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Friday, 31 December 2010

Top 5 Books of 2010

We close off 2010 in literary style. There are some good books for review due next year and we hope to read them as we reset the clock on our annual book reading goal. Before we do that it is worth taking a moment and share the top 5 books of 2010. It was a difficult choice, but I have restricted the list to 2010 releases. The list of course reflects my preferences and as always, I am interested to read yours - if only to detect what I may have missed this year.

The Shallows: What the Internet Is Doing to Our Brains(5) The Shallows by Nicholas Carr puts forward the argument that the internet is changing us in ways we may not have realised before. According to Carr despite the wide benefits the internet has brought, it is also having a fundamental impact on the physiology of our brains, altering not only the way we perceive reality but how we actually take in information and process it. Scary and fun though it starts off somewhat slow. It makes our list because it tackles a shockingly important if not scary subject.

Wednesday, 1 December 2010

Merry Xmas and Happy 2011

Dear Friends,

Every economist needs a break to recharge the batteries.
In that vein, in line with previous practice, I will be taking the next four weeks off writing and will resume on 1 January 2011. During this period I hope to meet with readers across the length and breadth of our country.

Huge thanks for all your support this year. Your encouragement and many website visits has kept me coming back to write more.

During period, I trust you will take time to visit all the three websites I have maintained throughout the year:

House of Chiefs - Political, social and economic perspectives on traditional authorities in Zambia
Zambian Economist - Economic perspectives on Zambia
Zambia Elections - All things concerning the 2011 elections

Special thanks to those who have signed up via Facebook and Twitter pages. It has been encouraging to see these mediums become a central part of the websites.

I trust its not too early to wish  you a wonderful Xmas and fantastic 2011!!

May the Lord keep you safe and secure during the festive period.

Chola Mukanga
Founder, Zambian Economist
http://www.zambian-economist.com
Email : cho@zambian-economist.com
Twitter : http://www.twitter.com/cholamukanga

Monday, 29 November 2010

Inflation Statistics - November 2010


The annual rate of inflation, as measured by the all items Consumer Price Index (CPI), reduced to 7.1 percent in November, from 7.3 percent in October. The 0.2 percentage point decrease is attributed to the "reductions in the cost of some food items". More detail via the CSO Monthly Bulletin.

Friday, 26 November 2010

Mining Taxation Debate (A Response to Kyambalesa), 2nd Edition (Guest Blog)

I think we all agree here that – when it comes to extractive resource which has finite lifespan, the thing to do is to maximize earnings from that resource and develop alternatives before it runs out. Copper and other minerals will run out, what happens then? Why are our current officials so adamant about the re-introduction of windfall taxes? Don’t they understand what is at stake? Why are they refusing to increase copper revenues when the prices are good?


Many people have counseled that we should levy these windfall taxes. Chares Milupi, Bob Sichinga and others have talked about it. Even some important cooperating partners like the US Embassy and IMF have also suggested that we should go for it. Nej, our people don’t see it that way. Here in Canada, Potash a strategic resource based in Saskachewan, has been protected by Federal government from aggressive (hostile) takeover by foreign companies. In other words, national interests superseded international open business concerns.

Thursday, 25 November 2010

The Constitution of Zambia (Amendment) Bill 2010

The Government has published the Constitution of Zambia (Amendment) Bill 2010 which will take forward the enactment of specific clauses which are not subject to the referendum. The public has 30 days to study and engage their parliamentarians before it makes it way into the House.  

The object of this Bill is to amend the Constitution of Zambia so as to—
  • (a) revise the Preamble to the Constitution in order to recognise the multiethnic and multi cultural character of Zambia, to honour and respect freedom fighters and ensure that all powers of the State are exercised for sustainable development
  • (b) provide for the right and duty of citizens to protect the Constitution and to compensation for punishment or loss arising from the defence of the Constitution;
  • (c) repeal and replace Part II in order to re-assert the status of Zambia and declare its sovereignty, national symbols and official languages;
  • (d) revise Part IV in order provide for the determination of election petitions by the Constitutional Court;
  • (e) repeal and replace Part V in order to revise the composition of the National Assembly, establish a proportional representation system and establish the Parliamentary Service Commission;
  • (f) repeal and replace Part VI in order to provide for the establishment of the Court of Appeal and the Constitutional Court and revise the jurisdiction of the superior courts;
  • (h) revise the provisions relating to national values, principles and objectives and the directive principles of State policy;
  • (i) revise the provisions relating to citizenship in order to permit dual citizenship and revise the modes of acquisition of Zambian citizenship;
  • (j) revise the provisions relating to local government in order to effect structures and principles of a decentralised system of government and provide for the determination of election petitions by a Local Government Elections Tribunal;
  • (k) establish the Political Parties’ Commission and Political Parties’ Fund;
  • (l) make provision for investigative commissions, establish the Gender Equality Commission and provide for the enactment of legislation for the establishment of a National Prosecution Authority;
  • (m) introduce provisions relating to a code of ethics and conduct for public officers and declaration of assets and liabilities;
  • (n) revise the provisions relating to public finance and budget, establish the National Treasury Account and the Compensation Fund and provide for the enactment of legislation on budgeting and planning;

This is the first of two bills to be published. The second one "The Constitution Bill" will be available tomorrow.  I encourage you to read these bills and provide comments on them. If we get enough comments and I have enough time, I may collate and forward them to the Clerk and associated players, like we have done in the past. I suspect that will be around early January (since I go on "blogging leave" next week).

Wednesday, 24 November 2010

And another thing...

Management of Collum Coal Mine and all the 13 workers who were shot at have agreed that their supervisors should not be prosecuted. This comes after mine management agreed to compensate victims of the shooting between K20 and K45 million.
There's something wrong in a country where the State allows witnesses to be bought off (that is what "compensation" is) before formal criminal charges are brought. The Collum incident was not a civil offence, it was an alleged "criminal" act. That is to say the alleged offence was committed both against the State and the individual. The alleged offence therefore is not a "private deal" between the victims and the alleged offender. A responsible government is supposed to do three things. First, protect the victim and ensure they are not approached or tampered with in any way. Secondly, institute formal criminal proceedings against the alleged offenders, with or without the witnesses, where such a case is in the interest of justice. Finally, after the criminal proceedings have been completed encourage individual victims to pursue civil law suits. It appears we are already at stage three!

In a country where we prosecute people for bouncing cheques, I find it bizarre that shooting someone can be handled through a financial deal between the alleged offender and the poor employee. If it was all a matter of money, the rich (not just those from east bearing gifts) would never face criminal prosecution. 

At this point we must surely ask - is the criminal process in Zambia just for alleged poor offenders?

Where are Zambians who will stand for justice to prevail in our land?

Tuesday, 23 November 2010

Are you in the UK?

A special event in London this Friday by STAR 100 a professional Ghanaian network. Among the speakers is the excellent Standard Chartered's Razia Khan and Oxford University's Rick Van Der Ploeg. Well worth attending!
Star 100 UK - Oil & Gas : Creating a Success Story for Ghana

The Collum saga, revisited

Since the shooting, Zambia’s labor commissioner, Noah Siasimuna, has been drawn into the dispute. Atop his desk is a thick folder about Collum Coal, but most of the paperwork is new. No signed labor agreement with the company was ever filed with his office as required by law, he said. Nor did the unions formally report any noncompliance.

Mr. Siasimuna, like the labor minister, Mr. Liato, cautioned against any conclusion that impugned Chinese businesses as worse than others. “We have bad employers that come from everywhere, including Zambia,” Mr. Liato said.

The unions, however, say Chinese owners are indeed their biggest headache. And, contradicting the government, the president of the Gemstone and Allied Workers Union of Zambia, Sifuniso Nyumbu, was able to produce contracts with Collum that had the signed and stamped approval of the commissioner’s office as well as letters from the Labor Ministry acknowledging union complaints about the company..
Excerpt from this recent New York Times piece on the Collum saga.  Taken at face value the above suggests that the Labour Commissioner would do anything, even lie, to protect Chinese owners. That is quite worrying considering that Chinese firms employ at-least 25,000 employees. Can those employees expect an impartial assessment from this Labour Commissioner? Not on this article!

Government media in numbers

I was delighted to see this question following the piece - Yes, let us sell failing parastatals! :
Information and broadcasting services deputy minister Angela Cifire has said the public media in Zambia is doing very well in newspaper circulation.

Ms Cifire said this in Parliament today when answering a question from Kachibiya Member of Parliament David Mwango who wanted to know how many copies of the Times of Zambia, Zambia Daily Mail, sold in the year 2009. Ms Chifire told Parliament that Times of Zambia in 2009 sold 2, 982, 211 copies while the Zambia Daily Mail sold 2, 239, 388 copies. The deputy minister further revealed that the Sunday Times sold 248 237 copies while the Sunday Mail sold 684 847. 
How is this doing well?

The best case scenario is to assume that Times of Zambia figures excludes Sunday Times. That means 2,982,211 divided by (52 weeks x 6 days) =  9558 per day. The Sunday Times figure can be obtained by 248237 divide by 52 sundays = 4773 per sunday.  I will leave others to speculate why the Sunday Times sells twice as less, but I think it is because govt is the largest consumer of it's own product! When offices are closed on Sunday no one buys except cadres! These are papers by government employees for government employees. What a waste of tax payers' money!

Now from what we have been told the Post ships 50,000 plus a day at the same price of K3,000 per copy as other dailies. When all things are put together it makes for a very ignorant Deputy Information Minister. I think I can now understand why she was demoted as Minister of Health. 

Monday, 22 November 2010

Lusaka Basic Needs Basket - October 2010

The latest Lusaka Basic Needs Basket and the associated press release for October 2010. In October the basic needs basket for a urban family of six stood at K2,877, 830 (or US$589).
Lusaka Basic Needs Basket - October 2010

Sunday, 21 November 2010

Collective inaction

In a recent debate on Road Traffic (Amendment) Bill which seeks to increase road tax by 50% a few parliamentarians echo arguments we have previously advance on infrastructure development :
"The heavy-duty trucks from South Africa, Namibia and Botswana are the ones destroying our roads but are paying nothing as they travel to Lumwana mine...Why don’t we put tollgates on our roads? These trucks are destroying the whole road from Livingstone to Solwezi. We could collect money from these road destroyers by simply applying the law. Why don’t you government want to collect money?"
- Hon Muntanga
"Why are we so kind to the mines? In countries where they come from, those involved in the mineral extractive industry pay up to 65 per cent in tax and here they want a tax break....When are we going to be rich? As a government, we should not feel pity for those mines...Maybe our generation has no potential to stand up to guys with money and we should leave it for our children"
- Hon Shakafuswa
It sounds like Hon Shakafuswa feels like he is banging against the wall, but realism demands we remember that he was once a defender of mining companies. The main point of course is that the proposed increase of the road tax demonstrates the importance of collective action (or inaction). The reason the government has failed to act on mining companies but is able to increase road tax is because the "drivers" are not as organised as mining companies. One has a powerful lobby the other doesnt. Which explains why Hon Muntanga's cry for the road tax to reflect the marginal cost imposed by various users will find no active government audience.

For previous discussion on the external cost of haulage firms see here, here, here and here.   

Saturday, 20 November 2010

Intellectual Poverty (David Mwanza)

This is a good example of it :
Konkola Copper Mines (KCM) says that Windfall taxes have the capacity to distort the country’s economy and suffocate mining companies.

KCM Board Member Jacob Mwanza says the taxes, if implemented, can only collect increased government revenue for a short period of time. Dr Mwanza says this revenue can distort the economy because it is money which is not budgeted for. He told a media briefing in Lusaka today that current mining taxes are adequate.

He added that the windfall taxes are not widely used in major copper producing countries such as Chile and Australia.
The intellectual poverty of the pro-low mining tax lobby has reached a new low. One does not have to be an economist to see why our Dr Mwanza is only a "Doctor of Philosophy" on paper. Are these these the people Musokotwane was referring to that are in touch with "modern economics"? This is a man who was at one point "Governor of BOZ" and Vice Chancellor of University of Zambia. Are you still wondering why we are poor with such "talent"?

Book Reading Goal : Week 41

Bonhoeffer: Pastor, Martyr, Prophet, SpyThe 34th book read in the last two weeks is also perhaps the very best I have read for sometime. The book in question is Bonhoeffer: Pastor, Martyr, Prophet, Spy by Eric Metaxas. At 591 pages it was worth every word!  It is hard for me to describe this book without doing some injustice to it.  The book truly opened a window to a dark era of human history in which one light shown brightly before all others. One quote sums up Bonhoeffer's life : "Silence in the face of evil is itself evil : God will not hold us guiltless. Not 2 speak is 2 speak. Not 2 act is 2 act". May we know the full meaning of these words!

Book Reading Goal Review
Books Read So Far : 34 books
Remaining Books to Achieve Target : 16 books
Weeks Remaining to Achieve Annual Target : 7 weeks **

**As December is "blogging leave", I shall also be taking leave from reading for 4 weeks (hence will freeze the count) :)

Friday, 19 November 2010

Zambia Weekly - Volume 1, Issue 46

Zambia Weekly - Week 46, Volume 1, 19 November 2010

Zambia Elections 2011

I had announced Zambia Elections webpage  a while back - it is now cleaned up a little bit. The website will published articles and news item solely related to the 2011 elections. We hope when the candidate profiles, "manifestos" or other policy statements are available we can put them on there. The website comes with its own Twitter and Facebook pages.

Do also check out the third website - House of Chiefs dedicated to the matters of traditional leadership. I have also cleaned this up a little bit!

Thursday, 18 November 2010

Debt Watch (World Bank)

Thought it was about time we started a thread that tracks new debt obligations by the government. We shall keep tabs on this through the "aid" tag. Last week ZNBC reported a new $150m loan to Zambia by the IFC :
The International Finance Corporation-IFC, an agent of the World Bank, says Zambia will next year receive 150 million US dollars credit meant for irrigation. Vice President Ars Phunell says the credit is meant to support irrigation projects at three yet to be identified sites in the country. And World Bank Country Manager Kapil Kapoor said the credit facility will be repaid in the next 20 to 30 years.

And Commerce Minister Felix Mutati said government is embarking on several infrastructure projects in rural areas, to give an opportunity to rural dwellers to participate in the economic success of the country. He named one of the projects as Kasaba Bay, which is creating investment and jobs.

Wednesday, 17 November 2010

Mining Taxation Debate (A Response to Henry Kyambalesa)

Hon Hamududu  recently observed that government had not given a coherent rationale on current mineral taxation, "It’s not that they don’t have an explanation, they do....The problem is that they are simply not making their argument clear when they talk about the new tax regime and the variable corporate tax which they claim is better than windfall tax".  Many of us have longed for a clear and coherent defence of higher mining taxation.  I was therefore delighted to see Henry Kyambalesa's defence of the current mining taxation. I welcome this intellectual "exchange of ideas" on the most important economic question facing our country.  Our children will judge us on how best it was handled.

I am afraid to say that based on his latest narrative, Kyambalesa is on the wrong side of the argument and without merit.  But let me start  with where I think we are in agreement. We fully share the basic premise that more government revenue is not a panacea :

Tuesday, 16 November 2010

Theresa Lungu's Twilight

Seize the Moment has a review of Twilight in the Morning by Theresa Lungu. There's also Q&A with the author, where she mentions her project - Books for Zambia.

Tarnished!

Canada’s aid agency, the Canadian International Development Agency, lost about $880,000 as a result of the embezzlement, The Globe and Mail has learned. The Canadian aid agency spent more than $30-million on programs in Zambia last year....Zambia’s president, Rupiah Banda, has accused the donors of “blackmail” and “interference” for their decision to suspend their aid payments. The British medical journal, The Lancet, has estimated that foreign donors have postponed or cancelled $273-million (U.S.) in aid to Zambia because of corruption allegations over the past 18 months. This does not include the Canadian suspension....
Canadians have been coming to grips with how their aid money is being "wasted" in Zambia. At the last check, this article from Canada's The Globe and Mail had 133 comments! Lets just say the Canadian public is not happy.

Monday, 15 November 2010

A defence of the mining taxation regime (Guest Blog)

Of late, the taxation of mining companies operating in Zambia has become a highly topical issue. Currently, the mining companies are reportedly taxed as follows:

(a) 3% mineral royalty on income (that is, earnings) from copper sales;

(b) 30% corporate profit tax on profits declared after deducting costs and mineral royalties;

(c) 15% variable profit tax on all taxable income (that is, profits) earned that exceed 8% of copper sales;

(d) Deduction of 25% of expenditures on machinery and equipment from taxable income per year once a mining project starts operating;

(e) 15% income tax on foreign companies and expatriate consultants providing services to locally based mining companies; and

Sunday, 14 November 2010

Another day, another party, 8th Edition

This surely must be a joke. It appears we have a new political party called African Democratic and Economic Organization Zambia Must Change Now. With a name like that it is not surprising that the abbreviation is equally long. ADEDO - ZAMUCANO has been formed with the intention of contesting the 2011 elections. The interim Party President is a  Brown Kapika who alledgedly had gone into "self-imposed exile" to the Netherlands in 1992 during the Chiluba regime. He returned last month! The party’s symbol is a "red card", which has not gone well with Father Frank.


Related posts:

12 reasons why profit margins are low in Zambia

By Ruth Henson

There are several factors that contribute to low profit margins for Zambian businesses :

1. Inconsistent government policies. Nobody knows what government policy will be for any reasonable period of time. Government can and does change the rules whenever it is politically expedient to do so. This can have unforeseen disastrous effects on businesses.

2. Excessive taxation. Every kwacha earned in Zambia is taxed over and over. Earn a salary and pay tax on it. Spend it and get taxed again. Pay your Zesco bill and pay excise tax which is then vatable. Anything imported is charged duty and then VAT even on the duty. Fuel has tax upon tax upon tax which then feeds into the cost of everything else.  All this tax would make sense if it was fairly shared but those who can afford good accountants pay less, mines pay less, new investors pay less. The formally employed carry a disproportionate share. Again sharing on the expenditure side is disproportionate. Taxes pay for politicians children to go to expensive private schools and the children of the poor have to pay to go to school because government funding is insufficient to run the school.

Friday, 12 November 2010

Quantum arrogance

The Company, through its Zambian subsidiaries, is party to Development Agreements with GRZ for its existing operations which provide an express right to full and fair compensation for any loss, damages or costs (including interest) incurred by the Company by reason of the government's failure to comply with the tax stability guarantees set out in the Development Agreements, and rights of international arbitration in the event of any dispute. Following consultation with external legal counsel, the Company assessed there to be a high probability of recovery from the GRZ of payments made in respect of these taxes.

In the consolidated financial statements, the Company has recognized a tax expense in accordance with applicable laws from time to time notwithstanding the Development Agreements. In addition and reflecting the enforceability of the Development Agreements, the Company has recognized a receivable from the GRZ for an amount in respect of the expected ultimate repayment of taxes in excess of the taxes permitted under the Development Agreements. This receivable has been classified as "loans and receivables" and initially recorded at fair value based on management's best estimate of the timing of receipt and amounts due. As required, the receivable is assessed for impairment at each reporting period based on changes in facts and circumstances; any impairment amounts required may be material. As at September 30, 2010, this receivable amounts to $221.4 million.

Currently, the Company is involved in discussions with the GRZ to find an alternative solution to arbitration or litigation to fully resolve all outstanding matters in relation to the tax changes introduced in conflict with the Development Agreements. While the timing and outcome of these discussions remains uncertain, the Company recognizes that resolving this dispute through arbitration may not be in the best interest of either the Company or the GRZ. Accordingly, while no terms have been agreed to, the Company is seeking to achieve a compromise resolution which respects the key terms of the Development Agreements.
Excerpt from First Quantum Minerals Ltd press release announcing the report of its results for the three and nine months ended September 30, 2010. The complete financial statements and management discussion and analysis are available for review at their website. First Quantum appear quite confident that they will have "their money" back! Interestingly that confidence is not placed in the courts since they conclude "the Company recognizes that resolving this dispute through arbitration may not be in the best interest of either the Company or the GRZ". Rather it is in their negotiating team and a weak GRZ at the other end of the table. 

Thursday, 11 November 2010

Yes, let us sell failing parastatals!

Treasury Secretary Likolo Ndalamei has indicated that the government will not recapitalise parastatals that have continued to face operational challenges : "We are in the process of seriously examining all the remaining parastatals, especially the loss making ones to see which ones should be privatised".  I think I know where Ndalamei needs to start with his "excellent" idea, :
I am reliably informed that the Post newspaper has the largest circulation of about 40,000 copies per day, as compared to the Daily Mail and Times of Zambia which have a combined print run of not more than 15,000.

The Post usually sells like hot cakes, whereas the public tabloids would be very lucky to push sales above 3,000 copies per day. I also speak with absolute confidence as someone who has sold newspapers before: for every 100 copies of the Post sold on the street, one would be very lucky to sell 5 copies of the Times and the Daily Mail combined. People hate these papers. The “unsold” copies are over 90%.
That excerpt is from Malama Katulwende's lengthy piece “Shikapwasha’s Dogs”: Why the Public Media in Zambia Has Lost the People’s Trust.  The reason why people continue to be baffled by Ndalamei and his friends' approach to privatisation is that it has no credibility. If their approach to privatisation is principled they would have sold the Daily Mail and Times of Zambia. Not only are these companies lossing making parastatals but they stand  in the way of a genuine democratic dispensation and the fight against corruption. The papers also continue to be a personal toy of the government of the day at huge expense to tax payers. 

Wednesday, 10 November 2010

How the copper mines won, 4th Edition

click to enlarge
We continue the bi-monthly copper price check. The general upward trend towards the magic 10 continues. Readers are reminded that we have of course long breached the copper price level at which President Mwanawasa introduced the windfall tax (in January 2008). The windfall tax was designed to match rises in the price of copper: it was set at 25 % while copper sold for $2.50 per pound, 50 % for the next 50 cents and increased to 75 % when copper fetched above $3.50 per pound. You will see that throughout the last six months prices have remained consistently above $2.50 per pound and since September consistently above $3.50 - in short no more thresholds to break. It goes without saying, we would be laughing all the way to swifter poverty reduction had stuck at it. 

Tuesday, 9 November 2010

The 2010 Human Development Report (Guest Blog)

According to the 2010 edition of the Human Development Index, the quality of life in three countries—that is, Zambia, Zimbabwe and the Democratic Republic of the Congo—has slid backward, while many people around the world have experienced dramatic improvements in education, health, economic well-being, and other key aspects of their lives.

The decline in the socio-economic well-being of Zambians has, by and large, been a culmination of several factors described in a nut shell below.

Monday, 8 November 2010

Cursed by mining companies..

Kafue River in Chingola has been polluted again by mining effluent from Konkola Copper Mines (KCM) Tailings Leach Plant (TLP) leaving most of the townships without tap water. Environmental Council of Zambia inspector Webby Simwayi who rushed to Kafue raw water in-take confirmed the poisoning of the Kafue River, the main source of drinking water for all Copperbelt towns....

Mr Simwayi said he was happy that Mulonga Water and Sewerage Company(MWSC) had quickly shut down the raw water in-take plant to prevent poisoning of people....He said the fact that even marine life was found dead prompted his technicians to shut down the in-take plant....A Times staffer who rushed to Kafue River found the peasant farmers living along the river picking the dead fish for consumption. The fish and other marine life was also found dead along the banks of Kafue River and by 18:00 hours yesterday the river poisoning levels were very high.
Excerpt from the Government controlled Times of Zambia piece Kafue Pollution Leaves Chingola Taps Dry. I have previously touched on the ecological and health genocide which continue to perpetuated by mining companies . In the words of Vendanta "Of course we pollute…but all the mines do. It was worse in ZCCM’s days...We are fed up being blamed. You cannot run a mine without causing pollution".  I said it then, and I will say it again.

Our people living in mining communities are humble and peaceful people. Their only crime is that the Creator has endowed them with a precious gift - the minerals below their feet. It cannot be denied that they do not enjoy these precious gifts and continue to pay a huge price (the costs to them continue to outweigh the benefits). It is a situation which would never be allowed in any society that values its citizens. No serious government on earth (aside from one running a failed state in Yemen) would let mining companies get away with significant pollution without huge associated costs and appropriate compensation to communities. 

Sunday, 7 November 2010

Reversing domestic violence

The problem of domestic violence appear to have gained significant prominence in recent times. Of course such problems have always been there, but they now appear to get more coverage as prominent individuals become entangled on them. We have for example seen in recent times' the sad death of Hon Mabenga's daughter at the alleged hands of her husband ('alleged' because case is still pending) and of course the famous saga involving Hon Mwamba. Without doubt, domestic violence, child abuse / trafficking and certain customary practices continue to be great evils facing our women. But how do we help them?

Certainly not through the empty talk recently exhibited by Non Governmental Organisations Coordinating Council (NGOCC) chair Engwase Mwale when commenting on the failure to prosecute  Kasama Member of Parliamentary who has previously admitted beating his spouse :
And Mwale said her organisation was disappointed with Mwamba’s wife, Chama, for withdrawing the case against her husband. Mwale said NGOCC had expected Chama to lead by example in redressing the rampant violation against women and children through this high-profile case. “She has once again lost an opportunity to give women an opportunity to resolve to seek justice at the hands of difficult economic, social and cultural situations,” Mwale said.
Its clearly irrational to expect Mrs Mwamba to act. Her actions reflect what most people would do - which is act in their self interest. Why should we expect her to bear the cross for every woman? Ms Mwale's  highlights the flawed thinking of NGOCC. They do not seem to realise that any victim of gender based violence will always be in a weak position to act, regardless of their status in society. What NGOCC should be focusing on is to provide specific proposals that would help reverse domestic violence by relying less on victims. My policy suggestions are two-fold.

First, we need a new law relating to gender based violence that allows pre-court evidence to carry substantial weight in court proceedings. In the example above, it would mean what Mrs Mwamba said first time would have carried more substantial weight than what she then said after the husband and relatives pressured her. We can justify this change if we all accept that domestic violence is a crime not just against the individual but society - it demeans us all. While making that change, we might also explore other issues around "burden of proofs" and the possibilities of " financial penalties" paid into a "victim's fund".

The second change is the need for special domestic violence courts. It appears that our courts may not fully realise the special nature of some of these cases, especially the cultural and economic angles. We need to experiment with tailored judicial proceedings. The reason why many people do not take these cases forward and choose to suffer in secret is that the process is too long and unpredictable. If we can make the trials quicker we are  likely to see more women come forward.

I will have a lot more to say on this issue in the future, but this is what NGOCC should be focusing on. Coming up with cost effective alternatives. Let us quit blaming victims like Mrs Mwamba and focus on how we can help them.

Quick notes

The IMF recently nodded a gigantic Chinese loan to Ghana aimed at finance Ghana's oil and gas infrastructure and agricultural development.

Jagdish Bhagwati on why the attempt by some NGOs and activists to impose a straitjacket on corporate social responsibility  is misguided and must be rejected.

Zimbabwe's Econet Wireless recently launched its mobile broadband package to 4.5 million subscribers after spending $100m on upgrading major cities.

Perpetual Sichikwenkwe on how the lack of land reform continues make Zambian women vulnerable and are effectively "forced to farm for free".

Saturday, 6 November 2010

Does 2011 belong to the youth?

The current electorate is the remnants of the electorate that registered in 2005. Many 2005 voters have died, lost or sold voters cards, or migrated in search of work. What remains is hard core that is not necessarily representative of the voters register that will emerge from the ongoing registration exercise. They are few in number – in the case of Chilanga the turnout was only 23 per cent versus the 65-75 per cent one would expect from a recently compiled roll. And their demographic profile is perhaps different from what is to come - none of them are younger than 22 years old, for one thing.
Guy Scott on the potential role of the youth in 2011. You can read the rest of the piece here.

Thursday, 4 November 2010

Death Penalty, 4th Edition

Conrad Mbewe on the death penalty :
The basis of punishment is not how successful it will be in rehabilitating the offender but rather whether it is fair with respect to the crime committed. In other words, the basis of punishment is justice. In the domestic sphere, our punishment is really a form of corrective discipline. The parents’ chief interest is not justice but the positive changing of the character of the child. But that is not the job of the judiciary. The work of the judge is to ensure a correct interpretation of the laws enacted by the legislative arm of government, to acquit the innocent (i.e. those who continue to obey the laws), and to prescribe fair punishment on those who break those laws.

So, whether the punishment meted out will reform the convicted criminal or deter other would-be offenders is not the business of the judiciary. The one question they should ask themselves is: “Does this punishment fit the crime that has been committed?

Once we are clear about the basis of punishment, then we are ready to address the question of the death penalty. The one question we must answer is: “Is it fair to take away the life of person who maliciously takes away the life of another person?”
The first part of the argument is broadly correct. The correct basis for "retributive justice" is just punishment. The issue is not rehabilitation but whether the punishment fits the crime.

The only problem I have is that Mbewe's argument remains incomplete because "who" determines the punishment is really what has always been at stake. It is not the judiciary, but the people (as he rhetorically states at the end). Many European nations that oppose the death penalty believe, right or wrongly, that society can always decide that a life taken does not deserve another one. Since both camps appeal to the "will of the people", at this point we must then ask are abolitionist countries like Sweden less just or more just than Zambia with its death penalty? It would appear that without a common objective standard across Sweden and Zambia, both would could be deemed just.

Mbewe's argument would have been more cogent if he had argued that the residual control of life lies in the power of the Creator and therefore only he has the power to take it. Anyone who takes another life forfeits theirs. I do not believe there's a cogent case for the "death penalty" outside a theistic framework. The reason is that without a theistic framework one has to deal with a problem of subjective moral values - which renders any form of justice impossible. Mbewe tries to deal with this problem by appealing to natural law "thankfully, fairness is not a preserve of those with university degrees in law. Even a child has an inborn sense of justice". But is the child born with the sense of just punishment? The child knows when she is wronged, but she wont naturally know what the appropriate "corrective" response to that wrong is. Moreover we cannot be certain that every child will have the same view.  Therefore, justice is not some inner thing we have, it is externally generated. A gift of the Creator in the natural order. This has been ably demonstrated by Nicholas Wolterstorff.

Update (6 Nov 2010) :

Conrad Mbewe's response below, as posted in our exchange on his website :
I have ready your incisive observations on your website and was tempted to post my response to you on the Zambian Economist. However, I thought I should first do it here. I agree with you that a rational basis to uphold the death penalty finds its strongest foundation in a theistic framework because values there are absolute. For instance, in that framework you can argue for a priceless value of human life on the basis that humans are made in the image of God.

However, given that I had fifteen minutes in a context where others together had a good three hours, I needed to confine myself to that which was already common ground with the vast majority of my hearers--common sense. In my booklet, "The Death Penalty--True Justice of Archaic Folly," I work from a theistic framework and my arguments are more formidable. Again, thank you for your observation!

Wednesday, 3 November 2010

IMF - Zambia Watch (Nov 2010)

Statement by the IMF Staff Mission at the Conclusion of a Visit to Zambia
Press Release No. 10/411
November 3, 2010

An International Monetary Fund (IMF) mission visited Lusaka October 28-November 3, 2010 to continue discussions for the fifth review under the Extended Credit Facility (ECF). The mission had fruitful discussions with Hon. Situmbeko Musokotwane, Minister of Finance and National Planning; Dr. Caleb Fundanga, Governor of the Bank of Zambia; and other senior officials.

Tuesday, 2 November 2010

Pf Policy on Agriculture

We have yet to see coherent policy propositions from the parties vying to rule Zambia for the next five years. Ideally, we should now be seeing emerging policy papers from the parties that test "the ground" with the electorate so that when their manifestos are finalise they would truly be "people driven". But clearly we are far from the "ideal democracy", so our people must be content with crumbs that fall off from interviews. We had another crumb this week with a hint of what PF agriculture policy might look like :
On agriculture, Sata said maize marketing and credit finance under the MMD government has disadvantaged small and medium-scale farmers due to lack of credit and the determination of the floor price of maize by the government without taking into account the production costs incurred by farmers.

Monday, 1 November 2010

Inflation Statistics - October 2010

Click to enlarge

The annual rate of inflation, as measured by the all items Consumer Price Index (CPI), reduced to 7.3 percent in October, from 7.7 percent in September. The 0.4 percentage point decrease is attributed to the "reductions in the cost of non-food items". More detail via the CSO Monthly Bulletin.

Sunday, 31 October 2010

Australia's bright mining future

The country is benefiting from rebounding commodity prices in its key exports, such as iron ore and coal, with China and India predicted to continue fueling strong demand in the future.....They [IMF economists] also recommend saving revenue windfalls, which would build a buffer against any sharp fall in commodity prices and permit those automatic stabilizers to operate during downturns. The economists also welcomed the planned introduction of a mineral resource rent tax as “a step in the right direction.” Tax reform could play a key role in allowing Australia to reallocate resources to the mining sector, and to take full advantage of the mining boom. They recommend that the new minerals tax could be broadened to cover other mineral resources beyond iron ore and coal.
Excerpt from the IMF summary on Australia's 2010 Article IV Consultation—Staff Report. The IMF praise for Australia's higher taxation proposals (trailed here) is interesting. No only do they welcome it, but they ask that these taxes are "broadened" to cover other minerals. 

A Parastatal Horror Show (National Airports Corporation Ltd)

We continue with our on-going series highlighting the horrors from the Report of the Auditor General for 2008 on Parastatal Bodies. The 2005 report had some very shocking things to say about National Airports Corporation Limited (NACL) :
In paragraphs 52 to 61 of the report of the Auditor General for 2005 on the accounts of Parastatal bodies, mention was made of the non declaration of dividends and non payment of taxes by the Corporation due to its poor financial performance. Mention was also made of the poor liquidity position, increased cost of borrowing, irregular payment of Christmas bonuses, outstanding pensions and failure to follow tender procedures among others.
Have things improved? No. It appears NACL continues to be a poorly run organisation whose position regresses with every AG report.

Losses :
"It was observed that although the Corporation recorded profits in the financial year ending 31st March 2006 and 2008, losses of K3.77 billion and K16.05 billion were incurred in 2007 and 2009 respectively".
Irregular payments:
Forty nine (49) payment vouchers in amounts totalling K241,442,834 and four (4) payment vouchers in amounts totalling US$16,308.28 were inadequately supported in that they lacked receipts, acquittal sheets or other supporting documents.
Poor procurement:
On 3rd April 2008 NACL awarded a tender for the supply, delivery, installation, testing and commissioning of 800 KVA Three Phase 50Hz 1500 RPM Standby Generator Set at Lusaka International Airport to Sulmach Limited at a contract price of K1,410,000,000 with a delivery period of twenty (20) weeks. Works commenced on 14th May 2008 and were scheduled to be completed by 15th October 2008. A total of K1,142,003,600 (inclusive of an advance payment of K846,000,000) representing 80% of the contract price had been paid to the contractor as of August 2009 leaving a balance of K267,996,400 outstanding.....

A physical verification of the civil works carried out in August 2009, revealed that construction works had stalled as shown in the picture below and the contractor was not on site.
And we can continue....

Next Stop : National Heritage Conservation Commission 

Saturday, 30 October 2010

Administration Issues

Advance Notice : Annual Break 

To be aware that in line with established practice, I shall again be taking my break from blogging between 1st - 31st December. The annual break from blogging is a long time tradition which allows me to  recharge my batteries and take a step back and focus on other areas of my life. What this will mean in practice is that no new posts will be published between that period.

Zambian Elections 2011 Project

A number of you have asked on the status on the Zambian Elections 2011 Project. Unfortunately, it wont be possible to take forward the idea in its original conception. Although I received interesting proposals for papers (10 - 15 credible proposals), it is likely to be resource intensive (despite the delusions of some that this is a sort of political project, this website is only an hobby. I do actually have a real job, a family, a church and other areas of service).  So I did ask myself whether such a project would require scaling back on other things. The answer was Yes, and the sacrifice proved too great - under the original conception.

I do think though we need a dedicate election website (during the three months of election campaigns) and we shall use that website in 2011, 2016 and beyond. It will be an independent source of relevant news, catalogue of promises, profile of candidates, election results, etc. 

Book Reading Goal : Week 39

Take Your Glory LordSince the last update, I have been able to read two additional books. First, I picked up a little biography of William Duma (1907 - 1977), Take Your Glory Lord by Mary Garnet. Duma was one of the most dynamic Baptist preachers in South Africa. When Duma died in 1977 he left behind a vibrant legacy. He had been the Moderator of the Baptist Convention (for black Baptist ministers), his work had been recognized by Christians all over southern Africa, yet he remained a humble servant of God to whom he attributed the success of his work.
Forgotten God: Reversing Our Tragic Neglect of the Holy Spirit
The other book I picked up was Forgotten God by Francis Chan. It examines the tragic neglect of the Holy Spirit in the church today. I picked up this book after listening to the introduction via a free audio version.

In general I am making quite good progress :

Book Reading Goal Review
Books Read So Far : 33 books
Remaining Books to Achieve Target : 17 books
Weeks Remaining to Achieve Annual Target : 9 weeks

How do the books I have read so far break down?

Economics and related disciplines : 12 (36%)
Zambia / Africa related : 7 (21%)
Christian Literature : 12 (36%)
Fiction : 2 (6%)

We are a little low on "Zambia / Africa" related literature. Will be looking to up that in the remaining weeks, if possible!

Thursday, 28 October 2010

It's prosperity Jim, but not as we know it!

That I suspect is what Lt Spock would say after reading the newly released Legatum Prosperity Index 2010. If Zambia has been prospering in recent years, as some constantly tell us, we don't see it from the LPI, especially with regards to health :
Zambians suffer from extremely poor health. They have the third lowest life expectancy, when adjusted for healthy years lived, of 35 years. A high 10% of children die before their first birthday and more than four in 10 people are malnourished. Only 80% of children receive vaccinations for infectious diseases and just 85% are immunised against measles, placing Zambia in the bottom quarter of the Index. Health expenditure is the 10th lowest on the Index at just $85 (PPP) per capita. Only half of the population has access to adequate waste disposal facilities and just 55% of people are satisfied with the quality of their water. There is a below average supply of hospital beds. Zambia places in the bottom 10 on the Index for the exceptionally high incidence rate of TB and also the high number of deaths caused by respiratory diseases. Zambians do not feel very healthy: according to a 2008 survey, fewer than eight in 10 Zambians express satisfaction with their level of personal health, placing the country 72nd. Less than two-thirds felt well-rested on the previous day and more than a quarter reported health problems that affected their daily life.

Tuesday, 26 October 2010

Developing countries and the world economy

Dani Rodrik argues that it is not certain that developing countries will become the engines for global growth. If the global centre does shift only those countries that adopt growth strategies based on stimulating domestic structural change will do well :


In the early days of the global financial crisis, there was some optimism that developing countries would avoid the downturn that advanced industrial countries experienced. After all, this time it was not they that had engaged in financial excess, and their economic fundamentals looked strong. But these hopes were dashed as international lending dried up and trade collapsed, sending developing countries down the same spiral that industrial nations took.

But international trade and finance have both revived, and now we hear an even more ambitious version of the scenario. Developing countries, it is said, are headed for strong growth, regardless of the doom and gloom that has returned to Europe and the United States. More strikingly, many now expect the developing world to become the growth engine of the global economy. Otaviano Canuto, a World Bank vice president, and his collaborators have just produced a long report that makes the case for this optimistic prognosis.

Monday, 25 October 2010

Harsh!

"Great Britain decolonized the African country of Zambia in the mid-20th century. China has recolonized it in the early 21st. The story is the same throughout the Third World from Sudan to Kazakhstan: China invests in a poor country in return for strategic benefits, usually an oilfield or a mine. Besides getting cash, local dictators get a weapons dealer and a protector at the United Nations..."
Toronto Sun's Ezra Levant using Zambia as the poster child of new Chinese led colonialism. In a recent review of The Beijing Consensus, I note the complexities of assessing Beijing's thrust on our nation. On the one hand the Collum coal incident reinforced the vision of a nation helpless before Beijing, on the other hand we have not seen tangible evidence of a country being intentionally transformed in Beijing's image. The sort of "black and white" pronouncements by Mr Levant is one which needs to be rejected for more sober assessment. China is not intentionally setting out to colonise Zambia - a sharp contrast to British foreign policy in the 19th century. As Halper rightly argues, Beijing's activities in Zambia are reactionary shaped by incentives at home, which gives our leaders sufficient potential to bargain, if they so wish. 

Sunday, 24 October 2010

This independence day..

The Council of Churches in Zambia  have some important words to share with you as you celebrate the past and look forward to a brighter tomorrow : 
It is our firm belief that Zambia is indeed a rich country with abundant human and natural resources. God our creator has blessed this nation with bountiful mineral resources which have a universal destination and are meant to serve the common good. We therefore need to be responsible stewards of God’s creation.

We can with satisfaction recall that on the eve of Independence 1964, the new Zambian Government secured arrangements that guaranteed that the rich mineral resources of this country could be made available for the improvement of all the people of Zambia. While it is true that our nationalised mining industry had over the years a mixed history of efficiency and inefficiency, at least the principle had been established that Zambian resources should be exploited for the benefit of all Zambian citizens.

Unfortunately, since the privatisation of the mines required by the Structural Adjustment Programme (SAP), this principle has not been respected. Often times, contracts have been secretly negotiated, advantages have been disproportionably awarded to foreign investors, environmental regulations have been postponed or poorly implemented, accountability has been compromised and a fair tax regime has not been put in place. At the same time, we insist that the government puts in place a legal framework that safeguards the safety and interests of workers who often seem to be mistreated by some investors. These concerns need to be urgently addressed by the government, the investors and all the key stake-holders.

We are also disappointed that the Government has steadfastly refused to offer what we and many others in the country could consider a credible defense for not taxing the mining industry in an equitable fashion. Proposals for a fair “windfall tax” have been summarily dismissed. There is need to explore mechanisms of transparency and accountability regarding tax payments currently being made by mining companies. We therefore call upon the President to summon a national “indaba” for a public evaluation of our current taxing regimes with the view of promoting greater efficiency and equity.

Moreover, serious concerns are currently being raised about the safety of uranium mining in Zambia, concerns that have not been adequately addressed by the Government. These concerns deserve fairer treatment and should not be dismissed as coming from ignorant or politically inspired sources. We call upon Government to design and publish specific guidelines on mining safety, health and protection of the environment that oblige uranium mining companies to protect communities and mine workers from the harmful effects of radio-active mining.
I continue to be impressed with how many of things we have be pushing for a long time are now being echoed by everyone. You can read the whole thing here.

Saturday, 23 October 2010

Robbing the poor

The M’cheleka Irrigation Scheme was meant to answer water and food security challenges in the Chadiza district of Zambia's Eastern Province. But ten years after the completion of the dam wall, only six families are benefiting from the water. It's an indication that in some cases the water crisis is due as much to poor governance as to actual lack of water resources.....

When construction of the M’cheleka dam wall was completed in 2000, Hastings Mbuzi and hundreds of other villagers in Chadiza thought they would soon be rich. They would no longer need to travel long distances to other parts of the province to buy food....But the dam filled with water and then stood there, unused. The villagers waited patiently, hoping something could be done.

In September 2008, it seemed a breakthrough had been achieved when the government released 190 million Zambian kwacha (about $40,000) for the completion of the project....But two years later, a report from the Office of the Auditor General (OAG) shows that while money released through the District Agriculture Coordinating Office in September 2008, and documents show it was all spent, the project on the ground remained uncompleted.


Extract from an IPS piece on the colossal failure of the M'cheleka Irrigation Scheme to benefit the poor. In the words of one Mbuzi, "All we know is that the money was released to the district agricultural officials to purchase material for the construction of the canals".

A portrait of poverty

We stop over at a newly constructed market shelter. The market was built by the former mining giant ZCCM. There is also a community library which lies empty and a play park for children. But the market shelter, which has 24 stands, only has five old women trading there. The oldest of them is 74-year-old Stellia Jere. Stellia had 10 children, but they have all died. The last one died in June. She now takes care of five of her grandchildren. “Most of the people prefer trading from the streets in town, but I don’t have the strength to run away from the council police,” she says when I enquire about the empty stands.
Excerpt from another excellent piece by Jack Zimba -  Living on less than a dollar a day. It paints a harrowing  picture 46 years after independence. Readers will be familiar with my advice that we must always measure the effectiveness of  our policies by how they affect "the grand mother in Samfya looking after many orphans". Stellia Jere is typical of that Zambian woman doing all she can to make a difference in face of impossible odds. 

Friday, 22 October 2010

The Beijing Consensus, By Stefan Halper (A Review)

The Beijing Consensus, By Stefan Halper
A Zambian Economist Review


The Beijing Consensus: How China's Authoritarian Model Will Dominate the Twenty-First CenturyA week never passes without hearing something about China’s rising dominance. The eastern dragon is beginning to dominate international economic and political relations, and with that exposure comes greater global scrutiny. Everyone has an opinion about China’s place in the world. Is China colonising Africa? Will it initiate global disorder, like empires before it?  Will the dragon implode and vanish causing wider global insecurity? These questions reflect not only the fear of change but also points to the fact that the rest of the world does not really understand China nor are we able to come up with the definitive answers about its future. Faced with such a vacuous knowledge the narrative about China’s place has largely been scripted by ignorant and an impatient media with little time to study the difficult questions. This has produced a rather unhelpful black and white juxtaposition. You either for China’s rise or against it.

Thursday, 21 October 2010

The government's case for low mining taxation

The Minister of Mines and Minerals Development recently delivered a response on all the mining issues raised. Nothing new here but government's strategy appears to be that give people the jobs and they'll keep quiet :
Mr Speaker, I thank you for allowing me to contribute to the debate on the President’s Speech which was delivered on the occasion of the Official Opening of the Fifth Session of the Tenth National Assembly....Sir, as mentioned in the President’s Speech to this House, mining will continue to contribute to the stability of our economy, job security of workers and for all Zambians to enjoy the prosperity this sector brings. In this regard, the mining sector still remains the main driver of the country’s economic development. The sector’s contribution to Gross Domestic Product (GDP) has been on the increase. It stood at 11 per cent in 2009 compared with 8.2 per cent in 2008 and 8.5 per cent in 2007 and contributes about 80 per cent to the country’s foreign exchange earnings. The target is for the mining sector to contribute in excess of 20 per cent to GDP. How will this be achieved?

A refreshing contribution

It is refreshing to read this contribution in parliament by Hon Simuusa on Zambia's mining fiasco. It is a comprehensive assessment which echoes line for line much of what we have discussed here :
Madam Speaker, in my debate, I will concentrate on the mining sector because as the President said, it is the backbone of this nation....as regards the mining sector, on three occasions, the President, on page 11, spoke about increased production. He praised the Government on the increased production and claimed the glory.

Madam Speaker, in the recent past, I have seen this phenomena of boasting about how Zambia’s copper production is increasing and that by the year 2011, our production levels will have gone back to the levels of the 1990s. Why are we boasting about this increased production?

My colleague, the hon. Minister of Mines and Minerals Development has been boasting about how we are improving our production in the media. Whenever I hear that, I touch my head in embarrassment....This is because I wonder why we boast about production which is not ours. That money is not ours.

The Chinese and Indians can boast, but not us. We have allowed 100 per cent externalisation of all the mineral proceeds. When it comes to tax, we have said, over and over again, that we are not gaining any benefits from the mines.

The social cost of our mines..

I would strongly urge the hon. Minister of Finance and National Planning, whom I think is the right person to do this, to conduct a detailed social cost-benefit analysis of the taxation system of every dollar made on the copper that leaves this country or every dollar that comes into this country from the sale of copper. He needs to do this for our benefit, the benefit of the people of Zambia and in particular we, their representatives. We need to know how many ngwees or cents of that money is expended on the Zambian infrastructure, Zambian education system and the Government’s general revenue. What is our share of our own wealth as it goes out of the country, not in vague terms of a few thousand jobs here and there, but what are we actually getting as a country?
Guy Scott echoing a point I have been making for sometime. When looking at the appropriate fiscal system for the mines one needs to adopt a "social" or "societal" approach. At present it is very much the case that mines are subsidised since they are free riders of social infrastructure. There's good reason why the government has never undertaken the sort of cost benefit analysis proposed by Mr Scott, it would be negative due to the gigantic revenue leakage from the system. We don't even need to do this for existing mines - a simple CBA for a new mining would also be negative. I have reviewed carefully all the Impact Assessments produced for the Environmental Council of Zambia, it is noticeable that not a single one does proper cost benefit analysis for a new investment. Now, I don't think that is because the ECZ is not aware of the need for thorough analysis or has no access to experts to quality assure the Impact Assessments submitted to them, its just that they don't care.

Lusaka Basic Needs Basket - September 2010

The latest Lusaka Basic Needs Basket and the associated press release for September 2010. In September the basic needs basket for a urban family of six stood at K2,850,680  (or US$576).
Lusaka Basic Needs Basket - September 2010

Something positive

The Zambia Revenue Authority has now started to publish aggregate statistical data on taxation and other issues. This is a good development, though the data needs to be more accessible in different formats (e.g. excel). It was painful just to put the chat below together - click to enlarge (real comparisons reveal very interest results - not shown below but will let others have a go). Hope it will be updated more regularly.


Update :
In case you are having trouble locating the tax data. The link is above and can also be found here (at the bottom of the page you will see options e.g Taxation, GDP. Click on one of those).