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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.


  1. I feel that the quote from Richard Mbewe is nonsense. No one knew that this was going to happen in Libya. No matter how thorough the investigation or due diligence, the likelihood of such an event was near zero at the time of the diligence exercise.

    Hindsight is always 20/20, foresight is much harder.

    I however agree that there may be problems ahead for Zamtel as a result of the asset freeze. It may hinder investment plans.


  2. Although I would agree that it would have been nearly impossible to foresee the wave of 'uprisings' (?) sweeping across the mainly arabic spreaking world, it was always apparent that there were big problems with the 'privatisation' of ZAMTEL.

    1) LP Capital Partners

    The dubious identity of the company that is headquartered in a tax shelter was always clear. It belongs to Dan Gertler, who has extensive diamond and other interests in Central Africa.

    How much was paid to the likes of Dora Siliya and other MMD people in this deal?

    I remember Dora Siliya making herself available on Zambiablogtalkradio, and not taking questions on any except one single subject. Apparently she wasn't so sure she could answer questions about ZAMTEL.

    2) Privatisation?

    It is not 'privatisation' or 'showing what the markets can do' when a Zambian state owned company is sold to a Libyian state owned investment fund.

    3) National Security

    What are the national security implications of having the nation's main telecom company in foreign hands? And the hands of a totalitarian state at that? How about some nationalism?

    Privatisation has been a major opportunity for corruption. There is no way around it. As soon as a company is up for sale, the state no longer has an incentive to make it work, to invest in it, change management, to pay bills, etc. That's what happened to ZAMTEL - it was run into the ground to lower the sales price. And as we know from Joseph Stiglitz's statements, ministers get a percentage of the sale the farther they sell it below it's actual worth.

    We need to turn away from all these neoliberal economic policies (privatisation, deregulation, and open markets for foreign capital), and start building our own economy. Also, there must be a strict legal framework for the independence and professionalism of both parastatals and the civil service.

  3. MrK,

    Good points there.

    The other issue of course is whether GRZ will freeze the Libyan assets.

  4. It is not difficult to have forseen this. Libya is and has always been a dictatorship under Gadaffi for the past 42 years. "This is something we know we know". Questions should have been asked about the risks of selling a strategic asset to a country ruled by one man. Everybody knows that dictators never step down on their own free will. It is usually through upheavals or revolutions. Do we even know as to who owns LAP Green? It is common knowledge that when you enter into deals with rascals or dictators you risk having your fingures burnt.This is no hindsight. The truth is that Zambian authorities are slow upstairs! It is even highly likely that no assessment was ever made whether LAP Green was a fit and proper entity to buy ZAMTEL. This deal was sealed through someones trip to Libya and a tent meeting with the colonel. Thus the decision was made first to sell ZAMTEL to the Libya government or is it to Gadaffi and Sons? Thereafter everything that followed was just going through the motions!

  5. With hidndsight, people appear more intelligent than they really are. Like Frank has said, Gadaffi had been in power for 42 years, short of dying, what would have prevented him from remaining in power for another 42 years? Let us not pretend that the uprisings in Tunisia, Egypt, Bahrain, Yemen, Jordan and Libya were foreseen. Even the USA is questioning why its own intelligence did not foresee these events. The cards fell the way they did and if we are affected in one way or another, so be it. Zambia once lost a major investor in Anglo-American Corporation when the company withdraw from Konkola. Besides, Zamtel was sold to Libya and not to Gadaffi. Should Libya decide to disinvest, then Zambia will simply have another chance at seeking another investor. And those who are waffling should then be asked to put their money where their mouths are.

  6. General,

    There are certainly limits to hindsights. That I think everyone recognises.

    As I note - the substantive questions relate to the underlying risk assessment that underpinned the sale; how ZAMTEL gets affected now by asset freezes; and, whether Zambia will follow wider international moves to freeze all Libyan assets until a new govt is in place.

    Whether we agree with the sale or not, surely all Zambians would desire the govt deals with these questions?

  7. Cho,

    " MrK, Good points there. The other issue of course is whether GRZ will freeze the Libyan assets. "

    I seriously doubt that this government would even use the collapse of a dictatorship to renationalize ZAMTEL.

    However, it is more than time for parliament to start asking questions about - who owns ZAMTEL, who runs ZAMTEL, what their relationship to the Libyan president is, and how the management of ZAMTEL is going to be affected by the change in government there.

    I still think that it is insane for Libyans to run ZAMTEL. There has never been a rational explanation of why ZAMTEL had to be sold, but we all know that ministers get bribes to do so, which is why nothing anyone in Zambia says can change their mind.

    Which is another point that should be raised in parliament - has anyone at the ministerial level or above been paid, how much, by whom, and to do what?

  8. All the above mentioned are important but if anyone has used the phone service here I contend Lapgreen dramatically overpaid for the worst infrastructure in the world. I could tie a string to two cans and get better service.

  9. I agree that hindsight is always 20/20 but the fact that you are dealing with a strategic asset such as ZAMTEL ,needed that extra work is done to ensure that the desired buyer is clean and will handle the transaction with the clarity of purpose required for such a transaction. In this case the Zambian Government did not act in the best interest of the People whom they are supposed to serve but in the interest of the ruling party and its cronies. The question is what next?

  10. Anonymous,

    Why sell ZAMTEL at all? It is up to the Zambian government to make parastatals run well.


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