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Friday, 31 October 2008

Rolling Election Results Update (4)

The fourth set of election results have been announced by Justice Mumba bringing the total of announced constituents to around 93 /150 (i think) . The latest update covers the following constituencies:

Isoka West
Kasama Central
Zambezi East
Mongu Central

These new results bring the total to the following (the nearest hundred):

Sata (Pf) = 518,500
RB (MMD) = 469,800
HH (UPND) = 259,900
GM (HP) = 10,000

I'll link the ECZ website when their detailed results are in. You might also want to know which constituencies are currently "officially" unannounced by playing around with the Zambia Electoral Map
here and comparing them with the updates on this blog.

The race is certainly narrowing, but these new sets of results appear to show the opposition have competed okay in previously uncharted waters.

Rolling Election Results Update (3)

The third set of election results have been announced by Justice Mumba :

Kalulushi - PF
Ndola Central - PF
Milanzi - MMD
Npika - MMD
Kapoche - MMD
Nchelenge - PF
Mbala - MMD
Mufumbwe - MMD
Choma Central - UPND
Mbabala - UPND
Pemba - UPND
Dundumwezi - UPND
Mapatizya - UPND
Chikankata - UPND
Magoye - UPND
Sinazongwe - UPND

National totals to the nearest hundred (based on 59 constituencies):

Sata (Pf) = 407,600
RB (MMD) = 317,600
HH (UPND) = 186,200

GM (HP) = 7,200

As expected, UPND holding its own in Southern Province.

Also to note that the PF have retained the two seats in Mwansabombwe (not "officially" released) and Ndola Central.

Rolling Election Results Update (2)

The second set of election results have been announced by Justice Mumba :

Pambashe - PF
Feira - MMD
Chilanga - PF
Chongwe - MMD
Chawama - PF
Kanyama - PF
Mandevu - PF
Matero - PF
Munali - PF
Kapompo east - MMD
Kapompo west - MMD
Solwezi Central - MMD
Solwezi West - MMD
Mazabuka Central - UPND
Sesheke - MMD
Siavonga - UPND

National totals to the nearest hundred.

Sata (Pf) = 361,300
RB (MMD) = 240,900
HH (UPND) = 98,300

As a footnote, these results appear consistent with the profile emerging on
this website.

According to that website, with a third of constituencies in (53/150) - Sata leads 55% (450,275) to RB's 30% (246,074).

Zambia Election Website

All the latest "unoffical" results can be found on the Zambia Election Results website.

Rolling Election Results Update (1)

The first set of election results have been announced by Justice Mumba :

Kabwe central - PF
Chingola central - PF
Nchanga - PF
Chimwemwe - PF
Kanfinsa - PF
Kwacha - PF
Nkana - PF
Wusakile - PF
Luaynsha -PF
Roan - PF
Kankoyo - PF
Kantashi - PF
Mufulira - PF
Chifubu - PF
Chipata central - MMD
Petauke - MMD
Kabwata - PF (large margin)
Lusaka Central - PF
Itezhi tezhi - UPND

National totals to the nearest thousand :
HH (UPND) - 26,000
RB (MMD) - 96,000
Sata (PF) - 189,000

A few early notes, and its still very early :

The Northern and Central Provinces will be the battleground provinces. Northern was evenly shared last time, and central went strongly to Levy. This time round it appears that Northern is going significantly to Sata. Central is competitive between RB and Sata.

The outcome will depend largely on the DISTRIBUTION of the votes. The indications so far is that the turn out has been generally low in rural areas relative to urban areas.

Update :

This first ECZ online document on the 2008 results is revealing in terms of turn between rural and urban areas.

Wednesday, 29 October 2008

Election eve chatter (4)

Final election eve chatter goes to the Electoral Commisssion of Zambia, who finally got round to releasing Justice Mumba's 21st October statement on their website today. Let us hope its not a foreshadow of things to come. But at this point, I highlight it because it has this useful extract:

Voting Process at the Polling Station

To allay any fears that stakeholders and the general public may have that, the process may not be transparent, I wish to call on each and every Zambian to pay attention to the polling procedure. All the participating political parties have been provided with a full set of the voters’ register for use by their polling agents who should be stationed in the polling stations from the time the polling stations open at 06.00 hours to the closing of the stations at 18.00 hours. During the voting period all polling agents, monitors and observers will be able to observe the voting process and record the number of voters who will cast their votes. At the close of the poll, the polling agents and observers will know therefore the number of ballot papers that will be used, as these should equal the record of the number of voters who would have cast their votes.

The Count

After the close of the poll, the counting of the votes will be done at the polling station. All polling agents and monitors should witness the count. The announcement form for the election results for each polling station will be signed by the presiding officer and a polling agent from each of the four participating political parties and any monitors and observers present. A signed copy of the results will be given to each of the political parties’ polling agents. The Commission has also instructed that the signed poster of the election results should also be clearly displayed outside each and every polling station. One polling agent or monitor agreed upon by the political parties will then be allowed to accompany the presiding officer and security officer to deliver the election results to the returning officer at the constituency totaling centre.

Totaling of Results

At the constituency totaling centre, the returning officer will total all polling station results in the presence of polling agents, monitors and observers. The polling agents and monitors will be obliged to sign the election results form and will each be given a copy for their records by the returning officer.

Transmission of Results to the Commission Headquarters

The results will be transmitted from the district centres in the presence of political party agents to the Commission Headquarters in Lusaka both electronically and by fax. The same results will also be transmitted to the results centre which will be at Mulungushi International Conference Centre. The final election results will only be announced on receipt of all the election results from all the 150 constituencies. I however wish to remind stakeholders and the public in general, to be mindful that election results from the constituencies and districts will not be received at the same time. This is due to the different terrain and varying distances of polling stations to the constituency centres. As such, we should be patient as we await the receipt of the election results, bearing in mind that the urban constituencies results will be received earlier than the rural constituencies.

Election eve chatter (3)

Famous last statements from the two leading candidates :

Rupiah Banda:

"I will continue the policies and programmes that Mwanawasa started. I will complete them and add more."
Michael Sata:

"There is money for all of have money which they are wasting on other things ... that money will come to you..."

Famous last images, from today's rallies, courtesy of Lusaka Times :

Election eve chatter (2)

A shocking article from the Financial Times. Well may be I shouldn't be so shocked, but its incredible that headline can only be matched to a quote by Saasa. Don't get me wrong, may the investors are rattled, but where is the evidence? Saasa's quote?

Election eve chatter (1)

The BBC's Musonda Chibamba profiles the four presidential candidates standing in Thursday's polls and hoping to succeed the late President Levy Mwanawasa who died in August after suffering a stroke. Good audio from the three candidates there.

Mine Watch (Ndola)

First Quantum Minerals announced yesterday that it had suspended copper production at its Bwana Mkubwa mine due to a shortage of copper ore at the facility. The mine ran out of copper ore this year, and has been relying on copper ore mined in the DRC. The DRC banned the export of copper ore to Zambia in 2007, and with stockpiles at Bwana Mkubwa running out, production has had to stop, with inevitable job losses. Full story here.

Tuesday, 28 October 2008

A Mozambique Paradox ?

Shanta Devarajan (Chief Economist, World Bank Africa Region) is puzzled by the recent growth in Mozambique, despite its undeveloped financial system :

There is widespread consensus that financial development is critical to economic growth, globally, and in Africa. Yet Mozambique, a country with very low levels of financial development (in a recent survey, only 13 percent of firms had obtained credit from the banking sector, rural credit is almost nonexistent), registered a GDP growth rate of over 8 percent a year over the last decade.

On a
recent visit to Mozambique, I tried to understand this apparent paradox, but ended up with even more puzzles. A group of prominent bankers said the problem was that enterprises lacked managerial and accounting skills, which is why they didn’t want to lend to them. They insisted that subsidizing credit will not solve this problem. In a separate meeting, one of the most successful entrepreneurs in Mozambique said that even he has trouble getting credit; he needs to put up his factories as collateral, and even then it takes about seven months. Finally, the government’s plan to stimulate agricultural production includes a program of credit subsidies to farmers to buy tractors and other inputs.

So, while everybody seems to agree that access to finance is a constraint (which begs the question of how Mozambique grew so fast), there are different views on how to relax that constraint.

I fail to see the paradox here. There's nothing special about Mozambique, that you don't see in DRC or Angola. All of these are countries posting higher growth rates, without a developed financial system. The simple point surely is that all of these countries have started from very low positions - previously ravaged states. Simply put, when you at the bottom, even minimal macroeconomic stability is enough to propel you forward (since it makes it an attractive destination for investment). The question is whether Mozambique can sustain the growth without further financial development. Much will depend on what is propelling the growth. As we have chronicled many times on this blog, Mozambique is investing heavily in infrastructure, fuelled by innovative partnerships between the State and foreign investors. As these continue to pour in, we are likely to see the economy expand, and with good policy interventions "credit access" may follow.

Monday, 27 October 2008

The sprint to plot - who will get there first? (Guest Blog - KBM)

Thursday, October 30, 2008, is the day set aside in Zambia as a presidential ‘by-election’ date to replace the just deceased President Levy Mwanawasa (Levy). Mwanawasa had a stroke and passed away in a Paris hospital on August 19, 2008.

In the race to replace him you have – the VP, who is acting as President, Hon Rupiah Bwezani Banda for Movement for Multiparty Democracy (MMD); Michael Chilufya Sata (King Cobra) of Patriotic Front (PF); Hakaimbe Hichilema (HH) of United Party for National Development (UPND); and Brigadier Gen Godfrey Miyanda of Heritage Party (HP).

When Levy Mwanawasa died, he was heavily mourned by Zambians, such that when his body was shunted from province to province – thousands came to pay their last respects. Levy was leading Zambia when fresh economic Asian Tigers like China and India were thirst for natural resources like – copper, cobalt, uranium and others.

Consequently, world commodity prices improved. Copper prices rose to as much as US$10,000 per MT on London Metal Exchange. This boosted the government revenues. Mwanawasa gets credit for having presided over good economic times because it is though his policies anchored on Fredrick Jacob Chiluba’s (FTJ) economic liberalization and privatization concepts - he crafted policies, which were sellable to the investors. It is estimated that during Mwanawasa’s regime, Foreign Direct Investments (FDIs) peaked at over US$1.5 billion per year.

Attracting foreign investors is a good thing. In fact a lot of these investments found its way in renovating old mines and opening up new ones.

In addition, even though the war on corruption still remains elusive, Mwanawasa’s efforts in trying to contain this vice, has earned him a good name. Thus, at the end of the day, Zambians are looking forward to someone, who at least must perform as well as Levy Mwanawasa. And choosing a new president is being done against this background.

There are three things that a politician needs to be – to win in today’s volatile political climate.

  1. He must be inspirational and persuasive. These attributes are essential for swaying, say doubting Thomases and useful when raising campaign funds.
  2. A successful politician must also be imaginative, one who is able to link political talk to the solutions he/she is proposing.
  3. Finally, he must be representative across the board. A national leader, who is multi-provincial in approach. What this entails is that – whoever is to be a Zambian president must be fairly acceptable in ALL provinces. Otherwise it would be difficult for him/her to implement development programs.

When analyzing what lies behind these postulates – as regards to the first requirement: a persuasive communicator, is in another description – a charismatic speaker. This category includes people like Winston Churchill, Ronald Reagan, JFK, Pierre Trudeau, Malcolm X, Fidel Castro, Martin Luther King, Kenneth Kaunda, FTJ, and currently Barack Obama.

Using this as a yardstick to measure the Zambian candidates, Michael Sata seems to be best of them all. Therefore, it is no wonder he is pulling mammoth crowds wherever he goes. Sata articulates the voice of ordinary people, even though he flounders when it comes to foreign policy issues. In 2006, China/Taiwan issue and open support for Robert Mugabe, worked against him. No wonder he is more careful this time round.

On the second requirement of being imaginative and pragmatic: Again Sata seems to be the better one. Wherever Sata goes during the campaign – he tries to demonstrate how he can solve local people’s daily problems.

In Mpulungu and Luapula for example, he talked about fish nets and the elimination of taxes on fishermen. In Kabwe, he talked about his economic plans to revive the moribund town. Re-opening of Mulungushi Textiles, rehabilitation of Railways, and elevation of Chindwin Barracks - are some of his ideas. These issues resonate well with local residents.

Contrast that to Acting President Rupiah Banda’s message of – “I will keep Mwanawasa’s legacy by continuing with his programs”. Or Hakaimbe Hichilema’s (HH) – “I will improve civil servants conditions”, or yet a more generic message from UPND – that education will be universally free because UPND understands the value of education. Everybody talks about education and health, so nothing is special about that.

A funnier one from Hichilema is that – “vote for me and not Bashikulu, pantu nabanaka lekeni baye batushe”. [Vote for me because these others are too old and tired, let them go and rest]. True, HH is the freshest – youthful and untainted leader politically. But age alone can’t persuade voters to turn your way. Some might. Hichilema’s biggest drawback is lack of political experience and the perception that he is a regional oriented leader.

In the case of Gen Godfrey Miyanda, I think his chances of winning are very remote. His Heritage Party lacks both money and machinery to put on a credible campaign.

Assuming that these party leaders’ messages reach the people in equal sound bites (i.e. fairly) – whom do you think people would go for? Currently Sata seems to be taking the lead. RB’s electability chances wane as the campaign matured. He started off as the strongest candidate. He had many things going in his favor such as – incumbency, experience with government, seasoned diplomat, and investor’s preference.

Since the goal of each leader is to try and sell what’s contained in their Manifestos – their vision so to speak, whoever wins the believability contest will scoop the day. But since people these days are not totally stupid – the believability must be accompanied by the probability of promises being made to be fulfilled. People end up asking this question – who is going to do what he says he’ll do?

In this category too, it is my feeling that people are flocking to Sata because they believe that he might be the guy to deliver. People remember what he did as Lusaka District Governor, as well as his performance at Ministries of Local Government and Health. Not to mention his position as MMD Party Secretary General.

His shrewdness at MMD could have in fact reconverted Zambia to a one-party-state had it not been due to the intelligence of Anderson Mazoka, who challenged MMD with his UPND. The only thing which made Andy fail to rule Zambia was his failure to break out of his ‘Tonga enclave’. Over reliance on Tonga loyalty eventually broke him down.

So it remains to be seen if Sata’s party organizing ability will propel him to presidency. And if indeed he does become one, we will hope that he doesn’t become the “bully boy” of Southern Africa.

The consolation to other candidates however, is that – experience alone cannot get you elected – as we are even witnessing in the American elections. Both Hilary Clinton and now John McCain have failed to slow down Obama’s march to White House. It turns out that charisma, good communication, command of knowledge about peoples’ needs, become important qualities.

Strictly speaking in terms of being knowledgeable about world matters – RB, HH, and Miyanda - they are far better than Sata, but yet they are trailing.

The third attribute I referred to, is that of being a president for everybody. In USA to be a leader of main stream political party – one has to appeal to many interest, class, and racial groups. For example in the case of Obama – he had to make inroads even in traditionally GOP (Republican) States such as Virginia and Ohio to be regarded as ‘national’. People tend to identify themselves with a leader who’s fairly known and respected.

Basically one needs to be a ‘household name’, which in technical terms means becoming a recognizable brand name. In the Zambian context, Daniel Munkombwe put it succinctly when he de-campaigned HH in Southern Province by calling him a ‘regional leader’ who “does not wear national colors”. [See Post, Oct 19, 2008].

During the UNIP days, having multi-provincial recognition is what separated KK from many other potential candidates. For only him was well known and respected in all provinces.
If you were to ask me about this one – I would say that Rupiah Banda scores better on acceptability. Only recently, in some provinces Sata was not very welcome. That may only change because of overwhelming votes in other places.

Before Sata started pulling large crowds in areas where PF has no strong hold like in N Western and Western Provinces, many pundits projected VP Banda to win handily. But things are now looking different – that Sata has a possibility to pull it off.

If RB loses, that would spell disaster for MMD, an indication that the party is on way to obliteration – the fate which befell UNIP in 1991. It will at least show that MMD machinery is now rusty, because by and large Zambians identify with a ruling party.

Banda’s loss would be reflected in two-three things. First, that even though he seemed to have been nearly unanimously chosen as MMD leader – the party is not united. And the perception that he is an-outsider factor, might have inhibited party stalwarts from energetically campaigning for him. Lastly, that would indicate weak leadership on his part. This is not surprising considering the fact that he is brand new at the helm of the party.

Maureen factor/death of Mwanawasa could be another angle in explaining his position. Levy’s death and Maureen factor could influence RB political fortunes either way. It will be his bonanza – if the death of President Mwanawasa and his body shunted around the country, makes the sympathy vote swings his way. It would be a net loss if the ‘Maureen factor’ makes him lose. In this camp you have people like: Brian Chituwo, Shakapwasha, Mpombo, Siakafuswa, and Ng’andu Magande – some of these lost to RB in NEC. More significantly, The Post also belongs to this camp.

As soon as the battle for Plot 1 began with RB beating Magande, this group got upset and the Post sharpened its attacks on RB. Just about every Post editorial since, is anti-RB/MMD. It remains to be seen if the Post still enjoys the power of influence and as ‘opinion kingmaker’ it once had. If they do, then RB is in trouble. He would lose elections if Zambian people were to judge RB based on its editorials. In particular, Post paints RB and MMD under him, as heading for big corruption.

Lumping RB with Chiluba is very damaging, because the late president did manage to label FTJ as corrupt. Unfortunately, VP RB hasn’t come up with a good strategy to counteract the Post’s attacks. Reacting in a combatant fashion or threatening Post as a newspaper, has made things worse. Trying to silence newspapers or opponents using State powers usually backfires. Banda should have consulted Chiluba, who ended up earning derogatory names such as – “thief, corrupt, stupid minion” and others for trying to fight Post.

That said, I personally feel that the Post has taken its wars against RB too far. Actually this should be taken as “an abuse” of its power of the pen. The role of the media such as – print, TV or radio, is to act as a conduit of information to the people so that they can make informed choices and decisions. The Post, ZNBC, Radio Phoenix and others are crucial in helping people in raising awareness.

Note that – while government (VP RB) complains against private media – such as Post, the opposition parties also criticize the unfair and biased news reporting by State controlled media. A balance must be found.

In the Post editorial of Tuesday, September 30, 2008 it said – “The radio, television, and newspapers must be at the service of the truth, justice and all the best values of our people….because when the media are used for other purposes, then the trust disappears and lies flourish. Unity is broken”.

If this is valid, then the goal of having neutral, impartial, objective and balanced reporting even from independent media like Post is also true. We do not need a media that is biased and tilts towards one side. People can’t make proper decisions if they have to rely on skewed information.
In terms of outcome – if on the other hand Sata loses elections after pulling so many thousands at his rallies – if riots don’t’ break out, it would finally prove two things: Firstly, that KK is right when he says that he is a non-presidential material. And secondly, that he is not a good strategist. A good strategist takes advantage of all opportunities coming his way – including maintaining popular support.

When you lead in polls as Sata is alleged or perceived to be, it is your job to solidify that ‘leadership position’. You do that by watching what you say or propose. That means selecting words and presenting your programs/platform in such a way to consolidate that support. In addition you try to win over the undecided voters, whom strangely, do exist even in a Zambian context.

If that is not done, it would be a failure of Sata’s strategists’ team, if he has any.

To conclude, if in the remaining days Sata does not utter anything damaging, to send many voters either the VP or HH’s way, he will win on Thursday. On the other hand, since the incumbency is so powerful, having a lot resources and options at his hand – Banda, will continue to be President of Zambia. Given these probabilities, some people fear that MMD will do every thing possible to keep the power – including use of short cuts. We hope not, because we must avoid what happened next door.

To some readers, this discussion may sound as if I am watching the American presidential election. Yes, I am – who is not? It is historic – and because of it I am sure Zambians will be extra careful when choosing their own leader. And I am convinced that the Zambian voter of today is more informed and clever than the politicians think.

Kaela B Mulenga (Guest Blogger)

Boosting Lusaka International's safety...

ZNBC News reported last week that the Government (or more specifically the parastatal NACL?) plans to purchase new air navigation control system for Lusaka International Airport :

Air navigating kit bought (ZNBC News) : The Zambian government has mobilized over $10-million to buy new air navigation control equipment for the Lusaka International Airport.

Assistant Secretary in the Ministry of Transport and Communications John Chipuwa says bids for the supply of the new landing system are currently being evaluated.

Mr Chipuwa said this in Lusaka Saturday during commemorations to mark this year's Air Traffic Controllers Day which fell on 20th October. He said the government fully appreciates the work of local traffic air controllers in enhancing air travel safety.

And Guild of Air Traffic Controllers Association of Zambia president Peter Mazombwe observed that currently there is a shortage of qualified air traffic controllers in Zambia and the world over. Captain Mazombwe said his association will continue working with other stakeholders in an effort to enhance air travel safety.

As always the headline ZNBC News headline title is a bit misleading, since nothing has been bought yet, however, it is good to see government / NACL looking into this. A previous blog Radar-less Lusaka International Airport? noted the current predicament. Unfortunately, the article is unclear on what type of equipment government has in mind, perhaps thats the subject of the "bids". But it is good that they are looking at this issue seriously. I would say, that what Zambia should be looking at is the Automatic Dependent Surveillance-Broadcast (ADS-B). I am told by experts in this area that this is a cheap technology, easy to maintain and suited for countries in the developing world such as ours. Tanzania has it.

Separately, Peter Mazombwe is definitely spot on with regards the need to invest in soft infrastructure - human capital. The Zambian Air Services Training Institute for example must be considered as critical to aviation development. I think the institute should be privatised to allow it to expand and grow. It has good staff and good students. We can become an exporter of pilots in the region if we made it private.

Sunday, 26 October 2008

Chiefs and election fever (9)

Two significant developments this passing week on the campaign trail.

The Times reported an
audacious promise from the Pf Presidential Candidate to the Lozi Cabinet, if elected, his government will recognise the Barotse Agreement and will reinstate several chieftainships abolished by first Republican president Kenneth Kaunda’s administration :

Mr Sata told the Kuta, the Lozi Cabinet at the palace in Mongu yesterday that his government would implement the provisions of the now contentious agreement to restore dignity to the Barotse Royal Establishment. Mr Sata who is in Western Province to drum up support for his presidential candidature in this month-end’s election, said the agreement had been highly misunderstood by people in the country.

Contrary to views in some quarters that the agreement entailed seceding of the Barotseland from Zambia , he said, the accord was all about dignity for the royal establishment and development of the area.

Mr Sata said the Barotseland governance system was one of the best decentralised local government systems and it should serve as a model for people in other parts of the country. He said it was unfortunate, therefore, that successive government administrations had not tackled the issue of the agreement and continued to abrogate it, hence the need to implement it.

In case you wondering what "governance system" Sata has in mind here, I have uploaded this very short paper which broadly explains the Barotse administrative framework.

The Watchdog reported that the Tonga Traditional Authority had finally thrown its weight behind Hakainde Hichilema :

...Speaking in a special programme on Musi-oa-tunya community radio station in Livingstone Friday, President of the TTA Dickson Namanza disclosed that his association which comprised of 3.5 million people across the nation has decided to endorse Hichilema’s candidature because he is the only Presidential candidate who has so far promised good policies for the economic development of the country. Mr. Namanza who is also Chairman of Lwiindi Traditional Ceremony said there is no doubt that Hichilema will transform the country’s social and economic problems should he be voted into power next week....

The 3.5m people presumably is the proportion of Tonga speaking Zambians ? I have not got data to hand to immediately verify this assertion. In any case, it sounds extremely bizarre to imply that the organisation speaks for all Tongas, many who belong to other parties. In the grand scheme of things, this endorsement is not a "game changer", since all it does is reassure HH's support base. HH cannot win without securing Southern Province, anymore than RB can win without Mpezeni's support in Eastern Province.

Saturday, 25 October 2008

New Presidential Opinion Poll

The Steadman Group has release an opinion poll today for the Presidential bye-election. This indicates the following:
  • Michael Sata - 46%
  • Rupiah Banda - 32%
  • Hakainde Hichilema - 20%
  • Godfrey Miyanda - 1%
The random survey of 1,062 registered voters has a margin of error of plus or minus 3 percent.

According to the SG Statement: "Even if there are only (a few) days remaining before election, many changes or events could occur at either national, regional and local level that can affect people's views or voting intention...[But] it is also assumed that there will be no significant changes in political alliances before the election."

The latest opinion poll also provides some insights on the pressing issues - 61% percent of respondes said the most critical problems they faced included a poor road network, poor water supply, high unemployment and hunger. 25 percent of voters surveyed said they had complete confidence in next week's election while 48 percent had some confidence and 16 percent had none.

Steadman Group is a prominent African market information group with over 400 permanent employees and access to 5,000 field staff in various markets in Sub-Saharan Africa. The group predicted President Mwanawasa's victory against Sata in the 2006 presidential vote.

Much of this information has been sourced via Reuters , though the results where forwarded to me initially through another source.

Term of Office for the Next Republican President (Guest Blog - HK)

I wish to comment on recent statements made by Patriotic Front President Michael Sata, Attorney-General Mumba Malila and Law Association of Zambia President Elijah Banda regarding the term of office of the Republican president who is going to be elected on October 30, 2008.

According to Mr. Sata, there should be no presidential elections in 2011 because whoever will be elected president in this month-end’s election is supposed to rule for five years. Messrs Malila and Banda, like Justice Minister George Kunda, have insisted that the Republican president who will be elected on October 30, 2008 should serve until 2011, to complete the remainder of the time the late President Mwanawasa would have been in office.

These conflicting statements reflect a possible misinterpretation (by Mr. Sata or the other three individuals) of Articles 34, 35, 36, 37, 38, and 88 of the 1996 Republican constitution. Otherwise there could be a flaw in the Articles involved.

In proceeding with my comment on this matter, I wish to pose the following question: What would have happened if the President had died 5 or so months before the next tripartite elections in 2011? Would a presidential by-election have been held within 90 days as provided for in the 1996 Republican constitution? Would it not be impractical to hold a presidential election after a new Republican president has held office for only 2 or so months?

There seems to be a problem in the interpretation of the Articles involved in this case, particularly with respect to “general elections” and the “dissolution of parliament.” Article 88 (7), for example, states that: “Whenever the National Assembly is dissolved under this article, there shall be Presidential elections and elections to the National Assembly and the first session of the new Parliament shall commence within three months from the date of the dissolution.”

This Article does not say that a Republican president can only be elected whenever Parliament is dissolved. Neither does it say that a President elected after a by-election has to face another presidential contest before serving a full 5-year term provided for in Article 35 (1) of the 1996 Republican constitution. It also does not say that Presidential, Parliamentary and local-government elections have to be held concurrently. The Article, however, seems to assume that there is no death, incapacitation, resignation, or impeachment of the incumbent president.

Article 35 (1) of the 1996 Republican constitution, on the other hand, states that: (1) subject to clause (2) and (4) every president shall hold office for a period of five years. Clause 2 relates to the two term limitation on the Presidency, while Clause 4 reads as follows: a person assuming the office of the President in accordance with this Constitution shall — unless (a) he resigns his office, (b) he ceases to hold office by virtue of Article 36 or 37, or (c) the National Assembly is dissolved — continue in office until the person elected at the next election to the office of President assumes office. [Articles 36 and 37 of the Constitution deal with the removal of the President for incapacity and impeachment, respectively.]

Apparently, Article 35 also does not suggest that whoever will be elected as President during the Presidential elections should hold office only for the remainder of the period before the next general elections.

So, the assumption one can make from the relevant Articles in the 1996 Republican constitution is that Parliamentary and local-government elections would be held in 2011, and a Presidential election, on the other hand, would be held in 2013. This is perhaps the point Mr. Sata is making.

It is unbelievable that Zambia, a 44-year-old country, would be grappling with problems associated with leadership succession.

I hope I am not one of the few Zambians who are having trouble in interpreting the Articles in the 1996 Republican constitution relating to this matter. But it surely explains partly the reason for having an elective vice-presidency to provide leadership when there is a death, incapacitation, resignation, or impeachment of the President until the next general elections.

Finally, I wish to implore Zambians to agitate for inclusion of the following in the new Republican constitution currently being considered by the National Constitutional Conference (NCC) in order to circumvent the costs associated with presidential, parliamentary or any other by-elections in future:

  1. A constitutional clause requiring each and every candidate for the Republican presidency to have a running mate, who would provide leadership until the next scheduled general elections in the event of incapacitation, resignation, impeachment, or death of the President.
  2. A constitutional clause providing for a political party that loses a Member of Parliament or any other elected government official due to death or incapacitation to appoint a replacement to serve the remainder of the incumbent’s term.
  3. A constitutional clause providing for a Member of Parliament or any other elected government official who loses a seat through a nullification of his or her election by a court of law to be replaced by a candidate from another political party or an independent candidate who secured the 2nd highest number of votes to serve the remainder his or her term.
  4. A constitutional clause providing for a parliamentary or any other elective seat that becomes vacant due to an incumbent’s expulsion from his or her political party, or due to his or her decision to voluntarily leave his or her party, to be filled through an appointment of another member of the political party by the party’s national executive committee to serve the remainder of the term.
  5. A constitutional clause providing for a Member of Parliament or any other elected government official whose political party ceases to exist due the dissolution or de-registration of his or her political party to become an independent elected official and serve the remainder his or her term.
  6. By-elections should be held only in the case of unopposed office bearers; or in the case of non-availability of persons with the 2nd highest number of votes due to death or incapacitation of the persons with the highest number of votes, or due to a tie in the number of votes obtained by persons with the 2nd highest number of votes, or due to any other reasons.

Besides, Articles 46(2) and 47(3) of the Republican constitution, which restrict an incumbent Republican president to making ministerial appointments only from members of Parliament, need to be replaced so as to provide for Cabinet-level appointments from the Zambian society at large. This can afford an incumbent President a larger pool of people from which he or she can constitute a Cabinet, as well as provide for greater separation of the legislative and executive branches of government. [Thanks to Murray for suggestions to improving the wording in this paragraph.]

Appointment of Cabinet Ministers from non-Members of Parliament can also afford presidential aspirants enough time to identify potential ministerial appointees well before tripartite elections rather than waiting for Parliamentary elections to be concluded.

Henry Kyambalesa (Guest Blogger)
Agenda for Change

The financial crisis (Guest Blog - Yakima)

I have read a number of explanations for the credit crisis, but I thought Yakima's explanation here is extremely insightful and accessible, deserving a separate post. He also provides some interesting discussions on the opportunities for Zambia which are worth exploring.

I feel that it is important to elaborate somewhat on the rather oversimplified explanation of the causes of the financial crisis.

First of all, while it is true that defaults by homeowners can be considered as triggering events, such events would not in and of themselves have caused the failure of many of the world's largest banking and insurance companies. Rather it was (and is) the existence of a US$50 Trillion unregulated market in exotic derivatives called Credit Default Swaps (CDS).

CDS were created in the wake of passage of the US 1998 Banking Modernization Act, which among other things removed the Glass-Spiegel rules established in 1934 to prevent home mortgages from being traded on securities exchanges or to insurance companies. At its most basic, a CDS is an insurance policy, payable in the event that a homeowner defaults on their mortgage.

This presented US mortgage lenders with an alternative to the regular risk v. return calculation in assessing homeowner eligibility for loans. By purchasing a CDS from an institution such as AIG or Lehman Bros, the mortgage lender could reduce their risk to zero in exchange for a somewhat lower return on each mortgage they sold. Certainly they would have to increase the volume of new loans sold in order to maintain the same overall return to stockholders, but with zero risk of losses, any loan which could be covered by a CDS became a good loan for the initial lender.

Meanwhile the companies which were selling CDS to lenders were eager to do so, as they generated regular premium payments without any upfront capital outlays. As the market for CDS increased in volume, it also became more competitive and complex, as companies vied with each other to package CDS in as many different ways they could think of: selling bundles of CDS, or pieces of CDS, or pieces of bundles of CDS, even CDS bundles to insure other CDS bundles.

As this fevered haste to tie as many different securities as possible to individual home mortgages began to overwhelm the ability of banks to support their potential liability with tangible assets on hand (otherwise known as leverage ratio), the US Government stepped in with a 2004 law (the name escapes me atm) which effectively removed the standard 12:1 leverage limitations on institutions which were larger than US$5B.

At the time of their appeals to the government for assistance this year, companies such as AIG and Lehman Bros were running leverage ratios in excess of 30:1, which goes a long way to explaining how low-income home mortgage defaults can result in the collapse of wall street investment banks and international insurance giants (without them ever selling a single mortgage to a single homeowner themselves). At 12:1, even if 8% of an institution's potential liabilities have to be covered with tangible, liquid assets on a single day, they can weather the storm. At 30:1, it becomes impossible to cover more than 3.33%.

There is the usual institutional combat occurring between the democrats and republicans in Washington over which aspects of the crisis are highlighted, in hopes of assigning blame and directing reform efforts along partisan political lines. The White House and republicans in general are hammering on the changes in federally assisted home loans pushed through in the

waning years of the Clinton administration, which softened eligibility requirements for support to lenders targeting lower income and otherwise marginalized borrowers seeking loans from the large federally chartered Fannie Mae and Freddie Mac. They argue that the unrealistic standards set by these relatively powerful semi-public facilities led through competition to industry-wide relaxation of lending requirements.

The democrats meanwhile are trying to emphasize aspects related to corporate greed, such as excessive salaries and bonuses for top executives even in the face of massive job cuts (defined in US as more than 50 persons by one company in one day) and losses for shareholders (which now in many cases will include taxpayers as a whole). They further argue that imposition of regulation over the trading of CDS and other exotic credit derivatives is the primary avenue for reform.

Both sides are advocating in favor of "keeping families in their homes", however with approximately 4.2 foreclosures over the last 22 months, it is unclear if anything they are actually doing is helping such families. The general atmosphere that I can detect on "main street" is one of fear and uncertainty, with resulting declines in consumer spending. This will likely affect Zambia primarily through lower commodity prices as forecasts of demand are scaled back (bad for copper revenue, good for import prices on fuel, etc).

On the brighter side, it may be possible to pitch the relative isolation of Zambia's banking and investment sector as a potential flight to safety, rather than a risky "emerging market". Targeted investments and entrepreneurial activities in an environment of overall growth (even 6% can look attractive with many forecasts for other economies in the negative) should be able to significantly outperform the nation as a whole, making double digit return projections not unreasonable for investors.

In contrast to credit availability, the amount of cash being held by potential investors is well above average levels (ie those who recently liquidated assets have yet to be persuaded to re-invest them somewhere). At the very least, if Zambian banks can be persuaded to offer inflation-positive interest on savings, the relatively tiny savings pool held domestically could be significantly augmented, which in turn could increase the volume of private lending for business and housing development(hopefully without CDS, artificial lending standards and similar traps attached).

Friday, 24 October 2008

Admin Issues (Comments)

A new "embedded comment feature" has been adopted which puts the comment form at the bottom of each post page, below the comments, instead of on the separate, Blogger-styled page. The embedded comment form is more convenient for everyone because you can use it to post a comment immediately, without clicking over to a different page.

If you’re logged in to the blog with your Google Account, you can also subscribe to comments via email by clicking the “Subscribe” link. Unlike with the full page comment form, you don’t need to post a comment to subscribe. In short it means that you can follow discussions without ever commenting!

If anyone has any trouble with the feature, do let me know, and we can rectify it / switch it off.


Thursday, 23 October 2008

The outsider versus the cobra

The Economist has done a piece on the impending elections. Nothing new or insightful here, and in many respect very simple (HH is easily dismissed when infact, how HH performs particularly in Central and Western could really be the decider on who gets the crown between RB and Sata) but thought it was worth flagging up for completeness.

Copper-rich Zambia faces uncertainty as it chooses a new president, The Economist, Commentary

Following the untimely death of President Levy Mwanawasa in August, Zambians must vote for a new leader on October 30th, just two years after their last presidential election. Four candidates are in the running. But the real contest is between Rupiah Banda, the vice-president who has acted as caretaker since Mr Mwanawasa’s death, and Michael Sata, a fiery populist who was defeated in 2006.

Zambia, a leading copper producer, has been one of southern Africa’s most stable countries. In 1991 its people voted out Kenneth Kaunda, who had run the show since independence in 1964, along with his ruling party. His successor, Frederick Chiluba, stepped down in 2002 after his own party had got fed up with him.

Bordered by troubled neighbours, such as Congo and Zimbabwe, Zambia has avoided violence or coups, even though copper riches were squandered after independence and most people are still dirt-poor. But the poll is a big test. Mr Sata, who claims the last election was stolen from him, has said he will not accept defeat. The ruling Movement for Multiparty Democracy (MMD), in power for the past 17 years, may be tempted to stack the decks in its favour. Can Zambians maintain their tradition of changing leaders peacefully?

The opposition is worried about rigging. Because the election was unexpected, the European Union has sent only a skeletal observer team. But the electoral commission’s chairman is a respected judge. This time, results will be posted outside each polling station, making it harder to fiddle results at the centre. More local observers will be on hand than before. But close or contested results may stir up Mr Sata’s people, who feel his time has come. A former MMD stalwart who broke ranks in 2001 to create his Patriotic Front, Mr Sata appealed for calm after his disputed defeat in 2006. He may not do the same if he feels victory is being stolen again.

Mr Banda, a former diplomat and minister whom Mr Mwanawasa plucked out of retirement in 2006, says he will follow in his predecessor’s footsteps. But he may lack the authority to push for unpopular reforms and steer a divided party. He faced more than a dozen rivals for the ruling party’s nomination. He is something of an outsider in the MMD; until quite recently, he was still a member of Mr Kaunda’s old party. He has also embraced several people whom Mr Mwanawasa had cast aside on suspicion of dishonesty. It is not clear whether he would keep these questionable new friends after the election.

With the friendly bias of the state media and easier access to election funds, the incumbent has a head start. It is a one-round affair, even if no one gets more than 50%. Mr Banda is a slight favourite. But King Cobra, as Mr Sata is known, cannot be written off.

He is popular in the capital, Lusaka, and in the Copperbelt, the economy’s power-house. Many voters want change. Mr Sata draws big crowds at his entertaining rallies. This time he has put more energy into campaigning in rural areas, still the MMD’s base, so that is where the election may be decided.

If Mr Sata won, it is unclear what he would do. Parliament will still be controlled by his rivals, the MMD. He tends to tell people what they want to hear, with promises of more jobs, free housing and lower taxes. In 2006 he fuelled a growing anti-Chinese mood, threatening to cut ties with China, a leading trading partner and investor in Zambia, and to expel foreign traders. Since then he has changed his mind; foreign companies should merely respect labour laws and get no better treatment than local ones. At a campaign rally he was reported to have said he would force foreign investors to have local partners, but his officials deny this is his plan. Critics say he is an autocrat; his party has never had a congress to elect its leaders. His fans say he is a man of action who gets things done.

Whoever he is, Zambia’s next president, who will be in charge only for the three years left in Mr Mwanawasa’s term, may be boxed in. Rising food and petrol prices have pushed up inflation. Zambia relies less on foreign generosity than a few years ago, but a big chunk of its budget is still funded abroad; the tap would soon run dry if economic policy became populist. The economy is more diverse than it was but still relies on copper, whose price has slumped by around 40% since early September. Cash-strapped foreign investors are likely to take a dimmer view of riskier emerging markets such as Zambia, despite its quite perky performance of the past few years. Zambians may have to tighten their belts, no matter who wins.

BOZ / MoFN Statement on Kwacha Depreciation

The Kwacha has taken a beating in recent days, especially against the dollar, prompting BOZ and Ministry of Finance and National Planning to issue this statement yesterday.

Wednesday, 22 October 2008

Towards slower growth?

The government has revised its growth expectations for 2008 from the "targeted 7 per cent " to "6 percent", attributing the change to the global slowdown.

Tuesday, 21 October 2008

Mogae wins the Mo

In London yesterday, Kofi Annan announced Festus Mogae, the former president of Botswana as the second winner of the largest award in the world--the Mo Ibrahim Prize for Achievement in African Leadership. The award consists of $5 million over 10 years and US$200,000 annually for life, as well as up to $200,000 a year for 10 years "towards the winner's public interest activities and good causes". President Mogae was praised for his "outstanding leadership [that] has ensured Botswana’s continued stability and prosperity in the face of an HIV/AIDS pandemic which threatened the future of his country and people....Botswana demonstrates how a country with natural resources can promote sustainable development with good governance, in a continent where too often mineral wealth has become a curse." The Ibrahim Prize has been established by the Mo Ibrahim Foundation, launched in October 2006 as an initiative to support great African leadership . The 2007 recipient was Joaquim Chissano.

Monday, 20 October 2008

Election 2008 : HH vs MCS vs RB

Its now 10 days to go before the elections. Time for an "open thread" on the elections. I would like to hear your opinion on the state of the race, and all else related to it.

  • How do you see the race evolving next week or so ?
  • Who will take the crown, and why?
  • Which areas will be critical for which party?
  • Whats the electoral maths that will get candidates there?
  • Are we destined for unity government ?
  • Is there rigging going on, already?
  • How do you see the media coverage so far?
  • How has this blog covered the candidates (fair and balanced?)
  • And any other issues you want to cover regarding the election.

This will be a "moving thread" to discuss the state of the race (that means it will also appear on top !).

Lobbying Vs Corruption

A new paper sheds light on the extent on the factors that shape lobbying and corruption, and the extent to which they are substitutes / complements of each other :

We find that the firms that are more likely to engage in lobbying are those that are older, larger, and foreign-owned, and tend to be in countries that are less politically unstable, more democratic, with more independent media, and more leadership alternations since 1989. We also find that the firms that are more likely to engage in lobbying are those located in federal states, with presidential systems and, within presidential systems, where the president has fewer (de jure and de facto) powers. Within parliamentary systems, lobbying is more effective where there are more constraints on the executive. We find that lobbying is also more effective where the electoral system features closed lists and has smaller district magnitude. Crucially, the significant determinants we find for corruption are the same but carry the exact opposite sign, with extremely few exceptions. On this basis, we claim that corruption and lobbying and substitutes in our sample. Further, we find confirmation that lobbying, seems to be a much more effective instrument for political influence than corruption. More surprisingly, we also find that lobbying is a much stronger explanatory factor of firm performance than corruption, and this even in poorer, less developed countries.

One of the interesting questions we face as a nation (and probably in this election) is the extent to which the supposed reduction in corruption during the Mwanawasa years (not fully supported by real evidence beyond a few high profile cases and public utterances), has simply been substituted by more lobbying from foreign dominated firms. There's certainly influence peddling going on in Zambia by many firms, according a recent paper from CDG , which has affected industrial competition and ultimately productivity. Add to that a previous blog on Foreign Ownership in Zambia that documents the heavy domination of foreign firms. Also add the recent evidence we have seen of a government failing to effectively implement a fiscal regime for the mining industry, in face of very strong arm twisting. The answer clear seems pretty.

Linking Zambia (Siavonga)

Siavong businesses and the tourism industry have come together to start a website called Siavonga Zambia, a community website intended to inform visitors and prospective investors about the town of Siavonga, tourist facilities and activities available, industry/commerce and business opportunities, local authorities and procedures, the chiefdoms and places of interest to visitors. The website is primarily sponsored by the business community, third party advertising and donations. I sure hope to see similar websites for other parts of Zambia.

Saturday, 18 October 2008

Photo of the week (Michael Sata)

This week's images from the Pf presidential campaign trail, that shows that democracy is alive and well. Images to rival any from the USA presidential campaign. For one thing, I have not seen Obama or McCain getting down to the beat!

Chalabesa village in Mpika (The Post)
Mpulungu Rally (The Post)

Kapiri Mponshi Rally (The Post)

Chiefs and election fever (8)

Weekly developments on chiefs and the election fever as we approach the 30th. With just under two weeks left, endorsements from chiefs are gaining momentum.

Chief Nyampande of the Nsenga people in Petauke endorsed MMD presidential candidate RB early in the week. A position backed by Chief Ndake of the Senga people, who also happens to be the spokesperson for the Nsenga chiefs. For his part, Chief Nyamande cites MMD's "demonstrated capacity to take development to the Zambian people through good policies". Among the notable policies includes "the completion of Kakwiya rural health centre [in his chiefdom]... and the completion of Sasu health centre".

We always knew Mpezeni was strongly behind RB, given that it was Mpezeni's request for an easterner as VP that led Mwanawasa to offer the post to RB in exchange for his support. Mpezeni's support effectively leading to the death of UNIP. This week the
Post provided revealing insights on how far Mpezeni has consulted on his endorsement:

"You children of Mpezeni, children of Zwangendawa let's agree on one thing, we need to vote for that one (Rupiah Banda). I was in the Bemba land and Chitimukulu said they are behind us; they want to push us [easterners]. I was in Zambezi same, same. I was at chief Ndungu's place, he is also saying the same. Even the Tongas, I don't know whether it can be a lie but they are also saying the same thing but because we look at the majority between Southern and Eastern, you are leading here in terms of population," chief Mpezeni said.

That statement was always going to stir some strong reactions, and it wasn't long before the PF presidential candidate Michael Sata responded linking Mpezeni to what he characterises as 'Bandanian tribalism', at the same time suggesting Mpezeni may have been bought :

“We know the Paramount chief is not sincere and he should not use tribalism......We don't want umozi ku mawa, we want umozi ku Zambia....Mpezeni has endorsed the language of Rupiah Banda in Katete because Rupiah Banda must have met Mpezeni first and it is Mpezeni who told him to say what he said...If he[Mpezeni] doesn't [tread carefully], he's just going to invite unwarranted attacks on himself. That is not saying we have no respect for the chiefs, but Mpezeni himself has invited us....And we know Mpezeni as he is, he is saying that with some inducement.”

As always not all "easterners" are in full agreement with Mpezeni, Chief Mwajabantu of the Nsenga people of Petauke (or whose coronation is apparently under dispute) is quoted as saying that "only corrupt chiefs in Eastern Province could support Vice-President Banda", along the way aiming some fire at Minister Peter Daka. Clearly the chiefs are at war and not just with themselves:

"It's not a secret that easterners vowed not to vote for Rupiah Banda. This is why they sent Peter Daka to talk to chiefs and is here visiting chiefs....I challenge Peter Daka to deny this. They want to use these chiefs to dictate to their subjects to vote for Rupiah. This is what has happened here.....Peter Daka has failed to deliver to his constituency. He has neglected his constituency. So I call upon the Nsenga people and the people of Eastern Province that we shouldn't be cheated by these cheap politics exercised by some chiefs who are receiving khaki envelops....As chiefs, we are not supposed to force our subjects who to vote for. Let our subjects choose the president they want. It is clear that those chiefs have no vision, no direction just like Rupiah Banda because only corrupt chiefs in Eastern Province can support Rupiah.”

But he was not finished, leaving the harshest criticism for Chief Nyampande who earlier had endorsed RB, and questioned the legitimacy of Chief Mwanjabantu :

"The way chief Nyamphande was crowned is the way I was crowned. Yes, so he should stop being funny because I am ready to meet him anywhere. I am prepared to meet any chief who feels is capable to meet me, because they are hopeless..."

A name mentioned by Mpezeni is Chitimukulu. Earlier reports indicated that he had endorsed RB, something that appeared to have been comfirmed this week, albeit in roundabout way. The Post reported that the late Paramount Chief Chitimukulu’s grandson Makumba Mukuka disgrees with "the current Chitimukulu’s decision to endorse Vice-President Rupiah Banda as his preferred candidate in the October 30 presidential election".

“I have great respect for our chief but I don’t agree with his decision to support Rupiah Banda,” Mukuka said. He feared that the chiefdom would not develop if the preferred candidate lost the October 30 presidential election. “If we endorse Rupiah today and instead PF president Michael Sata or UPND’S Hakainde Hichilema wins the election, how are we going to get back to either of them?” Mukuka asked.Mukuka cited the late Chitimukulu’s stance of being non-partisan as an example that the current chief should follow. “My grandfather gained great respect because he was neutral and that is how a chief is supposedto be non-partisan,” Mukuka said.

In the meantime, ZNBC News reported midweek that more northern chiefs have moved to support RB :

Traditional rulers in Northern province have pledged to support Acting President, Rupiah Banda, in the October 30 presidential election. Speaking on behalf of eight Tabwa and Lungu chiefs, Chief Chitimbwa said traditional rulers in the area will support Mr. Banda in the election. Chief Chitimbwa was speaking when the traditional leaders met the Acting President in Mpulungu on Tuesday.

It would not be far fetched to say that Mukuku wishes the current Chitimukulu could emulate Mwata Kazembe , who continues to show a very balanced hand - perhaps its because he does not need to be partisan. Many believe that PF will carry the province, and therefore it does not make sense for Mwata to say anything. Nothing Mwata would say either against Pf or for Pf would change the dynamics of the race in Luapula. This week Mwata met UPND presidential candidate Hakainde Hichilema and advised him "to be brave and courageous during his campaigns" and to do all he can to strengthen the grassroots :

"We need to strengthen our presence at the grassroots level, that is where politics starts from there...If we get very strong on the ground, then we are home and dry...I know time is not with us. I think with me, you have my blessings. You have to be courageous and brave...I think in future, we would love to have a leader who people should be looking up to for hope. People have been looking for development and so this is the kind of leader that we want. And I think wherever you will be, this is the same message that people will tell you.”

Perhaps not surprising given Mwata's neutral stance, that Chief Puta has been keen to present himself as fairly neutral, even going as far as to bemoan the confluence of politics and culture : "Some of the politicians want to involve chiefs in their political disputes. Just recently some politician was claiming that I was not qualified to be chief Puta.."

I end this week by flagging up Gershom's recent post Chief's support unlawful which revisits the "Mwansabombwe incident", and the lessons it holds for the current electoral fever among chiefs.

Linking Zambia (Kusilakwacobra Blog)

A new presidential bye-election blog, I believe the first of its kind, focused on debunking the Pf presidential candidate - Michael Sata. I have yet to see alternatives on HH or RB.

Friday, 17 October 2008

Mine Watch (Lumwana)

Reuters report that Lumwana Mining Company plans to produce 1.0 million tonnes of high-grade uranium at full tilt once full operations start, according to company data released this week. It is projected that uranium output will last nine years.

Reuters reported last week (and repeated in the cited articled) that the Ministry of Mines had "enacted a law for mining, storage and export of uranium" which bars the diversion of the mineral for use in making nuclear weapons or devices. However, there's no such "law" on the statute books, and my checks with the National Assessmbly proved the same. According to Reuters, "the law" covers the prospecting, mining and milling of uranium ores and other radioactive minerals ores, gives all powers in the mines minister to issue licences for mining and exports of uranium as a safeguard to ensure the mineral is exported to the right consumers.

Perhaps someone can clarify whether we are dealing with a directive from Kalambo Mwansa or something more enshrined. In any case LMC appear confident that now money awaits from this uranium spin-off project. Incidentally, I am sure what the fiscal regime with respect to uranium - explanations welcome!

In search of Zambian mining entrepreneurs...

Anthony Lipmann (Minor Metals Trade Association) has an interesting piece for Reuters, where he argues that the global slowdown may provide an opportunity for Zambian mining entreprenuers, to take more shareholding in developing mines.

Can resource-rich Zambia keep more wealth? Anthony Lipmann, Reuters, Commentary :

Can "resource rich" but "infrastructure poor" countries such as Zambia ever obtain a fair share of their country's wealth?

The last few years, after copper prices rose from $0.62 per lb in the late 1990's to about $4 per lb July this year should have been good for a copper-rich country like Zambia.

But was it good enough?

This is the question that lies behind Zambia's announcement in April 2008 of a 25 percent windfall tax on mining house profits and arguments today about its possible deferral.

For a country that has in the last 12 months exported about 600,000 tonnes of copper worth $4.5 billion and 4,000 tonnes of cobalt worth about $300 million, but may only have received net revenues of $650 million, it is a legitimate question.

This is a country which depends upon copper and cobalt for more than 65 percent of government revenues.

But what are the choices available?

State-owned mining following independence in 1964 was not a success. So, in the late 1990s concerted efforts by the World Bank and the International Monetary Fund thrust privatization onto the country as the only route out of poverty.

The President at that time, former Union leader, Mr Frederick Chiluba, made deals whose hand stretches out to today and beyond, with tax free concessions made to miners in return for massive investment.

While the state holds, 20.6 percent in Vedanta's Konkola, a 10 percent stake in First Quantum's Kansanshi open pit mine and similar stakes in Mopani and others, these are relatively small crumbs from the bounteous bread basket that has been copper income during the commodity boom.

Clearly, in one sense, Zambia might not have much of a mining industry today were it not for the investment from the foreign mining houses.

But can it be right that a sovereign government be inferior in strength to a global mining house or to the mining giants of resource-hungry powers such as China ?

There are other models to observe which show it need not always be this way -- KGHM in Poland is still more than 50 percent government-owned and Codelco in Chile, the state-owned copper miner, is still the main source of that country's wealth.

Perhaps now that the commodity boom is drawing to its natural close, there will be a chance to redress the balance in preparation for the next cycle (whenever that might be.)

My prediction is that next time around, as global miners retreat because of balance sheet problems in other areas, the state or Zambian entrepreneurs will have a chance to grow local shareholdings.

Zambia today is unlike it was under Frederick Chiluba. The late President, Dr Levy Mwanawasa, who was born in Zambia's oldest copper town of Mufulira, led a government of reform and appealed to this largely Christian country to have the highest standards of public service and to resist corruption.

In Zambia, a trained middle class has grown up which should command greater credibility in the money markets and so reduce the old dependence on IMF and World Bank loans which led to debt-laden central governments across Africa in the second half of the 20th century.

In short, what is needed is home grown Zambian entrepreneurs; a Zambian Richard
Branson for example, capable of proving that local interests can succeed in one of Africa's most democratic countries.

I mention these matters today, ahead of London Metals Week (Oct 13th - 17th) in which almost every copper and cobalt interest in the world will be represented in one way or another.

I hope they will listen and encourage.

For our part, The Minor Metals Trade Association will be raising funds at our dinner for exchange trips of students and teachers who have been travelling between Mufulira in the Copperbelt and Castle Cary in Somerset since 1991, work that is going towards building that all important educated middle class, so essential to raising the living standards in Africa.

There's no doubt this issue remains the most pressing for any government. I do not think the current government has answered it effectively - the fiscal regime it created appears to have collapse. More importantly, it appears there's no mining strategy beyond the tax adjustments earlier this year, especially one that links mining to wider goals on reducing poverty levels and empowering Zambians in general.
That said, the article above appears a little short on what government can actually do to help. But more importantly, I am not persuaded about this "window of opportunity". The issue really is about access to funding, and the role government can take to help local mining entrepreneurs (and Zambians abroad) to grow in the industry. There are several ways this could be done, including tax breaks for firms willing to give Zambians larger stake, encouraging more development of the ZANACO model for new emerging mines, where workers and Zambians in general are offered a stake. Another idea of course is to look at how chiefs at the local level can have a stake in these mining iniatives (e.g. through royal development corporations of sorts). I do think there's something special about "new mines", and it is unfortunate that government has not quite grasped that.
The real question is whether the little fiscal space generated by the new fiscal regime (which unfortunately appears to be in tatters), can partly be used for such in initiatives? Clearly that requires a proper assessment of the various alternatives (e.g. a stabilisation fund), but we do need to consider how some of the additional funds can be ploughed back in the industry, especially with a view of encouraging more participation by Zambians.

On Zambians abroad, I believe this to a significant source of capital, and partly why I think initiatives such as Zambia Diaspora E-Conference 2008 , needs to be encouraged. There's a real need to eliminate "coordination failures" among Zambians abroad and use the diaspora more effectively as a source to further of entrepreneurship that powers the Zambian economy.

Thursday, 16 October 2008

The Albidon DA?

Speaking of DAs, this report in the Post yesterday claims that Albidon, currently taking forward the Munali Nickel project, has an agreement with the government that protects the company from paying new mineral taxes until 2012. Apparently Albidon Mine has stated that its corporate taxes will remain unchanged at 25 per cent and 0.6 per cent royalty tax until January 2012 in case the incoming government decides to change the current mineral taxes. This means Albidon’s operations will attract a royalty tax of 0.6 per cent as opposed to the current 3% charged on base metals while the corporate will be paid at the previous 25 per cent instead of 30 per cent.

I have yet to track down where they got the information from. If someone knows the issues surrounding this DA, I would only be too keen to know!

Mining windfall tax in tatters, 4th Edition

Early this week, the Minister of Mines Kalombo Mwansa refuted reports that the government has entered into renegotiations with mining companies to restore the defunct development agreements (DAs) that gave mining companies huge tax incentives. Apparently the "negotiations" are all to do with a little arithmetic problem :

"We are not renegotiating anything. Besides, the new taxes have become a law and it is wrong to negotiate anything outside the law but we are engaging mining companies on the newly imposed mining taxes in order to harmonise the situation because government is aware that calculation of effective tax rates at 47 per cent is still an issue on the part of some mining companies..."

"Their (First Quantum) calculations indicate that they are paying more than the 47 per cent effective tax rate and this is what we are discussing and not restorations of the defunct mining agreements so consultations are on going to find common ground..."

"....the finance ministry has already started to engage the companies on the matter but the purpose of the new fiscal regime is to enable the companies continue to operate viably while contributing a little more in government revenue for the benefit of Zambians."