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Friday, 24 July 2009

A privatized ZAMTEL

The President announced today that government has resolved to sell 75% shares of the Zambia Telecommunications Corporation (Zamtel) to a private equity partner and retain 25 % shares to enable the company operate profitably. ZAMTEL needs about US$200m to recapitalize and the President said he has no money, given other priorities. The plan is for government to "hold the 25 percent and possibly later sell them to the public through the Lusaka Stock Exchange". The privatisation of ZAMTEL will also entail the "liberalization of the International Gateway".

At the surface this looks like the "decoupling approach" we have advocated and backed by Parliamentary Committee on Transport and Communication, but it remains to be seen what is done about the IGW itself - we have recommended to Government directly this model. (Yes, really we wrote to them and they responded saying "ZAMTEL does not need space age solutions, it just needs new money".....but we knew they had no money and sooner or later they would realise that!)


  1. Cho,

    (Yes, really we wrote to them and they responded saying "ZAMTEL does not need space age solutions, it just needs new money".....but we knew they had no money and sooner or later they would realise that!)

    I guess they are more interested in the money than the future of ZAMTEL, or how it is run.

    I haven't been able to place one decent call into Zambia using landlines. There is always massive distortion and all kinds of problems.

    They're more interested in something - but it isn't running a functioning service.

    ZAMTEL has a page that lists it's management. Please visit it, and if you see anyone you recognize, please mention their background here.

    ZAMTEL Excecutive Management:

    Mr. Mukela Muyunda - MD/CEO
    Mr. Basilio Musonda - A/Finance Director
    Mr. Kambani Ndhlovu - A/Director of Commercial Services
    Mr. Luwani Soko - Director Technical Services
    Ms. Linire Mulima - Company Secretary
    Ms. Harriet Maliwatu - Director of Human Services
    Dr. Chilao Mtesa - Director of Corporate Planning
    Mr. Lawson Lupunga - Regional Director South
    Mr. Chewe Kampamba - A/Chief Internal Auditor
    Mr. David Mwanza - Regional Director North

    So what went wrong with the management structure? Does the MD get overridden by others? Why can't ZAMTEL get itself out of this mess on it's own power?

    On a general note - things seem to move very slowly in Zambia. What is causing this enertia? Is it structural - tight (political) hierarchies, both in for instance the political parties, and how would this carry over into these parastatals?

  2. MrK,

    We have a huge problem which needs a good 50years to solve especially in terms expertise. We need to train people in some of the critical areas such as railway systems, power, and telecommunication among others for these entities run profitably. What does that institute they have in Ndola do, providing knowledge in laying cables only? I fail to understand how that Zamtel has failed to tick even with basic infrastructure which its rivals relish and crave to be using. Is it really a question of funds that Zamtel cannot tick or we do not just have the right people with innovation ideas in management?

    Looking at the list you have put above, I know someone personally there, he has a BEng from UNZA but I doubt if he has gone beyond level yet he seems to be in a strategic position. Some names also look like they have risen to some of these positions through links to LPM.

  3. Cho,

    Some names also look like they have risen to some of these positions through links to LPM.

    No one can dispute that there is a need to overhaul the parastatals. However, selling the entire enterprise (or 3/4 of it) also hands over 3/4 (or more) of the profits, which will undoubtedly be expatriated.

    In my opinion, the parastatals and the civil service have to become divorced from the political class. There are ways to do that - if there is the political will to do whatever it takes to have efficient, functioning state enterprises. If the will is there to sell it off, there should also be the will to make it run efficiently and not use management positions to repay political favours.

    Therefore, I would suggest that the independence of the civil service should be written into the constitution.

    Promotion only from within the ranks of the civil service or parastatals, based on merit, by higher ranking civil servants would be a start.

  4. Yes, Zamtel could do with re-energising. What I don't understand though, is how is new money going to achieve that when the Zambian govt remains the biggest debtor to Zamtel?

    We saw recently what drastic measures Zesco had to resort to just to draw govt's attention to their debt.

    And if this privatisation is not well thought out, or done in bad faith, this could happen.

  5. That said, I think RB's handling of the Dora Siliya and RP issue has not been transparent enough for Zamtel's privatisation to proceed without further scrutiny.

    It is unclear who RP are, what their interest in the communications business is and in particular their interest in Zamtel. For we know, they may well turn out to be the buyers through some proxy company, after having evaluated Zamtel's assets.

    The water is far too cloudy at the moment for Zamtel to be privatised just yet.

  6. It has quite a few good assets such as the fibre optic and mobile telephone network built out recently and the cause of much of the debt. If the potential investors are able to manage these assets and handle the labor and other issues successfully, it has a chance of being a good investment in the long run.

  7. Zedian,

    The approach to privatising ZAMTEL am sure will follow what we have recommended, and was agreed by the Transport Committee.

    The company will be split in two.

    Zam-Int will have the gateway and most likely will be run by a government dominated company.

    Zam-dom will be sold with GRZ retaining 25%.

    I cant see ZICTA running Zam-Int because eventually multiple gateways will emerge. Also according to the ICT Bill 2009, there's no provision there for ZICTA to own gateways. It is a pure regulator now.

    I think the ICT Bill 2009 anticipates the break-up of ZAMTEL.

    ZAMTEL cannot survive if the ICT Bill 2009 was implemented to the letter. For example, it forbids "cross subsidies" and also will ensure that the tariff rates for the gateway are "cost reflective". That is crippling for ZAMTEL.

  8. Cho,

    Magande is also expressing concern over the RP issue, as I did.

  9. It is very difficult to deduce what most Zambians presumably in influencial positions stand for. Take the two trade union leaders Mtanchalo(?) and Hikaumba of communications union and ZCTU respectively. These two guys have come out in support of the govt modalities for privatising ZAMTEL. However these two gentlemen were opposed to the liberalisation of the IG supposedly for security reasons. How I wish now that they could explain how selling 75% of ZAMTEL to a foreign investor does not raise the same security concerns. Will they be agreeable now to Zain operating its own IG since its also 70% owned by a foreigner and listed on LUSE?


  11. I have lots of respect for Yvonne Mhango's opinions on economics, but her comments on the security matters regarding Zamtel privatisation suggest on this occasion she may be out of her depths:


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