope? I'll let you decide. Here is a short extract:

...arising from the recent discovery of high grade uranium deposits, Zambia is now well-poised to wield counter-economic importance among, specifically, the world economic and nuclear super-powers on advantageous grounds. Chauvinistic super-nuclear powers are currently five - United States of America, Britain, Russia, France, and China. Additional rising nuclear-powers include, India, Pakistan and covertly, US-propelled Israel - virtually a US satellite state.

Zambia abounds in uranium mineral with mining viability, Zambian Mines Minister Dr Kalombo Mwansa, has made this revelation in the affirmative based on geological findings undertaken extensively in North-Western and Southern provinces of Zambia

All Zambia needs to do now, is to constitute a "council of uranium mining experts" for formulation of far-reaching policies, in national interest, concerning the running and operations of the newly-born uranium mining industry.

Monday, 27 August 2007

The Forgotten...

Guy Scott and Gavin Lubinda have written a fascinating piece in the Post newspaper (requires subscription) on the unbalanced composition of the National Constitution Conference (NCC). The NCC will define Zambia's future for some years to come. The article emphasises the over representation of politicians (63%) and the under representation of civil society:

The stated aim of the NCC Bill is to provide a forum with fair representation across Zambian society – representation that goes beyond Parliament (even though this body has the power to actually enact a new Constitution). Theoretically, the jealously held powers of politicians should be balanced with the influence of civil society – representatives of the people who regard themselves as charged with keeping an eye on politicians and their tricks.

How well has the job been done? In terms of politicians versus non-politicians, the NCC is preponderantly made up of the former. The political composition is as follows:

Members of Parliament: 158
Political party officials: 48
District/City Councillors: 73
House of Chiefs members: 18

This gives a total of 297 out of the total expected membership of the NCC of 472 – 63 per cent to the politicians.
The imbalance is of course deliberate, as a little comparison will show. Each party with at least one MP in Parliament has its MP(s) accredited to the NCC plus it is allowed to send six officials. Thus the United Liberal Party (ULP) for example, which has three MPs, gets to send nine representatives to the NCC. What about the churches in comparison? Well, each of the three Church mother bodies gets to send three reps. So the entire Christian establishment has nine votes on the NCC – equal to the votes commanded by the ULP!

But there's another group that is not mentioned in the article and is not represented on the NCC. These are Zambian citizens working and studying abroad who are doing their very best to support the nation through remittances and regular visits. Not only that, Zambians abroad through education and wider experience have a lot to contribute towards the NCC debates (see the blog 'benefits of foreign education').

The Government has responsibility to ensure Zambians abroad were brought into the fold to take part in such crucial issues. Equal responsibility also lie with Zambians abroad who should not wait for Government and other people to 'remember' them! Zambians abroad must seize the initiative to define their destiny - unless they gave up being Zambian long time ago! It is for this reason that I fully support what
ZASN is trying to do in creating a framework where Zambians abroad can leverage their skills and expertise back home. Our hope surely must be that may be one day an organisation like ZASN can push for such representation in other areas of decision making e.g. voting (which I currently oppose but may be future technology will overcome my worries).

Sunday, 26 August 2007

A cultural approch to Zambia's development....

I have been asked several times regarding my strong emphasis on culture in defining development. I thought it deserves a quick blog. The question is 'how do we link culture and development, and crucially, how do we connect chiefs chiefs to the national dialogue, and on what issues, etc?' Here is my quick take on this difficult but important question. Its one I think the nation cannot afford to ignore and the Mungomba Draft Constitution did a bad job by ignoring it.

The traditional approach to economic growth is to see democracy as a necessary condition to development. Indeed most of the discussions we have had on this blog emphasise that open institutions are much more suited for high quality growth. We therefore try and see that any cultural or social function must fit within that model. I would agree with that there is merit in that approach at the national or macro level, but I would like to see a more sophisticated approach on the local level.

The notion of “development” at the local level requires a more explicit ‘Zambian’ definition. To put it another way, the national institutional approach to development presupposes the meaning of “development” for everyone and realigns national institutions accordingly to deliver such high quality growth. It is quite feasible that an alternative definition of local development may command different requirements on the type of local institutions that delivers that development. In fact the reason why people are not experiencing the benefits of national growth at the moment is not just that the “trickle” down effect is minimal (I think it is there) but that local people have a different idea of what development means to them.

Now to some extent things like
participatory budgeting helps, but I think more fundamental approaches are needed. This is why I have argued that at the local level our nation needs to go through two steps:

1. Each locality in Zambia needs to define what local development it wants to see and what it means by development.

2. Each locality in Zambia then needs to ask itself, “What local institutions does it want to put in place to help deliver that development?”.

Now it might be the case that for area X “development” to them may means a greater emphasis on cultural norms (less democratic openness) than economic growth. For area Y it could be the other way round (more democratic openness and growth, but erosion of culture e.g. the Swiss model of referendums) or area Z it could be both (e.g. the Japanese model). We should then allow X, Y and Z to define their “local institutions” accordingly to deliver their goals.

What Government should not do is super impose its view of the world or its definition of development on local people. Local people must define what development means for them. In some cases, they will reject democratic openness and in some others they’ll embrace it. Of course then a challenge emerges : how do you align the “macro” picture of open institutions that delivers high quality growth, to the “micro” picture of intrinsic definitions of development – with culture and development interlinked and traded-off according to the preferences of each individual locality?

I think that is where the recognitions of culture at the macro level become important. The reinforcing of the House of Chiefs as a credible second chamber links local preferences on culture to national ideals on high quality growth. By accepting that locally, development also has a cultural perspective, our quest for national growth would not come at the expense of weakening our cultural institutions that some regard as part of the very notion of development. Rather development would come through a greater affirmation of our traditions and bringing them to the centre. If this logical premise is accepted then, Chiefs who are the very heart of our traditions must be recognised as having a primary role to play in our quest for higher national growth, and in defining that national growth.

A very important question we would have to consider with this approach relates to the practicalities . Yakima expressed it best in one of my discussions with him: "is it possible to generate a reasonably complete breakdown of the traditional functions which are or should be performed by chiefs and/or tribal councils?”.

My view is that at the local level, the role of chiefs would be dictated by how localities define development and the level of emphasis they would place on using existing cultural institutions to deliver that development (or keep it as some would see it). So the role of chiefs could even be an improved version of the role they played during colonialism as “native authorities” working hand in hand with local Government administrators and members of parliament. The problem at the moment is that Chiefs looks after the people but they have no budget. Everyone in the village runs to the chief for land and food. One of the great travesties of colonialism is that it reduced these institutions that served the people so well to an irrelevant spectator. The current framework of local governance has continued that approach and no wonder we find delivering local development (of whatever shape) such a challenge – we are constantly working with two systems (Government imposed system and traditional functions). A way must be found where Chiefs can become meaningful. We would need to deal with the issue of literacy for Chiefs, but it can be done.

At the national level – the key is a much stronger House of Chiefs. This will provide checks and balances to what Parliament does – similar to the House of Lords in England. But unlike the House of Lords, these chiefs will be having direct links to the grass roots since they would operate within local “native structures” of some sort.

If I may indulge a little bit: I think the beauty of my vision is that it neatly fuses modern principles of governance while holding onto the beauty of our heritage. In the end really we will never achieve political or economic independence until we develop a distinctly Zambian idea to solving our economic problems. We are struggling to achieve local development because there’s no local idea of development and no vision of what institutions can deliver a more harmonious route to getting there.

Saturday, 25 August 2007

US led Zimbabwe reforms....

The key role played by the United States ahead of Zimbabwe's independence in resolving the sticky point of land redistribution has just come to light. Read more here.

"He came back to me within 24 hours. They had got hold of Jimmy Carter and Carter authorised Brewster to say to me that the United States would contribute a substantial amount for a process of land redistribution and they would undertake to encourage the British government to give similar assurances. "That of course saved the conference."

Nearly 30 years after the Lancaster Conference, Lord Carrington was surprised to learn of Shridath Ramphal's secret intervention. "Maybe that is so. Why should he pretend if it isn't true? But I didn't know anything about it at the time," he said.

For eight years the unwritten deal worked. White farmers were paid around $35m by the UK for their land, which was then redistributed. But the UK government found that some of the farms were being given to President Mugabe's close associates, and refused to continue the payments. Mr Mugabe was furious, claiming bad faith. The path to the seizure of white farms was opened and thus began the long slide to today's economic chaos.

Political earnings...

If you are one of those interested in how much Zambian politicians (ministers, MPs etc), earn from the trade you can find it all here.

Economic & military help...inseparable?

I have had some very interesting exchanges with MrK on the relationship between economic help and military intervention. Are the two inseparable? Is it logical to expect nations that invest billions in other nations, not to back up that investment with some guarantee of security? It seems to me that once you allow someone to invest billions in your nation, its only a matter of time before the military comes along. The China - Africa relationship provides an appropriate modern case study as illustrated by the Asia Times article. Brief extract below:

China's military-to-military activities in Africa, including defense attache presence, naval ship visits, arms sales and other missions to support military cooperation can be expected to expand to keep pace with China's growing national interests throughout the region. An increase in its diplomatic military representation and overall presence may inadvertently be encouraged by the establishment of the new United States Africa Combatant Command, if China feels a new combatant command impinges on China's security interests in the region.

........China will increasingly be challenged to respond to security threats to Chinese property and personnel in the region that may necessitate a re-evaluation of the role of China's military. The recent kidnappings and killings of Chinese workers in Ethiopia and Nigeria painfully demonstrated that China can no longer depend on local security forces to protect its oil interests (personnel and facilities) in areas such as Ethiopia and the Niger Delta. Potential attacks by local insurgents, criminals, and even terrorists, demand skilled defense practitioners. The PLA could provide this either directly and openly in tailored military units with or without Chinese police force participation, through quasi-military or "outsourced" rent-a-soldier security entities that would be manned by trained soldiers who may retain loose association with the PLA as demobilized soldiers, or through other mechanisms based on negotiations with the host African countries.

Friday, 24 August 2007

Weekend read....

We have discussed a number of times on the ICT situation in the nation. Communications Authority of Zambia (CAZ) have now got round to uploading the National ICT Policy Document on their website launched in March this year. Worth a read.

Not least because it settles a few
disagreements with statements like this:

ZAMTEL, a 100% state-owned company is the only provider allowed to operate a public switched telephone network (PSTN) in Zambia. ....The installed capacity of fixed telephone lines is about 90,000 but the demand has over time exceeded the available capacity resulting in one of the lowest teledensity in Southern Africa of only 0.9 per 100 people (9 people per 1000 with telephone service) across the country.
...and has some interesting proposals worth reflecting on:

A key provision of this Policy is to transform the existing regulatory agencies in the communications sector into a converged regulatory agency whose roles and responsibilities recognise and takes into account the rapid changes and developments in the local, regional and global communications industry. However, the implementation process shall take due regard of specific sub-sector demands so as to minimise policy, legal and regulatory conflicts as well as industry disturbances. Therefore, a phased approach to this vision shall be implemented in order to secure a smooth transition to a converged regulator.

.......Therefore, the broad
responsibilities of the regulator shall be to:
(a) Ensure universal access with regard to basic communication services and universal service with regard to basic and advanced information services;
(b) Ensure the provision of affordable, adequate, high quality and cost effective
ICT services that meet the diverse needs of consumers in order to promote economic growth and social development;
(c) Facilitate the development of a seamless national, regional an international ICT infrastructure connectivity; and
(d) Manage the Internet Governance including CLTD (.ZM) as a national resource; undertake domain name registration and assign the frequency spectrum to operators/services providers in the ICT sector.

Wednesday, 22 August 2007

IMF/World Bank on Mining Contracts

The IMF/World Bank today published the Joint Staff Advisory Note on Zambia's FNDP, with some interesting comments on the mining contracts. It appears even they are getting wary of the current position:

Staffs commend the Government for taking steps to reform the fiscal regime of the mining sector while preserving Zambia as a competitive, credible, and attractive investment destination, but advocate the inclusion of an additional revenue-sharing mechanism that would capture a higher share of mineral rents for government during period of abnormally high international prices for minerals. Such a device is currently not part of the proposed reforms.
With the "big two" having your back, there can only be one outcome even without the foreign consultant.

Tuesday, 21 August 2007

Wanted....

Wanted: An able and articulate foreign consultant, with a sound understanding of the Zambia mining industry, familiar with Zambia's culture and its current fiscal position, and armed with good negotiating skills. If selected, you must be willing to take on mining companies from your country in order to secure a good deal for the Zambian people. Pay will be in the foreign currency of your choice. Please contact Hon Magande at the Ministry of Finance, and quote ref: Reuters Africa - Interview 20th August 2007.

P.S: This job is strictly for "foreign consultants" as we think they are best equipped to do the job. Zambians should not bother to apply.

Monday, 20 August 2007

Linking Zambia (Ntheye Lungu's Blog)....

My Zambian friend Ntheye Lungu has started a new blog. Expect some political fireworks as his latest blog on SADC illustrates:

There is, therefore, a real need for SADC to confront him [Mugabe] directly and impose specific sanctions against him and his leadership in his neighbourhood -SADC. Instead he is being courted as a hero making his attitude towards his own people even more callous. What bothers the discerning observer is that ALL SADC leaders, in their own countries at least, seem to be proponents of the very freedoms being denied the Zimbabwean people. How can they allow such a contradiction where on one hand they proclaim to be champions of democracy, whilst on the other, condone and perhaps applaud dictatorship right next door?

Sunday, 19 August 2007

Zimbabwe on the brink of Congo-style anarchy.....

The economy of Zimbabwe is facing total collapse within four months, leaving the country facing a slide into Congo-style anarchy, The Sunday Telegraph has been told. Western officials fear the business, farming and financial sectors may be crippled by Christmas, triggering a collapse of government control that could leave the country prey to warlords and ignite long-suppressed tribal tensions.

It also follows reports that Britain's military is reviewing contingency plans to evacuate more than 20,000 Britons, were any widespread state of emergency to occur.

As reported in the UK's Sunday Telegraph. Certainly the UN appears to be getting ready. In the meantime SADC reckons it has a rescue plan. Except it won't publish the plan or bring it for broader debate among its people. Is the grand plan based on the recent Mugabe request of oil from SADC leaders to power the new farming tractors? Or is based on the new SADC military unit? Surely, the answer has never been more urgent - according to the Sunday Telegraph we have "four months" before SADC members find themselves in negotiations with "warlords" and armed tribal chiefs. Normally we would say "people get the Government they deserve" - I am not sure "warlords" is quite what the Zimbabwean people are asking for.

Towards a Vedanta owned Zambia?

Speculation continues that Equinox may be subject to a potential takeover in the not too distant future off the back of Lumwana's expansion. Among the potential suitors might be Vedanta Resources plc who have substantial copper deposits in Zambia. Read more here.

Friday, 17 August 2007

Dialling out poverty....

A new fascinating paper by Robert Jensen provides evidence for why the provision of information technology - mobile service in this case - ought to be a priority, especially for nations at the lower end of the income scale:

We find that the addition of mobile phones reduced price dispersion and waste and increased fishermen’s profits and consumer welfare. These results demonstrate the importance of information for the functioning of markets and the value of well functioning markets; information makes markets work, and markets improve welfare. And it is again worth emphasizing that the results represent persistent rather then one-time gains since market functioning should be permanently enhanced by the availability of mobile phones. As mentioned earlier, information technologies are often considered a low priority for developing countries relative to needs in areas such as health and education. However, not only can such technologies increase earnings, but those increased earnings (or increased purchasing power, due to reduced consumer prices), in turn, can be expected to lead to improvements in health and education. In addition, because mobile phones in Kerala are a private sector initiative rather than a development project, other than through perhaps raising interest rates for capital, they do not crowd out investments in other projects. Also unlike most development projects, the service is self-sustaining; mobile phone companies provide service because it is profitable to do so, and fishermen are willing to pay for mobile phones because of the increased profits they receive.

Wednesday, 15 August 2007

What the Post Editor forgot to mention....

I have watched with some interest the on-going momentum for deeper regional integration. Indeed some are even calling for monetary unions down the line. The Post Newspaper is the latest to voice its opinion on the matter with these open and closing lines in today's editorial:

There is no alternative to regional integration. And any politician who doesn't realise the importance of regional integration is not fit to be called a politician or indeed to be in politics. Regions of the world are integrating at a very fast pace.

Even the most economically powerful countries are seeking one form of regional integration or another. The United States is busy trying to get some Latin American countries in some form of regional integration with it. Europe is continuing to expand its union while the Asian countries are also getting closer to each other.

…. Let the Lusaka SADC summit be a turning point in our regional integration; let's move into a much higher gear of regional integration. There's nothing to fear about regional integration because there will be no losers - all will be winners. Let us not take half-hearted measures; let's go all out for regional integration of our region.
It’s not surprising that people tend to see enormous benefits in deep integration. For a number of years the politically correct solution to fighting poverty has always been deeper regional integration. What surprises me is the how unbalanced the debate seems to be, and how one sided this issue is being portrayed to the Zambian people. (It also surprises me that opinion leaders keep suffering from Sakism). Let us be clear on one thing: the Post editorial assertion that "all will be winners" is a naive and misleading statement. Deeper regional integration does not always lead to benefits for everyone in the region. In fact it can be quite harmful for others or to be more precise it could deliver less economic growth for Zambians than would be the case without, say, a SADC free trade area. There are plenty of examples from around the world that show that there are 'winners and losers'. So it is quite understandable that those knowledgeable in these areas have tended to be careful how they integrate.

The reason is actually very simple. When you combine a number of poor, slow-growing individual economies, you have a poor, slowing growing regional economy. Trade is really generated by differences and the big opportunity for nations in the SADC region is to trade with richer countries, by harnessing the advantage of our cheap labour. Within a group of poor countries that are in the SADC region there simply not sufficient differences to generate much trade that the Post editorial seems to imagine. Worse, the differences that do exist between SADC countries will get reinforced rather than reduce.

What is even more unfortunate is that the Post Editor has chosen the EU as an example. It's deeply misleading . Why is the EU example misleading? Well we know that Portugal and Ireland have benefited greatly from deeper EU integration. These nations appear to be catching up with the richer ones like France and Germany. Free trade in Europe has been equalising and will continue to be with greater enlargement. However, such cannot be expected for poorer nations.
Tony Venable's paper on "Winners and Losers from RTAs" provides the reason why. It appears that while regional trade integration among richer countries leads to convergence, trade integration among poorer nations leads to divergence. The reason for this is that regional schemes, whether between rich countries or poor countries, benefit those member countries that have characteristics closest to the global average. In a rich-country club, the member closest to the global average is the poorest member; in a poor-country club, the member closest to the global average is the richest. So in the rich-country clubs the poorest member gains (convergence) while in the poor country clubs the richest member gains (divergence).

A quick illustration of what happens when poor countries group together. Suppose Zambia and South Africa went into deeper integration via SADC. The comparative advantage of South Africa relative to Zambia leads South Africa to export more skilled labour intensive goods (say manufactures) to Zambia, which in return exports more unskilled labour intensive goods(agriculture).

The first of these flows is trade diverting: Zambia is getting manufactures from South Africa rather than the rest of world in line with "comparative advantage" within the new SADC free trade area rather than global comparative advantage (say it previous got Chinese goods). But the second flow is trade creating : by increasing agricultural imports from Zambia, South Africa is trading with the lowest cost supplier in the world, not just within the SADC region. South Africa gets a better deal than Zambia does leading to deeper divergence. What all of a sudden look like a good idea…does not appear so good.

So faced with these possibilities, what is a reasonable and more cautious way to proceed? I think for a nation like Zambia, the best way is find areas where most progress can be made without generating negative distributional effects. I was deeply encouraged when I read President Mwanawasa's priorities for integration as quoted in the
Daily Mail:
In our quest to consolidate this unity through infrastructure development, we must exploit all opportunities and seek new ones". Mr Mwanawasa said.

He said air transport facilities, road and telecommunication networks should all be developed further to enhance development.
The agenda therefore should be focused on infrastructure. This is the integration SADC nations need at this stage of our growth not deeper free trading of the poor nations with weak governance structures that will only benefit the likes of South Africa and Botswana which are closer to the the 'global average'. Its time to have a proper and well informed debate on what level of integration is good for Zambia, and simply not assume as the Post editorial suggests, that all integration is good integration. Except this time, I find myself pleading that the President lead the debate rather than the media.

Tuesday, 14 August 2007

Fighting HIV/AIDS….the challenge of "Plot Two" relationships

I read a very fascinating article this past Sunday in the Post Newspaper by Dr Mannesseh Phiri on the fight against HIV/AIDs. Well worth a read. I have uploaded the article here. Apparently emerging research on HIV/AIDs shows that the problem of concurrency ( phenomenon of long term multiple concurrent relationships or commonly referred to as Plot Two relationships) may be a major factor in explaining the spread of HIV/AIDs than simple casual sexual encounters. This conclusion apparently draws on the fact that “men are more likely to use condoms in casual sexual encounters but not with their regular partners". Given that in Zambia cultural norms often seem to reinforce concurrent sexual behaviours, this could be a major explanatory factor.

Whilst the article does not really provide a “magical bullet” on the appropriate incentives that are needed to break these cultural norms, I think it does extremely well in opening up this important topic for wider debate. Enjoy the read!

Monday, 13 August 2007

Zambia in the late 80s....

That is how Dianna Games describes Zimbabwe:

"Zimbabwe in 2007 reminds me of Zambia in the late 1980s, early 1990s. Shelves were bare, foreign currency was scarce, the kwacha was worthless and skills flight was rampant. Now Zambia is booming and Zimbabwe is down where its neighbour was nearly two decades ago".

The good news I guess is that at least for Zimbabwean husbands, the economic situation has reduced the compulsory compliments they have to give to their wives:
"A joke doing the rounds in Harare suggests that there are three things you should never tell a Zimbabwean woman: that she looks like a million dollars (only about R30), that you will stand her to a candlelit dinner, or run her a bubble bath — the last two references to extensive power and water cuts"

Sunday, 12 August 2007

Zambia's Development Challenges....Part 1: Clean Water Delivery (Guest Blog)

The dictionary defines development as growth, increase or advancement. Whatever their values, the greater majority of people the world over desire better material conditions , need of options , general increase of welfare and personal wealth regardless of how the then use the increased wealth. The Indian economist and Nobel laureate Amartya Sen, put it in a far better context "poverty is not just material problem. It is something wider; it is about powerlessness- being deprived of basic opportunities and freedom of choice. Small income is often symptomatic of the absence of these things, of people’s marginalization or subjection to coercion." (Business & Economics- Johan Noberg).

I will limit my discussion to human development which means enjoying a reasonably healthy and secure existence; with a good standard of living and freedom to shape ones own life.

In Zambia the dominance of neo-liberal economic programs that promise faster and sustainable economic growth, with a specific belief that the poor would automatically gain from adjustments not only through aggregate growth but also because of devaluation and trade liberalization - has failed to bring about real growth especially to the rural poor who expected the removal of anti export and urban bias restraints. The majority of Zambians still live on less than a $1, with poor or no access to education and medical services. Even among the urban population low wages, and government corruption causes a poor standard of life - an increasing urban population has overwhelmed old public utility infrastructure especially water and energy delivery systems.

Since rural population relies heavily on agriculture, a failure to development an effective commodities market for their produce has rendered the rural farmer venerable exploitive buyers. One might argue that this is a characteristic of free market activity, however this phenomenon extends it self to corporate Zambia with international financiers buying retail, manufacturing and mining ventures at rock bottom prices. The attendant risks of using international capital to improve human development are therefore, obvious - increased marginalization of the poor is the most significant factor in my view especially in a population like Zambia where over 50% experience absolute poverty. Whatever gains result from increased capital is dwarfed, when weight against the terrible effects on the marginalized poor who despite availability of more choices can not participate actively. In the words of International financier George Soros “Although I have made a fortune in financial markets, I now fear the untrammeled intensification of laissez-faire capitalism and the spread of market value into all areas of life is endangering our open and democratic society. The main enemy of open society, I believe is no longer communism but the capitalist threat.... Too much competition and too little cooperation can cause intolerable inequities and instability". Source (Working together for Change business and civic partnerships for poverty - Ariel Fiszbein).

Water and energy needs in Zambia impact the quality of life more than other needs, with the Lusaka water and sewage company and Zesco trying to source international capital to expand and renovate existing infrastructure. Let's discuss these two cases-Since the impact of HIV and other diseases such as malaria increase the urgency to resolve these needs, I will first address the clean water provision challenge - how does using international capital vs. partnerships between local people and aid organization to expand infrastructure impact access for poor people to clean water?

Lusaka Water and Sewage Company been trying to secure international capital to renovate and expand its water delivery (see www.lwsc.com.zm/company%20profile.htm). A Germany agency GTZ worked with LWSC for more than a decade but pulled out because the GRZ defaulted on its end of the bargain. A German economic advisor argued that“it is our view that the budget situation is not a sane one, budget discipline is not being observed.... the Zambian government has not paid their paid their water bills..." (Political and economic liberalization in Zambia 1991-2001 by Lise Rakner.)

In absence of fiscal discipline on the part of the Zambian government, no private foreign investment is likely to occur in the water sector. GRZ through public institutions like hospitals, schools, prisons, public offices etc is a major consumer of services such as water, energy, and telecommunications. As long GRZ lacks the capacity or commitment to pay for these services use international capital to extend water delivery will not materialize.

Aid organizations partnerships with local communities probably offer a more viable approach to the water crisis in Lusaka. By exploiting ground water systems Irish aid and Jica (Japanese aid) have sunk boreholes in peri- urban areas and erected water reservoirs. Local communities then manage the water system by charging small token fees. Though water is not readily available in their homes the poor have a least an easier access to clean water. As this excerpt from Matt Damon's letter from Zambia shows the challenges in rural Zambia are much greater-

"One of the reasons I got involved in the project was because of the day I spent with a 14-year-old girl in Zambia earlier this year. I walked two miles with her to the closest water source, a well outside her village. I asked her if she wanted to stay in her village when she grew up, and her face exploded into a huge smile. The translator said to me, "She is being very shy...she says that she wants to move to big city—Lusaka—she wants to be a nurse." And it was clear to me at that moment that if this well were not there for her, she would never even be able to entertain the concept of planning for the future—she would have been trying to survive just for that day.

This one well was giving hope to thousands of people in the surrounding area, and this hope translates into something concrete—that girl can now fulfill a dream to become a nurse, and can become an economic contributor to the Zambian economy.

Running the Sahara is happening NOW. These guys are there and they are going for it. And we want the world to sit up and take notice. These guys are my heroes, and I want to do whatever I can to support them and their mission.Please join me.
Thank you,
Matt Damon
For more information go to
www.H2oAfrica.org. ''.

Are partnerships with aid organizations our only hope for ensuring clean water supply to poor Zambians or can we attract sustainable private sector participation with current Govt fiscal indiscipline?

David Kabamfwile
(Guest Blogger / USA)

Saturday, 11 August 2007

The challenge of defaults..

Interesting comments in the Daily Mail yesterday from Guy Robinson (National Farmers Union) on the credit access challenges facing the farming community:

THE Zambia National Farmers Union (ZNFU) says the Agriculture sector in the country is still a risky area for financial lending institutions because of the high rate of default by most farmers. ZNFU president, Guy Robinson, says the banks in the country were unwilling to offer lower and specialised lending rates to local farmers because most farmers had a poor repayment culture.

Mr Robinson said there was need to strengthen dialogue among all the stakeholders to find a solution to the problem of default as well to ensure that the financial sector in the country contributed to the consolidating the gains made by local farmers. He cited the Lima and the Co-operative Banks as some of the financial institutions which where intended to cater for the specialised financial needs of local farmers but collapsed due to the high levels of default by the farmers.

“Sometimes we farmers discourage the commercial banks from giving affordable finance. There are cases where a farmer borrows money to buy equipment but uses the money for unintended purpose,” Mr Robinson said in an interview. “It’s not right to be dishonest, we are to blame. We farmers must behave,” he added
.
Full article can be accessed via African Agriculture.

Seems to me that Mr Robinson has identified the right problem with a wrong remedy. The issue is not as straightforward as "behaving honestly". Its a vicious circle - higher rates encourage defaults, higher defaults encourage higher rates. The key is to recognise that financial access to services in Zambia is generally expensive (farmers and none farmers). Banks aren't only lending costly to farmers, they're doing it to everyone (see the World Bank paper referenced here). A robust policy therefore needs to handle both defaults and higher rates simultaneously. Some of the policies we have discussed on this blog include adequate land reform and central bank funding for development through an India-model NABARD refinancing support system. In the end these appear to be the best long term solutions to the problems facing farmers (and more importantly those who want to become farmers).

Friday, 10 August 2007

Wireless villages?

Highway Africa News Agency (HANA) has a fascinating article on a Zambian youth led charity that has taken the initiative and plans to take wireless to Mazabuka . Full article can be accessed here. (after a short free registration). A small extract below. I particularly like the drive to provide free ICT training :

“The project aims to implement a modern telecentre with an innovative communication infrastructure using Very Small Aperture Terminal (VSAT) and wireless connectivity,” Mulenga explained. He pointed out that the telecentre will help the communities to benefit from the ICT revolution by accessing information that is of specific relevance to their daily lives for their overall development process.

“We would want to contribute to the development of ICTs and as a leading example of best practices in helping to address the digital divide,” Mulenga explained. The WDVP will implement a modern telecentre in Mazabuka and this will provide a platform for the delivery of local content, government and private sector information services as well as tele-health and education applications.
One of the objectives is to work with local the local community so that they develop human capacity to manage and maintain ICTequipment.

“We want to engage the locals to develop human capacity to use ICTs for their development and also build the presence of existing radio stations and linkages with church activities in order to fully leverage the potential of the technologies and existing human resources thus helping to ensure sustainability,” Mulenga explained. He further pointed out that the project is expected to facilitate the local communities in order to provide viable alternatives for the youth to seek employment within their rural towns.“There is need to improve access to jobs in marginal communities so that we reduce the levels of helplessness and dependence on the state utilities, and be proactive in developing alternative communication systems for economic growth,” said Mulenga.

He however said to run a modern telecentre effectively skills such as business support, content creation and technical support were required from qualified locals so that they train others on how to use the facilities. Mulenga further said that the telecentre will provide free ICT training on different ICT skills so as to give a chance to the less privileged in the small town.

Wednesday, 8 August 2007

Fighting poverty...the Ugandan way

The old phrase says give a person some Nshima and they'll come back for more, give them a hoe (or is it a fishnet?) and they'll won't be back. Okay, I am paraphrasing here, but the Ugandan Government apparently believes otherwise according to BBC News.

Uganda's government has announced it will pay a $10 monthly allowance to the country's "chronically poor". Any Ugandan who was born, raised or has lived in poverty all their life will be eligible, officials said. An additional $6 a month will be given to families who care for needy orphans and children with disabilities.

I don't think cash transfers of the kind proposed by the Ugandans is the best way to tackle extreme poverty. For a number of reasons. First, the idea that the poor will somehow spend all the $10 on the essentials has been questioned. Even our poorest members retains choice on how they spend the little they have. And guess what? Its not always on essentials. See the blog here. Secondly, the poor actually don't want hand outs. They want to be empowered so that they can look after themselves. The poor are not necessarily beggars. Thirdly, I am naturally against free handouts. They just don't create enough incentives. Its much better giving the poor access to cheap credit and incentivising them to work hard than giving thee free handouts. Free handouts don't empower them, it enslaves them further. In fact I think politicians tend to favour free handouts to the poor precisely because it makes the poor depend on them. Fast forward to campaign time and it wouldn't surprise me to hear a politician saying "if you don't vote us back in your handouts will go". To a poor person who has come to depend on $10 such a threat would be credible enough to enduce them to keep the incumbent - unless of course another politician promises $20 then we have a problem - as the bidding war begins!

Cash transfers are normally favoured by "market driven" economists compared to tailored vouchers because they tend to deliver "theoretically" superior welfare solutions. Since they increase the people's budget sets and allows them to spend their money as they please (choice is always a good thing in economics - more choice the better). But for the reasons stated above, I think there are good reasons for seeing that such approaches do not always move society (as a whole) where it wants to be.

Tuesday, 7 August 2007

Blogging agriculture

African Agriculture is a fascinating blog on....well...African agriculculure. Worth checking out as a way of keeping track of interesting stories on agriculture across the continent - country by country or topic by topic.

Sunday, 5 August 2007

Living with a bad neighbour...

Zimbabwe's neighbours are coming under increasing strain as they try and cope with what is now becoming a rapid exodus from Zimbabwe. Zambia is the latest victim. Read more here.

Its quite clear now that Zimbabwe has become a regional problem. I have previously questioned the incentives for regional leaders to act and resolve the situation in Zimbabwe given the benefits some countries have derived at Zimbabwe's expense (e.g. tourism and agriculture for Zambia). But it becoming clear that the costs of inaction may now be outweighing the benefits. The rapid flow of immigrants in both South Africa and Zambia is becoming serious.

For both nations closing the border is not an option. What we need is a creative way of dealing with the influx of Zimbabweans. In the short term temporary migrants are beneficial to business since there are just crossing the border to buy food and going back home. As the Zimbabwean woman says "Zambians should not be annoyed with us. We are only coming here to buy goods which are not available in our country in order to survive". Of course in the long term that might change as this quote from the Immigration Official indicates : "We foresee a situation where there will be a lot of people on the streets such that we may face problems if people continue coming in such large numbers".

Perhaps its about time Zimbabwe's neighbours considered setting up special border towns where Zimbabweans would be free to enter and leave and buy food? It would need careful handling and tight security controls, but its something that should be considered. Zimbabwe is not at war, so we have no refugees as such, just people wanting to purchase food and go back. Admittedly, South Africa faces a deeper problem given the more attractive prospects it offers. But with careful implementation, mini border trade towns could be the way forward of containing the Zimbabwean problem until the political and economic situation changes.

Saturday, 4 August 2007

Learning from mistakes, 2nd Edition

In what is becoming an unusual burst of ‘learning from mistakes’, the Government has now come up with a Draft Mining Policy. The document is proving elusive – but I am sure it’s out there somewhere! According to Mineweb:

Among the changes proposed in the draft policy are that the country shall not offer tax holidays in the mining sector but instead develop a friendly tax regime for mining investment. Further, all development agreements signed with investors would be subjected to public scrutiny and must be ratified by the National Assembly before taking effect.

According to the draft mining policy, which seeks to replace the one of 1995 that was anchored to attracting investors into the mines as the country privatized the industry, any fiscal provisions in any agreement will be subject to public scrutiny and be gazetted before taking effect.
This is good news indeed, especially now that we are hearing that Zambia has the potential to be one of the world’s greatest uranium producers. More on that striking revelation here.

Friday, 3 August 2007

All is nice and clear?

On the previous blog “Now Gwabe has uranium”, various commentators raised the point that Zambia needed to be cautious on how it deals with the sensitive issue of uranium. The Mines Minister this week clarified the state of play to the Daily Mail:

MINISTRY of Mines and Mineral Development is working on a legal instrument on the processing of uranium in Zambia. A draft instrument has been formulated for extraction, processing, storage and transportation of uranium.

Mines and Mineral Development Minister, Kalombo Mwansa, said currently those mining uranium were stockpiling until a regulatory framework was in place. Dr Mwansa said they had to identify and write a policy that would provide a regulatory system on uranium. “We have reached a stage to provide and identify regulatory regime for writing a policy. It will be submitted to the Ministry of Justice for approval,” he said.

Uranium is the basic material for nuclear technology. Dr Mwansa said in an interview in Lusaka that formulating the law on uranium was part of the Ministry of Mines and Mineral Development’s role. “What I mean is that we have acquired sufficient legal instruments for extraction and processing among other things,” he said.

Earlier this year, Dr Mwansa said the ministry had not given out any licence for uranium mining because it was still consulting the United Nations International Atomic Energy Agency. Uranium deposits have been detected in Muntanga and Dibwii areas of Siavonga, where Omega Corporation expressed interest in opening a plant with an investment of US$60 million. Equinox Resources which is exploring for uranium in Solwezi, has also identified good grade deposits in North-Western Province.
So there you have it. No uranium is being shipped anywhere. It’s all being stockpiled (and always has been?), and presumably remains the property of the Zambian Government (or is it Zambian people?) held on their behalf by the mines. Someone needs to tell Equinox - they seem to be pricing in the 'uranium discoveries' into their valuations. Unless of course Mr Mwansa has missed something!

Thursday, 2 August 2007

Vulture funds video….

A New Zambia reader kindly sent me the link to the fascinating vultures fund video. It makes compulsive watching!! You can access it here.