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Friday, 24 January 2014

Stadia Mania Zambia

Government is pressing ahead with construction of more stadiums in Livingstone and Mansa. The construction of a new stadium in Livingstone will start in the first quarter of 2014.  The Mansa stadium plans were revealed by Home Affairs Deputy Minister Nixon Chilangwa as a personal promise from Mr Sata. Mansa was allegedly chosen because of its "readily available abundance of good accommodation" (Source : ZANIS).

These latest stadium initiatives are coming off the back of ongoing construction in Mongu and the pending completion of Heroes Stadium in Lusaka. Government has already slated Solwezi for a stadium having completed preliminary studies and drawn a strategic plan for the project.

Government believes that building sports stadiums is a key way of "taking development to the people". The new "provincial stadiums" all cost in excess of US$50m each. Levy Mwanawasa Stadium (LMS) at a cost of $70m and Heroes Stadium at a cost of $94m. The Chinese contributed to funding LMS but the rest of the cost has been picked up by tax payers.

With no new foreign contributions the new stadiums in Mongu, Mansa, Livingstone and Solwezi are all to be funded by Zambian taxpayers. The stadiums make poor business sense to the private sector that is why they have never been built. Presumably it is only a matter of time before people in Eastern, Northern and Muchinga demand a stadium each.

No one knows when this building of stadiums frenzy will stop. What we know is that the costs for such projects is staggering and GRZ is essentially living off borrowed money. We also know that these are are not projects where you expect to recoup the money in the future. If the LMS experience is anything to go by, GRZ financial support is critical to sustain them, even on the richer Copperbelt.

LMS is currently cash strapped. It has been surviving off a government grant that meets only half of its financial deficit. It is failing to narrow the gap and this will become harder as the facility becomes older and newer stadiums take away some of the football business. It is a stadium where even the water supply is unreliable leading to health and hygienic problems. The facility ideally needs boreholes but again - there's no money.

The design of these stadiums is also worrying. LMS lacks indoor sports facilities for basketball, volleyball or badminton. This means the stadium is rarely used as a general sports stadium. Most of the time it is just a white elephant as far as developing sports goes. Management wants to build these facilities but there's no money. The other stadiums are being built with similar challenges.

As the government is bent on building these stadiums at any cost, it is vital it addresses the basic issues. Top of the pile is to ensure there's a legal framework to regulate the running of the facilities as commercially-driven entities so as to make them self reliant, and reduce political interference. Similarly all stadiums will need better ticketing to maximise the sale of tickets at the Stadium. But that too needs money.

When all is said and done the bottom line is that these investments are poor value for money as social infrastructure projects. You can put Bill Gates in charge of these stadiums it will still be poor value for money to build them for two reasons. First, there's insufficient demand. The problem is that Zambia does not have high quality sports events that people would pay for regularly to be hosted at these many stadiums. The business model is broken without continuous government grants. Secondly, there are betters ways of spending money to reduce poverty than building stadiums. Should borrowed money really be spent on football, when people are have no health referral systems?

All of these issues of course highlight a key problem at the heart of policy making in Zambia today : it is economically bankrupt. There's a lack of application of economic analysis. This is a key reason why investments being made in Zambia are failing to grow the economy in double digits and income inequality is at unprecedented levels. It is also why we continue to be one of the poorest countries in the world, in spite of never experiencing natural or man-made tragedies.

This state of affairs is of course due to the limited demand from the public for evidence based policy. The government won't do what the people don't demand. At present Zambians just see a stadium and money spent on it and they think its development. Questions about value for money, alternative uses, economic rationale, etc do not cross their minds. Also government does not properly consult. Why would they, when people seem content with the status quo?

Chola Mukanga | Economist
Copyright © Zambian Economist 2013

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