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Wednesday, 19 August 2009

The impossible partner

Interesting recommendation from the Computer Society of Zambia (CSZ) :

"CSZ would recommend that Government select a private partner that would put national interests before business interest".
I struggled to imagine what such a "private partner" looks like. These are the sort of ignorant statements that are confusing a serious debate.

11 comments:

  1. I have to admit: I do not know my countrymen and women. "Liberalising the water sector will lead to high water rates". "Chiluba cannot be charged with a public theft offence because he was not a public officer" And now we are looking for a Zamtel partner who would put the 'national interest" rather than his/her business bottomline first! Honestly is there something in the waters of the Zambezi, Kafue, Luangwa, Luapula, Chambeshi rivers and the various Zambian lakes that is making my folks to turn logic on its head?

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  2. Cho,

    "CSZ would recommend that Government select a private partner that would put national interests before business interest".I struggled to imagine what such a "private partner" looks like.

    I can imagine what such a partner would look like. However, I don't see the GRZ of President Banda looking beyond the next election, which they may lose - which I think is why you are seeing all this activity in privatising Zambian state property.

    A partner which would put national interest before short term financial gain, would be a partner who would be interested in making some money from the long term development of Zambia and Africa.

    For instance, if someone (like the Chinese in Angola) would exchange raw materials for infrastructure, they would also (partly) own that infrastructure, and would be making money from the commerce that would arise from for instance linking up SADC's economic centers; the increased availability of agricultural goods that would follow from linking up remote rural areas; the transportation of those products that would be necessary; a future role for Zambia as a road/rail/replenishment area for transportation throughout the SADC region, and trade with Central and West Africa; the business opportunities that will arise from a future stable DRC and it's massive mining and agricultural potential. I could go on.

    Such a partner would not only be into mining, but would want to diversify into (become part owner of) transportation companies, agricultural schools and universities, production of chemicals for agriculture and manufacturing, etc.

    In other words, they would want to become a part of the future African economy.

    Right now, the West is acting like a colonial power, only interested in what they can get out of Africa, with as little cost as possible, and without sharing anything.

    Look at how much effort they put into not paying taxes, not sharing profits, not paying workers, not cleaning up the enviroment, etc., all so they can increase their financial profits.

    There is no vision for the development of Africa in that. And that should be abandoned as soon as possible.

    And of course I would very much prefer that Zambians and the Zambian government take that approach themselves, and not wait for FDI to do that.

    There is a western business sector that will not look beyond their balance sheet, and a governemnt that will not look beyond the next elections, 2 years from now.

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  3. Maybe you should start by listening to what they want instead of dictating what you think they need. You can force a horse to go to the river, but you cant force it to drink the water.

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  4. Anonymous,

    Maybe you should start by listening to what they want instead of dictating what you think they need. You can force a horse to go to the river, but you cant force it to drink the water.

    Who are the 'you' and 'they' you are talking about?

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  5. MrK,

    "A partner which would put national interest before short term financial gain, would be a partner who would be interested in making some money from the long term development of Zambia and Africa."

    So such a partner would be investing in Zambia not ZAMTEL?

    It does not make business sense. Its like a govt employee saying , I don't want to be paid wages by govt because I am interested in government saving money and making Zambia better.

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  6. Cho,

    So such a partner would be investing in Zambia not ZAMTEL?

    It does not make business sense. Its like a govt employee saying , I don't want to be paid wages by govt because I am interested in government saving money and making Zambia better.


    It would be more like - if you help us build this highway, instead of us paying the cost plus 20 million in profit, we pay you 5 million plus 20% of shares of the freight company that we're going to create to use that road.

    Or say a Chinese miner building a mine at cost only plus salaries, and getting 25% of a coppersmelter that we build with some the money.

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  7. MrK,

    But that is just a barter arrangement.

    It does not change the motive of the Chinese company, which is putting cash before Zambia.

    We need to stop looking for fictional partners.

    We should just recognise any partner would want to make profit... so if we are worried about that we should retain a controlling stake...

    The first basic question Govt needs to answer is - what do we want from ZAMTEL?

    Just saying we want lower rates etc is not good enough.

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  8. Cho,

    But that is just a barter arrangement.

    It does not change the motive of the Chinese company, which is putting cash before Zambia.


    Whatever name it goes by, it means that the company is interested in the success of both ventures, which links it to the economy in the long term.

    We need to stop looking for fictional partners.

    I agree, we need to start taxing the mines.

    We should just recognise any partner would want to make profit... so if we are worried about that we should retain a controlling stake...

    The questions at which stage do they make a profit and how much.

    How about this - you give out a commission for the development of 2 mines - one at a cost only basis (with profits going to the GRZ), and one where the foreign company can make a profit with little taxation. And the development on the for-profit mine is conditional on the development of a cost only mine.

    There are ways to link development that allow the people and country to benefit a lot more than what is happening now.

    There is an article in The Post, quoting President Banda:

    Laws governing mines not ‘totally fair’ – Rupiah
    Written by Patson Chilemba in Kabwe

    Which is an interesting sentiment coming from the MMD. The arguments raised do not go as far as higher taxation. However, that is where the money for economic diversification is - in the mining sector.

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  9. Mr K,

    By insinuating a preference for a Chinese partner, are you really suggesting that the Chinese are any more inclined or dedicated towards the long term development of Africa than anyone else? If so, I would be worried, very worried.

    Not to divert from the Zamtel issue here, but we must scrutinise Chinese investment, as any other, for as far as evidence shows, quality (and corruption) from that side of the world is a serious issue.

    As for Zamtel, the govt ought to be clear about how their proposed solution will help the company's situation. The ultimate goal of any investor is to maximise the financial returns for its shareholders. However, it's the govt's job, through the regulator, to ensure that the company adheres to industry regulations with regard to improving and expanding service through universal service obligations, etc, as well as ensuring harmony in the industry.

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  10. MrK,

    "Whatever name it goes by, it means that the company is interested in the success of both ventures, which links it to the economy in the long term."

    No it doesn't. It just means that they have a good deal they are up with and the government is smart in negotiating.

    My point is that we should stop looking for Mother Teresa type investors. They don't exist.

    We should just focus on our end. Strike a hard bargain and not worry about what is driving the other equity partner.

    In short, I am saying even the Devil can be an equity partner if you specified your contract with him properly. Stop looking for an Angel Gabriel to come and partner with us. Just look for partners, but do your homework.

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  11. Zedian,

    "The ultimate goal of any investor is to maximise the financial returns for its shareholders. However, it's the govt's job, through the regulator, to ensure that the company adheres to industry regulations with regard to improving and expanding service through universal service obligations, etc, as well as ensuring harmony in the industry"

    I should have read yours first before I wrote!

    You put much clearer than I did!

    ReplyDelete

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