Find us on Google+

Sunday, 24 July 2011

Mining - A Call for Indigenous Ownership (Monthly Essay)

The July 2011 short essay comes from our resident contributor Musaba Chailunga. It sets out a bold vision for approaching the mining question, especially the need for Zambia to look more inwards and directly empowering indigenous market driven ownership. More information on the Monthly Essay project can be found here. We value your feedback and suggestions for future topics - as well as guest contributors :
Romancing the Mining Industry - A Call for Indigenous Ownership

29 comments:

  1. Before going off defending 'free market's and 'free enterprise', the writer should start reading Ha-Joon Chang, and find out how markets really developed. Including the Asian Tigers - massive government protection. Not free trade, not private education for those who can afford it, etc.

    How about having a close look at Japan's Keiretsu/Zaibatsu?

    The first issue partly demonstrates how most Zambians may not understand the role of a
    liberal economy and that what is needed here is more ingenuity than government
    intervention. Zambians need to be creative first by starting projects before asking for either
    government funding or private financing and not just help from nowhere with nothing to
    support.


    I can't get past the 24% bank lending rates. How are you even going to draw up a business plan without some access to finance? Foreign mining companies don't start out with investing their savings. They borrow heavily, then pay back their debt with the profits they make from their mining operations. This is the governments' main excuse for not taxing them - that they have to pay back their start-up costs - from profits made on OUR minerals. Well excuse me, we don't need foreigners to do that. What is needed, is access to financial markets and financing, whether that is government or the private sector. The problem is that in Zambia there is no private banking sector that will front the startup money. So the government must foot the bill, and there is nothing wrong with that.

    Zambia is not South Africa or the United States, we don.t have a race that was
    deliberately disadvantaged to start creating empowerment programs, empower who against
    whom?


    Anglo-American De Beers, which has monopolized the global diamond trade and mining, for instance.

    1. Financing for private ownership and control has little or no impact on the national
    debt, the government should focus on public services.


    Paid from what - taxes.

    2. It is more than likely that Zambian owned mines will do more business with the local
    small business which will generate more economic activity.


    I don't disagree.

    ReplyDelete
  2. 3. Government is already dealing with national budgets and public spending and with so
    many questions surrounding government accountability or lack thereof, private
    ownership helps keep government hands from the „mining cookie jar.


    Not at all. There has been plenty of private sector to government corruption. The Development Agreements signed with foreign mining houses come to mind. This is why neoliberals get into government - to wreck it, and make is so bad that people will make any concession to the private sector.

    4. Will eliminate Zambia.s dependence on mining royalties and taxes entirely as
    opposed to all benefits of owning controlling such huge operations.


    Zambia doesn't depend or get mining royalties and taxes - the government does. And that same government will have to tax for the public services and infrastructure you advocate for.

    5. Stock ownership and options for individuals and Zambian institutions will be easier to
    obtain making local people wealthier and with better retirement packages. Mineral
    prices will only get higher as reserves get depleted and demand increase in both
    Asia and African were development is yet to take hold.


    I think that, with all respect, this shows a misunderstanding of why commodities prices are at record highs today. It isn't scarcity, it is rank speculation with financial instruments like futures, ETFs, and other derivatives. Copper is around $10,000/tonne, it has an intrinsic (demand/supply) value of $3,000/tonne. To presume that copper will appreciate when it grows scarcer puts too much faith in classical economics.

    ReplyDelete
  3. 6. Indigenous ownership would eliminate the possibility of what happened with ZCCM
    which led to Zambia.s current situation. There.s need to understand the historic
    context on which mines were privatised as those issues still hold lessons for today.


    Imagine this. What if the State owned the largest mines (the indigenous private sector the smallest), and used that to finance agriculture, infrastructure, manufacturing, etc. (The state could do so through bond markets, or grants, etc.) In times of high copper prices it could continue and open new mines, while paying miners a double wage, half of which would be put into a separate fund. This fund would pay out unemployment to miners when prices are low. Remember a big issue back when ZCCM owned the mines was that politically, they couldn't close the mines because there would be strikes and unrest, causing continued losses to the State. At the same time, the miners should have access to a little land, so they could farm when the mines close. This would make it possible for the State to close mines in times of low copper prices, just as the private sector will do when prices go down. And unlike what the 'efficient' private sector will do, it will not lead to unemployment and poverty (which is really externalising the true cost of labour, and calling that 'efficiency').

    7. Other industries especially those in engineering and mining related fields will emerge
    to support mining as the owners and suppliers to the mines will be mostly Zambians.


    I agree, but only if there are protections for the domestic work force and domestic entrepreneurs, i.e., regulation. Having

    I conclusion, I would suggest everyone starts to memorize prof. Ha-Joon Chang's book Reclaiming Development - An alternative policy manual. And, dr. Ravi Batra's book The New Golden Age.

    ReplyDelete
  4. Absolutely brilliant article! We need to start doing more for ourselves. This tendency of relying on donors- donor this , donor that .. attitude should be eliminated. Also this expectation that the state (GRZ) should provide health, education, electricity, water and the more recent clamour to get involved in mining should be extinguished before it catches hold. To quote Ronald Reagan "The nine most terrifying words in the English language are: 'I'm from the government and I'm here to help.

    Musaba quite correctly points out that there are colossal amounts out there that in low yielding instruments and they are looking for yield. He also gives us a way of establishing and leveraging local sourced funds to create bigger Zambian controlled entities that could invest for real development of the country. And don’t we need that development!

    As much as Zambia has begun to move up, we are still a long way away from true middle income status . A lot of investment in infrastructure needs to be made to really justify and support and enhance the mining boom we are seeing. Let us not think of grabbing what outsiders have built up. Let us start our own mines, Let us start our own Power stations, let us start our own water treatment plants. There is so much that still needs to be done. If I remember correctly, less than 30% of the population has access to electricity. Where are the local entrepreneurs to put up power stations? It irks me to realise that Zambia with all its vastness, mines and potential, produces and consumes less than what a single RSA city like Cape Town uses.

    Government of course has a big role to play, but that role is to not to run the business.

    ReplyDelete
  5. Kaiba
    Only 19% of Zambians have access to electricity. It is 25% in Kenya, 35% in Zimbabwe, over 50% in Botswana and Namibia. With the 1600Mw that Zambia generates, it is possible to connect upto 70% of the population. How has Kenya, with a population of 39m, managed 25% connectivity when she only generates 1500Mw? Some people have peddled the lie that the mining industry consumes most of the electricity in Zambia. The mining industry consumes less than 500Mw. It seems there is lack of business acumen on the part of the people who run ZESCO and govt generally. Like Ben Turok recently commented 'Zambians never seem to know the value of their assets'!

    ReplyDelete
  6. Kaiba,

    To quote Ronald Reagan "The nine most terrifying words in the English language are: 'I'm from the government and I'm here to help.

    That was the actor Ronald "Bedtime For Bonzo" Reagan who was shilling for the corporations and against the middle class. Most of the problems the US and world economies face started under his watch - Reaganomics.

    However, you should also listen to the Ronald Reagan who ran as a Democrat.

    On the mythology created around Ronald Reagan, see:

    http://crooksandliars.com/clsphinx?keys=reagan

    ReplyDelete
  7. Kaiba well said.your views are those of the future and our world stands a chance of survival

    ReplyDelete
  8. First off, I thank and commend Musaba Chailunga for his wonderful thought piece.

    That said, prospective founders of a Zambia-based and Zambian-led mining firm should consider the following (as brainstorming):

    1. Assume company is to be created brand new and is to be founded by indigenes - black African Zambia, Asian Zambians, European Zambians, etc. These would be folks religiously committed to the creation and success of a local mining firm. They would trust each other and be trust worthy by general public and have done serious study of the sector and prepared a formal business plan accordingly. Some of them may even possess mining experience.

    2. The acquisition and cost of an exploration license from ZED government which will have expiration date and whose cost is allied to size of acreage. Owner funds/houses/land may have to be risked here as collateral for bank capital. Owner savings will likely be the only source of funds at this stage.

    3. The cost of digging or drilling test holes to discover and prove economically viable ore bodies. Syndicated bank or venture capital of some scale ($5 million and below?) may be necessary. Its is to be hoped that not all licenses for potentially explorable land in the Copperbelt or Northwestern province have not been sold. At this stage, a Zambian institution such as ZNPF, ZNBS or local Insurance firms may be approached for risk capital. Perhaps also owners may try regional banks such as the Development Bank of Southern Africa. Lusaka branches of Euro American, South African or West African banks are unlikely to fund activity at this stage. A check of their loan portfolios from public information sources should reveal this. Perhaps the multilaterals - African Development Bank or IFC, might bite here but I doubt it. At any rate, firm owner equity at this point will be minuscule and the firm will be highly leveraged and at high risk of failure. Everything depends on finding feasible ores. Perhaps a review of the history books detailing where and how our forefathers used to mine may be helpful in identifying potential ore bodies. Modern and well capitalized mining firms rely on helicopters, satellite and other sophisticated tools to find minerals. I also doubt that any former ZCCM claims/properties now exist that an indigenous firm might purchase to obviate the need for exploration. In all this, the founders of firm can attempt to identify, locate and hire former managers, engineers, and miners under now defunct ZCCM/NCCM, AMAX, RST etc. This experience can be profitably leveraged perhaps.

    4. Once minable mineral reserves of a certain size and duration are established, it should become relatively easier to raise capital for physical plant and for ongoing mining operations. This is so as the ore itself serves as collateral. Likely a syndicate of local banks (4 of more?) will be required to diversify risk. Ability by owners to raise capital will require great marketing and financial management skills. Principals will need knowledge of commodities and FOREX hedging, mine unions relations management, and financial engineering and forecasting to include a deep knowledge of debt, equity, and hybrid financial instruments. I estimate that a small to medium sized Zambian formed mining company can be up and running for under $20 million, perhaps with an arrangement to sell cathodes or ores to the local giants such as Vale or First Quantum. The initial target would be to mine ten thousand tonnes of ore per year as a start.

    5. From the get go, relations with governmental bodies/persons and knowledge of mining, environmental and tax laws will be key to survival. There are tax incentives that perhaps the new firm can exploit. Principals may also consider that the lubricating/oiling of particular key politicos may be necessary to get started or for ongoing operations.

    ReplyDelete
  9. Anonymous thanks for providing the statistics on access to electricity. The situation is actually more dire than I presented it! I do not know how the Kenyans can get 25% of 39m people connected with only 1500MW. Do the majority use it only for lighting and not heating? I am happy to learn that by 2016 we could be having up to 3000MW- but again that is Chinese investors constructing new plants. Where are the Zambians?

    Thanks Aaron for your kind words.

    MrK, I agree that the current Ronald Reagan's legend/legacy and actual governance record are not in 'accord'. In my reckoning Obama's governance record is actually to the right of RR. America has drifted too far right and that is what has caused the problems. In Zambia we are not yet liberal enough. We need to grow our middle class more than we need to grow the government. The middle class is still too small and that in itself is a problem. People have argued that you cant have a stable democracy without a thriving middle class. Example , it is more difficult to distribute sugar and mealimeal and expect to get peoples' vote, if there is a bigger middle class!


    Musaba's innovative ideas if expanded on , refined and implemented could sow the seeds for the rebirth of a sustainable middle class with attendant economic and democratic and other benefits to our beloved country.

    ReplyDelete
  10. Thank you Kaiba

    ReplyDelete
  11. A way to go:

    http://www.steelguru.com/metals_news/Tranter_Zambia_and_Tranter_South_Africa_JV_spent_more_than_USD_2_million/190633.html

    (Filed by Mr Kapembwa Sinkamba SteelGuru Correspondent Zambia)

    ReplyDelete
  12. Musaba to Mr. K part I

    It will be nice to have no free trade, private education for those who can afford it and to also have a close look at Japan's Keiretsu/Zaibatsu. The problem is at the moment Zambia is not in a position to do all of the above. You can argue that if only we would collect taxes due to us, all this would be possible. But remember if we had all three in place, these new investors would not have come in and our copper output would have been low. No Lumwana too, Just think Dag Stadium, brought down in 1986 so that it could host the Africa cup in 1988. More than 20 years passed before the Chinese came to the rescue. So you can apply Japan's Keiretsu/Zaibatsu but who and what are you going to use to implement it.

    How many industrial spies does Zambia have that the Japanese had and sent to Europe and North America to ‘steal technology’? I bet it’s Zero. How many families in Zambia do we have resembling the Hitachi or Toyota family to create industrial backbones for us – Zero again. I would suggest you provide a detailed account of things you can create as a nation without outside help or something like that, suggesting something you yourself can’t implement is not good enough. Saying we should just do it the way Japan did it is not a solution.


    I am not sure why the 24% tax rate came in, but anyway. That can be avoided which might even help bring the rates down. Everyone starts out with investing their savings, your down payment is always something you have saved up it allows you to borrow, and usually 20-30% is good enough depending on the size of the debt or value of the undertaking. You can’t argue for me what can be done and want can’t be done, those are my challenges to my solution. I am confident everything has a work around. My goal is save government money for social services so I am not interested in government footing the bill.

    “Anglo-American De Beers, which has monopolized the global diamond trade and mining, for instance.” Mr. K

    I am not sure how Anglo and De Beers came in here. I was talking about Apartheid in South Africa and segregation in the United States, Zambia is almost 98% African. So we don’t need empowerment on racial grounds.

    Regards,

    Musaba

    ReplyDelete
  13. Musaba to Mr. K part II

    Corporate taxes are not the only taxes that account for government revenue. If unemployment numbers were to drop to even 20% you will see that income tax, property taxes and sales taxes would be substantial the goal should be to bring government employees to account for only 20% of the workforce. The 80% coming from the private sector can support their wages and other government spending. Imagine a 5 million workforce paying $30 in income taxes and an average of $100 in value added or sales tax. It is wrong to believe that there is only one way to do things and that way is through government taxing corporations.

    Not all corruption can be eliminated. Corruption is everywhere but I would rather private money is stolen than public money. It cannot be disputed that private companies deliver services more efficiently with little or no cost to tax payers. We may not agree on this but that is okay.


    “Zambia doesn't depend or get mining royalties and taxes - the government does”. Mr. K. This is the question of semantics on your apart. If that is true why do you keep calling for windfall tax?

    and said “To presume that copper will appreciate when it grows scarcer puts too much faith in classical economics.”

    I am not a big fan of classical economics but whichever way you look at it speculation will be there. The commodity prices will be the same at any given time in the future whether the mines are owned by the state or private foreign individuals or private Zambians. But I would rather Zambian mines are controlled by a clan from Mongu or Kolwezi than one from China.

    “Imagine this. What if the State owned the largest mines (the indigenous private sector the smallest), and used that to finance agriculture, infrastructure, manufacturing, etc. (The state could do so through bond markets, or grants, etc.” Mr K.

    I can imagine all that. So why is the state not building the mines? Why are you not leading the charge to do so? Zambia is very big. It is also a free enterprise, you do what you want I do want I want. The problem with your plan is that you know the state can’t build the big mines hence you want to nationalise other people’s mines, and why should the government be in the business of building businesses like agriculture and manufacturing. Why should the state be making toys and sugar and bread? Why can’t they just focus on education, health and water delivery?

    Mr. K why would you want everyone to memorise Chang’s book? My essay is an alternative and I think I know about Zambia more than he does. I also know that China, Korea and Japan could manage to do things on their own. I am not saying Zambia can’t that is why I am writing this. We need to learn. You are the one who is preaching State babysitting.

    Regards,

    Musaba

    ReplyDelete
  14. Good thinking, from Musaba to Kaiba:

    Thank you for your kind words on my article. I am counting on the fact that most Zambians and indeed Africans have been moving towards free markets. The country and continent is ours for the taking, I can't argue and fight those who believe otherwise.

    The Irony is that many people know what the problems we have really are. Yet, they want solutions that make things worse. Increased government spending, the poor thinking they can help the poor, discouraging the poor from becoming innovative by offering them an easy life the country can't afford etc.
    Imagine a child telling his father that the solution to his regularly breaking down car is to buy a new one like his friend’s father did.

    We all agree that would solve the problem, but the father may not be right there and then be able do it. If he does he may make some changes that may include doing overtime, cutting the child's allowance and asking him to get a job. The child may actually protest and this is the situation we have in Africa we don't want to make the tough decisions, but I am glad there is a movement out there that is on the march to change things for the better and not through politics but through wealth building.

    Thank you again

    Musaba

    ReplyDelete
  15. Dear Anonymous with mining Information.

    One can tell that you have a deep understanding of mining in general. I would also like to thank you for the kind words about my article. I believe your rough calculations fall within the boundaries of what I would consider a small to low medium mining operation. In fact there are many of those from around the word. Until very recently I did not know that the ore does not require having very high content of copper to be economically viable. In the case of Zambia the content is about average almost across the country and the information exists at the ministry of mines, thanks to the colonial mapping.

    In the future, even at the lowest. Copper prices will be around what they were in the mid-1990s which compared to now was practically nothing. But this was the time the decision was made to invest and build Lumwana. This tells you that, current copper prices are a bonus to Lumwana as they were ready to pump $1.5 billion in operation which came to $2 billion with $.5 billion budget overshoot. This has been my bone of contention with the Zambian government regarding the 2008 concessions following the credit crunch. But this is a different subject all together.

    I believe that in Zambia we can build mini corporations, and collect small amounts of money from a large pool of people raising upwards of 20, 50 and even 100 million dollars. We just need to know how to sell the stories. In some cases 5 to 10 percent can go into prospecting. People have to be aware of the risks involved and the benefits. Some funds can be sourced from indigenous venture capitalists which is an area we don’t need foreign money for especially with small projects.

    In general your observations and suggestions are correct. Zambia will also need strong contract laws which usually take care of issues of trust as you point out.

    Musaba

    ReplyDelete
  16. Hi Musaiba Chailunga,

    I can imagine all that. So why is the state not building the mines?

    Because they 'believe in free markets', and don't believe in the state doing or developing anything. They also choose not to tax the mines.

    That is an ideological choice, and one that has failed to bring basic services to all the people (witness the increase in street children), and failed to even maintain infrastructure.

    Mr. K why would you want everyone to memorise Chang’s book? My essay is an alternative and I think I know about Zambia more than he does.

    I suggest you haven't read it.

    The problem with your plan is that you know the state can’t build the big mines hence you want to nationalise other people’s mines, and why should the government be in the business of building businesses like agriculture and manufacturing. Why should the state be making toys and sugar and bread? Why can’t they just focus on education, health and water delivery?

    Why wouldn't the Zambian state be able to build mines? The Chinese, Korean, etc. states are. So what is the basis for your statement that the Zambian state can't?

    Remember the roads that were built by the Chinese, under UNIP. Those were state enterprises, from China.

    So no, I don't know that 'the state can't build the big mines'. The state can do all that, at a lower cost than foreign enterprises, and all the profits are kept in the country.

    I never said that the state should make 'toys and sugar and bread'. However, the state should be in charge of the commons - infrastructure, mining, even banking. Look at the private foreign owned banking sector today. Who are they lending to? How are they better?

    ReplyDelete
  17. In short, too many idealistic claims not backed by reality. Why the premise of always building on someones effort? No one has stopped any Zambian from mining copper or any other minerals. Why the eye specifically on what has already been done by others? Our greatest hindrance to meaningful progress is this psyched dependence syndrome - salivating on the fruit of others labour.

    ReplyDelete
  18. Is there a public log or register at Mines Ministry showing large and smalle scale prospecting license sales by year, age, province/region, price and, it is to be hoped, by buyer? Or is this all secret? I realise some of this info can be garnered, at least for large players, from newspapers, magazines, journals and such on the wide web. Those on the ground in Lusaka may assist here as well as those with intimate knwoledge of this process. Is there a sort of public auction at the Ministry where one can see an mapped inventory of available areas to be explored and the related prices for prospecting licenses? Perhaps certain blocks of land are reserved for large players and others for smaller aspirants.

    ReplyDelete
  19. Plain evidence tells us that when the mines were nationalized,production nose-dived. The state was in control, not for a few years! The very reasons, failed ideas I must add, that led to the Mulungushi reforms of 1972 are the very ideological standpoints of those who now call for this shift. But there is evidence to point that those ideas failed!

    ReplyDelete
  20. If I do not misparaphrase him, Minister Musokotwane has publicly said that the gain on ZCCM's? positiion in the sale of Equinox to Barrick will be used to begin a Zambian government owned mine. If this investment happens, it should provide further proof whether a Zambian government run mine can succeed, and will provide a good comparison for the UNIP run mines (when prices where seriously low)

    By the way, there are plenty of partial or full state corporations that do well: Codelco, Aramco, Debtswana, Statoil (Norways' state oil firm government-created in 1960s ), to name a few. Some of these are the results of outright nationalization. Airbus and some of the large international Korean and Japanese firms all received various forms of state support. This support may have started when Korea for example was in the pre or nascent industrialization stage.

    The point is each country should decide what is in the national interest and use private capital (local or foreign), grow state owned enterprises or nationalize, try affirmative action/positive discrimination, or take over land as happened in the colonial period in Southern Africa and in Zimbabwe. Key is, each choice is not without risk - economic, political, geopilitical, etc.

    The ideological discussion is fascinating, but the weight of evidence falls somewhere along a 25% to 30 % state participation in the economy - look at the US, Scandinavia, Japan, Canada, etc. The key question is how the state chooses to usefully participate.

    ReplyDelete
  21. Musaba to Mr. K.
    Mr K. Said "Why wouldn't the Zambian state be able to build mines? The Chinese, Korean, etc. states are. So what is the basis for your statement that the Zambian state can't?"
    I say the Zambian State can’t because as a nation we lack the skills and the technology and equipment to undertake projects of that magnitude and since you want a closed economy, Zambia cannot import those skills and funds to build the mines. This applies to any government that will be in Zambia for the next 15 or 20 years therefore we will continue to need outside help.
    The MMD Government came to power in 1991. You can’t show me an example of a Zambian mine which was built by the State in the second Republic. But I can show you how many of those Mines where run down. Yes copper prices were low, and so they were for all copper producing countries that include Brazil, the US, Chile, Australia and Canada. Their mines continued to perform just as well when my father and other kids had parents laid off from work by Zambia’s State Corporation - ZCCM. Let us not forget that Zambia still had the biggest copper mines (which they just Nationalised) on the continent and controlled by the state, so don’t speak like your “wish has not come and gone” already.
    You give me examples of Roads and railways built by the Chinese State in Zambia, not by the Zambian State in Zambia. So even under UNIP we could not do things by ourselves. Who started building the University of Zambia, is it complete? Who built UTH, Kitwe Hospital, Who built FINDECO house? Who built TAZARA, who Built TAZAMA, who built INDENI, who built Kariba Dam? Who built Great North Road, and Great East road? Who built the longest Bridge in Zambia over the Chambeshi river in Northern Province? Who built Mansa Batteries, Nitrogen Chemicals, Kafironda Explosives? Kapili Glass?
    All these projects were built under UNIP with primarily foreign Engineers and labour with a few Zambians pushing wheelbarrows. Some of them where not completed when people who started them left. Why is that? Why is that you did not question Kaunda when he brought Chinese people and workers to build a bridge in Luapula or the Findeco house and all the things I mention above. It is one thing to be realistic and to just argue just for the sake of it. Why did UNIP close Kalengwa mine in North Western Province and not Built Lumwana in 1975 when Kalengwa was closed, it is in the same area. Why is Bwana Mukubwa in Ndola being mined today when it was close under UNIP?
    If you can answer all these questions honestly in your own mind you will understand why I say the Zambian State cannot build the big mines. Not just now…

    Musaba

    ReplyDelete
  22. Anonymous with Reference to Dr. Musokotwane
    You raise good points. Weighted ownership by the state is vital and I am not against that. But Putting things into perspective, if we imagine ourselves in the closed world where no international trade or travel is allowed and no exchange of ideas is allowed, which of the following countries will do well and continue to live life as they do now.

    Japan
    Canada
    Sweden
    Norway
    USA
    Zambia
    Zimbabwe
    China

    Feel free to support your answer.

    Musaba

    ReplyDelete
  23. Hi Musaba:

    re. "which of the following countries will do well": my answer is none would do as well. No country is an island but ironically, if international relations and commerce were frozen, Japan and US sould grind to a halt becase they rely too much on imported oil and in case of Japan, minerals. In Canada and Norway, natural resources exports (oil, gold, copper etc) play a signficant role in the economy, so from an energy standpoint, these two would fare better than the US and Japan. i think Zambia and Zimbabwe would be fine, most of the poupulation is rural and farming still plays an important role. Most people are not reliant on electricity or piped water or good roads or even modern medicine. So I will be cheeky and say, given the structure of ineternational economic relations, the African countries' people might survive better. A perhaps poor example to buttress my point is the impact or lack of of the credit crisis on Africa vis the advanced economies. The key to how a country fares is how tightly wound in/up or integrated its economy is to the rest of the world.

    Just some quick mischevious thoughts.

    ReplyDelete
  24. Hi Musaba,

    Musaba to Mr. K.

    Mr K. Said "Why wouldn't the Zambian state be able to build mines? The Chinese, Korean, etc. states are. So what is the basis for your statement that the Zambian state can't?"

    I say the Zambian State can’t because as a nation we lack the skills and the technology and equipment to undertake projects of that magnitude and since you want a closed economy, Zambia cannot import those skills and funds to build the mines. This applies to any government that will be in Zambia for the next 15 or 20 years therefore we will continue to need outside help.

    Please don't put words or thoughts in my mouth. I have not talked about a 'closed economy'. Also, you are confusing ownership with management. At no time have I said that they must be the same.

    The fact is that just because the mines would be owned by the state, doesn't mean it couldn't be managed by any management company in the world.

    However, why would that management company not also be Zambian. What is your evidence (source) for the statement that 'we lack the skills and technology and equipment'? I'm sure you have heard of the Chinese, and how they built their industry through knowledge transfer?

    There are a lot of different development models that are out there.

    This is why I would suggest that everyone reads prof. Ha-Joon Chang's works first.

    ReplyDelete
  25. Mr. K. I think you are all over the map. You are trying to compare Zambia to China and Japan when you should not. Honestly Mr. K is that really a genuine question that I should provide evidence for Zambia lacking skills, technology and equipment? I understand knowledge transfer very well. To put things in perspective, Zambia today is not where China and Japan where in even 1860 if you really want to talk about real development and the infrastructure that you need. Official Zambian Language - Zero. Zambian Engineering Books - Zero. Zambian invetions - Zero. True Zambian education - Zero even your reference of how I should behave is based on you insisting I read Ha-Joon Chang, what does that tell you, you have nothing.

    In modern times the easiest and cheapest way to implement technology or knowledge transfer is through global intergration which you are not in favour off. We can continue to debate like this, Zambia is very big, you can pick a corner and do your thing that is the beauty of democracy. I understand that there are different development models, infact I am creating one myself and will come to the book store new you very soon. What I don't understand is why you did not implement what you preach when UNIP was in power, or why we did not hear from you. What is your excuse for Mozambique, Ethiopia, Angola, Zambia, Tanzania and all socialist countries that existed before 1990. How many mines did they build, or cars did make or even steel plants. This no time for theories Mr. K, things move in cycles, your cycle is over. Infact Japan is very Imperial if you ask me.

    Let us do it this why, please show me evidence of Zambian technology and equipment. Why is what I said to empower ourselves wrong. Why can't Musaba, Mumba, Mundia or Sibeso acquire things on their own. Why does it have to be through the state. Are you not infringing on my rights of expression in economic terms?

    Musaba

    ReplyDelete
  26. I think the title of the article is well chosen. For the argument seems to be based on romance rather than reality. Every Zambian, including me, would love to see more Zambian ownership of our mining industry. But let us be realistic. Successful investment is based on reality. The investor has to be confident, not just of potential, in the form of resources and market He or she must also have confidence in the financial and technical management of the enterprise. Experience of the industry, access to finance, contacts and many other aspects are all vital for successful investment. Romance is no substitute for these essential requirements.

    Investment finance for new mining projects is not easy to raise. And rightly so, for such projects tend to be risky. It is not sufficient to point to NAPSA, and other publicly funded institutions. For their first duty is to their owners, whose investments must be safeguarded, and certainly not put at serious risk. NAPSA's investment in renovating the ZNBS building at an extraordinarily high figure, is not an encouraging example.

    Every Zambian would love to see successful Zambian owned mining enterprises on a large scale. But the last thing we want to see again is unsuccessful ones, which lose the investments entrusted to them. Let us by all means encourage and invest in indigenous mining ventures, but only on the basis of freedom and reality, not of romance, and certainly not of coercion.

    I should add that the writer is to be commended in emphasizing that the proposed investments should be entered into freely and not through coercion. We should also emphasize that publicly owned investments must not be put at serious risk.

    ReplyDelete
  27. Murray, I agree wholeheartedly with you on the need for caution with regards to pension funds. These are funds that should be placed in relatively low risk 'blue chip' investments. Of course the downside is that the less risk there is- the less upside will accrue to the investees. And this risk /reward equation must be continually interrogated and discussed internally to ensure that NAPSA or indeed any fund continues to show real growth at acceptable rates.

    But I will jump to Musaba's defence I will point to his innovation of bringing to the table the idea that capital can be raised from the 'bottom billion', the 'base of the pyramid'. I will hasten to say that his ideas are not the finished article by a long short. A lot of refinement is possible. But at least he jumps into the arena and dares to innovate and suggest solutions! ( And this forum is one such place where it is possible to get critical examination, from a variety of perspectives, of nascent ideas. (I digress -Thanks to the herculean and tenacious efforts of Cho in maintaining this gem of a Zambian blog)

    ReplyDelete
  28. The fact that Lusaka needs a world class hospital is very very glaring.Someone saw this hole in market and tried to provide the service. Unfortunately he meets hurdles from both the Govt and the local private sector. I am a proponent for an indigenous private sector. But maybe, not the one depicted here in this South African article

    http://www.thedailymaverick.co.za/opinionista/2011-07-29-doing-business-in-africa-how-hard-can-it-be

    The local partners ,Mahtani ,in particular comes out as a ravenous vulture. Rupiah features as well and sheds light on why Mahtani and Rupiah differed . Not a very flatering account.

    ReplyDelete
  29. Musaba to Murray

    I believe this is Mr. Sanderson, I have to address you accordingly in accordance with our African culture. You won’t know me but I keep hearing about you from my uncle, your friend Robert who used to live in Riverside and later Parklands. I would visit and stay with him when I was really young and my cousin and I would be running around knocking down beverage bottles sometimes when you came by. This was almost 35 years ago. I won’t use his last name but I am sure you know who I am talking about. He lives in Lusaka now.

    Anyway, I don’t think you made any comments that contradict my position. You only raise legitimate questions that anyone would. Your assumption though is on the use of the word ‘Romancing’, which maybe took away the intended seriousness of the message I am trying to deliver. Your observation in the first paragraph about reality can be addressed if I was making a proper presentation on how the same can be achieved, I can answer all questions. I am aware of the reality; that reality tells me that no Zambian or investor will set up a mine ‘just to make Musaba happy’ that alone tells you that anyone considering this will ensure, “Experience of the industry, access to finance, contacts and many other aspects” are available before they proceed. I believe Zambians have the capacity to do that. Not every Zambia, remember only need a few.

    It is true that it is not easy to raise capital, but at the same time not impossible as others continue to do it. As Kaiba helped out here, the NAPSA example was used to illustrate two things; the first is that you can easily raise $10 million dollars from within Zambia and the second is that, pension funds the world over have equity in mining corporations why not NAPSA. There are guarantee pension funds that get deducted from every employee we can leave that alone but we can create some retirement funds that people can opt in and the risks explained. If only 50% subscribe to those Zambia could collect 50% of what NAPSA collects less 10% management fees.

    Getting people who understand what the “reality” of mining is will put us on the right track and we could have our first mine with maybe 51% controlling interests. I honestly do not see how this cannot be done.

    Thank you, your observations are very encouraging as I don’t find them to be opposite from mine.

    Musaba

    ReplyDelete

All contributors should follow the basic principles of a productive dialogue: communicate their perspective, ask, comment, respond,and share information and knowledge, but do all this with a positive approach.

This is a friendly website. However, if you feel compelled to comment 'anonymously', you are strongly encouraged to state your location / adopt a unique nick name so that other commentators/readers do not confuse your comments with other individuals also commenting anonymously.