Inflation Statistics - January 2011

The annual rate of inflation, as measured by the all items Consumer Price Index (CPI), increased to 9.0 percent in January, from 7.9 percent in December. The rise is attributed to the "increases in the cost of both food and non-food items". More detail via the CSO Monthly Bulletin embedded below.
Zambia Statistics - January 2011

Child Labour And Poverty In Zambia

I was struck by this Children International video that tells the story of Loveness an extraordinary young girl, who at the tender age of seven, has been sentenced to a life of hard physical labour. Admittedly it is captured to highlight the need for financial support, but this an issue we have previously touched on e.g. Children As Bread Winners (HT: Zambian Watchdog).

Book Reading Goal : Week 4

I have now finished one of the most fascinating books I have read for some time. The book in question is To Change The World : The Irony, Tragedy and Possibility of Christianity In The Late Modern World by James Davidson Hunter. He is the LaBrosse-Levinson Distinguished Professor of Religion, Culture and Social Theory at the University of Virginia and Director of the Institute for Advanced Studies in Culture. In short, a man who knows something about something!

The book seeks to address how Christians should engage themselves in the modern world. But it is more than that because within this book he explains to us how cultural change comes about. I was particularly struck by the simple but not so obvious idea that cultural change is not democratic but comes largely from overlapping networks. We certainly see this in both Amerindian and African independence struggles. We also see it today why many Zambians have failed to bring about a paradigm shift in thinking. The majority may want a different Zambia but the majority don't run the country. Equally vital are Hunter's perspectives on the nature of leadership, in particular how all of us are leaders in different spheres of influence and therefore inherently accountable for how we exercise those gifts and areas given to us by the Lord God.

The best compliment I can pay this book is that it has helped me define both the reason why I should keep this website (many a times I have considered abandoning it), but also the purpose for this website - which is first and foremost to honour God and by extension to ensure that it contributes towards shalom for our poorest. For there's no greater cause in this world than to ensure that the research and economic analysis all make a huge difference to the "least of these".    By extension it has also helped me define how best to contribute to meaningful positive change. In seeking to change our country, we must be strategic. It is more important to be heard than to shout. As I said, the point is not to feed our egos but to feed the poor. There's a faithfulness needed in ensuring the blogging is of high standard (poor and unresearched pieces dishonours one who made us and those around us). It is also vital to have positive relationship with those who may be at the opposite end of our views. I am more interested to see some of our biggest issues addressed than score political points. So we gotta be passionate, objective and  loving at the same time.

This may just be a life changing book. I am hugely thank to a good friend who recommended. I like wise recommend it strongly.

Book Reading Goal Review
Books Read So Far : 3 book
Remaining Books to Achieve Target : 47 books
Weeks Remaining to Achieve Annual Target : 48 weeks

Zambia Weekly - Volume 2, Issue 4

Zambia Weekly - Week 4, Volume 2, 28 January 2011

Help Re-Brand Zambia

We have been asked by World Bank - Zambia to advertise the item below. Please spread the word. Typical GRZ though this request has to come from a non-Zambian source :

We invite you to enter this amazing competition. 
Zambia as a tourist destination is looking for a new brand! 

You could win a 15 day safari for two – worth up to US$ 30,000. 

Zambia is a stunning country to visit with unbeatable safaris and adventure, great culture and friendly people and of course the iconic Victoria Falls!
It is still relatively undiscovered, with much potential. And tourism is key to Zambia and it’s people.
Increased tourism means more jobs in rural areas, more funds for conservation and a healthier economy in a developing country.
So play your part – share your ideas with us and enter the competition. Help Zambia and have the chance to explore the country yourself... 

To find out more, open the attachment…or go to www.zambiatourism.com/competition

And please, “pass it on”, spread the word by sending this email to your friends, clients, colleagues, everyone!
Another way would be to copy the icon below and put it on your email signature, or copy the icon off the website and put on your website with a link.
We look forward to seeing your creative ideas.

www.zambiatourism.com

Follow the competition…on Facebook (Zambia Tourism) and on Twitter @Zambia_Tourism
 

Zambia 2010 Census - Preliminary Results (Presentation)

Interesting results from the 2010 census. The population has gone up to 13m, with eligible voters at 6.5m - which is a bit of a problem considering the current voter registration exercise has only delivered 2.5m. Did someone say a government of the people? On the positive front,good to see urbanisation has rebounded from the disastrous policies of the early 1990s. The cities are clearly engines of growth again. That has a huge impact on a key constitutional requirement - the "constituency delimitation" exercise. It would be good to see how this density map might look like. 

Zambia 2010 Census of Population and Housing

Why do things fall apart in Africa?

Things have fallen apart in Africa for a long time because of colonialism, capitalism, socialism, Marxism, communism, tribalism, ethnic chauvinism… neoliberalism, globalism and what have you. Things are in total free fall in Africa today because Africa has become a collection of vampiric states ruled by kleptocrats who have sucked it dry of its natural and human resources. It is easy to blame the white man and his colonialism, capitalism and all the other “isms” for Africa’s ailments, but as Cassius said to Brutus in Shakespeare’s Julius Caesar: “The fault, dear Brutus, is not in our stars, but in ourselves.” The fault is not in the African people, the African landscape or skyscape. Africa is rich and blessed with natural and human resources. The fault is in the African brutes and their vampiric regimes.

You can read the rest of Alemayehu G. Mariam's diagnosis here. 

The Status of Zambian Privatisation

Another gem from the friends of this website! We are extremely grateful to be able to get an electronic version of this important report. It sets out the privatisation that has taken place to date and for how much. In this report you will see the mining companies sold for $3m and the like. Very important for students who regularly ask for this. Equally interesting, you will see towards the back end of the report "companies under preparation". Among them is one we tweeted that it appears to be developing rapidly - National Airports Corporation. I hear stories of Lusaka International Airport being sold to the Chinese.  Unfortunately the big elephants missing are the government papers - Daily Mail and The Times which are in serious debt. It appears again government has no proper objective criteria for what it chooses to privatise or retain.

Zambia Privatisation Status Report 2010 - ZDA

Namibia's Nuclear Ambitions, 2nd Edition

We have previously touched on Namibia's nuclear pursuit here.It appears the plans are very real indeed. Our uranium rich neighbour is pressing on with its plans to develop its rich uranium resources and intends to pursue uranium enrichment locally. It also plans to build its own nuclear electricity plant. Nuclear energy experts from Finland’s Nuclear and Radiation Authority are currently helping the Ministry of Mines and Energy (MME) to draft Namibia’s first ever nuclear policy, which is to be completed mid-2011, together with relevant laws. The plan is to generate electricity from the nuclear reactor by 2018. More details via IPS News.

The Planned Stem Cell Bank in Zambia (Guest Blog)

I wish to comment on the planned establishment of an umbilical cord blood stem cell bank in Zambia by Cryobank International of India.

Essentially, a “stem cell” is a ductile type of cell that can either naturally develop into most of the 220 types of cells of the human body—such as blood cells, heart cells, brain cells, and kidney cells—or be developed into most of such cells through manipulation.^[1] The fun­gibility or non-specialized nature of stem cells provides consider­able therapeutic potential in that the cells can be “doctored” and used to replace damaged, infected or dead cells in a person’s body and restore his or her health.

In the ensuing paragraphs, let us consider the ethical debate asso­ciated with stem cell research, a useful caveat for Zambian law makers and researchers who are involved in contentious research projects, and the need for an effective mechanism for assessing the benefits and costs of such research projects.

Capital Expenditure Provision for Western Province

Ministry of Finance Press Release (24 January 2011): 

2011 Budget: K586.5 Billion Capital Expenditure Provision for Western Province

In response to some queries from stakeholders regarding development programmes planned for Western Province in 2011, the Ministry of Finance and National Planning is pleased to notify the public that an amount of K586.5 Billion, approved by Parliament during its last sitting, has been provided in the 2011 Budget for capital projects, infrastructure rehabilitation, maintenance and development in the Western Province.

It should clearly be understood that the K586.5 Billion budget provision excludes funds already committed under different capital programmes financed by development partners. The 2011 capital expenditure allocation also excludes funds meant for operations, salaries and other non-capital expenditure in the Western Province.

Debt Watch (China)

We continue the practice of routinely tracking new debt obligations by Zambia. We regard this as absolutely vital in view of the poverty of information from central government. It is up to us to paint our own picture from the information emerging from various news sources and sporadic government reports. Recently we were informed that China has lend Zambia money in two areas.

First report is on the US $94m loan to construct a new stadium in Lusaka and undertake repairs to the old Independence Stadium. When these projects are done it is thought that Zambia will have three stadiums of respectable international stadiums. Two in Lusaka and one in Ndola. The money for all three of course is debt financed. In word of President Banda, "due to the huge capital investment required for the project and constraints in our national budget, government was unable to undertake the project". 

Second report relates to Tanzania Zambia Railways (TAZARA) which this will receive six locomotives and 90 copper wagons through a "soft loan" it obtained from China. We are not told how much is involved.

Measuring the Unmeasurable, 2nd Edition

We have previously touched on the challenges of measuring corruption. Bhagwati notes the "cultural" difficulties associated with universal definitions :

Getting Corruption Right, Jagdish Bhagwati, Project Syndicate, Commentary :

I just returned from India, where I was lecturing to the Indian Parliament in the same hall where US President Barack Obama had recently spoken. The country was racked by scandal. A gigantic, ministerial-level scam in the mobile-telephone sector had siphoned off many billions of dollars to a corrupt politician.

The Daily Mail

“The Government of the day expects the Zambia Daily Mail to serve the people. Your support and activities should be within the public mandate, not aligning yourself with a particular political party or organisation. So in pursuit of public service, you must know that you are serving the public..."

Sam Phiri (MIB Permanent Secretary) challenging the media institution to avoid the temptation of aligning itself with individual political parties. I have previous touched on how these government papers have become agents of poverty. In that piece I also noted that these newspapers are in financial stress because of poor demand. This appears to be confirmed by Evans Milimo (Managing Director)  who notes that  the company is in need of K10 billion and is appealing to government to consider recapitalising the institution. I wish he can ask for privatisation! The paper also has statutory debts owed to ZRA, Napsa and the Workers Compensation Fund Control Board :

“To get the company out of its financial quagmire, we request shareholders to help with recapitalisation by injecting K10 billion in the paid up share capital to enable the company buy more delivery vans, computer to plate machine, replace old computers and refurbish institutional infrastructure. We also appeal to government to write off statutory debt which stands at K40.2 billion. Most of this debt is historical.”

Now why should the tax payer continue footing the bill for a newspaper they hardly read? The only way to get Daily Mail back on a healthy financial footing to privatise it. Isn't it interesting that many people who were crying for ZAMTEL to be privatised are no where to seen, on such a obvious target? Government refused to recapitalise ZAMTEL! Why would they now waste money on this paper when others can perform that function? We also have Times of Zambia in government hands. We need to ask these questions and start pushing seriously for this paper to be privatised.  Zambians need to wake up and stop letting their money being wasted. 

I should say in recent days, I have noticed a slight move towards neutrality by the Daily Mail. I hope that is good preparation for their privatisation! As government sees that it no longer serves their propaganda purposes perhaps it will move to privatise it. 

Corruption Watch (Lusaka City Council), 3rd Edition

We have been tracking the corruption allegations at Lusaka City Council ("the Council"). Another one seems to have broken out in the last month. The Council is accused of illegally allocating land to itself without following the law governing the allocation of land. Out of 102 plots, the councillors got 45 plots, 10 plots were given to the Mayor while the deputy Mayor got five plots and members of the public were only allocated 11 plots. The Local Government Minister Chituwo has now moved to suspend the Council to pave way for an audit, "it has become necessary for the Ministry of Local Government and Housing to suspend the Lusaka City Council in accordance with the Local Government Act, Cap 281 of the laws of Zambia to pave way for investigations into the Lilayi land allocation". More detail via Daily Mail.

The move is welcome to help root out problems in land allocation. This practice appears common among councils. However, caution must be exercised because previous, and more serious allegations trailed here appear to have come to nothing. It may be political manoeuvring like previous allegations - see "related posts" below. Incidentally, many other allegations relating to Mr Chituwo's ministry also appear to come to standstill e.g. the hearse saga. Whatever happened to that?

Related Posts: 

Corruption Watch (Lusaka City Council), 2nd Edition

Corruption Watch (Lusaka City Council)

Economic Growth, Poverty and Inequality (Guest Blog)

The focus on economic growth is an important one – recognising that growth is important, but that unless the benefits are distributed, it will not by itself reduce poverty. A recurring issue in discussions on economic development is whether the main focus of development strategies should be placed on growth, or poverty, and/or on inequality. This author argues that this way of formulating the question of development goals poses a false dilemma. Rather, the answer can be simply expressed in two statements: First, the rapid elimination of absolute poverty, under all forms, is a meaningful goal for development. Second, to achieve the goal of rapidly reducing absolute poverty requires strong, country-specific combinations of growth and distribution policies.

The real challenge to establishing a development strategy for reducing poverty lies in the interactions between distribution and growth, and not in the relationship between poverty and growth on one hand and poverty and inequality on the other, which are essentially arithmetic. There is little controversy among economists that growth is essential for (income) poverty reduction under the assumption that the distribution of income remains more or less constant. Economic growth does tend to raise incomes overall, but the impact of growth on poverty varies enormously from one country to another, depending on the structure of growth and on government policies.

Zambia Weekly - Volume 2, Issue 3

Zambia Weekly - Week 3, Volume 2, 21 January 2011

The Growth Debate (A Response to Simumba & Shenton) (Guest Blog)

Zambia is a rich but poor country. I mean, Zambia is greatly endowed with minerals, fertile land and fresh water yet it is gifted with bad culture. Zambia in the pre-colonial days experienced mining activities at minimal scale, subsistence farming and fruit gathering. My interest is fruit gathering which inculcated a lazy culture because things come on a silver place. Adverse conditions are what shake people out of their comfort zone.

As fate would have it then come colonialization that taught Zambians to get educated for white-collar jobs. There was no deliberate policy to insure self-employment for school leavers. This developed unhealthy culture of job seekers. As a matter of fact stigmatization of people who wanted to venture into business upon finishing school was such that these people were viewed as school failures. From psychology of deindividuation in the mines where leadership was dominated by whites, we also learn that Africans believed that big businesses could only be run by whites. To date the inferiority complex still lingers in many citizens. Little wonder that entrepreneurship is not proficient in such an environment where individuals deindividualise themselves?

The PACT Presidential Candidate (Press Release)

Press Release by UPND (20 January 2010) :
UPND CLARIFICATON ON THE PACT PRESIDENTIAL CANDIDATE

The Limits of Institutions

The fact is that we realise that even the best structures and the most idealised systems quickly become inhuman if human inclinations are not improved, if there is no conversion of heart and mind on the part of those who are living in those structures or controlling them.

From an excellent editorial in The Post. The wisdom of this post is quite a rebuke for those of us with "institutional" tendencies. In recent months, I have come to appreciate the durability of culture and the limit of incentives to alter them. Perhaps that explains empirical failure of the "modernisation hypothesis". According to Acemoglu, "countries have embarked upon different development paths, most likely at some critical junctures during their histories, and while some paths have led to democracy and prosperity, some others involved non-democracy and relative poverty". Could it be that those "critical junctures" actually are those points where that conversion of "heart and mind" takes place? 

Parastatal Madness, 11th Edition

The never-ending madness of parastatals follows us in 2011.  Earlier this month, a Southern Minister proudly announced that he had ordered Southern Water and Sewerage Company (SWASCO) to reconnect water to all prisons in the region, which were disconnected over K160 million unpaid bills : "Three weeks ago in the prisons, water was disconnected over K160 million bill. Can we kill people? Some people are in prisons by implication. Yesterday, I ordered SWASCO to connect water immediately so we remain to sort out the money issue".

Uuh...no we can't kill people, but your administration can pay for off its debt! If the government values prisoners so much surely they should ensure that they pay their bill like everyone else - on time. They have been in government for two decades and they still fail to settle their debts. What level of incompetence is this? As we have tracked on this series, the failure to pay parastatals the debt owed to them is one of the main reasons for their under-performance. This is also confirmed in careful reading of the Auditor General's Report for 2008 (Parastatals). It is also the reason why many believe that the only way to run parastatals effective is to de-link them from government. How else does someone eliminate this incompetency? 

Related Posts :
Parastatal Madness, 10th Edition
Parastatal Madness, 9th Edition
Parastatal Madness, 8th Edition
Parastatal Madness, 7th Edition
Parastatal Madness, 6th Edition
Parastatal Madness, 5th Edition
Parastatal Madness, 4th Edition
Parastatal Madness, 3rd Edition
Parastatal Madness, 2nd Edition
Parastatal Madness

Growth Debate (A Response to Trevor Simumba) (Guest Blog)

It is true Zambia has finally got a positive growth going and one should not belittle the MMD’s commitment to a free market even though other fundamental reforms like justice, equality, freedom of expression and accountability fall well short of our 1991 commitments and even modest expectations. Frankly though, it would be hard to imagine how Zambia would fail to achieve reasonable growth under such favourable metal prices combined with continued budgetary support from the plethora of donors. It seems that once a society adopts the free market, the results are inevitable as can be seen by playing this video from gapminder.org. (tick Zambia in the right hand box).

In fact the question everyone is asking is why Africa has taken so long to arrive at high growth. Firstly the locust-like high consumer economies were focused elsewhere, mainly South America and Asia, and global investors have only just begun to take Africa seriously as a supplier of raw material. The second major factor for the delay is cultural resistance which I will come back to later.

Mine Watch (Various)

Several updates on recent mining developments :

Mulyashi Mine :

Zambia Development Agency approved the construction of the Mulyashi ‘Greenfield’ open pit mine in Luanshya in northern Zambia estimated to cost USD 400 million. The China Non Ferrous Metals Africa Corporation owned open cast mine is expected to be

The Elusive Quest for Free Elections

An important editiorial from The Post on how the ruling party has used state machinery in the last elections. It also points to the alleged practices of transnational companies "given all sorts of government favours in return for contributions to the MMD’s election campaigns". It is a timely article and one which should help us consider broadly the meaning of the word "free" - what does it mean to have a genuine free election?

Abuse of public resources in MMD’s election campaigns,  Editorial, The Post, Commentary :

Simply permitting the opposition access to the ballot box is not enough for us to have elections we can say are free and fair. Elections in which the ruling party has almost unlimited access to and use of state resources to the exclusion of the opposition cannot be said to be free and fair.

Sata writes Banda writes Sata

A bit of positive reporting from the Daily Mail. Transcript of correspondence from Mr Michael Sata to President Banda and vice versa. As general point I have previously touched on one of the issues raised by Mr Sata - see Are Some Lives More Valuable Than Others?

3rd January 2011

His Excellency Mr. Rupiah B. Banda
President of the Republic of Zambia
State of House

Independence Avenue
Lusaka

Dear Sir,

RE: DR. CHRISTINE KASEBA’S TREATMENT IN SOUTH AFRICA

We returned home from South Africa on Friday 31st December 2010 after my wife’s medical review on 30th December 2010.

My wife and I would like to take this opportunity to express our profound gratitude to you Your Excellency and the government including the staff at the Zambian High Commission in South Africa for the consideration, compassion and care extended to my wife during the period of her illness and stay at Milpark Hospital. 1 am indeed pleased to see that my wife’s life was saved due to the government’s prompt action to evacuate her.

The Return of Mining Development Agreements?

We continue the post-leave updates with this startling development towards over the leave period that the government has offered mining companies a new fiscal stability period - as part of the deal for them to pay legally mandated tax revenues owed to the Zambian government from previous windfall taxes (not even all the revenue ). Here is the quote from Hon Musokowane's speech to parliament (embedded below) :

A good tax system is one which is predictable and which provides stability to investors. It has therefore been agreed that a fiscal stability for a period of ten (10 years) be given to companies that will accede to the new tax regime. The stability will apply to corporate income tax, capital tax allowance, mineral royal and profit variable tax.

Readers will recall that a key part of the Mwanawasa reforms was to abolish all development agreements under Mines and Minerals Development Act 2008. The idea was that all mining investment should now face the same fiscal rules. We know that Lumwana has always been keen to mantain its own DA (see previous discussions on this here and here). We also know that all  other new mining companies have been busy signing new DAs with government in dark corners. It is bad enough that  new DAs are being signed, what is shocking is that they remain secretive. I have also been disappointed that the so called "media"  have not  picked up on these issues while we have been on leave.

ZIPPA on "Taxing the Mines"

The latest ZIPPA report focuses on the controversial issue of mining taxation. It seems to capture a diverse range of opinions, a practice in much demand in other forums. I will try and extract one or two for broader discussions.
ZIPPA Journal Jan-March 2011 - Taxing the Mines

Constitution of Zambia (Amendment) Bill 2010: Part IV

Qualifications of Parliamentary Candidates

Article 66 deals with qualifications of members of National Assembly :

(1) Unless disqualified under clauses (2) and (3), a person shall be eligible to be elected as a member of the National Assembly if that person—

(a) is a citizen of Zambia;

(b) is not less than twenty-one years;

(c) is registered as a voter;

(d) has obtained, as a minimum academic qualification, a grade twelve school certificate of education or its equivalent; and

(e) declares that person’s assets and liabilities as provided under this Constitution and by, or under, an Act of Parliament.

The failures under Article 66 mirror those relating to qualifications of presidential candidates. We therefore wont repeat the discussion except to make very brief observations.

Quiet Victims

This news item which appeared on the first of the new year appears not to have stirred any emotions, but it should :

Another miner has died on the Copperbelt after a rock fall at the Baluba Mine in Luanshya. This is the second miner to die in an underground accident within a week. Copperbelt Province Police Commanding Officer Martin Malama has confirmed the mine accident to ZNBC News in Kitwe. Dr Malama has named the victim as Fanwell Simwinga aged 57. Dr. Malama says the miner died after rocks fell on him, 460 metres below the surface.

Five lines, only five lines, that is how much value we place on this on-going problem of poor safety record in the mines. After the Chile disaster there was much talk about safety with the President even saying, "We all witnessed what happened in Chile, it was so touching to see the last person come out. We have to take care of our mines so that we do not go through what our brothers have gone through". Except your brothers have been dying from poor records and continue to do so without a word of condolence from your government!

Angela's Wisdom

 Manda Hill in Lusaka 

No one who has recently travelled the length and breadth of the country will deny one obvious fact : there 's emerging in Zambia, not a cohesive whole, but two Zambias. There's a Zambia for the rich (around Lusaka with its booming construction), along with Kitwe and other thriving towns. Then we have the rest of our destitute and forgotten people who occupy 70% or so of the periphery where very little, if any tangible development is taking place. They don't watch television because they have no electricity. Their children walk huge distances just to get to school. I am never deluded that they read this blog, how can they, when they barely have electricity? Internet access is not even something that occupy their priorities. They live to survive the next day. They are the voiceless masses, usually under the thumb of a chief who acts as a party cadre for the government of the day. Many of these areas are literally isolated from civilisation and frankly it is difficult to see how development will ever be brought to them under current pro-rich policies.  I believe it is this reality that Luanshya resident Angela Mwaba is reflecting when she says :

Unequal income distribution is one of the major causes of high poverty levels in our nation. The ratio between the rich and the poor is abnormal. The economy could be

Book Reading Goal : Week 2

I have recently began reading the four volume series on church history written by the excellent Nicholas R. Needham. I hold 3 volumes in my hand that is because the last one is not out yet, to my knowledge anyway. I have just completed volume one -  2000 Years of Christ's Power - Part One : The Age of The Early Church Fathers, released in 1998 covering the first 600 years or so. It is quite long (400 pages) but I enjoyed it thoroughly. The Needham volumes are not aimed at scholars but rather ordinary Christians who want to more about the history of the faith and get acquainted with some of Christendom's brilliant thinkers like Justin Martyr, Ambrose of Milan, the Cappadocian Fathers and of course Augustine. Very easy to read. As I read this book, I stood amazed at how little I knew! I am already now gripped with volume two, which I will report when I finish!

Book Reading Goal Review
Books Read So Far : 2 book
Remaining Books to Achieve Target : 48 books
Weeks Remaining to Achieve Annual Target : 50 weeks

Constitution of Zambia (Amendment) Bill 2010 : Part IV

Composition of National Assembly

Article 56 seeks to increase the number of MPs substantially :  

(1) The National Assembly shall consist of—

• (a) two hundred and twenty-five members (225) directly elected on the basis of a simple majority under the first past the post segment of the mixed member representation system provided for by this Constitution and as may be provided by, or under, an Act of Parliament;
• (b) thirty seats (30) on the basis of the proportional representation segment of the mixed member representation system from a list of candidates submitted to the Electoral Commission by each political party contesting the elections, as provided by this Constitution and by, or under, an Act of Parliament;
• (c) not more than ten members (10) nominated by the President under Article 68; 
• (d) the Speaker.

(2) Clause (1) (a) and (b) shall be subject to clause (3) of Article 184.

(3) Clause (1) (b) shall come into operation on the date prescribed by, or under, an Act of Parliament.

Clause (3) of Article 184 referenced above denotes that Parliament may enact legislation prescribing a different electoral system for the election of members of the National Assembly, subject to a Bill supported by the votes of not less than two-thirds of all the members of the National Assembly. In short, the electoral system presented in the Bill is not set in stone. Its quite possible to move to more members elected through Proportion Representation or fewer than suggested! It will be up to parliamentarians to decide!  In general I think all systems have their pros and cons and the evidence on how such systems affect economic growth is unclear. I may do a quick summary on this as a separate post later.

That aside, there are two key problems I have with these provisions.

A Pro-Corruption President?

"For those (candidates) offering you bribes in form of money to vote for them, take the money, use it but vote (with) your conscience"

President Rupiah Banda encouraging his party members to take bribes but "vote with your conscience". Not sure which "conscience" he is appealing to. It can't be the same conscience that allows one to take bribes.  This is a new low for the Republican President. I thought he is there to defend the rule of law? How can a President serious encourage people to engage in corruption? 

Zambia As A Fast Growing Economy (Guest Blog)

Economic growth and development has traditionally been subject of economics since Adam Smith and it is still focused by theoretical, methodological practical experts as well. Despite our increasing knowledge, the international community emphasise and point to the importance of research into this field. The relation between the economic growth and the development of a nation is excessively debated among the economists and the international development agencies. In the case of Zambia it has even become a political football with a number of opposition politicians refusing to accept the fact that Zambia's economy has experienced strong growth in recent years, with real GDP growth in 2005-08 about 6% per year. This performance has been lauded by many independent international observers and Zambia has been dubbed by the Economist magazine as ‘the lion kings’ putting Zambia alongside the Asian tigers.

Mining Taxation In Zambia (A Response to Trevor Simumba) (Guest Blog)

The article by Comrade Trevor Simumba states that "Australia is now implementing the Mineral Resource Rent Tax (MRRT), which is a proposed tax on profits generated from the exploitation of non-renewable resources in Australia. It is the replacement for the proposed Resource Super Profit Tax (RSPT). The profits-based tax, to be levied on 30% of the ‘super profits’ from the mining of iron ore and coal in Australia, is proposed to be introduced from 1 July 2012.”

If this reflects the total of what Australia extracts as tax revenue from mining operations in the country, then Zambia extracts more in tax revenues than Australia. Currently, mining companies operating in Zambia are taxed as follows:

Zambia Weekly - Volume 2, Issue 2

Zambia Weekly - Week 2, Volume 2, 14 January 2011

Why access to clean water is important

This recent film documentary by Water Aid highlights how water problems in our rural areas interacts with other rural challenges e.g. health, gender empowerment. Water Aid are quietly doing very important work with their water pump projects and it deserves much support. Sometimes I wander what our rural areas would be like without the priceless work of these NGOs :

A Broken Campaign Tool

President Banda in 2008 :

Acting President Rupiah Banda has promised to increase the Constituency Development Fund (CDF, from the current K400 million to K1 billion once elected as President of Zambia. The Acting President said this when he arrived at Chibefwe Basic School grounds in Mkushi district Saturday afternoon. The Acting President was in the district to drum up support for his presidential campaign election scheduled for 30 October 2008.

Minister Chituwo in 2011:

Government has increased the Constituency Development Fund -CDF from 665 million to 720 million kwacha for the year 2011. Local Government and Housing Minister Brian Chituwo says this is because the fund has been appreciated by people at constituency level.

The idea behind the CDF is to empower local communities by providing a pot of funding for health, education and other initiatives. Although some great projects have actually been accomplished through it,  in practice, it is more of a political tool at election time. In 2008  the CDF budget was released on the 7th October 2008, in good time for the 30th October elections! In the last campaign it was again used with a promise of rising to K1bn. 

An excellent paper by the International Budget Office explains what is wrong with CDFs. Seeing that I am anti-CDFs,  I suppose I should thank President Banda for breaking his campaign promise of K1bn. Its a weird world! 

A uranium world out of control?

Wikileaks cables have revealed a disturbing development in the African uranium mining industry: abysmal safety and security standards in the mines, nuclear research centres, and border customs are enabling international companies to exploit the mines and smuggle dangerous radioactive material across continents.

In case you missed this important news item you can read it all here. The issue of uranium safety and security is something we have kept our eyes on since various discoveries (e.g. Kariba, Gwabe) -  we recently flagged up concerns from NGOs on Is Zambia Ready for Uranium?

Constitution of Zambia (Amendment) Bill 2010: Part IV

Provincial Ministers, Deputy Ministers and Cabinet Composition

There are several articles that puts forward provisions relating to the ministerial teams. Three are particularly problematic.

Article 52 :

(1) The President shall appoint not more than twenty-one persons as Ministers, or such number of Ministers as the National Assembly may approve, from amongst members of the National Assembly.

Article 53 :

(1) The President shall appoint a Provincial Minister for each province from persons who are members of the National Assembly.

Article 55 :

There shall be a Cabinet consisting of the —

(a) President and the Vice President;

(b) Ministers; and

(c) Provincial Ministers.

There two problems that emerge from these provisions :

Does Zambia need more bye-elections?

Yes. According to this rather strange article via Lusaka Times. I have to say I disagree with nearly every point but thought it was worth sharing so that others see what Zambians are reading / writing elsewhere. If I am pressed I can debunk each and every point raised but I will leave it to the readers to reach their own conclusion :

Why Zambia Needs More, and not Fewer, By-Elections, Elias Munshya wa Munshya, Lusaka Times, Commentary :

Just this year Zambia has had several by-elections. Some came as a result of death of incumbents while some were necessitated by expulsions or resignations. In a few months’ time, another by-election will take place in Mporokoso, after the resignation of its MP, Maynard Misapa.

Several NGOs, some politicians, and a good number of candid citizens have condemned the number of by-elections that Zambia conducts each year. By-elections are condemned as expensive and in some cases as unnecessary. Most recently a prominent Zambian political party said the money used for by-elections, which runs in billions of kwacha, could be well used for other developmental projects. However, I wish to argue in this article that Zambia needs more by-elections as they have more benefits for our growing democracy.

Constitution of Zambia (Amendment) Bill 2010: Part IV

Office of Vice-President

Article 50 provides provision related to appointment of the Vice President :

1. There shall be an office of Vice-President of the Republic.
2. The Vice-President shall be appointed by the President from amongst the members of the National Assembly.
3. A member of the National Assembly shall not be appointed as Vice-President if the member has dual citizenship. 
4. Subject to the provisions of this Constitution, the Vice-President shall vacate that office upon the assumption by any person of the office of President.

The above is the well debated rejection of a "running mate". The arguments for having a running mate are well known, not least because it would save money. The Presidential bye-election cost Zambia (and the donors) around $70m. Changing Article 50 can ensure we never spend that amount of money again.

Broke institutions (ECZ), 4th Edition

“It is ironic to see that government hastily sourced money to sustain the operations at Finance Bank but is failing to mobilise enough resources to fund the Electoral Commission. It goes without saying that the excuse of having no funds from government cannot be acceptable by right-thinking Zambians but that government lacks political will to both fund the Commission and to conduct a voter registration exercise that is comprehensive....Further, it is mystifying to note that this is happening when most government leaders were calling for the extension of the exercise in their constituencies despite their knowledge that government owes the Commission huge sums of money in the previous two exercises and no attempts are made to either pay the Commission the outstanding amounts or allocate enough resources to its operations"

FODEP highlighting something that we have noted many times.  The problem with many of our institutions is not that they are poorly run, its just that government does not want them to run properly. A while back there was a proposal by Justice Mambilima to ensure there was a legal provision to compel government to fund the NCC. Not sure what happened! But we shall find out as we continue the review of the draft constitution bill. 

How long will Justice Mumba keep begging? 

The Treason of Nawakwi

Nawakwi said when the government sold the mines; the price of copper was hovering around US$2,900. She said when she argued that the price was too low; the buyers said it was uneconomical for anyone at that time to invest into the Zambian economy, saying that was why the mines were sold for a song. Nawakwi said the buyers projected that in their lifetime of 15-20 years, the price of copper would not go beyond US$3,000.

“That is how the story of windfall tax came in, ‘what would happen if their theory was proved to be wrong’? And all concerned said ‘let’s exploit the concept of sharing the profit unexpected at the time of the sale’,” Nawakwi said. “Truly it has come to pass that the dip in copper prices was temporary. The price of copper has grown by over 100 per cent. What is in it now is not the royalty because the royalty was fixed. You can increase it by 10 per cent, it is nothing compared to the opportunity cost of a Zambian not owning a mine.”

Edith Nawakwi once again defending her role in the selling of the mines. When is Hon Nawakwi going to apologise to the Zambian people for falling under the spell of IMF undergraduate economists? Her story has never made sense to me. She said exactly the same thing in 2007. My position has not changed. Everytime ordinary Zambians start fighting for greater mining revenue she appears from no where as a pro-poor champion. There's no Zambian finance minister who has done more to sell our people to the yoke of poverty than Edith Nawakwi. She has never come clean. Infact Nawakwi knew where all the Development Agreements were buried but she never said a word! It took academics to unleash the documents on the world. She needs to start every sentence on this issue, with "I am sorry for my incompetence when I was Finance Minister........"

Zambia is Growing

From the Economist's daily chart on Africa's impressive growth. (HT : Richard)

Constitution of Zambia (Amendment) Bill 2010 : Part IV

Ratification of Appointment by National Assembly

We resume our selected review of the draft bill with Article 49 :

(1) Where any appointment to be made by the President is expressed by this Constitution to be subject to ratification by the National Assembly, the National Assembly shall not unreasonably refuse or delay the ratification.

(2) Where the ratification is refused, the President shall appoint another person to that office and shall submit the appointment for ratification by the National Assembly.

(3) Where the National Assembly refuses to ratify the second appointment, the President shall invite the National Assembly to ratify another appointment for the third time, but the third

appointment shall take effect irrespective of whether the National Assembly refuses the ratification, or delays it for a period of more than fourteen days.

(4) Subject to the other provisions of this Constitution and any other law, any person appointed by the President under this Constitution or that other law may be removed by the President.

(5) Nothing in this Article shall prevent Parliament from conferring functions on persons or authorities other than the President.

There's a principle in game theory we call the "chainstore paradox". You can check the Wikipedia link for full explanation of the theory but the general gist of it is that if the final outcome is set in stone then the game essentially unravels backwards. The whole full game need not be played. 

So lets play this out with the above provisions.  

According to the provision above, the President gets to nominate three times. At stage 3 he will always get his preferred person.  So what will happen at Stage 2? Well at stage the MPs will know that at Stage 3 the president will always get his man, so why put a fight at Stage 2?  So game theory suggests that they will always fold at Stage 2.  Now if at Stage 2 they always fold, then what will they do at Stage 1? Well at Stage 1 they know that he will always get his man at Stage 2, therefore why put up the fight at Stage 1?  So what do we get? Well at Stage 1 the President chooses his man and always wins.

That is the value of an economic framework in policy development. 

As a pro-bono economic adviser to you the Zambian people, my advice is that  this piece of legislation is not good because it will always result in the President choosing his man. The reason is because the deterrence effect has been removed by automatically ensuring that in Stage 3 he always get his man! 

Is there a way out? 

Yes! The Mung'omba Draft Constitution suggested that the game should be indefinite for many provisions except a few.  That of course was rejected by the NCC without explanation (see page 445 of the NCC Initial Report). I would go further by ensuring that for those posts regarded as "critical" (i.e. not subject to indefinite ratification process) they would only be approved on temporary basis e.g. 12 months and then they come back to Parliament. This is a slight modification of the American system. 

What I don't understand is why the NCC Parliamentarians did not see the folly of what they proposed!

The important point to note here is that this is not an academic exercise. If your ratification process is flawed then you will have weak separation of powers. The power of the Legislature does not just reside in making laws but also in its ability to check the Executive. The above provision is weak and should be replaced with what I have suggested. 

The Zambian Economist is currently reviewing the Constitution of Zambia (Amendment) Bill 2010 before it formally responds to the Legislature. All posts in this ongoing review can be found at the Constitution of Zambia page.

Formal Sector Employment, 2009

A report from the Central Statistics Office reveals a top heavy employment scenario - 1 in 3 employees work for the government. 1 in 5 are civil servants in central government department :

Formal Sector Employment, 2009

The 2009 Employment and Earnings Inquiry Report reveals that the estimated number of workers in the formal sector increased slightly between first and second quarter 2009. In the first quarter, the number of workers was estimated at 659,582 while in the second quarter, the number of workers increased by 1.8 percent to 671,246. The increase in the overall number of workers is largely attributed to the Financial and Insurance activities and Construction industry, which registered growths of 21 percent and 20.8 percent, respectively.

An indictment of a diminished culture

The belief that everything foreign is better than locally produced has affected all parts of [African] society. Some studies suggest that Africans are the largest absorbers of all foreign materials, from beauty products to re-used products. Nigerian alone imports close to 500,000 containers of reused items including computers and radios according to CNN....African presidents today are known for their designer suits, than for their traditional attires like King Mswati of Swaziland who seems to have been the remaining one to stick to his traditional dress. Interestingly, this belief in foreign items and philosophy is firmly rooted even among the structures of Government. Apart from the Tanzanian parliament, the majority of African parliaments converse in a foreign language.

The clear mark of diminishing African value includes the barrier to African dress when one wants to attend a parliamentary session. This is in short the most ridiculous rule for a continent struggling to find a voice and place in global society. Equality cannot be in terms of how white or how much one has adopted the “so called civilization” but acceptance of human diversity in a global society that have similar moral and social obligations to one another. Lawyers still dress as if they are in London, children in school learn of the philosophies of the British and others, while there are very little details about African philosophy and way of life even in schools in rural Malawi or Uganda.

The thoughts of Nelson Mandela as he adopted and later abandoned armed struggle, the thinking of Mozambican Samora Machel, the political system of Julius Nyerere, the rise and fall of Mobutu Seseko, the birth of a democratic South Africa, the HIV/Aids conquest in Senegal, all these are African stories that are yet to be taught.

From  Kondwani Munthali's fascinating post on Reflecting Africa's Diminishing Values.

GDP on the up!

We continue our post leave catch with this interesting projection from the Central Statistics Office (CSO) that the economy probably grew by 7.1 percent in 2010,  higher than the earlier forecast of 6.4 per cent. The growth is attributed to rise in copper production as demand for the metal surged. 

Economy expected to grow by 7.1 Percent in 2010, Central Statistics Office Bulletin, December 2010, Report:

The preliminary estimates of Gross Domestic Product (GDP), i.e., the total value of goods and services produced in the country, show that the economy is likely to grow by 7.1 percent in 2010 compared to the 6.4 percent recorded in 2009. The preliminary estimates of Gross Domestic Product are based mostly on data up to the second quarter of 2010. 

Book Reading Goal : Week 1

This week I begun the annual book reading goal with an important classic as I prepared for a new release by the same author. The title is Until Justice and Peace Embrace by Nicholas Wolterstorff. The book was released in 1983 and is formed from the Kuyper lectures Wolterstorff gave in Amsterdam. In this classic Wolterstorff lays out the foundation on why we must agitate for justice and peace in our world. In particular the important of having a praxis oriented approach that actively moves us to side with the poor. Perhaps no philosopher has had a greater impact on my view of justice and poverty than Wolterstorff.  I eagerly await his next volume on "love and justice" due out later this year even as I read a newly released compendium of essays by him.

Book Reading Goal Review
Books Read So Far : 1 book
Remaining Books to Achieve Target : 49 books
Weeks Remaining to Achieve Annual Target : 51 weeks

Mining Taxes in Zambia Need Sober Debate (Guest Blog)

Lately, a number of people including politicians who have no idea about Economics have been arguing for the Zambian Government to re-introduce Windfall taxes on the mines. However, much of the arguments for this re-introduction have been quite shallow and without much technical basis. Similarly, Governments’ response has been emotional and far from assured, rather the Government has instead been perceived to be in cahoots with the foreign mining firms.

However, it must be noted that Mineral extraction in most African countries including Zambia is a predominately “enclave” economic activity in which foreign mining companies import most of the equipment, technical, financial and managerial services needed to run their mines and export raw ore for further refinement or processing. Because industrial mining creates very few forward or backward linkages into the local or national economies, there is a consensus among UNCTAD, UNECA and the IMF that the paramount development benefit of mining in Africa is the potential to generate public revenue through a transparent tax and budget system.[1]

Everyone has conveniently forgotten the history of the privatisation of ZCCM and the role that the donor countries played in particular, the British Government and USAID. It should be remembered that it was the World Bank that paid the fees of the mainly British advisers to Government. The privatisation of ZCCM commenced in 1996, after GRZ and the Boards of ZCCM and the Zambia Privatisation Agency (ZPA) approved the ZCCM Limited Privatisation Report and Plan presented by UK based financial and legal advisors, NM Rothschild & Sons and Clifford Chance, respectively.

On the advice of the World Bank, and other bilateral donors, the Zambian government, desperate to attract foreign investors into the mining sector during the 1990s, changed the tax laws to give mining companies the tax breaks they were asking for through the secret Development Agreements, which today we realize were negotiated in bad faith. A number of prominent Zambians were part of these negotiations, including two current heads of political parties. More importantly, the current Minister of Finance and other senior Government officials were privy to the negotiations and technical studies done at that time and should in the national interest provide open facts so we can make our own better informed analysis of the facts on the matter.

We know that Mining companies are generally against windfall taxes as they view windfall profits as a compensation for the financial risks of their operations. This signals an unwillingness to share, in a reasonable fashion, the rents of mining activity with governments while at the same time expecting tax subsidies to compensate them for financial risk. Multinational mining corporations, and their subsidiaries in Zambia, have been announcing huge profit increases since the mid-2000s, resulting from the unexpected steep increases in international prices of gold, copper, cobalt, platinum and other minerals. In fact, current projections state that copper will go beyond the US$10,000 per metric tonne within the first six months of the year. It closed the year 2010 at US$9,200 per MT. The question we should all be asking and debating is how best can the country utilise this opportunity for the creation of wealth for Zambians on a sustainable basis?

It is important that as this debate moves on it is done based on facts and it would help a lot if politicians both from the Opposition and the Ruling parties came clean first on their role in this decision. In Australia, it led to the removal of a sitting Prime Minister and a renegotiation by the new Prime Minister who campaigned on the basis she would re-negotiate the deal with all stakeholders. Instead of a super profit tax as earlier planned, Australia is now implementing the Mineral Resource Rent Tax (MRRT), which is a proposed tax on profits generated from the exploitation of non-renewable resources in Australia. It is the replacement for the proposed Resource Super Profit Tax (RSPT).

The profits-based tax, to be levied on 30% of the "super profits" from the mining of iron ore and coal in Australia, is proposed to be introduced from 1 July 2012. The RSPT was initially announced as part of the initial response to Australia's Future Tax System review, known as the Henry Tax Review, by the Treasurer, Wayne Swan and the then Prime Minister, Kevin Rudd. The tax is similar in concept, although different in operation, to the existing Petroleum Resource Rent Tax levied on off-shore petroleum extraction activities. The statement from the Australian Government stated that: “The breakthrough agreement keeps faith with our central goal from day one: to deliver a better return for the Australian people for the resources they own and which can only be dug up once. It is the result of intense consultation and negotiation with the resources industry.”

Surely, if a developed country like Australia sees the need to gain more from their mineral resources why is it so difficult for Zambia to do the same. It is vital the Government of Zambia engages all stakeholders, the Chamber of Mines, business community, trade union leaders, mining experts, academia, economic, financial and legal experts and any other well meaning Zambians and let 2011 see Zambia implement a new and more sustainable mineral tax regime for the country. Does Africa always have to wait for donors to do something good for their own countries'?

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[1] Africa Analysis, Volume 5, Issue 1; ‘Breaking The Curse A CASE FOR TRANSPARENT TAXATION; Compendium of NGOs

Trevor Simumba

The guest author is an international business consultant currently based in the United Kingdom