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Thursday, 31 May 2012

Dark side of nationalisation?

Ben Phiri recently wrote a piece on the "dark side of nationalisation" which instead of illuminating only served to darken people's intellect. Consider this opening:
One of the most dominant developments in African governments in the last four decades is the issue of nationalisation which has been driven mainly by politics and ideology. This stems from the need to increase local control over economies which, prior to gaining political freedom, were completely dominated by foreign nationals and corporates. Although this looked workable in its initial stages, it later backfired, affecting almost all sectors of the economy. As feared by several economists and technocrats, nationalisation could easily affect macroeconomic goals of economic growth such as employment creation and inflation rate. The other factor is that, should modern African governments pursue nationalisation, then they are headed for economic disaster.

Wednesday, 30 May 2012

From Beijing With Weapons, 3rd Edition

Zambia and China this week signed a US$8m military aid agreement for the rehabilitation of the Ndola and Maina Soko Military hospitals. Defence Minister Geoffrey Mwamba has been in Beijing signing meeting with military officials there. Mr Mwamba said the signing of the agreement is part of GRZ's effort to "uplift standards in the defence forces". The Chinese on their part are keen to "continue to provide monetary and various forms of support to help the Zambian government". It is unclear the extent to which the money is a grant or loan. What is clear is that China - Zambia military cooperation continues to deepen. We have previously warned that China's economic cooperation is accompanied with deepening military cooperation. The latest deal come immediately after buying K-8P jets from Beijing.

Tuesday, 29 May 2012

Corruption Watch (Various)

The Joint Government Investigations Team formally charged China's Zhongui Mining Company for alleged corrupt practices with a public officer. It is alleged that the mining firm corruptly gave former Mines Minister Maxwell Mwale received over K470m gratifications as an inducement or reward for the issuance of mining prospecting licenses in North Western province.

Police authorities are pursuing members of an agricultural cooperative society in Mumbwa who include a senior police reservist for theft of more than K2 billion. The senior police reservist has been stripped off his position to pave the way for investigations concerning the K2 billion which he and others received from the Food Reserve Agency (FRA) for maize purported to have been supplied.

Zambia Revenue Authority has announced that it will institute investigations into the alleged corruption among some of staff at Nakonde border post as alleged by the customs clearing agents who staged a protest over the weekend. Clearing agents have been accused ZRA officers of working in collaboration with some agents in under-valuing goods to evade paying appropriate taxes.

Monday, 28 May 2012

Energy Watch (Hydro Power)

Copperbelt Energy Corporation has begun the construction of the 40 Mega Watts (MW) Kabombo Gorge hydro-power project in Mwinilunga to cost about US$160 million. The project will create 1,000 temporary jobs during construction and is expected to be completed in four years time. It comes with a price of displacing 115 households at Kamikezhi area. In recent years electricity demand in Zambia has been on the rise as the economy grows. This has exerted pressure on the current available supply with national installed capacity of 1,730 MW significantly below demand which is well over 2,000 MW. The construction will do little to narrow that gap.

Thursday, 24 May 2012

Talking unemployment without solutions..

A recent IMF high-level international conference co-sponsored by GRZ, ILO, and the IMF to discuss solutions for sustained, broad-based, and employment-intensive growth appears to have drawn blanks - with no clear policy outputs. Whilst acknowledging the urgent need for a solution, the participants appear only to suggest the following :
"Unemployment has grown across the world since the onset of the global financial crisis...There is now a need to incorporate employment creation into the formulation of macroeconomic policies to improve employment outcomes. That is why the ILO and the IMF are supporting this national dialogue"
- Martin Clemensson (ILO)
“Growth and jobs are inseparable, and Zambia must invest in social protection, diversify its economy, and reduce its dependency on copper”
- Jaap Wienen (ITUC)
“We need to steer employment creation in the right direction. For that we need coherence and balance across policies, as well as coordination and dialogue among institutions and stakeholders. This conference has marked an important step in that direction”
- Fackson Shamenda (GRZ)

All of this must disappoint Vice President Guy Scott who recently noted that the Patriotic Front will lose power in 2016 if it does not solve the unemployment problems. Separately Alexander Chikwanda is targeting a million jobs before then. But with no clear national development plan (the MMD's sixth national development plan appears to have been abandoned) that puts jobs at the heart of development, there's no clear path to achieving 100,000 jobs let alone a million! 

What should Government be doing to reduce unemployment?

Wednesday, 23 May 2012

Society, entitlement and preferences

A recent paper explores the influence of society on individual preferences. Standard economic literature more or less takes preferences as given (exogenous), new evidence however is poking some important holes in this area :
The recent work in psychology and economics has implications that are only beginning to be explored for the examination of the question how different aspects of society affect preferences, but which promise to undermine long-held standard assumptions in economics. If historical institutions shape preferences, which shape the choice of public policies and their effects, then societies almost surely have different optimal paths of development. If individuals understood these processes, they could design policies to nurture desirable preferences and in turn shape the paths of economic change. At a minimum, these findings should give pause to those who accept WTAs, WTPs, and market prices as stalwart guides to welfare.
The issue has many important policy implications, but two come immediately to mind in our Zambian context. The first is that it reinforces the need to look at our cultural context positively. Culture is usually seen as a constraint to "development". But this appears to again emphasise that a more positive approach to it could lead to much more harmonious outcomes. For example, we have previously noted the need for greater attention to be paid to "local ideas" in generating policies, rather looking to import "western models" alien to our land. The current constitution draft is an example of a foreign important with many non-Zambian ideas.

Tuesday, 22 May 2012

Zambia's neverending borrowing

Zambia's never ending borrowing frenzy continues under the new government without parliamentary oversight.

First we had the announcement that Government has signed a US$50 million loan agreement with the World Bank for "livestock development and animal health project".

Separately, the World Bank informed us that it had approved another US$60 million credit to Zambia as part of an effort to reinforce the existing electricity transmission network and increase Zesco’s power transfer capacity to Kafue town and the Southern Province. The development objective of the project is apparently to "improve the reliability of Zesco’s regional power trade transmission network infrastructure along the Kafue Town – Muzuma – Victoria Falls corridor".

The World Bank loan was clearly not enough because Government also is borrowing US$30 million from the European Investment Bank (EIB) for upgrading of the same power transmission line. No one knows whether this is the end of the borrowing for the power project because no one has told the terms of the loans or how much money is being raised in total. To be fair to Mr Chikwanda, no one is asking for an explanation!

Monday, 21 May 2012

Zambian School Triumphs in Global Competition

Indeco Community School wowed judges in global competition, the School Enterprise Challenge 2011, to   win $5000. This exciting announcement coincides with the launch of the 2012 competition, which is now open for registration.

This international competition is organised by the UK based development charity Teach A Man To Fish. It is a great chance for schools to develop businesses, bringing in extra income and teaching students useful entrepreneurial skills.

Indeco School were awarded the ‘People’ prize for their bag and school uniform-making business, named Indeco Divine Hands, for positive effect it is having on their local community. Not only has their business provided employment for four local community members, they have also organised a number taster days to introduce other schools to the world of business. Profits from their business have been invested in improving the school, which has included the installation of electricity in the classrooms – a fantastic step that will improve the wellbeing of Indeco’s students no end.

Friday, 18 May 2012

Exceptional People (A Review)

By Chola Mukanga

International migration debate has risen on the global public agenda in the last few years. Sluggish global economic performance has given a platform for nationalistic forces to agitate for stronger limits on migration, largely fuelled by concerns that foreigners may take away local jobs and impose costs on public services with little benefit to domestic European economies. Such arguments, usually made without any empirical evidence, in practice have only served to highlight the inherent inconsistency in current migration policies being pursued by western governments. While most continue to preach global liberalisation of economies and poverty reduction, they erect borders that diminish competition and reduce labour choices available to the poor. Goldin, Cameron and Balarajan’s Exceptional People represents a challenge to this inconsistency by seeking to demonstrate that properly considered the historical, contemporary and future case for migration is strong.

Thursday, 17 May 2012

China's New Colonialism in Africa

By Chola Mukanga

The word colonialism naturally awakens images of King Leopold and other tyrants in ages gone by that subjected defenceless Africans in the rampant thirst for wealth and power. This shouldn't surprise us because the human mind has the tendency to gravitate towards the worst triangulation of any issue, even though reason dictates that much of colonialism is subtle and propagated through indirect structures. 

Properly understood both theory and practice show that colonialism is the act of one nation or society extending its influence by controlling territories outside its national boundaries. The motivation is always self interest – to gain access to limited resources. Usually these include natural resources but there may be a desire to gain access to land which offers strategic economic or military advantage over competing rivals.
It is through this prism that China’s current activities are rightly viewed as a potent emerging colonising power. It certainly did not deliberately set out to colonise Africa, rather its colonisation efforts are an outworking of its rulers struggle to maintain the current growth trajectory at all costs, in order to pacify the expectant masses. The Politiburo’s quest for domestic stability has produce in Africa a situation where it is now the pre-eminent colonial power of the 21st century. From Zambia to Mongolia, poor country after another, China is investing in return for strategic benefits, usually copper or oil. Besides the thirst for local resources, China is exporting people and selling weapons, as well as shipping of prisoners[i]. Large tracts of lands are now in Chinese hands across the continent[ii]. These resources are important to keep its billion people under control.
Like colonial leaders of the past, the Chinese strategy for dominance has targeted its effort on a corrupt African leadership through dirty deals. Out of desperation and corruption, African leaders are selling their people into a new era of corruption and virtual colonialism as China seeks to buy up all the metals, minerals and oil she can lay her hands on: copper for electric and telephone cables, cobalt for mobile phones and jet engines - the basic raw materials of modern life. It is crude rapacity, but to Africans and many of their leaders it is better than the alternative, which is slow starvation.
In recent years China has expanded its influence in Angola with billions worth of credit agreements related to electricity, water, road and housing. In exchange, Angola keeps offering more barrels of oil. The exact amount of the Chinese credit is unknown, but experts put this at $10 billion, with more loans in the pipelines. In Zimbabwe, there have been closer economic and diplomatic ties with Beijing, often with wide and far-reaching effects. Not satisfied with using its influence to block democratic reform and improvements of human rights, China’s capital and funding arrangements for Zimbabwe have been responsible for keeping Mugabe in power. Chinese firms supported by their powerful State apparatus and employing low-cost but efficient labour consistently outbid contractors from other parts of the world. China has de facto control of telecommunications, textiles, construction and mining deals in Zimbabwe.
China’s growing ties with corrupt governments inevitably undermines ordinary Africans striving to build a better Africa. Zambia has experienced firsthand the human right abuses and flouting of countless labour laws by Chinese companies which were recently documented in a hard hitting report by Human Rights Watch. Recourse to the legal process is fraught with difficulties as political actors intervene to maintain a parallel form of justice. When the employees at Collum Coal Mine were shot by their Chinese supervisors the Banda led government quickly stepped in to agree that they should not be prosecuted. A crime against the state had become a private deal among individuals.
The apex of colonialism is military influence. It therefore comes as no surprise that China has been increasing its military influence in Africa. China's military-to-military activities in Africa, including defence attaché presence, naval ship visits, arms sales and other missions to support military cooperation having expanding to keep pace with China's growing national interests throughout the region. Indeed, as Chinese presence grows China will increasingly be challenged to respond to security threats to Chinese property and personnel in the region that may necessitate a re-evaluation of the role of China's military.  
In 2011 Zmabia’s Army Commander General Lopa sign bilateral deals with Beijing to strengthen military cooperation[iii]. Recently, the new administration bought eight K-8P jets for Zambia Air Force (ZAF) from China[iv]. ZAF Commander Eric Chimese said the jets would "enhance the military wing’s ability to monitor the stability of the country". Plans to purchase helicopters and other police and military gear from China have also been muted. Why poor nations like Zambia need to expand its military cooperation with Beijing’s beats the poor. What is clear is that Beijing's military foray into Zambia and other African countries continues unabated and the aim appears to challenge western military influence in Africa, even as many reject America’s Africom[v] advances after pressure from Beijing. None of this comes as a surprise because it’s well established that the relationship between economic help and military intervention is inseparable. It is illogical to expect nations that invest billions in other nations, not to back up that investment with some guarantee of security. China's growing integration in Zambia is bound to be accompanied by greater military intervention as it seeks to guarantee its "investment". This is the most worrying aspect of China's reach in Zambia, and ignore it our peril.
At the social level, China has been expanding its influence with significant cultural exchanges facilities through training programmes and expansion in development of Chinese communities across the continent. These social developments are facilitated with increased aviation links. More routes are inking African airports to mainline China than ever before. But not all social contact has been welcome. Recent evidence appear to show that as Chinese jails reach the full bream, thousands of Chinese convicts have allegedly been pressed into service on infrastructure projects undertaken by state-run Chinese companies in Asia and parts of Africa, reminiscent of exports of convicts to Australia at the height of British imperialism. Many have come across such Chinese convicts finishing their jail time as forced labourer on road projects in Africa. This export of unwanted peoples is not only blocking unskilled local labour to have job opportunities but it may lead to deep social problems in the future.
With the export of people comes direct land grabs. The DRC has been involved in proposals that relate to proving large tracts of land to China to grow large amounts of palm for oil production. The details of such deals are never discussed but have come at a time when arable land around the world is in short supply due to climate change and other factors, and Africa's land supply attracts growing attention from wealthier resource-hungry nations. This of course is was part of ever expanding Chinese deals including a range of energy and infrastructure package, following the cancellation of debt worth $8 billion by multilateral institutions including the World Bank. Alongside the deal was a $9bn agreement that pledges millions of tonnes of copper and cobalt to China in exchange for roads, railways and other infrastructure, dubbed the Congo’s Marshall Plan. The deal was naturally accompanied by large tax breaks for Chinese companies and the ceding to Chinese companies mining rights to over 10 million tonnes of copper reserves and around 600,000 tonnes of cobalt estimated at $87 billion[vi].
Sceptics are quick to suggest that such things are nothing to worry about. Africa has plenty of land and resources. But unfortunately Beijing’s actions go beyond these considerations. For one thing, Chinese influence involves new forms of African dependency. Indebtedness is turning the African into a slave of the lender.
The increasing piling of Chinese debt for countries which have experienced debt relief in the past is demonstrated again in Zambia. Under the Banda presidency Zambia acquired $1bn in credit for projects in hydro power and road infrastructure. Other deals include credit for building stadiums ($US100m); buying rail wagons; and, funding new regional electricity inter-connections from Zambia (US$225m). This trend of increasing indebtedness has continued under the present administration, with new deals being announced everyday[vii].   In all these deals, when the payback comes, it is our children to think of how to pay back daddy's careless borrowing habits. If the money was properly channelled Zambia could create not a paltry 4,000 low quality jobs but 50,000 jobs through properly focused infrastructure development. All of these deals are secured with no parliamentary oversight and overseen by corrupt civil servants.
Colonialism is of course also intellectual. At the heart of the Chinese story in Africa is not only an escalation African subjudication but also the spread of ideas. One such idea is the perpetuation of a slavery ethos. Africa's current leadership continues to enslave their people, repeating the same mistakes of their pre-colonial forefathers. The buyers may have changed but the sellers remain the same - a small band of power hungry elites. The commodities were ivory but now its copper, manganese, diamonds, etc. One thing never changes - people are still being sold. Africans are not being physically shipped, but certainly many have all their dignity stripped through poverty and other abuses.
Another idea being promulgated by China is market authoritarianism which it is now exporting to Africa. China is changing how we think about the nature of development China’s emergence on the international stage poses a serious threat of ideas about how prosperity is attained and the society we want to live in. The Chinese model promises rapid growth, stability and a pursuit of better life for poor countries. Absent from this model are the things ordinary Africans desire such as free speech, freedom of worship, open government and royal political opposition. The Chinese model is proving attractive to African corrupt leaders as they flock to Beijing to learn how they can stay in power in exchange for economic growth. They are literally learning how to exchange growth for a rod of iron.
The “no” camp would of course contend that China is not unique its thirst for dominance indeed, some recent empirical work appear to show that when compared to aid from OECD and other emerging donors Chinese aid does not appear to be motivated by any rogue intentions. That is to say there appears no evidence that China's aid is biased towards autocratic or corrupt regimes as claimed by its critics. But that argument is premature because motivation must be assessed alongside the outcomes of its political actions. That China may not be selective does not diminish its likely impact - which is significant control of resources and colonisation. The other point is that procedures matter. As noted Chinese resource acquisitions are mainly done through back room deals, something that cannot be assessed through econometric analysis.
Others believe that the Chinese are misunderstood and do not deserve their negative reputation as their operations are no better or worse than Western companies. For example when Chinese managers in Zambia are more willing to pitch in with manual work when necessary, due to the socialist mindset, they are misread by politicians who believe Chinese workers are taking Zambian jobs. But the rampant disregard for laws and mass protests in Chinese led industries shows that this argument is not sustainable because the source of concern is shared by the general population, not a selected “anti-Chinese mob” as usually alleged.
As Africans we have a serious challenge on our hands. How are we to respond to this new colonialism? The African response must start with recognition of our current limitations in the Chinese partnership. China is here to stay and the deals it has put in place are irreversible. No future leader no matter how opposed he may be to China’s practices will be able to reverse the current arrangements. Zambia has seen this policy of accommodation in the last six months. With every investment China raises the cost to Zambia of reneging on her in the future. It pushes Zambia into becoming increasingly reliant on China.
The only ray of hope lies in an urgent recognition that at the core China is a rational economic agent seeking to maximise its own gains from this unequal of colonial relationships. That requires African governments to recognise the opportunities. China’s growing thirst puts Africa in a strong bargaining position. China is experiencing huge deficits of raw materials across a range of sectors. Its markets are anxious for imported minerals to bridge the gap.  Africa is estimated to hold more than 10% of global oil reserves and one-third of reserves of cobalt and base metals. South Africa alone possesses 40% of the world’s gold, which has been skyrocketing in value since the onset of the global financial crisis. Africa’s agricultural potential has barely been touched. Africa must start to see itself as a potential global driver not merely a comfortable passenger on the Beijing Express
To take advantage of its position, Africa must avoid the “divide and rule” that led it into the arms of previous colonial masters. It needs to improve coordination among states in dealing with Beijing. Moving away from striking individual deals and negotiate stronger as a bloc. It is the only way to avoid a full fledged Chinese colonialism of Africa.


Chola Mukanga is an economist and founder of the Zambian Economist which provides independent economic perspectives on Zambia's progress towards meaningful development for her people

Copyright: Zambian Economist, 2013
www.zambian-economist.com

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Wednesday, 16 May 2012

Aviation Watch (New Routes)

Tanzania's Precision Air has opened a new route between Lusaka and Dar es Salaam with a B737. The flights will be launched in May. The same month KLM begins the Schipol - Lusaka flights.

South African Express (SA) has opened a new route between Lusaka and Durban effective July 2012, uisng the PRJ-200, 50-seater aircraft. The airline will fly three times a week with possibility of increasing to six flights. 

Tuesday, 15 May 2012

On Constituency Development Funds, 2nd Edition

A revealing recent exchange in parliament on Constituency Development Funds paints a picture of a corrupt and poorly administered fund. Yet, MPs still want it to be increased? 
Mr L. J. Ngoma (Sinda) : What has been the impact of the Constituency Development Fund (CDF) had been on the socio-economic development of constituencies from inception to date? And when is the CDF for 2012 going to be released to all the constituencies?

Local Governmemt Deputy Minister Mr Tembo: I urge the House to pay attention as I give a comprehensive answer which is of benefit to all the 150 constituencies.

The ministry has not measured the impact of the CDF on the socio-economic development of constituencies from inception to date. However, there are two major studies which were conducted by Caritas Zambia and the Economic Association of Zambia (EAZ) on the impact of the CDF which are in public domain.

The findings of these studies indicated the following:

Monday, 14 May 2012

Barriers to Justice (Sub-Standard Prisons)

The poor conditions of our prisons is thankfully now getting a proper hearing. Part of the reason is the new willingness by the media to cover such issues in more depth. Case in point is this recent article in the Times of Zambia that chronicles the unsuitability of the current prison arrangements for vulnerable groups especially people with disabilities, contrary to current laws.

When the current colonial era prisons were being built no attention was given to the needs of vulnerable inmates. No surprise there. The problem is that the past failures to invest in prison capacity has left many vulnerable groups languishing in deplorable and inhumane conditions. Consider also that a third are on remand - innocent until proven guilty.

Friday, 11 May 2012

Should Nitrogen Chemicals of Zambia be privatised?

Yes. According to Agriculture Minister Emmanuel Chenda who recently argued that privatisation is the only way forward for the crippled Nitrogen Chemicals of Zambia because GRZ has no money to revitalise it. According to Agriculture Minister Emmanuel Chenda the cost of revamping it to 132,000 tonnes production potential is above the K1.6 trillion budget for the whole ministry :
"Our total budget as a ministry is K1.6 trillion and revamping this plant would chew up the whole budget, so the ultimate solution as government is to privatise this plant as soon as we find a suitable investor"
However, the Government is open to considering NCZ’s standing request to increase the production tonnage from 30,000 to 70,000 metric tonnes. NCZ recently asked GRZ for K25 billion to revamp the ammonium nitrate plant as it had a ready market from Africa Explosives and rehabilitation of the whole plant at the cost of K200bn to improve its current operations. The Government's decision has naturally annoyed local PF leaders who suggests it showed a "lack of vision and proper planning" and a break of campaign promises.

Thursday, 10 May 2012

A poverty of policy making

Local Government Minister Nkandu Luo recently banned the alcoholic beverages packed in sachets known as “Tujilijili". Her actions  continue to demonstrate a poverty in policy making that has come to characterise many Government administrations in Zambia. The problem is not that the ban has no wide public support, the problem is the lack of cost benefit analysis evidence and crucially the failure to consult widely.  

The councils have been the first to signal the measure as inept. Lusaka City Council recently suggested it wont be able to enforce the ban because it has no financial capacity to do so. It is appealing for government to help the council by beefing up manpower through provision of state police. But where is Government going to get the money from? No cost benefit analysis has clearly been done on this. The ban is typical political posturing with zero practical effect. Presumably the idea of the ban is to encourage people to come together and buy whiskey in bottles. May be its a community initiative to encourage oneness! The sad thing is that it will simply stretch an already over stretched police.

No surprise therefore that the proposals are now before the courts. 15 liquor companies have challenged the Government’s decision to ban the manufacture and supply of Tujilijili in the High Court. The liquor firms  filed a notice of application for leave to apply for judicial review over the ban on the beverage. Which has now been granted though the ban has not been set aside.

According to the application, the liquor firms contended that Professor Luo’s decision to revoke the liquor licences was procedurally improper, illegal and was a breach of rules of natural justice. The minister, they said, breached rules of natural justice when she arbitrarily revoked the licences. They contended that they came into Zambia at varying times but between 2002 and 2011 and were given investment licences by the Zambia Development Agency after meeting the mandatory minimum requirement of US$500, 000. They employ 1, 000 people directly and about 10, 000 indirectly. The firms said the decision had far-reaching consequences of job losses, creditors losing their monies and loss of revenue on the part of the Government.

All of these issues could have been avoided had the ban come through with wider public debate and careful reasoning. But here is a more important point - why is this ban being taken forward by Ministry of Local Government? Under the law she certainly has the power to do so through the provision of her local "statutory instruments". But these powers are too arbitrary and risk perpetual abuse without sufficient parliamentary scrutiny. The vast implication of this measures for police means that such measures must have wide public and parliamentary debate before putting them into laws.

Wednesday, 9 May 2012

Reversing domestic violence, 2nd Edition

Deputy Minister of Foreign Affairs Effron Lungu recently called on countries in the Great Lakes Region to establish fast track courts for 'sexual gender based violence' cases because it continues to be a pervasive and challenging issue in the Great Lakes Region. There are several points we can make here:

First, what hypocrisy! When is the Zambian government going to actually do what it preaches to others? Mr Effront Lungu will do well to first review the recent legislation which is missing the same. The recent Anti Gender Based Violence Act (2011) was a step in the right direction but the provisiom Mr Lungu talks about is not there.

Secondly, why only fast courts just for domestic violence? We have been calling for similar reforms for corruption cases, but to no avail. In a way, it is understandable. We don't want to create multiple streams of judicial processes. Hence the need for clear criteria for introducing swift processes for some cases and not others.

Thirdly, the reform of measures to tackle domestic violence must go beyond special courts. It must also be clear on use of evidence. We need a new law that allows pre-court evidence to carry substantial weight in court proceedings. This is especially so because often cases fall apart because women later withdraw their testimony due to family pressures.

Finally, while making that change, we might also explore other issues around "burden of proofs" and the possibilities of " financial penalties" paid into a "victim's fund". The 2011 Act created a Anti-Gender-Based Violence Fund  - but the money for the fund does NOT come from perpetrators, just donors and govt. It is not well thought out.

What I have never understood is why many, especially Zambian women groups, have gone to sleep on these issues. When the 2011 Act was being legislated there was very little substantive discussion. It was all just business as usual. Hence though we now have a stronger framework in place than before, it is one with substantial holes as far as tackling domestic violence is concerned.

Tuesday, 8 May 2012

Corporate Social Irresponsibility

Our arguments on the folly of the "corporate responsibility" excuse for not paying sufficient tax is finally finding support in unexpected quarters:

The Post recently run an excellent editorial directly echoing what we have been saying :
"We are not interested in mining companies running our townships. We want them to pay reasonable taxes so that together with our government, we can decide how to best use that money to develop our country and improve the living conditions of our people. We can’t be begging for money that is ours. We are not interested in donations from mining companies; what we are interested in is fair and reasonable taxes and just wages for our people and respect for the environment. If these companies were paying reasonable taxes, they would not be interested in any way to take up responsibilities they had from the very inception refused"
Norway's development agency NORAD has also been picking up on this, with direct advice for the Zambian government :
“What Government [needs] is for these companies mining important minerals to pay tax so it can be used for national development, Corporate Social Responsibility should not be building a clinic or school but paying taxes accordingly".
The problem is that Ministers are struggling to understand this very simple argument. But it's great to see some of our more 'difficult to understand' arguments (to some) finding public traction. 

Monday, 7 May 2012

Investment Watch (Various)

A collection of recent investment stories:

BATA Shoe Company is looking to undertake a K4.8bn expansion with the opening of six additional stores and renovation of 20 stores countrywide. The company currently has 44 stores.

Nigeria's DANGOTE Industrials says it has spent US$150 million out of the US$400 million total investment of the cement plant under construction in Masaiti, expected to be completed by December 2013. The construction works are on schedule and once completed the cement plant will have a production capacity of 3,500 tonnes of cement per day. It is expected to create 600 jobs. The company has been hampered by the delays in issuance of work permit for specialists from China which is affecting construction works. The project was strongly encouraged by the 4th President as part of his efforts to capture Copperbelt rural. Though at the time locals were told it wold be 3000 jobs! Nevertheless it is good to see it progressing!

Ndola Lime Limited has commenced its recapitalisation project at a cost of more than US$80 million that will see the company double its quick lime production from 170,000 tonnes to excesses of 300,000 tonnes. The company is modernising the plant in response to high demand of lime products by mining firms and construction companies, locally and in the DRC. The future for Ndola lime with the new investment looks very bright indeed. This is important because Ndola Lime is a wholly owned subsidiary of ZCCM-IH. That is to say is a parastatal owned by GRZ. The Company has been in existence since 1931. In the past it has been a hotbed of corruption.

MTN Zambia is aiming to become the largest mobile phone provider in the country with plans to invest more than US$100 million on network expansion in the next three years. The company currently has 36% market with less than 3m subscribers.

Friday, 4 May 2012

Mine Watch (Various)

Recent note worthy mining related stories.

First Quantum Minerals is working hard to update its public image. It has allegedly set aside more than K40 billion "to produce more Zambian engineers and artisans to meet the skills gap in an increasingly demanding mining industry and expanding economy". The bursary programme will see "more than 200 Zambians study in local and foreign higher learning institutions in diverse fields that include engineering and medicine and artisan skills by 2013".

Zambia's mining future has never looked brighter for its foreign investors. Caledonian Mining Corporation has become the next mining investor to strike rich. It has discovered a new copper zone at Nama Project in the Copperbelt Province and phase one drilling is expected to commerce this year. The company holds licences covering squares of kilometres adjacent to Konkola and Vale/ African Rainbow Minerals properties.

Zinc Aluminium Lead Copper Limited (ZALCO) is looking to create 1,000 jobs in Kabwe when its multi-million manufacturing and processing plant is completed next year. The company is appealing to Government recognise "its huge investment", by helping it with wider training programmes that will "produce people who will have skills that the private sector needs". 

Thursday, 3 May 2012

Is RDA too big to deliver?

Yes. According to Zambia Consumer Association(ZACA) Muyunda Ililonga who believes the Government should urgently review operations of the Roads Development Agency : "The scope of work required to be done is large considering that almost the entire road network in Zambia has broken down..It is a challenge for RDA to make quick decisions and implement them in districts such as Kitwe because of the large scope of work the agency is faced with...the Kitwe-Chingola Road is cardinal and strategic to the national economy and yet it is in a bad state and serving as a death trap". More detail via The Times

Wednesday, 2 May 2012

From Beijing With Buses

The Chinese government recently donated 65 motor vehicles worth US$6 million (about K31.8 billion). The vehicles include 30 protocol saloon cars, 10 protocol coaches and 25 Higher city buses. China's Ambassador Zhou Yuxiao says "the vehicles are intended for two purposes. One is to help the Zambian foreign ministry or State House to establish a standing protocol fleet for receiving foreign delegations and the other is to put more buses in the public sector". Works and Supply Minister Yamfwa Mukanga says the Zambian Government cherished the assistance it had so far received from China and the new vehicles would boost Government's transport system.

Two observations that are worth noting from a wider appraisal of China's continued engagement in Zambia. First, China continues to demonstrate its ability to adapt to changing political situations. It has made great effort to demonstrate that it deals with the Government of the day not the party. Perhaps again emphasizing that the incentives at home drive its policy abroad. Secondly, the variety of China's bilateral aid. One minute we are talking about weapons, then next day we are talking about buses. This complex variety is challenge as we seek to understand the implications of its continued engagement. What is clear is that China is in it for the long term - and therein lies our leverage if properly utilised. 

Tuesday, 1 May 2012

ZAMPOST's downsizing

Zambia Postal Services Corporation (ZAMPOST) recently reduced its post office box rates by five per cent on all commercial boxes across the country. The company has also reduced charges on personal post boxes for Ndola, Luanshya and Western Province by 20 per cent. The rest of the country will see a 10 per cent reduction. That appears to be good news because it is seeking to be competitive. The more baffling development is that ZAMPOST's "streamlining" now includes an acquistion of 10 new buses which will be deployed to all provincial centres, thats after recent initiatives to introduce banking services. A weird streamlining indeed. It would be good if ZAMPOST was good atleast at one thing! A more extensive post is coming in due course on postal service reform.