Purdah

A word we need to get acquainted with. The British House of Common's defines it as follow :

The period of time from when an election is announced until after the election is held has been known as ‘purdah’ but is now more often referred to as the pre-election period. Guidance has been issued to civil servants before general and local elections, and to local authorities on their activities during the period before local elections.

External Costs of Free Education

Among the popular calls for government intervention is free secondary education free. But as this recent IPS article demonstrates, free education without a corresponding increase in capacity can have external costs that undermines the provision of free education. An "external cost" is a cost not borne by the producer or consumer of a good or service. In this context the student gets the "free education", but in the process of doing so they impose further costs on society.  The excerpt below demonstrates :

An absence of boarding facilities for high school pupils in Zambia's northern province of Luapula is forcing children to share lodgings with their peers - unsupervised by adults - leading to teenage pregnancies and HIV/AIDS infections.

A Poverty of Rule of Law

A recent editorial in the Post contains some important reflections which we touch in our forthcoming monthly essay on the judiciary :

Rupiah Banda and George get the judgements they want from our courts. In a word, justice in this country is a presidential prerogative, which Rupiah, with the assistance of George, carries out through his appointed officials or justices....As we have stated before, as long as judges are appointed, paid, promoted or dismissed by persons or bodies controlled directly or indirectly by the president or the executive, the judiciary’s independence in our country will continue to remain more theoretical than real.

Is President Banda ripe for impeachement?

"Unless President Banda succeeds in shirking Ambassador Phiri’s serious allegations, he is in office illegally and in wanton disregard of the country’s basic law and must be shown the door to answer criminal allegations in court....given the serious nature of the allegations, which border on violating the Constitution, and the fact that they are levelled against the Head of State, I find this deeply troubling. President Banda should be the first one to know that as President, he swore to uphold the Constitution. By that Constitution, therefore, he could be removed from office if it is proved he violated it. This offence carries the possibility of seven years imprisonment without an option of a fine.”

Prof Michelo Hansungule argues that unless President Banda clears himself of the false parentage declaration in the 2008 he has committed perjury (lied under the law) and violated Article 37 of the Constitution. More on this via The Post. The allegations are certainly very serious and we all await to see how the Chief Justice, who hails from Banda's village alongside the Deputy Chief Justice, deals with this. What is important is that the rule of law should prevail and the judiciary asserts its independence much more than we have seen in recent past. 

Functions of the Republican President (Guest Blog)

In a news article entitled “RB Should Be Left to Decide Election Date,” which appeared in the Lusaka Times of 12th May 2011, comrade Ronnie Shikapwasha was quoted as having said that there was nothing wrong with President Rupiah Banda’s delay in announcing the polling date, and that he should be left alone to decide as the President has every right to do so. He was further quoted as having said that those calling for early polls are doing it out of ignorance and are not following the constitution as it states that the country’s leader has the power to announce the election date at whatever time he feels the nation is ready.

Well, I have thus far combed through the 1996 Republican constitution for an Article or Clause which gives President Banda the “constitutional right” to decide on, and announce, the date for the general elections, but have not found any!

For the benefit of those who do not have time to skim through the 1996 Republican constitution, here is a summary of the functions of the Republican president which are stipulated in the constitution:

The Illusion of Free markets

Dani Rodrik on the outdated economist’s illusion of free markets :

Raised on textbooks that obscure the role of institutions, economists often imagine that markets arise on their own, with no help from purposeful, collective action. Adam Smith may have been right that “the propensity to truck, barter, and exchange” is innate to humans, but a panoply of non-market institutions is needed to realize this propensity.

Debt Watch (China), 2nd Edition

More debt from China, this time to "to upgrade a road that should help boost trade with Africa's Great Lakes countries". There's nothing with borrowing for infrastructure but when you have no nationally agreed debt acquisition policy it is worrying.

Corporate Fraud

The world is drowning in corporate fraud, and the problems are probably greatest in rich countries – those with supposedly “good governance.” Poor-country governments probably accept more bribes and commit more offenses, but it is rich countries that host the global companies that carry out the largest offenses. Money talks, and it is corrupting politics and markets all over the world. Hardly a day passes without a new story of malfeasance. Every Wall Street firm has paid significant fines during the past decade for phony accounting, insider trading, securities fraud, Ponzi schemes, or outright embezzlement by CEOs. A massive insider-trading ring is currently on trial in New York, and has implicated some leading financial-industry figures. And it follows a series of fines paid by America’s biggest investment banks to settle charges of various securities violations.

From Jeffrey D. Sachs’s recent article The Global Economy’s Corporate Crime Wave.  The bad news is that “the close connections of wealth and power with the law, reining in corporate crime will be an enormous struggle”. So how then do we rein in leviathan? Sachs hopes that “rapid and pervasive flow of information nowadays could act as a kind of deterrent or disinfectant. Corruption thrives in the dark, yet more information than ever comes to light via email and blogs, as well as Facebook, Twitter, and other social networks”. That means in a country such as ours where these mediums are yet to find a home, and public media is effectively shackled, it’s a hard road fighting corporate fraud. In Zambia of course we have other bigger problems – that is the huge capture of political players through “campaign finance” and other forms of corruption. We touch on this in the monthly essay - Understanding Corruption in Zambia. 

Book Reading Goal : Week 21

Read three interesting books since the last update. The first was a compendium of essays by my favorite moral philosopher Nicholas Wolterstorff - Hearing the Call : Liturgy, Justice, Church and World. I have been trying to read everything Wolterstorff has written (and is writing). It was great to pick up some papers I had missed! I am eagerly awaiting his next book on Love and Justice.

I have been fascinated by issues surrounding the digital explosion especially after reading the The Shallows : What the Internet is Doing to Our Brains by Nicholas Carr.  I was therefore delighted to pick up another book that addresses these issues from a Christian perspective - The Next Story : Life and Faith after the Digital Explosion by Tim Challies. A great read and I have already shared some quotes from it on our Facebook page. Speaking of the page, be sure to sign-up, we are currently reading an important book together there - Getting Better : Why Global Development Is Succeeding and How We can Improve The World Even More by Charles Kenny (I am review this for a  magazine, but hope to share it when it is published). 

The final book I read was Preaching for God's Glory by Alistair Begg. I occasionally get to preach at my local church, so this was useful reading on handling God's word with care. In fact, after reading this I have become enthralled with Begg's ministry and keen listener of the Scotman's exhaltation. 

A word on reviews. We have somewhat slow down on reviews due to other commitments - also no new books have come out that I have really thought offered a fresh perspective and may be of interest to readers (I always emphasise quality over quantity). But I am hopeful that over the summer we can review  some books on Zambia, history and economics. I am making heavy use of Kindle at present, so very much constrained to e-books. 

Book Reading Goal Review

Books Read So Far : 15 books

Remaining Books to Achieve Target : 35 books

Weeks Remaining to Achieve Annual Target : 31 weeks

How is development achieved?

"Development depends not on the abstract national goals of, and the more or less enforced decisions by, a cadre of planners, but on the piecemeal adaptation of individuals to goals which emerge but slowly and become clearer only as those individuals work with the means at their disposal; and as they themselves become aware, in the process of doing, what can and ought to be done"

Herbet Frankel in his Quarterly Journal of Economics article published in 1952. In other words, it is slow and hard work and will take individual effort to bring it about. That of course does not mean government cannot create the conditions for which people flourish, but in Mr Frankel's view their government is no saviour neither are external players (your FDI chariot riders). 

The Biggest Problem In Africa

"The biggest problem in Kenya - and across sub-Saharan Africa - is not poverty but inequality. Many African countries are growing at rates of 7%-8% a year, but this is destabilising if it is not accompanied by equity. In highly heterogeneous societies, structural inequality is easier to politicise, and you do that by ethnicising it - as happened in Kenya in 2008. And then you militarise these conflicts using party youth militias. That combination fundamentally undermines democracy because it leads to mobilisation along ethnic lines, and that becomes toxic. You can blame an entire group for your woes..."

John Githongo, the Kenyan anti-corruption campaigner who once served in the Mwai Kibaki administration and was exiled to London for speaking out. I am not sure it is the biggest problem, but it is up there with other huge problems like absence of rule of law. At this point it helps to distinguish, as we always admonish, between "proximate" and "ultimate" causes. Inequality is clearly a proximate cause. For further discussion of the problem of inequality see here, here and here. 

How poor are Zambians?

"The bright spots [in Africa] are tiny. Botswana and Mauritius have both posted impressive GDP per capita growth rates for extended periods but have a combined population of about 2.5 million people. More representative of the region's performance is the fact that the average rural Zambian will enjoy a lifetime income of about about $10,000, compared to a lifetime of around $4.5 million for the average resident resident of New York City..."

From Charles Kenny's new book Getting Better. We are reading this book together on our Facebook page. Follow along!

The government's case for low mining taxation, 2nd Edition

The Minister who speaks for Mining Companies is back with the government's strategy which appears to be built around job creation. We have dealt with every single reason the Government has ever dreamed of under Eight Reasons for Rejecting Higher Mining Taxation.

Linking Zambia (People's Pact)

The People's Pact have now got a new website. I continue to be impressed with how the People's Pact are using  new media so effectively. See www.peoplespact.org for their activities. 

The Real Truth About The PF Manifesto (Guest Blog)

The Patriotic Front (PF) - the largest opposition party in Zambia - has adopted "change" as their core theme for their campaign this year. Indeed, their recently unveiled manifesto promises a significant departure from virtually all policies implemented by the ruling part - the Movement for Multi-party Democracy (MMD) - in the last 20 years. This essay offers an analysis of the promises contained in the PF manifesto and attempts to assess whether they represent genuine, viable change and an alternative to the current policies of the MMD.

In the balance of this assessment is a host of critical questions: PF proposed approach to converting Zambia's vastly improving economic growth forecasts into meaningful and sustainable economic development (that creates viable jobs and consequently reduces poverty); policy on how to handle revenues from mining operations (the single most important sector in the Zambian economy); and finally, constitutional (as well as institutional) reforms that Zambians hope can advance their young democracy, help curb corruption and foster a sense of responsible governance.

PF Utopia - The Promises

Beginning with the foreword by the PF president, the promise of the PF manifesto is a Zambia where jobs are plenty, individuals (and companies alike) pay low taxes (even lower for families with children), while the value of incomes and savings is protected by a low inflation rate and a fixed exchange rate. For those that want to borrow, there will be government assured low interest rates.

Are the Chinese in Zambia misunderstood?

Chinese companies operating in China have been criticized for poor labor conditions and bad pay. Controversy grew in October 2010 when two Chinese managers at a privately owned mine shot and wounded 11 Zambian miners after a dispute over working conditions. Charges against the two managers were dropped in April this year and the men were allowed to return to China.

Sautman argued that China’s socialist legacy means Chinese managers are more willing to pitch in with manual work when necessary. However, this willingness to “push wheelbarrows” has been misread by local opposition politicians who believe Chinese workers are taking Zambian jobs. This lack of division between Chinese engineers and African workers appeals to many miners who previously worked for Western companies as they enjoy the absence of the “white boss complex.”

Barry Sautman (Hong Kong academic) reckons that Chinese mining companies in Zambia do not deserve their negative reputation as their operations are no better or worse than Western companies. You can read the rest of the piece here.

New farming methods for biofuel in Zambia

Why I am Endorsing PF (By Kaela B Mulenga)

Resident contributor and economist Kaela B Mulenga has produced a special paper for us on his endorsement of the Patriotic Front. We had previously uploaded this but due to the "Blogger reset" it had been lost.
Why Pf is a Better Choice Than Mmd - An Address to Doubting Thomases

MMD Manifesto: Electoral Reforms

Electoral reform is one of the key issues facing Zambia. We have long argued that for Zambia to develop it needs to devise systems that diminishes the role of leaders to act as rent seekers. Currently many of our leaders govern purely to enlarge their pockets. Until we introduce processes that prevent them from doing so we won’t see meaningful development. Related to that it needs institutions that allow ordinary Zambians to be able to kick out incompetent and shallow leaders. These requirements are best fulfilled through development of contestable and credible electoral arrangements. Until the electoral machinery is more contestable and leaders can be hired and fired easily, corruption and malpractice will continue unabated. It is therefore very important that not only do we continue to strive for a better voting system, but also ensure that that what ever system is in place, it is managed properly and without malpractice. For these reasons, we regard proposals in this as extremely vital.

What are the main specific policy proposals?

The MMD has no specific policy section on “electoral” reforms. However, it has a small section that mildly touches on this:

“The MMD government will ensure that the process started in 2007 to review and enact a new constitution and reform the electoral system is brought to its logical conclusion. This will culminate in the enactment of a new constitution, necessary supportive legal and institutional frameworks and ensuring that elections continue to be held in a free and fair atmosphere”. (Section 7.1)

Scattered elsewhere is self congratulatory message on how the MMD has increased “voter participation by eligible Zambians” by adopting the “the Electoral Act 2006 recommendation by the Electoral Reform and Technical Committee for the continuous registration of voters and use of transparent ballot boxes”.

What is the rationale?

No problems have been identified.

What is our main assessment?

The MMD’s only promise is that “elections [will] continue to be held in a free and fair atmosphere”, whatever that means. The manifesto has absolutely no new policies whatsoever. MMD evidently has no plans to reform the nature and administration of elections. It does not acknowledge any deficiencies with the current electoral process. The electorate therefore cannot be sure of what MMD intends to do in this area. It has no commitments. Right now MMD is not pledging anything that you could hold them to.

No policy diagnosis. No commitments. No vision for the future.

Related Posts :

PF Manifesto : Electoral Reforms

Zambian Economist is currently reviewing manifestos of leading political parties in Zambia. All posts in this ongoing review can be found at Manifesto Analysis.

PF Manifesto: Electoral Reforms

Electoral reform is one of the key issues facing Zambia. We have long argued that for Zambia to develop it needs to devise systems that diminishes the role of leaders to act as rent seekers. Currently many of our leaders govern purely to enlarge their pockets. Until we introduce processes that prevent them from doing so we won’t see meaningful development. Related to that it needs institutions that allow ordinary Zambians to be able to kick out incompetent and shallow leaders. These requirements are best fulfilled through development of contestable and credible electoral arrangements. Until the electoral machinery is more contestable and leaders can be hired and fired easily, corruption and malpractice will continue unabated. It is therefore very important that not only do we continue to strive for a better voting system, but also ensure that that what ever system is in place, it is managed properly and without malpractice. For these reasons, we regard proposals in this as extremely vital.

What are the main specific policy proposals?

The main PF proposals in relation to electoral reforms are:

• Amend the Electoral Act (1996) to ensure members of the Electoral Commission of Zambia (ECZ) are appointed by Parliament and not the President; and, ECZ is representative of political parties in parliament.
• Political Party Registration: new legislation to allow for the registration of political parties with the ECZ and not the Registrar of Societies.
• Political Funding Reform: PF plans to “introduce legislation to allow for government financing of political parties with representation in parliament”.

There’s also a general commitment to “review the recommendations of the Electoral Reform Technical Committee and implement those recommendations which are progressive in achieving democratic elections”. However, this is too generic for our purposes.

Is corporate social responsibility associated with lower wages?

Yes. According to a recent paper by Nyborg & Zhang that draws on Norwegian evidence :

If workers prefer socially responsible employment, all else given, then irresponsible employers must pay more to recruit equally qualified employees. Combining survey data on firm reputation with official register data on demographic and labor market variables, comprising wage observations for more than 100,000 full-time employees, we do find a negative, substantial, and statistically significant association between wage and CSR among Norwegian firms. However, this effect is mainly observed for men. This is partly, but not fully, explained by a high correlation between firm’s CSR and gender equality policies......Hence, we conclude that firms associated with CSR do indeed have a cost advantage in terms of lower wage payments as compared to other firms. One implication is that even if social responsibility is associated with higher costs, for example in terms of higher emission abatement expenses, responsible firms may survive market competition – even in the absence of ethical consumers or investors. Since labor costs constitute a major cost component for most firms, this might well be of substantial importance when it comes to firm profitability.

The result is hardly surprising, it makes sense that there would be a trade-off between corporate social responsibility (CSR) and employee wages for so many reasons - and not least because they both cost money. More interesting is the policy implication. It is understandable that the authors are keen to make the "environmental point"  (it's the easiest way to get your paper noticed these days), what is actually useful for our Zambian context is that there is a trade-off between CSR and wages. 

This issue matters to us because we have seen mining companies answer the call of government ministers to do more CSR projects. First Quantum Minerals  has previously rehabilitated roads in Ndola.  Konkola Copper Mines is working to empower the Luano Community in Chingola through an innovative goat draft project - an interesting alternative to microfinance. Lumwana has also got into the act with the past pledges to spend K4bn on the local area, including plans to launch a multi-million Kwacha programme to diversify its local economy in Solwezi away from dependence on mining.  As we have noted in the past, these projects are at best distortionary second best scenario. The ideal scenario is that government should tax mineral resources sufficiently in a way that profits local people and does not impact negatively on the environment and safety of workers.   In true CSR “social projects” are nothing short of "bribes" to keep local people quiet. Firms do not engage in "social responsibility", they practice "shareholder responsibility". The CSR projects are a small price that mining companies pay to local people in case they become agitated at the lack of development in the area and demand the government to do more to tax the companies (or in election time switch to the opposition). 

What is more interesting is that if we take the Nyborg & Zhang evidence seriously, there appears another serious problem. CSR may actually simply be a "fools game" where locals are conned into believing that they are gaining a school when in actual fact they are getting poor wages in return. The obvious way to prevent this of course is through some form of minimum wage or better still state mandated "reinvestment projects" tied to a stronger planning and local taxation policy. 

Election Polling Misunderstood

UPND's Charles Kakoma on CPD's presidential opinion poll :

Is the opinion of 1,000 people representative of more than 4,000,000 registered voters? That is a joke and his sampling techniques are questionable and too biased. He has not been to all parts of Zambia. How does he know what the entire voting population is saying?

There are many reasons to question the recent opinion poll but the sample size is not one of them! What he should be asking are things like : what was the question asked? how was it worded? what is the sampling error? how representative was the sample? Was there any selection bias? Have they taken into account the "fear factor"? Zambians who plan to vote for the opposition may be unwilling to disclose their intentions for obvious reasons. This is what Mr Kakoma should be focusing on. Quite clearly UPND are not doing any internal polling otherwise he would have understood the main questions around polling. They are going into this election blind!

Zambian Matrix Reloads on New Poll

Dr Neo releases a new poll, but Banda (the other Banda) is having none of it :
 

I must speak to the Doc for more information, but without seeing the write up, the most fascinating part of the poll is the conclusion that the landscape has not changed. That is both good news and bad news for Patriotic Front. Good news because with the new register (5.2m voters), more than 50% of the voters are in  PF strongholds (Northern, Copperbelt, Luapula and Lusaka). Since new voters are more likely to actually vote than old registered voters, this bodes well for them. The bad news, and we must check with Dr Neo's on this, is that it would appear Western Province is static. We were led to believe that things are much more fluid there. So perhaps MMD is holding the fort. But we have atleast 3 more months of unofficial campaigning and the MMD to spend, spend and spend (and use the public media).

Also let us remember that we have seen other polls fail - see A New Presidential Poll.  And of course there was the problems with the poll that never was in 2008. 

Michael Sata - Special Lecture at Oxford University

We are delighted to make available this week's lecture by Mr Michael Sata (President, Patriotic Front) at Oxford University. (Huge thanks to folks at Oxford University for forwarding this to us).

Michael Sata Paper - How to Be a Successful Opposition Leader in Africa

The Impossibility of Opposition in Zambia

“The intimidation is incessant and has major effects; Law enforcement agencies including the Zambia Revenue Authority (ZRA), the police, the Drug Enforcement Commission and the intelligence are used to curtail the freedom of assembly and association, police arrests and intimidation against the opposition, the public media are used as vehicles of personal slander and hate speeches...Government programmes are abused for campaign purposes even before the commencement, before announcement of election date. And of late, government and ruling party-induced physical violence is used to disrupt operations and programmes of opposition parties. Recent cases bear evidence of this. All these methods which are against the electoral legislation are used to cripple the opposition especially their leadership.”

Another revealing response from Mr Michael Sata at Oxford University. It is all too easy to criticise our opposition for failing to score points in some areas, but we must always maintain perspective. In Zambia, and much of Southern Africa, the ruling party uses all the machinery of government and directs its at the opposition. There's a good reason why one must stretch their memory far back to remember the last time an opposition party triumphed in the SADC region. 

How does PF reconcile low taxation with high spending?

Mr Michael Sata answered the question at Oxford University yesterday:

I have often been challenged on how PF will enable citizens to have more money in their pockets while lowering taxes. My simple answer to that is that we shall achieve substantial revenue increase by stamping out corruption, misuse of funds, streamlined government operations costing-saving schemes, reducing cost of doing business...I believe that the foregoing measures shall lead to higher employment levels, achieve savings for government and business, and improve performance and efficiency. Our economic policies shall be based on smart partnerships to achieve mutual benefiting position for investors and the government providing appropriate resource....There can be no justification why Zambia should have one of the highest taxation levels while at the same time industries that are making the most profits, such as the mining industry should hardly pay taxes, yet they exploit a non-renewable national resource...

So low taxes for everyone then? One is tempted to think PF will increase mining taxes but with the current government entering new Development Agreements (DA) every minute (do you really think Trident is not underpinned by a DA?) any future government's hands are tied. We'll come back to this as part of Manifesto Analysis.

Diversification Misunderstood

Fredrick Mutesa (former UNZA academic) on a strategy for diversification:

"If we have a strategy of diversification that is dependent on external investment, the local people will not benefit much and the local economies will not benefit much. We have seen it in the mining sector (in Zambia) where copper prices are high but the government is getting very little while local suppliers and contractors are getting raw deals...We need a strategy that will embrace local enterprises. We need to look at how we can empower local farmers to expand their production..We need to find ways of how we can help small businesses to expand their businesses.."

A poor and but all too common misunderstanding of diversification. There are many ways in which diversification takes place and the source of investment is not really the problem. What Zambia needs to do is work on attracting the right foreign investment and put in place policies that encourage spillovers from new foreign investment to domestic firms. These spillovers are critical for long-term diversification, but are not inevitable. The right conditions need to exist for them to occur. More discussion of these issues in the monthly essay - Five Questions on Zambia's Diversification. 

Mobile Hospitals—A Gigantic Policy Blunder! (Guest Blog)

A news article which has appeared in the Zambian Watchdog under the title “Each Mobile Hospital to Gobble K450m per Trip on Allowances,” if its content is authentic, is one of the many good reasons why President Rupiah Banda’s decision to buy the controversial mobile hospitals will be recorded in our beloved country’s history as having been a gigantic policy blunder.

In the article, it is revealed that each mobile hospital, which consists of 7 trucks, will require more than 36 personnel per visit of 2 weeks in any given rural area, including medical doctors, nurses, clinicians, laboratory staff, surgeons, pharmacists, and support staff.

And it is estimated that K450 million will be spent in allowances on EACH of the 36 or so mobile hospital personnel over a period of 2 weeks, an amount which does not include expenses on fuel, oil, spare parts, maintenance of the 7 trucks, and so forth, especially after the two-year initial contract with the Chinese supplier of the mobile hospitals. Also, the amount does not include the monthly salaries of the 36 or so mobile hospital personnel expected to serve on EACH of the 9 mobile hospitals.

Understanding Corruption in Zambia (Monthly Essay)

The May 2011 short essay. More information on the Monthly Essay project can be found here. We value your feedback and suggestions for future topics.
Understanding Corruption in Zambia