A wonderful Op-ed from Michael Sata gives a glimpse of his vision for Zambia. A state led capitalism for adequately defined areas where the role of the state is paramount :
"a synergy between foreign investors, the government and local investors is one that can propel Zambia to the heights of South Africa and Ghana once well nurtured".Interestingly, Mr Sata draws a direct link between lower taxation and greater state involvement in strategic sectors :
"we could lighten the burden on taxpayers by cutting down your taxes and become a healthier and happier nation if we had some other form of income other than squeezing the already squeezed formal sector by holding small shares in state companies just like our friends in the west do".As for which sectors, the list appears comprehensive :
"It is through the partial ownership of state telephone companies, power companies, health funds, mines, pension funds and so on and so forth that they lead a quality life and they enjoy longer life spans than us".Then comes the question of how this would be implemented. There's the leadership hypothesis :
"Rupiah Banda on the other hand wants to auction the entire country in the name of efficiency when we can hire highly qualified private sector managers and pay them well enough to profitably run state enterprise: The British hired an American to turn around their railway underground system, Australians hired an American to run their billion dollar Telecoms company…we can join the queue..".Taken together Mr Sata's contribution is timely and well informed. A lot of people are asking what is the PF-UPND approach to economic management? What is their vision for Zambia? I think in this article he makes it very clear that he has a different vision for Zambia. A departure from MMD neo-liberalism to more state led capitalism. We have a clear break now between these two parties. A conflict of ideologies. That said, I think there are some areas where we still need more answers regarding this vision of state infused capitalism. While Mr Sata ably demonstrates the many flaws with the current approach and offers examples of where state owned companies have been successful, difficult analytical issues remains. I appreciate he was not writing a manifesto, but it would be good if having laid the ground the next debate can now move to the tougher issues.
On this I have several observations. First, in order to implement effective state led capitalism we need to be clear on what sort of ownership or organisational structures that would be pursued that would lead to successful state led / supported enterprises. We must understand why Zambia Airways failed but Singapore Airlines is very successful. Then there’s Mr Sata list of "strategic industries". Secondly, we must be clear how one go about distinguishing areas where the state should or should not consider direct production. For example, we should ask, why should the state look for partnership in mining and not tourism? Thirdly, there's need to resolve the complicated problem of government taking part in markets where private players already exists and the problems that has for regulation (a state funded ZAMTEL competing against private companies in a market regulated by ZICTA is not ideal). Finally, we must be more cautious on the "leadership hypothesis". It is true in many parts of the world capable managers have been able to transform corporations, but as I have noted previously it is not as simple as simply picking a qualified person. There has to be political will to make these companies operate independent of political actors and there's need for effective contract designs.
These of course are difficult issues and highlight the need for good analytical input in decision making. In short Mr Sata's vision can work but needs good economic and business advisors around him to translate them into effective policies. When Mr Sata said houses could be built within 90 days many people laughed, but everyone living in the West and the Far East have seen structures come into being in less than 30 days! This time round it must be hoped that rather than debate impracticalities we shall all start dreaming how to make some of these ideas into being. We shall dream solutions not why ideas cannot work. This applies to all ideas from either end of the political spectrum.