Most Read - September 2010

The most read posts of September 2010 :

• The Red Card Movement
• PF Policy on Mining Taxation? 
• Process, Process and Process!
• President Banda : Parliament Speech 2010 (Transcript)
• Linking Zambia (Mwanawasa Foundation)

Straight talking...

This is not a good example of it :

[Akashabatwa Mbikusita-Lewanika] said the company has been facing some challenges in the last 20 years because of dynamism in the local, regional and global economies and the politics and philosophies that had evolved with time.

"TAZARA is coming from a peak performance of transporting above one million metric tonnes in the early days, averaging around 600,000 metric tonnes from the late 1990s to 2006, down to the lowest performance of 300,000 a few years ago," he said.

In the same article Mr Lewanika is looking for more investment - hopefully not tax payer funded because government has failed to run our railways and that first paragraph can do with more blunt speaking.  We have previously touched on the TAZARA mess here.

Ouch!

[Zambians] do not need more one-man parties. Let us be clear, Magande has no political following. The man even struggled to win the Chilanga seat. Chipimo is a political novice while Milupi thinks his success in leading the public account committee (PAC) in the National Assembly is proof that he can win the next elections.

The Panel on the continuation proliferation of weapons of mass delusions! Incidentally, the same post has this great understatement : "there are already more than 10 existing opposition parties with the leading parties being PF (Sata), UPND (Hakainde) and UNIP". I would imagine there are atleast 30+. Perhaps Angola's political death certificate is the answer to incentivise competition, all things being equal.  

Another day, another party, 7th Edition

This perhaps must be one of the most boring threads we have, nevertheless it is vital we put it on record that yet again another party  is allegedly in the works  - the name is purported to be National Movement for Progress. In a recent interview with The Post, Mr Magande appears strangely obsessed with becoming president in 2011 :

Kombe: And finally is it next year or it’s 2016?
Magande: For what?
Kombe: Magande for President?
Magande: The maize is rotting now you want me to come in 2016? ……It is now.

Delusions of grandeur I would say. I have always said that the electorate should be wary of those unable to make accurate political calculations. I say that because the economic calculations will not come as natural to them.

Related posts:

Another day, another party, 6th Edition
Another day, another party, 5th Edition

Another day, another party, 4th Edition

Another day, another party, 3th Edition

Another day, another party, 2th Edition

Another day, another party, 1st Edition

Lusaka Stock Exchange (Reuters Press Release)

Lusaka Stock Exchange - Press Release

The challenge of rural sanitation

A short WaterAid video presentation on how the lack of toilets in our rural areas affects the health, education and economic wellbeing of our people.

International political lessons...

The Post on international lessons for the Pact :

It is always good to study the way other people do things and learn some lessons. This is because we don’t live in a vacuum. The United Kingdom has just recently formed a coalition government which brought together two unlikely bedfellows – the Conservatives on the one side and the Liberal Democrats on the other. We are not saying that the situation that obtained when the Conservatives and the Liberal Democrats came together is the same as what is happening here, but there are some principles that could help us to better understand what is happening in the PF-UNPD pact.

We said as much earlier this year - see International lessons for the UPND-PF pact.

I have to say what has been most puzzling about the now defunct PACT is the collective failure to articulate a coherent policy platform by UPND and PF. Their supporters will say, "ah but the MMD would steal our ideas". Nonsense! So if they did, isn't that a good outcome for everyone? What is wrong with coming up with ideas which the government of the day steals and adopts? Isn't that the whole point of an opposition? To generate ideas that the party in government is either forced to adopt or is persuaded to adopt because in both cases the incentives are just too powerful for inaction?  I would also say it is not "optimal" in the long term for MMD to keep stealing ideas anyway because sooner or later people will realise that MMD has no intellectual drive. So this excuse by the opposition supporters is hollow. 

Also I don't think the MMD would steal any ideas by the opposition unless there's no ideological differentiation - in which case, why have multiple parties? Indeed, MMD cannot steal ideas from the opposition because I believe even in government their policies are drafted by multilateral institutions and foreign donors. There's no indigenous Zambian driven policies there. So we have two parties who can't generate ideas and another which is dictated to. How many years have we been "independent" now ?

Investment Watch (Energy)

The government is apparently in discussions with Exim Bank of China to fund construction of the Lunzua Power Station in Mpulungu at $37m.  Exim has agreed to fund 85 percent of the works and 15 percent will be funded by government, although Exim has been "slow to fulfil its commitment". The timing of the "announcement" of course coincides with the politics of the by-election, so it should be treated with caution. This could be another mirage.

Book Reading Goal : Week 34

I have a huge amount of unread books on my book shelf. At present it appears I have a book arriving in the post every other day. In fact if I manage to read all of them, I would have finished my book reading goal! But not to get ahead of myself just yet. Still some way to go! This week I did manage to finish two small books (as in less than 300 pages combined). Both of them externally recommended.

The first was actually recommended by my young brother! I had managed to get a free book audio for it, listened to it and then read it. After reading The Pursuit of God by A W Tozer I now understand why it is regarded as a classic and a must read for every serious follower of Christ.

The second recommendation I have read is Preaching - Pure and Simple by Stuart Olyott. I have not yet started preaching but will do from January 2011. At present I am learning the ropes through attending monthly sessions on the same and sharing bible studies, etc at my local church. Its a book I strongly recommend for anyone who feel called to serve through expositional preaching.  I was delighted when I got to the end to find that another person who recommended the book was a fellow Zambian - a certain Pastor Moses Kasefu. Separately, I am hoping to meet the author at a lecture he'll present next week.

Book Reading Goal Review
Books Read So Far : 28 books
Remaining Books to Achieve Target : 22 books
Weeks Remaining to Achieve Annual Target : 14 weeks

Mine Watch (Various)

There has been a spate of recent stories regarding mining. Thought it was worth pulling these together.

Peru’s leading copper miner, AAC Mining Executors has allegedlyy invested more than USD 20 million in Zambia to increase production of the metal as it expands outside Peru. The company is seeking further expansion because "high copper prices on the international market had seen the rise in Zambia’s mining profile with major mining firms running to them for help".

Mukuba Resources, exploring for copper in Ndola, has confirmed the presence of copper mineralisation after the announcement of assay results from the first eight boreholes drilled on its Northcore Project on the Copperbelt. The firm said assay results from boreholes drilled at targets 17 and 18 on Northcore Project, arose from the first phase of the company’s 2010 drilling programme. Detailed results via MarketWire.

On the uranium front, American mining firm Denison recently that it will start its uranium mining project in Zambia in 2012 "once prices of the metal on the London Metal Exchange (LME) picks up". The government granted Denison two large-scale mining licenses for uranium mining in 2008.

Finally, reports of miners in North Western province forming a rival miners' union group, Allied Workers Union of Zambia, to represent workers at Kansanshi and Lumwana Copper Mines. According to one source, "The new union has been meeting various government officials who have promised them support; the current government is uncomfortable with the two unions in the Copperbelt because they have been opposing government policies".

Zambia Weekly - Volume 1, Issue 24

Zambia Weekly - Week 38, Volume 1, 24 September 2010

2011 campaign begins!

Rupiah Banda 2011 team has moved into gear - they have a new website and a new YouTube Channel. This is a positive and exciting development. It is good to see the republican president leading in recognising these new mediums. I am sure he'll have a Facebook and twitter pages too!

On the YouTube Channel Mr Banda makes his case for re-election. The current three videos are embedded below for convenience:

Luapula Manganese, 6th Edition

"We have a lot of battles going on over land; people's right to land is being violated by manganese miners, time and again...we are handling about 20 complaints per week on average, and so far we have had more than 500 people evicted [since 2009] in various parts of Mansa as a result of manganese mining"

Zambia Land Alliance's Ignatius Musenge on how manganese mining prospectors in Luapula Province are forcing small-scale farmers from their land at gun point, according to villagers. The manganese companies continue to come under significant scrutiny including their alleged evasion of taxes. 

Public audit lessons from Kenya

How will the new Constitution affect Kenya's accountability on public finance?

In the new constitution, the process of appointment, qualifications, period of service and roles and responsibilities of the Auditor General are well defined. The performance of the Auditor General will be scrutinised by parliament and county assemblies with the audit reports being submitted to these two organs. The new law provides that within six months after each financial year, the Auditor General shall audit and report on the spending by the national and county governments. The reports are to be tabled to parliament or county assemblies where they will be debated and considered within three months of submission. This gives a defined timeline of nine months for the audits to be concluded.

This will be a complete contrast from the current practice where audits are carried out years later, making the audit findings difficult to follow up on.

The big question, however, is: what can the Auditor General do to comply with the new timelines? The options available are either hiring more trained auditors, or outsourcing some of the audit tasks to private firms. In the end, irrespective of which option taken, there will be demand for skilled accountants and auditors to undertake the required audits.

This appears a cardinal invention and one which we should emulate. It does not make sense in 2010 to be reading an auding report about 2008! The problem of course is having it in "law" is not the same as actually making it happen. We have many good laws on our books (as presumably do the Kenyans), the problem is enforcing them. You can read the entire piece here.

Million Dollar Baby

Quick notes

A political marriage in Namibia. The Rally for Democracy and Progress (RDP) and the Republican Party (RP) recently merged to and form a single political party, under the theme - "together we do better".

IPS reports on the alleged encouraging signs that Africa's agriculture is set for rapid growth, raising living standards for millions of farmers.

The Economist on why Mozambique's "angry poor" took to the street. More analysis on the same is presented by IRIN on the "urban ignored poor".

Some "analysts" are predicting that Zimbabwe would be thrown into serious political turmoil if Sir Bob of Harare  dies in office. We have previously touched on this here - Musings on A Post Mugabe Zimbabwe.

A new 76-milie road in Katine, north-eastern Uganda, has caused a building and business boom in one of the country's poorest areas.

Talakata Review (A Response by Princess Nyirenda)

Princess Zindaba Nyirenda has now kindly responded to the review of Talakata published here - Talakata, By Princess Zindaba Nyirenda (A Review). I am grateful for her willingness to engage in this intellectual exchange and to put her perspective on things. She raises some important points which I hope to respond to in due course :

Talakata Review (A Response)

President Banda : Parliament Speech 2010 (Transcript)

The full transcript of President Rupiah Banda's speech to Parliament earlier today - Friday, 17 September 2010. Comments to follow :
President Banda : Parliament Speech 2010

Zambia Weekly - Volume 1, Issue 23

Zambia Weekly - Week 37, Volume 1, 17 September 2010

A Parastatal Horror Show (Mulungushi University)

I was rather surprised to see the funding structure for Mulungushi University set out in the latest Auditor General (AG) report. When the university was created by President Mwanawasa it was announced that this was going to be a great model for public private funding (PPP) of the university education. The government burden was going to be limited and much of the funding was going to come from the private sector, with Konkola Copper Mines (KCM) named as a major contributor. A quick look at the funding sources for Mulungushi in the report reveals a different picture. Government funding in 2008 was 75% (K44bn). KCM contributed a mediocre 6%.  Its not that I expect KCM to fund these institutions, I am just baffled by the spinning machine. At the time this was hailed as a great form of corporate responsibility, which it clearly isn't.

The larger government funding undoubtedly explains why it suffers from the many problems we have seen in other parastatals. We have the customary lack of preparing financial statements : "contrary to the University Act, the accounts for the financial year ended 31st December 2008 were not ready as at 31st December 2009". Perhaps not too surprising considering those in position hold the position illegally (as in contrary to the Laws of Zambia) :

Contrary to the provisions of the University Act, which requires the Minister to constitute a search committee to advertise and select the Vice Chancellor and Deputy Vice Chancellor, a search committee was not constituted. In response, management stated that the appointment of the Vice Chancellor and the Deputy Vice Chancellor did not strictly comply with the provisions of the University Act because it was a new University and their appointment preceded that of the Council and that the Chairman of the Council had since written to the Minister of Education requesting him to appoint a Search Committee for the formal appointment of Vice Chancellor and Deputy Vice Chancellor.

Where you have irregular appointments you will also see irregularities in financial matters (no honourable man occupies a position illegally). We find self enrichment :

A review of records revealed that in 2008 additional furniture valued at K26,699,000 and K66,963,000 was procured for the residence of the Vice Chancellor and registrar of the University respectively. This was contrary to their conditions of service which did not provide for a fully furnished accommodation....

In the first year of operation of the University, all employees were given one year contracts. A review of the contracts of employment revealed that officers were only entitled to repatriation in the event that the contract was not renewed. However contrary to the clause in the contracts, repatriation allowances in amounts totalling K462,000,000 were paid to ninety seven (97) employees who had their contracts renewed.

These of course are in addition to the usual triad of unvouched expenditure (K1.8bn); unretired imprest (K0.3bn) and failure to follow tender procedures in expenditure worth K1.0bn.   As we go through this I hope readers are beginning to appreciate that our poverty is self inflicted. There's money leaking through the system with every parastatal / agency. When will the rot stop? What worries me is that this is an educational institution. We shall meet the other educational culprits (UNZA, etc) in due course. 

Next Stop : National Airport Corporation Limited

Previous Posts :
A Parastatal Horror Show (Judiciary)

A Parastatal Horror Show (Hotel and Tourism Training Institute)
A Parastatal Horror Show (Chambeshi Water)

A Parastatal Horror Show (Electoral Commission of Zambia)

Report of the Auditor General for 2008 on Parastatal Bodies 

Is Chinese Mercantilism Bad for Poor Countries?

Yes. According to Rodrik. China's undervalued currency has prevented developing countries from restructuring away their economies from low value primary goods to China-like high value manufacturing. The answer lies in these countries recognise inherent weakness of their current approach and consider using their exchange rates more actively in order to stimulate industrialization and growth (i.e. competitive devaluation that shifts the "burden" onto rich countries) :

Is Chinese Mercantilism Good or Bad for Poor Countries?, Dani Rodrik, Project Syndicate, Commentary :

China’s trade balance is on course for another bumper surplus this year. Meanwhile, concern about the health of the US recovery continues to mount. Both developments suggest that China will be under renewed pressure to nudge its currency sharply upward. The conflict with the US may well come to a head during Congressional hearings on the renminbi to be held in September, where many voices will urge the Obama administration to threaten punitive measures if China does not act.

Death penalty on trial

The Supreme Court has been asked to declare as unconstitutional a section in the Zambian Constitution that provides that anyone convicted for aggravated robbery while armed with a firearm should be given a mandatory death sentence. This is in a matter where Alex Njamba, who was sentenced to a mandatory death sentence by the Lusaka High Court on November 21, 2008, has appealed against his sentence arguing that the sentence was arbitrary and unconstitutional. According to the defence team the appeal was not a challenge to the death penalty per se, but rather it is "the mandatory requirement of death penalty" which allegedly "deprives the Judiciary of an essential judicial function in clear violation of the constitutional principle of separation of power".

Presumably this has repercussions not only for "death" penalty but on all mandatory sentences. At the heart of the debate is whether the Legislature and Executive (by specific statutory instruments) have the power to set mandatory sentences for crimes. I think there are actually two ways to look at this issue. The first is whether government is acting unconstitutional or not. It clearly isn't. The Legislature is tasked with setting the laws of our country - it is the only body that is directly reflects people's preferences. If it decides that judges should be harsh on certain crimes, that is not unconstitutional. The Judiciary of course also makes "laws" through precedence but that is within the limit defined by the Legislature.  A related question is whether it "makes sense" to have mandatory sentences.  I think that is a harder question because the whole purpose of mandatory sentences is to remove discretion of judges and guarantee minimum applications of retributive justice. This may especially be the case where judges are too liberal relative to the population.

That said, I should note that it is folly to have a death penalty for "anyone convicted for aggravated robbery while armed with a firearm". The death sentence may be better justified where life is taken - "a life for a life". Putting someone to death for armed robbery is shocking to say the least. We have previously touched on the death penalty here and here.

A rare event

"I am not happy that we are wasting money on a very unnecessary exercise. And even if I were to contest, I would be wasting my resources on a very unnecessary exercise. Very soon, it will be rain season. I think if I have a little bit of money I would rather give it to relatives to grow crops for the nation to eat. This is completely unnecessary, but also I already said having been an MP and minister and having been an economist, I can’t go back to repeat my achievements"

Ngandu Magande declaring that he has no intention to contest his seat following the expulsion from MMD. It clearly does not make financial financial sense for Magande to take part in these elections unless he was confident of not only winning now but also retaining the seat in 2011. But he can certainly for a legal blockade if he wants. That he is deciding not do so is very strange by Zambian politico standards.

The Red Card Movement

I was sceptical of the red card movement until I saw the above photograph with arguably the country's most important and influential NGOs. There we have SACCORD executive director Lee Habasonda, TIZ president Reuben Lifuka, CSPR executive director Patrick Mucheleka, Caritas Zambia executive director Sam Mulafulafu and Citizens Forum executive director Simon Kabanda during a press briefing at SACCORD secretariat - all waving red cards.

To be clear my scepticism was not related to the idea of a "red card". I think it is a simple and ingenious way for people to communicate their displeasure. Its something they instantly recognise and can make cheaply on their own. In fact as seen above, it need not a card at all! Anything red will do! My scepticism was related to  whether it could be "sustained" and could be identified with specific and concrete demands. This does appear to have happened, though it is still unclear on what "success" for the movement looks like.

A Parastatal Horror Show (Judiciary)

At this point in our series one may be forgiven if they gave up all hope regarding the fight against general mismanagement and plunder. The subject at hand brings us to the mother of all institutions - The Judicial Service Commission :

The Judiciary started operating as an autonomous institution through the Judicial Service Commission in 2008. According to Judicature Administration Act Cap 259 of the Law of Zambia, the Judicial Service Commission shall be composed of the Chief Justice who shall be the Chairman, the Attorney General (AG), the Chairman of the Public Service Commission, the Secretary to the Cabinet, a judge nominated by the Chief Justice, the Solicitor General, a member of the National assembly appointed by the Speaker of the National Assembly, a member to represent the Law Association of Zambia nominated by that Association and appointed by the President, the Dean of the Law School of the University of Zambia and one member appointed by the President....According to the Act, the Chief Administrator is responsible for the day to day running of the Judiciary and is assisted by chief officers namely the Registrar of the High Court of Zambia, the Director of Human Resources and Administration; and the Chief Accountant.

With such an illustratious list of "overseers", including the AG one expects the Judicial Service Commission to be above board in its dealings. Otherwise, what is the point of having them on the board? If the Judiciary is poorly run and without procedures what hope is there for anything else?  Its a sobering thought and a sad indictment therefore to find that this actually one of the most poorly run agencies. 

Process, Process and Process!

A fascinating piece on how across sub-Saharan Africa organisations s are providing farmers with the processing skills and materials they need to improve their incomes and support their families—and that can produce unexpected benefits, including wildlife, reducing food-born health risks, and improving access to education.

It’s All About the Process, Molly Theobold, World Watch Institute, Commentary :

Zambian grocery stores are filled with processed foods from around the world, from crackers made in Argentina and soy milk from China to popular U.S. breakfast cereals. In addition to these foreign foods, however, are also variety of locally made and processed products, including indigenous varieties of organic rice, all-natural peanut butter and honey from the It’s Wild brand.

Bicycles of Hope

Zambia Weekly - Volume 1, Issue 22

Zambia Weekly - Week 36, Volume 1, 10 September 2010

Quick notes

Namibia is poised to become the largest producer of uranium on earth, assuming all other countries' uranium production remains constant over the next years.

Speaking of uranium, Equinox recently announced that it plans to start exporting stockpiled uranium from Lumwana mine in about two to three years.

Equinox is one of the companies which forms part of the investment growth by Australian companies in Africa’s resources sector from 54 companies in 2003 and 160 currently (at $20 billion).

The IPS have an interesting piece on how the mobile phone is transforming the nature of entrepreneurship across the continent.

A second Murambatsvina? Another violent raid on a squatter community in Harare left 100 families homeless, the Zimbabwe Standard reports

Competing for Water

The Competing for Water programme (www.diis.dk/water) is a collaborative research programme which has documented the extent, intensity and nature of water-related conflict and cooperation occurring over a 10-year period in one district in each of the following countries: Bolivia, Mali, Nicaragua, Vietnam and Zambia. The programme produced these videos to illustrate some of its findings.

Revisiting Kachasu

Regular readers will know that the question of government policy on Kachasu has exercised our minds since the early days of this website (see discussions on In defence of Kachasu industry,  In defence of "in defence of Kachasu industry" and the Kachasu women of Kantolomba). My position has always been that the government's policy is not well thought through and needs a better rationale, not that I believe a sound argument can be constructed beyond the moral argument (though even that is complicated by the many obscene vices it lets people undertake, not least other forms of alcohol and smoking). Well, it is interesting that Kenya appears to have converged with my view - that better regulation is the answer not the ban :

Kenya's president has signed into law a bill which legalises the traditional home-brewed spirit changaa. The Alcoholic Drinks Control Bill is partly intended to stop people from dying after drinking adulterated moonshine. The BBC's Angela Ny'endo in Nairobi says at least 100 people have died in such cases this year. The bill also makes bars and brewers display prominent health warnings about the dangers of alcohol. The bill takes effect in 90 days' time.

By legalising changaa, officials hope to take business away from establishments where toxic chemicals are added to the brew to make it stronger - sometimes with deadly results. Changaa is normally made from millet or maize. The bill also introduces safety regulations, although some MPs have questioned how these rules will be enforced. Changaa is much cheaper than other alcoholic drinks, making it the beverage of choice for thousands of Kenyans.

However, some point out that under the new bill, changaa can only be sold in glass bottles, which would increase the cost. This could mean some people will continue to drink the illicit - and potentially poisonous - brews. Some MPs have resisted the new bill - some saying changaa should remain illegal.

Interesting to see also that some of the continent's biggest brewing firms are now trying to break into this vast potential market (£2.1bn worth) by developing safe and affordable alternatives.

A Parastatal Horror Show (Hotel & Tourism Training Institute)

I thought I had a fairly good knowledge of all parastatals until I came across the Hotel and Tourism Training Institute (HTTI). It was allegedly set up by KK in 1989 to provide training in hotel and tourism management and is meant to run on a "commercial basis". In other words, it is a legacy of a centrally planned economy.  The Institute is effectively run by the Minister of Tourism through her direct appointment of the six board members. The current board has been running things since 2007 - so technically it is not "her people".

Unfortunately, this again one of the most poor run parastatals in our country. We can spot a disorganised parastatal by those magic words we are so familiar with : "Contrary to the HTTI deed, the Institute did not prepare the financial statements and the annual reports for the year ended 31st December 2008 as of March 2010".  For two years the company has not prepared statements! Shocking indeed, but not unusual as ZCCM-IH, ZAMTEL and others we shall meet will testify.

That  however did not stop Attorney General (AG) from finding more rottenness within the 2008 accounts.  First there's straight embezzlement of nearly 10% of the total HTTI revenue (total revenue is K6.7bn):

Out of the K1,393,665,863 released for the procurement of capital items, K588,194,787 was misapplied on payment of personal emoluments. Consequently, the Institute was not able to procure all the equipment that was planned for.

Then we have the usual favourites "staff related costs" and "inadequately supported payments" :

Contrary to the terms and conditions of service, amounts totalling K30,964,300 were paid in respect of Christmas bonuses to members of staff during the period under review despite the fact that the Institute made losses totalling K110,260,000 for the period.....Contrary to Financial Regulation No. 52, there were sixteen (16) payments in amounts totalling K75,841,387 that were inadequately supported in that the vouchers lacked supporting documents such as receipts, invoices and quotations.

This is mind boggling incompetence - why would a company pay bonuses to loss making employees? The other problem I have is that I really don't see why HTTI is owned by government. If Andrew Chipwende and his colleagues want to privatise parastatals, why not get rid of these unnecessary companies? This is not an area where the state should be providing colleges. The market can and appears willing to take care of this problem. But I know I am shouting in a vacuum because it is obvious HTTI is not going anywhere for the same reason it under-performs - it appears to me that it is a "cash cow".

Next Stop : Judicial Service Commission

Previous Posts :

A Parastatal Horrow Show (Chambeshi Water)

A Parastatal Horrow Show (Electoral Commission of Zambia)

Report of the Auditor General for 2008 on Parastatal Bodies 

Linking Zambia (Mwanawasa Foundation)

A new website for the Levy Mwanawasa Foundation. It has a rather unprofessional look about it, so it is difficult to know whether it is an "official" website. Nevertheless, its one to watch going forward.

Mine Watch (Konkola North)

South Africa's African Rainbow Minerals announced recently that the construction of its new copper mine, which it is developing with Brazil's Vale begun in August, with full output eyed in 2015. The total capital expenditure for the project is estimated at $380 million, down from a previous forecast of $400 million. The life of the Konkola North mine, owned by the Konnoco Zambia joint venture split 50-50 between ARM and Vale, is estimated at 28 years, expected to yield 45,000 tonnes of copper concentrate per year. More detail via Reuters.

A Parastatal Horror Show (Electoral Commission of Zambia)

Strictly speaking a "parastatal" refers to a legal entity that is owned by government  to undertake commercial activities on behalf of government. The Electoral Commission of Zambia (ECZ) is therefore not a parastatal rather it is a "government agency". Anyway the Attorney General (AG) thinks it is a "parastatal" so who am I to argue with the excellent Mrs Chifungula?  Besides I am happy she has lifted the covers to check the rot. That said, its worth keeping that distinction in mind as we weave through the report, largely because "agencies" face different problems to traditional "parastatals".  The problem with agencies is principally corruption or embezzlement. In this regard the latest report on the AG has similar horrors.

The focus is on ECZ expenditure during the 2008 presidential bye-election - a staggering huge expenditure (part funded by donors) : "In the estimates of Revenue and Expenditure for the financial year ended 31st December 2008, an authorized provision of K 248 ,940 ,655,190 was made for the operations of the Commission against which amounts totalling K249,069,979,028 were released".  To underline - K250bn was spent on ECZ largely due to the by-election. I touched on this cost blunder at the time - A costly constitutional blunder.  With such large money at stake it's inevitable it will be abused.

Good Argument (Daniel Munkombwe)

"The effects of corruption are more severe on our poor who cannot afford alternative public services other than those provided by government. Nor can they afford to pay extra costs associated with bribery, fraud and extortion and other corrupt vices..."

Southern Province Minister Daniel Munkombwe echoing a point we have repeatedly made on this website. Unfortunately, the Minister appears not have to followed the argument to its natural conclusion. The central question is : if corruption is more detrimental on the poor, as rightly argued by Mr Mukombwe, how should that shape his government's approach to fighting corruption?  I answer this question in an earlier post - Corruption Wars – Part 2 (Corruption & The Poor). 

Book Reading Goal : Week 31

This week's book was what I just needed to up my reading momentum, after an hectic summer of competing demands. The Shallows, by Nicholas Carr puts forward the argument that the internet is changing us in ways we may not have realised before. Nicholas Carr is convinced that 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.

It is a quite shocking assessment, and one that he backs up with a range of evidence.  As a non-expert in this area, I was left somewhat convinced by the cumulative force of the evidence presented, though I retained deep scepticism on the individual bits.  The evidence also at times appeared "selective" - not enough studies cited that offer contrarian position. Mr Carr clearly has become convinced of the narrative and brings all the evidence to argue for it.

PF Policy on Mining Taxation (Update)

"The mines were privatized on certain binding agreements and from the time the government introduced the illegal tax regime new jobs are not being created because major expansion projects have been suspended....In order to retain and attract investors we must honour our agreements and also establish a stable, predictable and unambiguous tax regime"

Michael Sata officially announcing the PF U-Turn on its mining policies. We have been dicussing this isssue extensively here. It now appears that what The Post reported was indeed the new PF position. The argument appears to be "jobs" and "illegality of existing taxation". These are very poor reasons and we deal with them under Eight reasons for rejecting higher mining taxes. 

A Parastatal Horror Show (Chambeshi Water)

I promised a series of post to summarise some of the horrors contained in the latest Report of the Auditor General on Accounts for 2008 on Parastatal Bodies.  There are 21 parastatals covered in the report, not sure how many exists, so expect short 21 random posts, and at times less coherent, in the next few weeks.

We start with Chambeshi Water and Sewerage Company Limited, a company allegedly owned by various northern councils. Its principal activity is allegedly "to provide high quality water and improved sewerage services for high standard of living for the population of the districts of Northern Province".  Don't laugh! The only problem according to the Auditor General (AG) is that the company is dire financial position :

Although during the period under review turnover increased from K1.2 billion in 2005 to K3.0 billion in 2008, and grants also increased from K3.4 billion to K12.6 billion, the company made losses in all the years. The losses increased from K470 million in 2005 to K573 million in 2008. Consequently, the company was unable to declare any corporation tax or dividends.

Zambia Weekly - Volume 1, Issue 21

Zambia Weekly - Week 35, Volume 1, 3 September 2010

Quick notes

South Africa's Mining Ministry will soon approach the Cabinet with its proposal for a state-owned mining company, which could be formed before the end of this year.

Zambia Sugar, a unit of South Africa's Illovo Sugar, last month achieved energy independence as it started generating all of its own power needs, ending its reliance on shaky ZESCO.

Reuters analysis on the how new spate of elections across the continent is likely to put increasing pressure on banks to cut sky-high lending costs.

Reintroducing CDP - a favorable potrait of the Citizens Democratic Party and its apparent quest to introduce new politics in Zambia.

George Mpombo relives his time in prison, describing the "serious human rights challenges" in prison which have "reached very critical and alarming levels", especially in the area of accommodation.

Pf Policy on Mining Taxation?

The PF President Michael Sata wrote to the President Banda on August 12, 2010 with what appears to be a restatement of their 2008 position that the mines are overtaxed. I am trying to see if we can get hold of the full letter and then provide a fuller assessment. But here are the extracts from the letter as published by the Post - if the narrative holds in the full letter, this would represent a deeply flawed position  (and complicated  politically) :

I realise that the mines are mostly in areas where my party [Patriotic Front] dominates, but it would appear that no one in your government is aware of the damage the ongoing dispute [dispute between government and mines] is doing to the industry and to jobs on the mines.

Maybe no one in your government cares about the jobs that are being sacrificed by the delinquent and illegal tax regime introduced by the previous government....It is possible that your government would care if it stopped to think that loss of jobs in the mining industry carries its effect into all other parts of the job market, possibly even into areas where your party is strong.

As I remarked to your predecessor, the calculation that mining companies were paying 47 per cent tax was in fact wrong.

My party looks with envy at the wealth of Chile, a country which used to produce less copper than our wonderful country but now produces ten times more than Zambia. It is very easy to see, for anyone who is prepared to look that the entire Chilean economy has benefited enormously from a healthy mining industry.

Our government will move toward emulating Chile where the tax rate on mines is less than 35 per cent and where investment is thereby encouraged and jobs are created.... We believe it is necessary to be competitive with the best countries, not the worst. I am distressed to learn that your current Minister of Finance and his cohorts are pressurising the mines to capitulate to the previous government’s demands. I know this is because I can see all the investments that should be taking place and creating jobs are just not happening.

I wouldn’t be surprised, if he continues down this road, to see our country launched into a very public international legal case brought about because your party doesn’t honour agreements. This will no doubt cause us to lose even more investment and jobs....

Presidential corruption metrics

"Of course you know we are fighting against corruption. There are a lot of people in court; many of our generals are in court, we have never interfered with that. Why should just one case become a major issue?"

President Banda responding to accusations that his government has given up on the fight against corruption. The context includes a related statament where he says, "[Zambia] is not a banana republic; it doesn't belong to anybody....If [the donors] are fed up with us, they should just pack their bags and go where they come from. We are an independent state and I think that they should give us a chance to follow the laws which they left behind." I have a lot of things to say on this, especially the last sentence, but I shall leave that for another time. My immediate concern is President Banda's success criteria for his fight against corruption. His Excellency appears to make an elementary confusion between outputs and outcomes. The defence of  "having a lot of people in court" is an output measure, which is not necessarily a good thing (or does not necessarily indicate a good outcome). There are two reasons for this.