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Saturday, 1 November 2008

Mine Watch (Chirundu)

We are now catching up with economic developments over the last two days. An important annoucemnet from Albidon on Thursday it will delay work on its uranium project joint venture , due to "the turmoil in global financial markets".


  1. " An important annoucemnet from Albidon on Thursday it will delay work on its uranium project joint venture , due to "the turmoil in global financial markets". "

    I guess Sata was not to blame after all (as someone opined during a discussion I had on LusakaTimes).

    It's official now - Zambia once again missed out on a boom in it's primary export, copper. Thank you, MMD, thank you, IMF. And thank you, neoliberal ideology, that put an emphasis on 'free markets', 'deregulation' and the 'privatisation' which put Zambia's mines in the hands of foreign corporations - the ones that are so responsible that they refuse to pay taxes.

    I say it is time nationalize the mines, the way the US and EU have nationalized the banks.

  2. I am quite attracted to Sata's plan on parastatals . He was to sell all the parastatals - "25 percent will come from government to workers, 24 percent also from government to account holders, so that will liquidate the government's holding completely.'' The rest will be sold to ``other people with money.''

    This is like the ZANACO model, but at much superior terms.

    I think this is the only way to realign the incentives. Let Zambians be shareholders in these companies.

    Also let us think about LOCAL AUTHORITIES.

    I have been studying China's revolution of its aviation industry. it basically turned all the airports to the local authorities and realigned the incentives accordingly. Now its aviation infrastructure has been transformed.

  3. I would like to see a commission, that would prepare the ground for suing the IMF. It is their policy, complete with the claim to Edith Nawakwi that 'copper prices would not rise during my lifetime', which cost the Zambian state $2 billion to $2.5 billion per year since 2004.

    At some point, this waste has to stop. The ideology of borrowing money instead of taxing the biggest source of revenue in the economy is dead.

    On local authorities, I'm reading "Black And White In Southern Zambia" by Kenneth P. Vickery, and it seems that even early in the 20th century, local government functions were peformed by chiefs.

    On parastatals, I still think there are ways to depoliticize both the parastatals and the civil service, create incentives and have them perform as well or better than any private company.

    Examples of well run state owned companies:

    SABESP - Brazil

    CADELCO - Chile

    I quote - and this is what was happening to the state owned copper company, while in Zambia, money flew out of the country because of unrestricted foreign ownership of Zambia's single most important export, and the lifeblood of it's economy:

    The world's largest copper miner, Chile's state-owned Codelco, shattered all records in 2006 with US$3.34bn in profits versus US$1.78bn the year before despite rising costs and slipping output. Pre-tax profit, the figure emphasized by the state company due to its unusual tax structure, came to US$9.22bn in 2006 compared to US$4.90bn the year before."These results are thanks to the good prices that copper enjoyed last year," Codelco executive president Josà Pablo Arellano told reporters at a press conference recently, adding that costs rose 17.8% from 2005 to US$1.16/lb due mainly to rising energy expenses.Codelco raked in US$13.0bn in revenues last year versus US$8.39bn the previous annum, while total costs came to US$3.19bn in 2006 compared to US$2.74bn in 2005. Arellano had said reducing costs is one of Codelco's main concerns for the coming years, as he anticipates copper prices will fall in the medium term. The average copper price in 2006 was US$3.05/lb

    Zambia exports at least $4 billion in copper and cobalt per year, of which at least $2.4 billion per year should have ended up in the state coffers as income.

    It sort of puts to rest the 'we don't have any money' line that usually accompanies ideas the government doesn't like.

  4. "Black And White In Southern Zambia" by Kenneth P. Vickery

    Is that a recommendation?

  5. I think it is a very interesting expose of early dynamics that went into wealth accumulation among the first commercial farmers. Chapter 6, Transformation Of The Indigenous Economy: The emergence of a Peasantry goes into a little detail of two Tongan commercial farmers called Timothy Kachesa and Henry Jahaliso. I quote:

    " By the 1920s and 1930s, a number of Tonga individuals and households were farming and marketing on a scale obviously greater than average, and greater than some settler farmers. European observers called these figures "progressives"; the Tonga called them balimi basimpindu--"Farmers for profit". The most celebrated example was the jointly run operation of Timothy Kachesa and Henry Jahaliso near Chikuni Mission. It will be recalled that Jahaliso was one of Fr. Moreau's original converts; Kachesa likewise was closely associated with their patron Moreau and the mission for his entire lifetime. Kachesa and Jahaliso in 1923/24 reportedly had oxplowed 82 acres of gardens, from which they realized a profit of 200 pounds from sales in 1922; they owned three plows, two cultivators, a maize planter and a weighing machine. The families of the pair lived in a five-room pise house with windows and fireplace, surrounded by numerous outbuildings. They had constructed a 210 feet long by 22 feet deep, which "would be considered a large undertaking by any farmer."134 They employed up to as many as twenty-one workers at peak seasons. In the years 1926 and 1930 Kachesa and Jahaliso reportedly sold 800 bags of maize. By 1934 they had two dams, a 150-acre fenced paddock, a wheelwright shop, and a small store. Trapnell noted that Kachesa had "a better bank balance than some European farmers."135

    "There were other examples. Trapnell reported also in 1934 that Headman Siamecha in the Pemba area owned four plows and two cultivators, and employed as many as twenty men at a time at 8s. to 10s. per month. His workers were his villagers; they had small gardens around his larger one and used tools which he lent them.136 Another report in 1933 stated that in many villages there were "two or more substantial men or groups of men who cultivate upto 25 acres of maize and employ upto six people at an average wage of 8 shillings a month."

    Interestingly, with respect to security of tenure...

    " Kachesa and Jahaliso lived, incidentally, on an estate ("Russholme") surveyed for European occupation early on. They were approached in both 1920 and 1923 to surrender their rights. They reluctantly agreed in 1920, under pressure from Moreau to cooperate, but the application was withdrawn. In 1923 they refused, deciding that to surrender "for even double the compensation named, would be bad business," and were permitted to stay.139 In the 1930s they became one of the rare cases where Africans were allowed legally to stay on Crown land, on an annual leasehold basis.140 "

    Another book I'm reading is "The Politics Of Patronage In Africa", by Roger Tangri. It has an interesting chapter on the attitude of the state to African private capital - chapter 4, "The Politics Of Private African Capital", which lists the pitfalls of private enterprise.

    I would recommend both books, Vickery's for a historical context of the economy of Southern Province, but especialy The Politics Of Patronage, because it gives a very indepth review of context and effects of 'privatisation' and the attitude of government to private African capital.


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