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Monday, 16 March 2009

Wanted: mining industry experts?

In Governing in difficult times.. I suggested that "Zambia is blessed with many experts in many fields at home and abroad. A way must be found for putting together a brilliant group of these experts to provide government with the best advice in the core areas - finance, mining, transport, education and health". Yesterday, Mines Minister Maxwell Mwale announced that Government intends to constitute a multi-displinary team comprising experts to look at the affairs of mining sector and chart the way forward. We have had these promises before only for them to disappear in thin air. Perhaps the government is now turning a new page and has seen the merit of widening the tent beyond its existing pool of civil servants and party cadres. This is a Zambian problem that requires Zambia's best. We await to see how this team will be put together.

2 comments:

  1. Cho, I am always fascinated at your consistency with real issues and particularly the fact you avoid use of jargon as others would be inclined to in the hope of sounding intelligent at the expense of communication. Now, at the expense of sounding pessimistic I with to express half a sigh of relief at Hon Member of Parliament and Mines Minister Maxwell Mwales' pronouncement as quoted in your posting. Half a sigh as I am shocked at his simplistic approach to issues, his speeches and direction on the matter arent those of an intellectual delivering on serious matters and therefore leaves me thinking there arent any consolidated strategic plan after all this time.

    While it is appreciated there maybe no one solution for the immediate resolution of the mining challenge, my suggestion is in the interest of putting lasting measures in place we find means of passing those mines onto a fair percentage of shareholding to Zambians, and not the Zambian Government. This will result in;

    a. Retention of forex, which in itself will support economic growth.
    b. Prevent massive job loses as I am certain Zambian shareholders would not react in such a short period as the current foreign owners are.
    c. Stimulate infrastructure growth as the surpluses will be channelled to other growth area's within the country, as would any prudent business owner.

    We have for long admired economic growth in countries such as South Africa, that growth is as a result of local ownership of the main means of national income. Zambians need to have a notable stake large scale entities in this country for us to see growth. We can not have the Zambian governments' gross capital stock remain below that of the mining firms.

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  2. Mpashane,

    I like the way that you think. I am perpetually in search of third way types of solutions, and your suggestion sparked a thought or two in me. Perhaps the most equitable ownership structure over the long term, at least for that percentage stake which is claimed for Zambians, could be structured as follows:

    Each job in the company is assigned a certain number of shares of stock, which the job holder gains "ownership" of gradually over time by virtue of "pension fund contributions". The price per share would probably be best determined by dollar-cost-averaging over a predetermined period to mitigate the effects of market shocks on individuals. The job holder would be entitled to the full cash dividend for the entire bundle of shares regardless of their pension fund buy-in progress. In the event of retirement or job redundancy, the value of the shares can then be converted into either pension or severance payments, financed by the contributions of the next job holder or the savings from job consolidation.

    This would enable rank and file miners to reap relatively large long term rewards from profitable mining operations, equivalent to capital investors, without creating cash flow problems or risk of capital flight. It should also help to ease tension between labor and management due to shareholder demands, since labor itself will represent a large percentage of shareholders, if not a majority. Does that seem workable to you?

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