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Tuesday, 29 March 2011

Raising Government Revenue in Africa

The IMF's Mark Plant has an interesting piece on the key tax reform priorities facing African governments. Nothing we have not highlighted in the Zambian case, but it is interesting to see that Mozambique is cited as a "country success" worth studying further in this area :

Governments in Africa have a prime objective—to reduce poverty. To improve living standards and create jobs, they need to provide their citizens with better health care, better education, more infrastructure. They need to build hospitals, schools, and to pay doctors, nurses, teachers.
All this costs money. How to pay for this—in a way that is both fair and efficient—is a question that all governments face.

Monday, 28 March 2011

Tollgated Zambia? 2nd Edition

Its over two years now since government sounded the idea of introducing toll gates on pedicle road. As was reported at the time, rail operators were also pushing for a national wide introduction of toll gates to encourage modal switch to rail. The government has now come good, or bad depending on your view, with the introduction of the Tolls Bill 2011 - embedded below

The Bill has some good things. Particularly welcome is the creation of a specific Agency that would regulate toll roads. Its also good that the revenue pot from charging is being "ring fenced" for road related work. But three specific problems stood out which must be clarified.

First, the extent of toll roads. The way the Bill is currently drafted there's an expectation that a toll road can be imposed on any road : "The Agency may, on any road, border post, bridge, pontoon or other place - (a) operate toll points; and (b) erect and maintain such structures necessary for operating toll points. That is too broad sweeping.  It erodes the power of local councils to dictate what happens on local roads. I thought we were moving towards decentralisation. At present it sounds like a toll road can be erected right outside your house! Surely the current wording can't be right!

Sunday, 27 March 2011

The Jubilee Declaration

A good friend recently shared the "Jubilee Declaration" - a document produced by the People's Pact which is attempting to rally the opposition together. Naturally,  Zambian Economist does not endorse or oppose the document. It is being shared for information and reflection only. The document has created a lot of buzz in the blogosphere and therefore it would wrong to deprive esteemed readers from it. Ignorance is our core enemy. 
People's Pact - The Jubilee Declaration 2011

Saturday, 26 March 2011

Constitution of Zambia (Amendment) Bill 2010: Part XI

Political Parties' Commission

Part XI, Article 202, establishes the Political Parties’ Commission:
  1. There is hereby established the Political Parties’ Commission which shall consist of five part-time members who shall be appointed by the President, subject to ratification by the National Assembly.
  2. The Political Parties’ Commission shall be responsible for— (a) the registration and regulation of political parties; (b) monitoring the general conduct of political parties; (c) the promotion of co operational harmony between and among political parties; (d) the arbitration of disputes between members of a political party, and between and among political parties; and (e) any other function provided by, or under, an Act of Parliament.
  3. Parliament shall enact legislation to provide for the functions, composition, tenure of office, procedures, operations, administration, finances and financial management of the Political Parties’ Commission.
This provision effectively reduces the democratic nature of our politics. As the President effectively appoints and houses the Commission, he effectively controls this commission. The provision is an attempt by the current government to control political parties and must be opposed. The case for moving beyond current national legal framework and introducing this commission has not been made.

Zambian Economist is currently reviewing the Constitution of Zambia (Amendment) Bill 2010. All posts in this ongoing review can be found at the Constitution of Zambia.

Book Reading Goal : Week 12

After a slight pause with the reading, I have returned this week with another Lembani Trust publication - Kalonga Gawa Undi X : A Biography of an African Chief and Nationalist, by Walima T. Kalusa. It does exactly what it says on the tin - it provides a biographical account of the late Undi. It was fascinating reading about his contributions to the freedom struggle and how he became disillusioned with Kenneth Kaunda and Frederick Chiluba. 

Kalonga Gawa Undi X. A Biography of an African Chief and NationalistMany of the themes explored we have already touched them on both the House of Chiefs and this website. In particular, the central thesis of the book, which is that far from the predatory picture painted by Mamadani and others, Zambians chiefs steered a careful course and were not merely instruments of oppression. Undi was to all intents and purpose one of the fathers of modern independence, alongside Chief Mphanza. They used their traditional and financial muscle to steer the independence struggle pro-actively. See previous reflections on this post, which I hope to expand on in the future in light of this book.

This is the third Lembani book I have read - previous books here and here. Although I have enjoyed all the three books, and will prove useful sources of references, I was generally disappointed with their length. But as I have reflected it is certainly the right size for a Zambia audience. Its my view that a book 100 pages or so is more likely to be read than a 300 page volume. We don't exactly have a reading culture. So I hope Lembani continues to keep them that length.  These books are a must read for all Zambians, especially the new generation born after 1980. However, the size does certainly mean that it would be counter productive to offer a lengthy review on it, along the lines I prefer. Just in case you have been wondering why they have not made the review list. 

Books Read So Far : 9 books
Remaining Books to Achieve Target : 41 books
Weeks Remaining to Achieve Annual Target : 40 weeks

A New Dawn Beckons for Zambia?

For the first time in my life, I heard a Zambian politician focus on issues affecting our people and offer practical proven solutions that not only offer Zambians a way out of this current cycle of poverty and depravity and also allows them to take a leading role in effecting the change they want to see.

I have become accustomed to the insults that our politicians hurl at each other every day but to see a young man separate the issues from the personality was truly a breath of fresh air. Elias gave clear concise, everyday common sense solutions that are not only practical but are happening in every place where issue-based politics are practised.
Going by this quote, it appears Elias Chipimo has captured hearts of the Zambian diaspora on his tour of the western world. You can read more from the recent experience of a Zambian who attended his talk via Zambia News Features.  We hope to get copies of his recent book for review - Unequal to the Task? - Awakening a new Generation of Leaders in Africa

Mining Development in Zambia (Ministerial Update)

A recent ministerial statement on the current state of mining development in Zambia. Granted, it is missing key financial facts (e.g. size of investments, tax contributions), but it does provide a good update on new investments. It is also good to see that the older projects appear to have a longer lifespan (except for Mufulira which expires in 2017 - worrying given the level of local pollution there). Equally noticeable is that the much discussed China's Zhonghui International Mining Group project dubbed the "new Lumwana" appears to linger in the "exploration" stage. 

Friday, 25 March 2011

Rethinking Regional Integration

An important article on the current quest for sub-Saharan regional integration. It argues against a formal EU-like structure and instead proposes an African model that is responsive to the economic and political reality of the region. It says that the model should be underpinned by a security regime and should prioritise trade and regulatory cooperation The article essentially echoes the comments I made back in 2007, that deeper union may not be the answer and that the regional agenda should focus on infrastructure development. This is the integration SADC nations need at this stage of our growth not deeper free trading of the poor nations with weak governance structures that will only benefit the likes of South Africa and Botswana which are closer to the 'global average'.

Support for regional economic integration in Africa runs high among the continent’s international development partners and African elites. This is most loftily expressed in the African Union’s stated goal of achieving a continental economic integration scheme, the African Economic Community, by 2028.
As is often, however, the rhetoric does not match the reality. African economic integration suffers from a litany of problems, ranging from overlapping memberships, through unfulfilled commitments, to unrealistic goals (Dinka and Kennes 2007, Draper et al. 2007, UNECA 2006 and 2008).

The right tool for the wrong job

It is my contention that the dominant model pursued in Africa mimics European forms, and as such is not appropriate to regional capacities and may do more harm than good. In recent research (Draper 2010), I set out to reconceptualise the foundations of African economic integration through reviewing relevant debates within the international relations and economics literatures.

The political case for regional economic integration

Why do we have few women in Parliament?

"I am going to stand for election as president this year. In the past women were not standing because of intolerance from men who are scared of women and want to stop them from participating in politics"
- Edith Nawakwi

"As women we have taken ourselves into the political arena but the challenge is the adoption process. On adoption, most political parties don’t pick women because we do not have financial muscle. Women are just taken as dancers for male politicians but we want to contribute as well, as MPs or councillors. As you know, men are usually the ones picking candidates, hence women are usually disadvantaged. Because of the greediness of the men, we are not attaining the 50-50 gender representation. It will take long for women and men to have equal representation in parliament because of this greediness among our men"
- Elizabeth Phiri

From this recent IPS article.  I recently touched on this issue here. Ms Phiri is closer to the truth than the hapless Nawakwi. Men cannot be scared of women politicians because men on average have more financial resources than women. But Ms Phiri is also not quite there. 

There are only two possible reasons  why we don't have enough women MPs. Either society does not value them, for whatever reason, so it does not currently demand them. Or society values them but they are structurally prevented them from doing so. I think the answer lies somewhere in between. Ms Phiri is right that the lack of resources structurally prevents women from taking part, but I think we would also be right to note that society is signalling that it does not quite think women are currently up to bar. Why? Because not all contests are down to money, but even if it was down to money, if society valued women enough it would do what it can to pool resources to ensure they get through. So we value our women in different spheres of life, but at present not enough to want to see them occupy many seats. That does not mean we do nothing about it, but it does at least help us see the real problem!

What now for ZAMTEL? 2nd Edition

Ministerial statement on ZAMTEL in light of UN resolutions 1970 and 1973 as made available on Parliament Online :
Ministerial Statement on ZAMTEL and UN Resolutions 1970 & 1973

The Mauritius Miracle

Stiglitz highlights three key lessons from Mauritius growth experience - pursuit of social cohesion; minimal military expenditure; and investment in human capital. We have previously touched on this as part of "country success" series - see  Why is Mauritius so successful? Empirical evidence appear to caution against extrapolating too much from the Mauritian experience.  

Suppose someone were to describe a small country that provided free education through university for all of its citizens, transportation for school children, and free health care – including heart surgery – for all. You might suspect that such a country is either phenomenally rich or on the fast track to fiscal crisis.

After all, rich countries in Europe have increasingly found that they cannot pay for university education, and are asking young people and their families to bear the costs. For its part, the United States has never attempted to give free college for all, and it took a bitter battle just to ensure that America’s poor get access to health care – a guarantee that the Republican Party is now working hard to repeal, claiming that the country cannot afford it.

Thursday, 24 March 2011

Zambia APRM : Country Self Assessment Report

A very useful report for recent facts and figures pertaining to governance issues. You can find this and other reports at the APRM Zambia website.
Zambia - APRM Country Self Assessment

Barriers to Justice (Crowded Courts), 3rd Edition

Interesting perspective from Judge Catherine Makungu. The Kitwe High Court judge believes that the crowded nature of the courts is due to slow progression of cases by state prosecutors. The charge does not seem to hold much water because judges determine the procedures and can always quicken the process if they so wished. We have previously touched on the problem of crowded courts here and here.

Wednesday, 23 March 2011

A SADC Schengen? 3rd Edition

Now three years after it was first proposed, the picture regarding the regional schengen visa system dubbed Univisa remains unclear.

At a recent Arusha meeting,top tourism chiefs from SADC called for regional governments to endorse a single visa program that would ease movement of tourists in the region. There was some concern that the Univisa is timely as the number of foreign tourists visiting Southern Africa has been on the increase since the 2010 World Cup. In the words of the Zimbabwe representative, "A tourist in Angola needs a visa to enter Botswana or South Africa, a situation that takes days and unnecessary delays. Someone should pass through border restrictions before getting through to another member state".

What is muddies the water is this proclamation from COMESA Secretary General Sindiso Ngwenya that "there is political will at a very high level in the region, to ensure that there is free movement of people among member countries". According to Mr Ngwenya the "free movement of goods in the region should be complimented with free movement of people". A view which appears to have been endorsed by George Kunda. According to Mr Kunda, "regional integration will not be achieved in the COMESA region if the basic tenets such as free movement across the borders are not addressed".

So what is on the agenda- a SADC Univisa or complete movement of people in COMESA? Zambia of course has duo problems of not fully endorsing the Univisa proposal and belonging to two organisations.

Related Posts :

Parastatal Madness, 13th Edition

Our longest running "edition" reaches its "13th letter" with the recent revelation that government owes 199 former Zambia Army employees over  K3bn. According to Mr Mulyata (Deputy Defence Minister) "the delay in paying the ex-employees is due to under funding". As for when they will be paid? That will depend on "when the money is available".

Related Posts :

Tuesday, 22 March 2011

JCTR Press Release : Sovereign Credit Rating

Press Release by JCTR :
Zambia's Sovereign Credit Rating May Increase Zambia's Debt Burden 

Zambia has been rated with a B+ by an American Credit Rating Agency, Fitch Ratings, as announced by the Minister of Finance on 3rd March 2011. The rating is meant to estimate Zambia’s credit worthiness and has been partly influenced by among other things; low levels of external debt, a fast growing economy and a stable political environment. With substantial debt reduction through the Highly Indebted Poor Country (HIPC) and Multilateral Debt Relief Initiative (MDRI), an annual average economic growth rate of 6.1% in the last five years and a stable political and economic environment; Zambia’s credit worthiness has improved and thus has joined countries like Ghana, Kenya and Angola and can now access credit on the international market by issuing bonds.

Monday, 21 March 2011

A Broken Campaign Tool, 2nd Edition

New signals that the Government plans to increase the Constituency Development Fund (CDF) to K1 billion :
A senior Government official has proposed that the Constituency Development Fund (CDF) be increased from the current K720 million to K1 billion if its impact was to be felt by all constituents in the country. Presidential Affairs Minister Ronald Mukuma who is also Kabompo East Member of Parliament said the increment would help Government fund many developmental projects in various constituencies using the CDF.....The Minister said Government must consider increasing the CDF because of the fund’s contribution in supplementing Government efforts to take development to all parts of the country. Mr Mukuma expressed happiness that the money was being put to good use and for its intended purpose in his area.
In 2008, the then MMD Presidential Candidate Rupiah Banda promised that once elected he would increase it to K1bn.

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

Sunday, 20 March 2011

Constitution of Zambia (Amendment) Bill 2010: Part XI

Gender Representation in Elective Bodies

Article 183, clause (4) – (6) :
(4) The electoral system shall ensure that— (a) the representation of each gender is not less than thirty percent of the total number of seats in the National Assembly, district council or other public elective body; and (b) there shall be equitable representation of persons with disabilities and the youth at all levels of governance.
(5) Parliament shall enact legislation— (a) to ensure the conduct of free and fair elections; and (b) to provide a formula for achieving the purposes under clause (4).
(6) Clause (4) (a) shall come into operation on the date prescribed by, or under, an Act of Parliament.
The above provisions establish a minimum floor representation for women and men at 30% each. This is a sensitive provision which probably explains why it has received zero public debate. No one really wants to be seen as arguing against greater female representation. But we should have no such qualms. All issues must be up for debate otherwise we are no different to the dead, and this provision does have problems.

The main problem is that it is about representation not specifying a minimum level of candidates. The question is how this would be enforced in practice.  It seems there are only two ways this could be done.

Saturday, 19 March 2011

Does Local Radio Access Improve Public Accountability?

Prior research has argued that citizens with greater access to mass media receive greater benefits from targeted government welfare programs, but has not addressed these questions for public services such as in education and health. Using unique data from Benin, this paper finds that literacy rates among school children are higher in villages exposed to signals from a larger number of community radio stations. The effect is identified based on a “natural experiment” in the northern communes of Benin where within-commune variation in village access to radio stations is exogenous to observed and unobserved village characteristics. In contrast to prior research, the authors find that this media effect does not operate through government accountability: government inputs into village schools and household knowledge of government education policies are no different in villages with greater access to community radio. Instead, households with greater access are more likely to make financial investments in the education of their children.

One of the interesting things that the authors draw out is the potential impact of advertising. Where government advertising dominates local radio station revenue streams this is likely to influence the content of radio stations perhaps further weakening the possibility of having programming that would hold government account. Access to non-government revenue therefore might be one way to minimise government capture and ensure their editorial independence. This does mean that urban radio stations are likely to be more independent than rural ones which because of their broader advertising revenue sources.

The other point related to the role of collective action. The authors note that what stops citizens from holding government accountable may not necessarily be lack of policy information. Rather the constraint might be weak incentives for collective action. For example their may coordination failure among citizens: citizens believe that all other citizens demand clientelist transfers from politicians rather than broad public goods, and therefore vote only the basis of clientelist performance. Such coordination failures may be linked to the absence of organizations, particularly political parties, capable of mobilizing citizens for collective action. In short for information to be useful local organisations need to emerge that uses it to push for change.

All of this matters to us because Zambia is experience something of a rise in local radio. We should continue to celebrate this development but also keep our eye on how to ensure that such radio stations are independent of government and local people start using the information to hold government to account. As the paper notes having more local radios does not necessarily lead to more accountability.

Friday, 18 March 2011

Constitution of Zambia (Amendment) Bill 2010: Part X

House of Chiefs

Article 177, clause (1) establishes the House of Chiefs :
There shall be established a House of Chiefs for the Republic which shall be an advisory body to the Government on traditional, customary and any other matters referred to it by the President or as may be provided by, or under, an Act of Parliament.
Article 178 sets out its objectives :
Without limiting Article 177 (1), the House of Chiefs may — (a) consider and discuss any Bill, referred to it by the President, dealing with, or touching on, custom or tradition before it is introduced into the National Assembly; (b) discuss matters relating to national development; (c) initiate, discuss and decide on matters that relate to customary law and practice; (d) initiate, discuss and make recommendations regarding the local community’s welfare; consider and discuss any matter referred to it by the President, or approved by the President, for reference to the House; (f) submit resolutions on any Bill or matter referred to it by the President, and the President shall cause the resolutions of the House of Chiefs to be laid before the National Assembly; and (g) recommend to the President persons to be bestowed with honours.
These provisions largely perpetuate the status quo. In particular, it maintains the House of Chiefs as an "advisory body" that carries no weight. It is a talking shop for chiefs. Chief Puta perhaps expressed it best when he called the House of Chiefs a “mere white elephant”. It drains resources that could be used in fighting poverty.

The absence of credible power has dissuaded many able chiefs from taking House of Chiefs matters seriously. Many intelligent chiefs find the House of Chiefs pointless and therefore do not take part in sessions. This has left the House of Chiefs in the hands of illiterate and corrupt chiefs. Corruption is always rife in advisory bodies because such entities are used by the Executive to reward political friends in exchange for staying in power.

Thursday, 17 March 2011

Linking Zambia (Zambia Weekly)

We have been posting weekly summaries from the Zambia Weekly. They have now set up a magazine self standing website. Be sure to check it out every Friday for weekly updates.

Wednesday, 16 March 2011

IMF - Zambia Watch (March 2011)

Press Release No. 11/84
March 16, 2011

An International Monetary Fund (IMF) mission visited Lusaka March 3-16, 2011 to conduct discussions for the sixth and final review under the Extended Credit Facility (ECF). The mission had fruitful discussions with Hon. Situmbeko Musokotwane, Minister of Finance and National Planning; Dr. Caleb Fundanga, Governor of the Bank of Zambia, other senior officials as well as representatives from the private sector, civil society and labor unions.

At the conclusion of the visit in Lusaka today, Mr. George Tsibouris, mission chief for Zambia, released the following statement:

The performance of the Zambian economy continues to be good. Real gross domestic product (GDP) growth in 2010 was adjusted upwards to 7.6 percent, boosted by the record maize harvest, a continued increase in copper and construction output and a rebound in tourism. Inflation declined in line with expectations in 2010, but has increased slightly since the beginning of 2011 (up to 9.0 percent in February). Nonfood price inflation remains in the low double digits. Net domestic financing of the government was 0.3 percent of GDP higher than targeted at end-2010 primarily as a result of higher interest payments and additional expenditures on the census and voter registration. The balance of payments for 2010 experienced a record-high current account surplus of about US$600 million (3.8 percent of GDP), with international reserves increasing to US$1.9 billion as of end-February 2011. Private sector credit has returned to pre-crisis levels in nominal terms, despite an increase in nonperforming loans and still high real lending rates. Following the Bank of Zambia’s recent action to mop up excess liquidity to fend off inflationary pressures, reserve money growth slowed to 10 percent (on an annual basis) through February 2011.

Economic prospects for 2011 continue to be favorable. Growth is projected to remain strong in 2011 (at 6.8 percent) and over the medium term. The 2011 budget is consistent with the maintenance of sound macroeconomic policies, while providing for much-needed investments in infrastructure. Revenue collections are now expected to exceed the projections in the 2011 budget, due in large part to increased taxes from the mining sector, which should provide room for additional infrastructure and pro-poor expenditures. Drawing on the experience in 2010, the government will need to ensure that its maize marketing role does not hamper private sector incentives and minimizes budgetary costs.

“The good economic performance and prospects provide a strong platform for the government to pursue policies aimed at boosting employment creation and at protecting the most vulnerable so that the benefits of growth are broadly shared. As noted in the government’s Sixth National Development Program, economic diversification will be of key importance in this regard, including in the promising sectors of agriculture and tourism.

“Discussions related to the sixth review of Zambia’s ECF are expected to continue in the coming weeks.”

Health Warning :  The GDP figure quoted by the IMF at 7.6% is wrong. See the BOZ Quarterly Brief and CSO briefing which confirmed it at 7.1%. 

Tuesday, 15 March 2011

Constitution of Zambia (Amendment) Bill 2010: Part X

Participation of Chiefs In Public Affairs 

Part X, Article 176, Clause (1) states:
A person shall not, while remaining a Chief, join or participate in partisan politics.
Article 176 limits the participation of chiefs in partisan politics. An immediate observation is that it is unclear on what is meant by participating in "partisan politics". Is it just participating in elections or is it standing for elected office? A simple reading of the text would suggest that it is both "joining" and "participating" in any way including issuing political endorsements. This raises obvious problems because we continue to see chiefs engaged in politics one way or another, when in fact clause (1) is already in the existing constitution.

In light of the above, one might therefore be within reason to conclude that this provision would only be enforced with respect to elected office. The question therefore is whether a deletion of Article 176 is necessary to liberate chiefs to vie for political office if they so wished. Should chiefs be allowed to stand as parliamentary or presidential candidates? The answer requires a strong rationale to be established and a careful balancing between the costs and benefits of giving chiefs additional political space.

The issue of greater political participation for chiefs was at the centre of the debate in the media during National Constitutional Conference (NCC). There were a catalogue of the contradictory positions taken by chiefs, ranging from the pro-participation camp of Chief Kapalaula and Chieftainess Chiawa to the anti-participation camp of Chieftainess Lesa and Chief Macha. In between we found some like Chietainess Nkomenshya advocating for strategic incoherence, preferring the constitution to be silent on the issue.

What determines remittances?

The results indicate that macroeconomic conditions in remitting countries and exchange rate fluctuations influence remittances. Remittances growth falls with an appreciating currency of Tonga, but increases with higher real GDP growth and lower unemployment rate in remitting countries. With regard to the impact of remittances in exchange rates, the analysis does not find evidence of ―Dutch Disease in Tonga. The real effective exchange rate does not respond significantly to the change in remittance flows.
From the latest paper on IMF working paper on - Determinants of Remittances : Evidence from Tonga.

Monday, 14 March 2011

Banda's Zambia

Another campaign video from President Banda :

Constitution of Zambia (Amendment) Bill 2010 : Part IX

Funds for District Council 

Part IX, Article 173 states:
(1) There shall be established a Local Government Equalisation Fund.
(2) Parliament shall, annually, appropriate a percentage of the total annual revenues of the Republic, as may be determined by the Minister responsible for finance, to the Local Government Equalisation Fund for the sustenance, development and administration of the communities in a district.
(3) The revenue referred to in clause (2) shall be in addition to revenues raised by a district council and retained by it.
(4) The Government may provide additional funds and grants beyond what is provided under clause (2) to a district council, conditionally or unconditionally.
This provision seeks to fiscally decentralise revenues with some central government money going into a pot for local councils. The idea is to guarantee a certain proportion of funding. I will leave aside the relevant question on whether this should be in the constitution and accept that is bound to be there. The question therefore is whether it raises more problems than it solves. A few problems are easily discerned. 

Sunday, 13 March 2011

The Case for An Effective Diaspora Policy (Guest Blog)

According to the latest World Bank’s Migration and Remittances Fact Book (2011), remittance flow worldwide were estimated to reach US$440 billion by the end of 2010, up from US$416 in 2009. About 75% of these funds or US$325 billion will and goes to developing countries, up from US$307 Billion in 2009.

Zambia in 2009, received an estimated US$68 million in remittances from those living in Diaspora through formal channels. What this entails is that there more funds that come through informal channels that are not captured on record. With well structured system that offers incentives for investments, Zambians living in Diaspora can become a giant investor in realizing our Zambia’s development agenda.

In the recent past, the line has been drawn and clearly acknowledged that Zambians living in Diaspora can contribute immensely to the development of our country given a well structured advocacy strategy that demands that government tap into the capital of the huge Zambian Diaspora population worldwide by offering them incentives to invest back home.

Friday, 11 March 2011

What now for ZAMTEL?

An important development :

The European Union has agreed to extend its economic sanctions against Libya to include the country's sovereign wealth fund and central bank. Three other financial "entities" will also be targeted. The Libyan Investment Authority (LIA) wealth fund holds about $70bn (£43bn) and has stakes in a number of large European companies. The US has already frozen about $30bn of Libyan assets, including those of the LIA and central bank.

An EU spokesperson said: "The funds and economic resources of the five designated entities will be frozen and an additional name will be added to the list of 26 individuals deemed responsible for the violent crackdown on the civilian population since 15 February and subject to an asset freeze." The extended sanctions will come into force on Friday.
The reason why this matters is that Libyan Investment Authority owns ZAMTEL. LAP Green Network is part of the Libya - Africa Investment Portfolio, which is part of the Libyan Investment Authority, the sovereign wealth fund for Libya. There are fears that people will now steal the various parts of Libya - the sanctions aside.

In the meantime, South Africa has frozen all Libyan assets on its soil :
South Africa's President Jacob Zuma has ordered the Treasury to freeze assets linked to Libyan leader Muammar Gaddafi and his associates, a government official said on Friday. "The process is underway and we are writing letters informing them that no money will be allowed to leave South Africa," foreign ministry spokesman Clayson Monyela, said without offering further details.

Local daily Business Day said the money is invested through the $5 billion Libya Arab Africa Investment Co (Laaico), through Libya Oil Holdings, Libya African Investment Portfolio and Libyan Foreign Investment Company (Lafico).

In South Africa, it owns Ensemble Hotel holdings, including the luxury Michelangelo Hotel in Johannesburg. Libya holds billions of dollars in assets in Africa through subsidiaries of its $70 billion sovereign wealth fund. The South African presidency said on Wednesday that Gaddafi called Zuma "to explain his side of the story". The statement said: "South Africa has openly condemned the loss of life and attacks on civilians and reported violations of human rights in Libya."
The questions : What is the government's current assessment of the situation? What are we doing about the situation? Zambians deserve answers to these questions.

Another day, another party, 9th Edition

N’gandu Magande has been appointed (or appointed himself?) as Interim President of the newly launched National Movement for Progress Party (NMPP).  According to NMPP Secretary General Logan Shemena the party was registered on 2nd March 2011. Daily Mail reports that the vision of the party is "to transform Zambia into a modern, progressive and vibrant society of a united and peaceful people". They are allegedly in the process of identifying "other capable and committed Zambians of integrity who would efficiently and effectively run the affairs of mother Zambia". We have previously noted Magande's ambition's here. I have lost count of these new parties but see the "related posts" section below for similar incarnations.

Related Posts :

Another day, another party, 8th Edition

Thursday, 10 March 2011

Constitution of Zambia (Amendment) Bill 2010: Part VIII

Citizenship by Marriage

Part VIII, Article 153 deals with how a non-Zambian can become a citizen through marriage:
(1) A woman married to a man who is a citizen, or a man married to a woman who is a citizen, may, upon making an application in the manner prescribed by an Act of Parliament, be registered as a citizen of Zambia.
(2) Clause (1) shall apply only if the applicant has been ordinarily resident in the Republic for a continuous period of not less than fifteen years immediately preceding that person’s application.
Clause (2) is unnecessary punitive and may cause enormous difficulties for those who marry abroad. If I understand this correctly, there’s no limit of time for how long you should have been married to a Zambian before you apply. You can be married for 1 month and qualify to be a citizen. The limit is on how long you have had to be ‘ordinarily resident in the Republic’. In short the clause does not convey any benefit for being married per se – the large advantage comes from living in Zambia for 15 years. But here it becomes bizarre because Article 152 already tells us : “....a person may apply to be registered as a citizen if that person has— (a) attained the age of twenty one years; and (b) been ordinarily resident in the Republic for a continuous period of not less than fifteen years immediately preceding that person’s application for registration”. So we see a person can apply for citizenship when they have been in Zambia for 15 years. So what is the advantage of being married?

The citizenship requirements should be designed to reward and incentivise those with deeper commitment to our country without encouraging “easy routes” which can be exploited. I would recommend that we follow a model where a spouse can become Zambian after having permanent residency for a period, say three years. Then they can apply for citizenship. Under the current draft people who are married abroad but relocate to Zambia with their spouses have a tough time. It results in a bizarre situation where a person has been married abroad for 5 years, relocates to Zambia, but her husband has to wait for an additional 15 years to become Zambian.

Zambian Economist is currently reviewing the Constitution of Zambia (Amendment) Bill 2010. All posts in this ongoing review can be found at the Constitution of Zambia page.

Wednesday, 9 March 2011

Banda on the Economy

Constitution of Zambia (Amendment) Bill 2010: Part VI

Appointment of Judges of Superior Courts

Part VI, Article 122 specifies key judicial appointment:
(1) The President shall, on the recommendation of the Judicial Service Commission, and subject to ratification by the National Assembly, appoint —
(a) the Chief Justice;
(b) the Deputy Chief Justice;
(c) the judges of the Supreme and Constitutional Court;
(d) the judges of the Court of Appeal;
(e) the judges of the High Court; and
(f) the judges of the Industrial Relations Court.
This Article is of course in existing constitutions but here it specifically includes the new “constitutional court”.

The goal of this provision is to ensure judicial independence – but not too independent that judges become a law unto themselves. In other words the three branches of government (executive, legislature and judiciary) are meant to convey legitimacy on one another.

Unfortunately, here it appears the government has played a trick over the sleepy citizens. The government would argue that the above article maintains the independence of the judiciary for two reasons. First, the Judicial Service Commission comes up with the original candidates, which the President selects. Secondly, Parliament always has the final say through the ratification process. But both of these points are misleading.

The Judicial Service Commission is appointed by the President according to Article 132, which states “(1) There is hereby established the Judicial Service Commission. (2) The members of the Judicial Service Commission shall be appointed by the President. (3) Parliament shall enact legislation to provide for the functions, powers, independence, composition, tenure of office, staff, procedures, operations, finances and financial management of the Commission”. Notice here that there’s no ratification of the Judicial Service Commission! The President just appoints and puts anyone on the Commission. He can fill the Commission with party cadres and then get them to nominate the relevant judges. The Commission services at the pleasure of the President and therefore can be fired by the President if he so wishes. Is there any incentive for the Commission to disagree with the President?

The other point should be obvious to readers of this series. The idea of parliament having a final say is a joke. The president’s choice of judges will always be approved by parliament due to the “chainstore paradox” problem we discussed under Part IV, Article 49. As we note there, 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. Here we see that sadly the Judiciary is effectively in the pocket of the President. 

These challenges are not impossible to overcome. One obvious way to strengthen the process is to prescribe those who may be part of the Judicial Service Commission. This is the  Kenyan model. This reduces the discretion of the President to nominate cadres to the Commission and thereby restricts his choice. It would make sense to go further and make it clear, like the Kenyans, that in the performance of its functions, "the Commission shall be guided by....[the need to ensure] competitiveness and transparent processes of appointment of judicial officers and other staff of the judiciary". This would essentially mean all the choices they recommend to the President would be based on open competition.

Zambian Economist is currently reviewing the Constitution of Zambia (Amendment) Bill 2010. All posts in this ongoing review can be found at the Constitution of Zambia page.

Tuesday, 8 March 2011

EITI Zambia Reconciliation Report

Zambia has initiated to become a “Compliant" country in the global Extractive Industries Transparency Initiative (“EITI”). To achieve this, it is required to undertake an Independent Reconciliation on selected payments made by mining companies with income received by the GRZ. The report makes fascinating reading. More detailed posts on this to follow.
Zambia EITI : Independent Reconciliation Report (2008)

Related Reports :

EITI Zambia Scoping Report
Zambia Joins EITI

Monday, 7 March 2011

Constitution of Zambia (Amendment) Bill 2010: Part IV

Petitioning Parliament

Article 87 deals with the right to petition and make comments to Parliament :
(1) Every citizen has a right to petition Parliament to enact, amend or repeal any legislation.
(2) Every citizen may comment on the deliberations, statements and decisions of the National Assembly.
(3) Parliament shall enact legislation to regulate the manner of petitioning and commenting referred to in clauses (1) and (2).
Article 87 is designed to encourage the public to get involved in shaping legislation directly. This is welcome but this appears to be an empty Article with no clear framework in mind. Two issues illustrate this. 

First,  under Clause 3 – Parliamentary legislation appears to relate to the “the manner of petitioning and commenting”. It should be clear that such legislation must deal with putting appropriate mechanisms for petitioning parliament. Right now it is a nightmare to petition parliament directly. There are lessons that can be learnt from other countries on this. It is vital that such legislation set benchmarks for performance. 

Secondly, how will Article 87 be enforced? Is this just a theoretical right that will have no practical effect? If we petition for a new law to Parliament, assuming a democratic and accessible process is developed, what happens if nothing happens? How will Article 87 result in tangible citizen driven participatory democracy?

So it appears that a cardinal aspect of bringing Parliament closer to the people is the least thought through of all the clauses. 

Zambian Economist is currently reviewing the Constitution of Zambia (Amendment) Bill 2010. All posts in this ongoing review can be found at the Constitution of Zambia page.

Sunday, 6 March 2011

Dual Citizens, Remittances and Investment

The debate on dual citizenship has been fairly frantic in recent times culminating in new provisions in the current Constitution of Zambia (Amendment) Bill 2010, albeit in an extremely limited way. At the heart of the pro-dual citizenship camp's argument was that the absence of the provision negated remittances and prevented legitimate Zambians abroad from getting involved in the economic life of the nation. What does international evidence tell us? A new paper finds some support from cross country evidence :
This paper examined the role of the recognition of the dual-citizenship on both the level of remittance inflows and the utilization of remittances in receiving economies of the developing world. It mobilizes a large cross-section of countries (103) observed over the period 2000-2009 and finds that countries which recognize a dual-citizenship status receive  more remittances than others. Moreover, the results also highlighted that remittances are strongly channelled into investment in these countries compared to the others.

The policy implications of these results are two-folds. First, the issue of the dual citizenship recognition would be taken into account among all the strategies designed domestically and internationally in favour of sustaining remittances. Second, the recognition of the dual citizenship also enters the debate on the ways to increase the benefits of remittance inflows by encouraging their reinvestment. The paper shows that countries which have already allowed getting a dual-citizenship perform better in terms of more investment motivated remittances.
The results make interesting observations, but unfortunately the paper does not deal sufficiently with some of the empirical challenges, particularly reversal causality issues. It appears the authors did not consider the possibility that remittances can also buy political influence. So is it that dual citizenship leads to remittances or does more remittances lead to the nation granting dual citizenship? Incidentally, the paper does not also control for things like conflict and culture. But it is still an interesting question. 

Saturday, 5 March 2011

Constitution of Zambia (Amendment) Bill 2010: Part IV

Tenure of Office for Members of Parliament

Article 69 deals tenure of office and vacation of office of members of parliament :
(1) Every member of the National Assembly, except the Speaker, shall vacate the seat in the National Assembly upon a dissolution of Parliament.

(2) The office of member of the National Assembly becomes vacant if—
(a) the member ceases to be a citizen of Zambia;
(b) the member resigns in writing addressed to the Speaker;
(c) the member becomes disqualified for election under clause (3) of Article 66;
(d) the result of an election for that member is nullified by the High Court under Article 74;
(e) the member acts contrary to a code of conduct provided by, or under, an Act of Parliament;
(f) the member resigns from the political party which sponsored the member for election to the National Assembly;
(g) subject to clause (6), a member ceases to be a member by reason of expulsion from the political party which sponsored that member for election;
h) having been elected to the National Assembly as an independent candidate, the member joins a political party; or
(i) the member dies.

(3) A constituency based member of the National Assembly who causes a vacancy in the Assembly due to the reasons specified under clause (2) (b), (c), (e), (f), (g) and (h) shall not be eligible, for the duration of the term of that Parliament—
(a) to contest any election; or
(b) for nomination, by the President, as a member of the National Assembly.
The objective of this article is prevent the party in government from capturing opposition MPs. This is achieved by making it clear under clause (3) that an MP who resigns or is fired by his or her party would no longer be able to re-contest the seat. It therefore strengthens the disciplinary force of the party in question over the individual MP. More importantly, it makes it less likely for an individual MP to resign to resign of her / his own accord.  There are two implications  that flow from this - the practical effect of the clause; and, the inherent credibility of the clause.  

The practical effect is likely to be limited because of the nature of the judicial system. An MP under this clause would not be able to stand again once fired by the party but there's nothing to prevent the MP from challenging the expulsion and letting the court determine. This as we have seen can run and run. The incentive to switch sides would only be diminished if courts where efficient.  So no effect there in the foreseeable future. Unfortunately, where it will have an effect is to eliminate the incentive for "principled" resignations. There would be no MPs who would genuinely disagree with their party position and resign but still go to serve their people as independents. So the law basically makes it difficult for principled parliamentarians to emerge publicly. 

The credibility question is also important - is this a law that should even be contemplated? I think the problem this law wants to solve is important in the presence of a predatory Executive but preventing people to re-contest infringes their democratic rights (not human rights). In a democracy every one should be free to vie for office and it should be up to the electorate to decide. We should focus on institutional changes that expands freedom positively rather than limiting people's democratic rights. This therefore seems like another bad law which will in any case have little practical effect. I suspect it was championed by a foolish opposition which thought it could make any difference. 

Zambian Economist is currently reviewing the Constitution of Zambia (Amendment) Bill 2010. All posts in this ongoing review can be found at the Constitution of Zambia page.

Thursday, 3 March 2011

Regional Watch

Murmurings in Mozambique on whether the time is now right for the government to renegotiate contracts with some of the mega-projects that have come to dominate the economy.

The Economist on the most expensive city in the world dubbed the "New Dubai". Unfortunately, in typical Economist style no coherent explanation of why this.

A familiar story from Tanzania. Despite claims of a boom in its  mining industry, the bulk of taxes paid to the government comprises deductions from the workers' wages.

Zimbabwe's health crisis reaches another crescendo as the government announces that the country has run out of the critical painkiller morphine - replacing it with indigenous medicine.

Wednesday, 2 March 2011

What's the future for Libyan owned ZAMTEL?

Had the Zambian government undertaken appropriate assessment of LAPGreenN, surely they would have come up with information that there is a possible threat to this investment exhibited by a change in the political situation in Libya. This should have been proved and counter-checked by Zambian intelligence security reports from Libya, as to how long the Gaddafi regime was going to hold on to power. Now it is time to protect our national interests by our not further losing control over such a strategic company.
Richard Mbewe touches on the problems of an headless foreign direct investment policy. I suppose the larger question is - does it ever make sense to allow another government, especially an authoritarian one, to own your strategic asset?  A point incidentally not mentioned in his assessment is that the world has begun to freeze Libyan assets - what implications does this have for ZAMTEL? Indeed, will Zambia even consider freezing these assets in line with emerging international actions? No easy answers, but surely Zambians deserve to know. What is the government's current assessment of the situation? These questions demand further exploration.

Tuesday, 1 March 2011

Five Questions on Zambia's Diversification (Monthly Essay)

This month's  short essay. More information on the Monthly Essay project can be found here. We value your feedback and suggestions for future topics.
Five Questions on Zambia's Diversification