Cement

Zambia has experienced disrupting shortages of energy and cement during 2007 such that industry has had constant nightmares when it comes to business planning in the areas of continuity of production and cost of production irrespective of which sector one might want to consider. This across the board problem that manifests itself in the form of erratic electricity supply, or increased fuel prices, or shortage of cement, or increased cement prices plays havoc with all business plans and cash flows for most businesses.

ZESCO is attempting to stabilize the supply of adequate electricity by rehabilitating and upgrading various power stations in addition to embarking on the building of additional power stations at Itezhi-tezhi and Kafue Gorge Lower.

The issue of oil based fuels will continue plaguing us until INDENI oil refinery finds some serious investment and the world oil prices start to fall – an unlikely expectation for at least one more decade.

As for cement, we can actually do something about it.

At the moment the two major cement producers are based in Lusaka and Ndola. These two plants have been around for many years and have expanded only due to pressurized demand. Another small producer based in Lusaka probably outputs around 100 metric tons per day.

A huge opportunity exists for some new investment in the cement production sector. The mining industry is poised to grow exponentially in the next five to ten years. At the moment the existing mines are expanding their capacities and therefore require lots of cement to meet their construction needs. In addition, the new mining companies in the North Western Province and the Southern Province are going full throttle in building the mining infrastructure and will demand a huge amount of cement as they roll out. The growth in the economy is witnessing the building of new hotels, office blocks and housing estates in the strategic areas and the consumption of cement is escalating every day. Furthermore, the ZESCO program of expansion of our electricity production will demand vast amounts of cement as the different projects come on line. The two Economic Zones earmarked for Chambeshi on the Copperbelt and Chalala in Lusaka East will demand a lot of cement to see the intended construction work through. The indicators are there for all to see. A regional focus offers export opportunities for Zambian cement to South Africa where major construction of Stadia and transport systems are underway in preparation for the 2010 World Cup. Burundi, Congo DR, Tanzania, Angola and Mozambique are countries where economic development is on the increase and cement for construction will be required in large quantities.

This is the time for Zambian businesses to consider investing in this sector. This is the time for Zambia to attract foreign investment into this sector. This sector offers opportunities for Joint Ventures and other permutations such that Zambia can become the largest producer of cement in the region to supply the entire sub region covering SADC, COMESA, and the EAC.

The basic inputs for cement production are plentiful in Zambia. The technologies vary from small plants that produce 50 to 100 metric tons per day, to large installations that will produce as much as 2,000 metric tons per day. Cement production inputs include Limestone, Coal, Gypsum, and Clay. Zambia has vast reserves of these minerals and some strategic investment will render the cement industry self sufficient in raw materials.

Maamba Collieries is sitting on vast coal deposits that would both provide alternative fuel for the mining industry and other heat process manufacturing industries. Maamba Collieries can also provide much of the requirements for large scale cement production.

The current large investment in cement is expanding its production capacity to 2000 metric tons per day in an attempt to meet the growing demand. The fact is that there is, and will be, more than enough market for any new investor in this sector for some decades to come. The profile of the new investments in Zambia and the region that will require constant large volumes of cement, is that of businesses that are in for the long haul, and have chosen to put their investments in brick and mortar.

The current plans to regulate the number of registered sales outlets for cement is another restrictive and anti-development measure being considered between by the major cement producer and the Ministry of Commerce, Trade and Industry. The consequence of the shortage of supply of cement to the local market is seen in the high retail pricing of the commodity and a quickly developing black market. The stop gap solution may be to regulate the supply chain to the market, but experience tells us that as long as there is a buyer out there that is willing to pay more for the commodity, we can be sure that a black market price will prevail. The real problem is to address the shortage of supply. The existing producers should be persuaded to upgrade their production to meet the ever rising demand, and the Government through the Zambia Development Agency, should be going out full throttle to attract new investment and investors into the sector.

Several investments in cement production will benefit the cement consumer since broad and effective competition will be created, thereby developing a conservative pricing structure that will ensure a sustained and expanding local and regional market.

Published 18 December 2007

ZIM Yuan

‘Zim Yuan’ immediately reminds one of some Chinese name that may be a politician or a Kung Fu expert. It seems to fall in line with names such as Zhou Enlai, Deng Xiaoping, Jhao Ziyang, and Jiang Zemin, all names of former and successive Chinese national leaders.

In this case it is neither. It is the description of a currency that may be the ‘magic bullet’ for an economy that is convulsing and kicking before it finally dies. It may be compared to the blood transfusion that saves a terminal patient, the antibiotic to treat a ravaging epidemic, the rain which revives a dehydrated crop, or the air that is pumped into a polluted lake to supply oxygen to the suffocating fish.

Southern Africa is a sub region that has been dominated by predominantly European colonialisation since the 1600’s. Several Southern African economies have had to make bedfellows of the very people that they fought off for political independence. The post independence relationship between former master and former slave was that of economic and social development for the newly independent states. The basis for this continued and seemingly adjusted relationship between the independent states and their colonial masters may have been simply, ‘dealing with the devil that you know’. For many African countries the devils that we new back then have remained devils to this day and our people continue to struggle to scratch a living in their own ‘independent’ country.

If we were to put politicking aside and look at some options for a state that finds itself in a very difficult position in as far as relationships with their colonial masters and friends are concerned, what options does such an African state have when no developed country wants to dialogue with it? When the world monetary system descends on it with no mercy for its people and assists to introduce rampant inflation that multiplies every couple of weeks? When the freedom of movement of its people are checked and curtailed by aggressive immigration officers around the world? When the deck of cards is stacked against them to undermine any economic activity that will feed, clothe and educate the ordinary person? When its people can hardly trade their produce with the rest of the world because the physical product is reduced to a currency that is worthless? When schools, hospitals, roads, railways systems, and law and order are stressed by the sudden infusion of poverty in an otherwise very productive country?

Outside the arena of politics, what can such a country do to push ahead and climb out of this spiral downwards to disaster?

If this question were asked two decades ago, the simple answer would be ‘not much’ but to seek the political solution as demanded by the outside powers that be.

Today, there are some new options. An African country that works its way into such a tight scenario can consider taking a good and hard look at who is who on this planet for some possible strategic alliances.

Our history tells us that at the attainment of independence in the 1960’s, our newly introduced local currencies were pegged to the British Pound as that was the currency of most of the sub continent. A decade or so later the United States emerged as both the super power and economic giant of the world, so Africa scrambled to align our currencies to the US Dollar. Two decades later Japan came forward as the nation to watch as it held the world’s largest foreign reserves, but this achievement was not enough to attract other currencies to align to the Japanese Yen. The G7 Western countries assemble their Finance Ministers to fix international exchange rates and currencies presumably to suit their own economic needs, which leaves very little room for any single country to influence the monetary system. In this decade, we see China dominate as the world’s largest producer of manufactured goods, and holding the world’s largest foreign reserves that stands at almost double the amount that the Japanese have put aside. In addition, we see the BRIC’s team of Brazil, Russia, India and China get together and form an economic club of their own that may eventually displace the dominance of the G7 club.

Is there an option for an African state that wants to resurrect itself and break away from its hostile traditional partners in favour of strategically aligning itself with China? Can Chinese companies and state enterprises replace Western multinationals in African economies? Is there a case for the Bank of China to substitute the World Bank and IMF in providing development finance for social and economic infrastructure? Can African states opt to peg their currencies to the Chinese Yuan, or maybe, as the case has been for US Dollar and Pound Sterling, even use the Yuan in their economies, as a mechanism to provide currency stability and shield their domestic economies from foreign influenced currency devaluation? Any developed nation that would dare to devalue the Yuan would be committing economic suicide as their own economies would be invaded with cheaper Chinese imports.

Is it unthinkable for developing countries to think beyond their colonial boundaries? India, Indonesia, Thailand, and Malaysia all entered into strategic alliances with new non traditional partners and have today transformed their economies into vibrant and aggressive world players. The romantic notion, that our old friends will see us through thick and thin, needs to be re-evaluated. Where is the evidence? What have we achieved in the last half a century? Who really cares for our people except ourselves? The future lies in what is openly put on the table, and what agreements we can enter into that clearly shows what is in it for us, and what is in it for them.

Published 18 December 2007

Agreements

We have all no doubt read the contributions from the great Professor W J Baumol of New York University on issues related to privatization and development agreements.

We have also read comments from both the existing Minister of Finance and a previous Minister of Finance from the last administration on the same issues. Our compatriots spend much time and energy on claiming credit for successes or laying blame on each other instead of working together in national interest.

On the other hand, our anecdotal Professor prescribes some useful advice that is too little, too late, and well after the proverbial ‘horse has bolted.’

The Professor highlights that ‘Governments come under political pressure to renege on their promises once the benefits of privatization begin to be harvested’, but he forgets that many of our privatization programs were shoved down our throats by our co-operating partners namely; the World Bank, the IMF and the Western Donor Community. Very few Zambians were comfortable with the rush privatization program that our Government was forced to do in order to receive foreign support from the west. Today, at the expense of our people’s welfare, we are told that ‘they could not predict that copper prices would soar’ and that puts an end to the discussion. In the meantime, we pay the price for this indiscretion. The dissent is slowly surfacing as public pressure mounts on the Government to either re-negotiate the privatization terms and various agreements or renege on commitments as they were not in the best interests of the country.

The Professor cautions us when he states that ‘The danger is that these benefits may vanish.’ This scenario is not new to us as Zambia has had to bale out the mining industry many times before when times were tough much in the same way that it has done with the Development Agreements currently taking centre stage. The public understanding is that when business activity is difficult and the economy is sluggish, then the Government is called upon to make concessions to support the domestic industry. Conversely, when there is an economic boom, then Government is expected to collect more taxes to invest in the national infrastructure such as roads, communication, water and energy. The pendulum is expected to swing both ways.

The Professor argues that ‘The new price cap rules supposedly solve the problem by setting upper limit on price rather than profits so that a firm can increase profits by cutting costs.’ This scenario generally applies to industries or developments that have developmental impact such as roads, communications, energy and water. The Government therefore plays a much more instrumental role in these sectors than it would do in purely private sector investment where the sector is an economic end in itself. There are many permutations of how these special ‘catalyst effect’ sectors can be supported and facilitated as seen elsewhere in the world. Subsidies, soft loans, grants, guarantees, Private-Public-Partnership’s etc. are part of the support regime.

One cannot agree more with the Professor when he concludes that ‘The moral of this is that governments must be careful and conservative in what they promise…’ and ‘But once a promise is made it should be kept.’ The difficulty for Zambia is that many agreements were made under duress of some kind or another. This is characteristic even in the current relationships with our co-operating partners. Zambian Government officially will very seldom criticize or censure any of our colleagues on the other side, but our partners will waste not time in giving us a good tongue lashing when we are seen to step out of line.

The big question however, is what should we do about the current issue of the Mining Development Agreements?

We need to consider the effect of leaving the agreements as is – loss of tax revenues, energy revenues, mineral royalties, and so on, and weigh these against our ability to continue to grow the economy. We also need to consider the impact of the current agreements on how they attract expansion of existing investments and re-investment into the economy by the same companies enjoying the special incentives therein. Are substantially more jobs being generated for our people? We need to consider what our regulations are in respect to the export of copper and related products from the point of view of foreign exchange receipts and how these inflows affect our economy. Is all the forex accounted for in our banks because of the copper export boom? How is the current Mining industry supporting local businesses in the area of supply of goods and services? Is there more money available to lend out to the private sector because of the copper boom?

The Professor seems to have missed out on some of the issues above and therefore cannot truly appreciate Zambia’s predicament.

As a member of the global economy, it is very important for Zambia to be sincere in her dealings. To this end, we must respect our commitments and agreements to the letter. However, we must also recognize that the increased investments and operations in Mining subjects our roads and environment to high levels of damage and degradation. The cost of building a two lane paved road hovers at USD 1 million per kilometre and the water resources and air in the mining areas are being polluted with acid, effluents, noise, and other waste from the various operations.

The Government would be wise to focus on these areas by considering ‘Copper/Copper Ore Transportation’ road levies, ‘Pollution and Environment’ maintenance levies, and possibly introduce a ‘Copper/Copper Ore Shipment Protection’ levy that will ensure that theft in this industry is curbed to zero.

Levies are subject to annual review unlike develop agreements, and the levies can be adjusted on a need-to basis as the roads and environment require to be attended to in a bid to ensure that the Mining sector is supported with good infrastructure.

As Zambia develops her infrastructure as witnessed by the Zamtel Fibre Optic network currently being installed in Lusaka metropolitan area, our opportunities to attract investments both in the Mining sector and other sectors will be greatly enhanced such that in the near future our economy will be come more broadly based and we may never have to be forced to sign some unpalatable development agreements for the foreseeable future.

Published 4 December 2007

Ox Brown

Last week we heard officials from the Lusaka City Council pronounce another decree as has been their tradition since the old one party state which died several decades ago.

The legacy of the former command economy and form of governance still lives on in several government and civic institutions. Some Civil Servants and Council Officials still see themselves as little dictators that act in the public interest, without consulting their constituents or paying any attention to basic common sense.

The latest decree comes in the form of an ultimatum to business houses in the Kamwala business district of Lusaka, to paint their premises in an Ox Brown colour!

When the news broke out in both the printed media as well as on the broadcast media, one could not help but to sigh and exclaim, ‘here we go again.’ Another hair brained scheme to make business more uncomfortable, expensive, and another new item with which the Council can attack business houses. This move opens up a new channel for bribery, corruption and extortion.

We should not be surprised to see that within the next few weeks the market prices of Ox Brown paint will shoot up to double or triple the current going rate, due to the Council generated demand.

There may even be a possibility that a paint manufacturer that specializes in Ox Brown, or has a huge amount of Ox Brown colourant in stock, has had an influence on the choice of the colour by the Lusaka City Council. Could there be grounds for some corruption even at this early stage of the program?

Anyway, Councils all over the world seldom dictate what colour a town or district must be painted in, except for the good old Communist days in the East. What is more prevalent in a liberalized economy and a democratic state, is the demand that buildings be painted every other year, immediately after the rainy season. And this is enshrined in the By-laws of the local Council.

This continued dictatorial tendency by the Council is not backed by the various Wards and their representatives, and if left unchecked, will soon evolve to include new laws on what colour clothes we must wear, what type of shoes we must put on, how we must present our hair, and what we must eat.

Lusaka is plagued with uncollected waste dumped alongside the roads, common sights of dead animal carcasses on the roads that are eventually smeared into the tarmac by all those spinning tyres, no road names on many roads, no road signs at most junctions, no storm drains to prevent flooding, and so on. The Council seems to prefer to focus on areas where they can agitate a fight and make life miserable for others, rather than to provide the basic services that it annually promises to deliver to its residents.

Cholera and Dysentery are looming epidemics at the onset of the Rainy Season, but the Council seems not to care about this as they have never been held accountable over the years. Furthermore, Malaria threatens Lusaka residents between November and May every year, but no major plan is in motion to eradicate this mass killer disease except for trying to deal with the yearly impact on a need-to-basis.

There are some basic challenges that the Lusaka City Council must respond to instead of wasting its time and energy on prescribing what paint the private sector should use on its buildings, or buses, or taxis etc.

Trading Licenses demand that business houses must be inspected by the Council for Fire Safety, Sanitation conditions, proper Electrical installations, Public Fire Escape facilities, Car Parks, proper Construction of Buildings, Public Conveniences, Ventilation etc. before the license is issued. Does the council actually carry out these inspections? Or is a Trading License now issued on the basis of the applicant paying the appropriate fee? Liquor Licenses are supposed to be issued after careful inspection of the business premises as highlighted above, but in addition, measures are supposed to be put in place to prevent under aged youth from having access to both purchasing liquor and consuming it. Is the Council inspecting drinking places for these malpractices when the businesses are in full operation? Are the appropriate on-site signs to inform the public about the regulations on liquor sales and consumption being checked by the Council? What checks is the Council making in respect to Fire Hazards at Fuel Stations? How many people have been arrested or even cautioned for smoking on the premises of a Petrol Station? What alternate routes have been negotiated by the Council for public minibuses to service otherwise un-serviced areas of the City such as Kamloops Road, Thabo Mbeki Road, and Addis Ababa Road to name just a few examples? What plans are under way to decongest the Kamwala business district by routing traffic to Kafue Road through a more solid road than the existing track that threatens to destroy any smaller vehicle than a four wheel drive? Is the Council satisfied with the new traffic re-routing that now goes through the Kamwala residential area because of the previous congestion that was a traffic nightmare at the Independence Avenue Premium House junction? What impact has this had on residents, children and the residential roads?

Lusaka City Council must become more serious about its mandate from the Lusaka residents. Let’s stop being petty and a nuisance to the private sector with these punitive and dictatorial outbursts that can only be described as a disincentive to serious investments in the City. Let’s tackle the more important issues of servicing the City and uplifting the lives of our residents to develop a platform for social and economic growth that this expanding City sorely deserves.

Keyboard and typing practice shows us that the sentence; ‘The quick brown fox jumps over the lean lazy dog’ contains all the letters of the alphabet. This Ox Brown paint demand may compel Lusaka residents to dump out the mean lazy Council.

Published 27 November 2007

Equity

Last Friday saw the Economics Association of Zambia and several collaborating NGO’s host an evening meeting on Equity, Growth and Development.

Prominent speakers from the University of Zambia, the Citizens Economic Empowerment Commission, the Zambia Development Agency, and the Zambia National Tender Board presented the various challenges before the nation in respect o empowering Zambians and sustainably growing the economy.

The panel of experts highlighted the development initiatives within their institutions and were quick to point out that the public, business associations, NGO’s and any other interested parties were sincerely invited to submit recommendations, concerns, advice and criticisms that would assist in tailoring the programs towards Zambia’s development needs.

Many participants in the full house were concerned about access to resources by the ordinary person, and not least on the resource list, was access to affordable financing. Teachers, the youth, the disabled, the average employee, and the small scale business person lamented on this issue as a cross cutting setback on Zambia’s economic development program. In response to this outcry, both the Zambia Development Agency and the Citizens Economic Empowerment Commission conceded that both institutions were putting in place some funds to support Zambians and Zambian businesses.

The question that every Zambian is grappling with is the question of Equity. What Equity does the average citizen have in the developing national economy? What Equity does the average Zambian have in the decision making process on economic development policy?

The answer may lie in the understanding that every Zambia has the responsibility to engage in some economic activity to support themselves and their families. Furthermore, every Zambian has the responsibility to positively contribute to the economic and social development of the community that they live in, and to the nation at large.

Every Zambian is challenged to have an informed opinion, and personally contribute to the decision making process on the development of Road and Rail infrastructure, effective Communication and Information systems, access to Land and Natural resources, development of Energy sources, improved Health Care systems, quality Education services, access to basic Food, access to Shelter, and, access to affordable Financial Services to name a few key areas.

The Minister of Finance and National Planning in his budget speech early this year invited the public to challenge his Ministry on the management of the fiscal budget and the economy in general. In addition, the Ministers of Commerce, Energy, Agriculture, Education, Health, Tourism, and Mines, all continuously challenge the general population to participate in developing the economy. Several dialogue programs such as the Private Sector Development program, the EU-Capacity Building PSD program, and the Zambia International Business Advisory Council (ZIBAC) have been set up specifically to challenge our citizens to participate and contribute to the economic development agenda.

The interesting factor to consider is that all Government Ministries have experts in their planning departments and yet they still see the need for the public, the private sector, and the NGO’s to contribute to policy making.

The simple reason for this is that whatever the Government plans is ultimately for the benefit of the nation which is made up of ordinary people. The Government therefore encourages the stakeholders to bring to the table their views, which in many cases are based on ‘good old common sense’, in addition to any experiences and expertise that Government may be lacking. Even Government recognizes its weakness in effectively participating in WTO, EU-EPA negotiations at a global level, and in SADC and COMESA negotiations at a regional level. The private sector and various NGO’s are beginning to collaborate and work with Government in these areas, but there is room for much more, and much wider partnership.

The Zambian citizen is a shareholder in every public institution. ZAMTEL, CELL-Z, ZNBC, DBZ, ZESCO, ZANACO, NSCB, CBU, UNZA, NHA, ZNBS and every Public Hospital, are all public institutions ultimately owned by the citizens and tax payers.

The old saying; ‘you have the economy that you deserve’ is the basic challenge to all citizens to question what is happening in the economy and to be part of the decision making process. When citizens sit back and let smaller groups of interested parties decide on their behalf, then the undesirable result is squarely because of lack of participation, and we only have ourselves to blame.

The challenge to take up Equity in the national economic development program cannot be left only to the NGO’s and the media. It is absolutely necessary for every Zambian to be informed on what is happening in the economy and to develop some ‘expertise’ in addition to the common sense that we all have, so that we can all contribute effectively. The average Zambian is required to vote for Zone Development Committees, Ward Development Committees, Civic Leaders, and Members of Parliament. If we are to make well informed choices coupled with ‘good common sense’, then the time for taking a laid back position must come to an end and we must all endeavor to be part of the team in the driving seat.

The quest for Equity in participating in the development agenda does have some pitfalls. Members of the public or Government officers must not be discouraged by disparaging remarks and biased retorts because society is made up of all sorts of characters. There will be those that are instruments of their pay masters, those that are mis-guided by short term gains, those that are driven by ego, and those that are mis-informed. In the end, ‘good common sense’ always shows the right way forward.

Published 14 August 2007

Aid For Trade And The Private Sector

What has been the impact of Aid-For-Trade in the private sector in Zambia over the last one year? How have businesses, the public sector that support private sector development, and the general citizenry benefited from the Aid-For-Trade initiative? What has been the private sector target group for Aid-For-Trade in Zambia? Who are the Aid-For-Trade beneficiaries?

These are some of the questions that are often asked in the local chamber of commerce meetings and other business development association gatherings. Very few answers are given and if so, they are at best ambiguous and unconvincing to the majority of Zambians.

There are many collaborating partner funded projects running in Zambia focusing on both public sector service delivery systems, as well as private sector production capacity building. It is not unusual for collaborating partner project managers who are usually not experts in any particular sector that is relevant to the Zambian scenario, to muscle their own ideas and perceptions into the project program. This is formalized by amending Development Agreements with the relevant Government Ministries. This is easily achieved due to the apparent desperation to receive foreign assistance that Government officers are prepared to sign any document that will keep the project alive and funded. The technocrats at a lower level see the deviation from the national development agenda but have no voice to either caution, criticize, or question the amendments.

In addition, many collaborating development projects are challenged with procurement bottlenecks that need funding partner approvals and sign offs which can be unduly delayed. Furthermore, many programs have an implementation time line that is seldom met because of bureaucracy and red tape. At the end of the project period the unspent finance is reclaimed by the funder and we are branded as an incompetent and lethargic partner.

In the local recipient network, several heads of projects are influential personalities who run the public institutions as if they owned them and create a personal relationship with collaborating partners to entrench themselves even further. This creates apathy in the institutions and generates a high turnover of public sector staff thereby destroying institutional capacity, memory, and continuity.

The top civil servants namely Permanent Secretaries are often subdued by collaborating partner demands that are channeled through the Minister or Cabinet Office. Permanent Secretaries are confronted with decision making situations that may result in their jobs being terminated if they upset either the political machinery, or the collaborating partner representatives. In many cases Permanent Secretaries tend to look after their own interests at the expense of national development for fear of being ejected onto the streets.

In the last decade the collaborating partner group in Zambia has attempted to find mechanisms to co-ordinate their support to avoid duplication of projects and overlaps that are not complementary. This effort does not seem to have worked well and the number of development initiatives that have been duplicated is rampant.

The majority of collaborating partner projects in the private sector emphasize on developing export capacities and expansion of existing enterprises. This focus eliminates 83% of local Zambian businesses and eventually only targets the few well established companies, or enterprises that are owned by foreign investors. As a result, there is widespread criticism of foreign investment and a general feeling by Zambians of the lack of equity in the developing economy. This growing sentiment is affecting political decisions on policy such that we now have a Citizens Economic Empowerment Act which is no doubt discriminatory in favour of Zambian citizens. The questions of efficiency, professionalism, quality, and consistency are likely to be replaced by the option of a ‘Citizens Rights’ which may not support the development of business activity at a globally competitive level.

Zambia has seen several non tariff barriers to trade with the EU and North America as is evidenced by the slow and inefficient Sanitary and Phytosanitary Services to allow agriculture produce to enter these markets. At present, after six years of the African Growth and Opportunity Act (AGOA) being implemented, only three products out of a possible thirty can be exported to the United States of America.

Zambia is a country that hinges its economic program on the basis of food for all her people. Currently, many of our collaborating partners are disinterested in our Food Security program and tend to distract our local agenda towards some theoretically interesting regional economic development program that requires a dozen countries to collaborate efficiently for this to become a reality.

In our current development discussions with the EU Zambia and other developing countries are looking at the Change of Tariff Headings as a way to accelerate economic activity but the EU prefers to focus on Value Addition in the negotiations on the Rules of Origin. The discussions seem to have come to a deadlock with no progress expected in the near future.

The Zambian experience has been to see dozens of foreign experts, consultants, researchers and advisors that are paid for by the Zambian tax payer or our collaborating partners in an effort to support the country plot some economic development policy. Many of these experts have had no experience in Zambia or the region and tend to spend a very short time doing their on the ground research work. As a consequence, many collaborating partner funded programs result in poorly implemented initiatives at best.

The current level of collaborating partner supported programs include Export Development, Immigration Department operations, Tax collection, Anti Corruption interventions, Land Title processing, Company registration, Non Traditional Mining expansion, Market Access, Trade Enhancement, Central Bank operations, Regional Integration, Health Systems development, Zambia Development Agency implementation, Education Sector support, Customs procedures and processes, Agriculture development and Agribusiness promotion, HIV/AIDS mitigation and management, and Human Resource Capacity building.

In the last few years Zambia unapologetically refused to accept Genetically Modified Organisms (GMO) maize into the economy and into the agriculture system. This position resulted in the USA taking a very aggressive stance against Zambia. The USA then dispatched many Congressmen and women and a handful of scientists to Zambia to convince the nation and its leaders that GMO’s were unreservedly safe because ‘they say so’.

In recent months the European Union (EU) had some experts on Economic Partnership Agreements (EPA’s) come to Zambia to convince us to sign a trade agreement with the EU. At the end of the effort when the experts were asked why we had to sign any new agreements when we have ‘Anything But Arms’ (EBA), the experts said that we needed to think about it.

Is Aid-For-Trade working for Zambia? Not very much. The experience in Zambia seems to be much more of ‘Aid-To-Be-Played’ for the benefit of the Aid Donor.

Who has benefited from Aid-For-Trade? It seems the beneficiaries are the elite 17% of economic activity consisting of large companies, foreign investors, and multinational companies.

Who is the target group for Aid-For-Trade? It appears that the target groups are the businesses that are already established and fairly strong in the private sector, the Government public workers that can never have enough ‘capacity building training’, and the poor HIV/AIDS victims that lie in hospitals around the country. Very little focus is

given to eradicating Malaria which is a much bigger killer than HIV/AIDS, skills development in technical colleges and other institutions of learning, and to the Micro, Small and Medium (MSME’s) sized businesses that constitute the majority of private sector economic activity in Zambia.

What has been the impact of Aid-For-Trade? It has made many local development programs go on hold while the collaborating partner programs have taken centre stage. Furthermore, our Zambia Development Agency Act that regulates all investment in the country has been misunderstood, misrepresented, and misinterpreted to the detriment of investment into Zambia. Zambia is still battling with the Rollback Malaria program that is collaborating partner supported. This is an ill conceived program that endeavours to ‘control’ Malaria by the widespread use of Insecticide Treated Mosquito nets, Chemical Insect Sprays, and Drug based prophylactics and treatments against the disease. How can this program hope to succeed in a country where the World Bank and International Monetary Fund conclude that 70% of the population lives on less than one US dollar a day? Is it any surprise that villagers and the poor sell the mosquito nets, insecticides and drugs to traders so that they can buy food for the day?

The results of last years Presidential and General Elections speak for themselves. 44% of the voters wanted the Government of the day to stay in office. 32% wanted to replace the current Government with a Government that would break all the trade agreements and protect domestic indigenous businesses. 24% wanted a Government that would represent the interests of a particular province of the country.

One obvious conclusion can be extracted from these results. 56% of the voters wanted a Government that would concentrate on local domestic demands at the expense of regional and global integration. This may be the most important indicator of the impact of Aid-For-Trade in Zambia.

Published 24 May 2007

Labour and Freedom

May is the month in which we recognize the role of Labour and Freedom in our communities.

The relationship between the quality of Labour and the access to Freedoms as a consequence, is important to recognize, especially in a developing economy such as that of Zambia.

Merriam-Webster’s Dictionary defines Labour as: (1) human activity that provides the goods or services in an economy, (2) the services performed by workers for wages as distinguished from those rendered by entrepreneurs for profits.

Nobel laureate for Economics Amartya Sen indicates that labour is a key ingredient in the discussion on Development as Freedom, since “labour has a direct impact on the Capability of human beings to lead the kind of lives that they value”.

Sen’s notion of Capability may be defined as “the various combinations of beings and doings that a person can achieve and value”.

There is therefore an argument for the development or widening of peoples ‘Capabilities’ in order for them to have the freedom to choose how to live their lives, and actually live as they have chosen.

Some basic mechanisms would need to be put in place for most people to both widen their capabilities and make their choices, and these include a democratic and non oppressive environment, access to education and health care, access to information, and the recognition and implementation of women’s rights.

Sen argues that Individual Capability depends on the Collective Capability, as individual preferences and tastes are usually a reflection of the community that one lives or works in.

From this argument, it is clear to see that civil communities or indeed labour communities, will seldom develop the freedom to work and live as each individual may choose, but may have to make these decisions as a collective in the form of neighbourhood committees, village councils , women’s movements, staff associations, and labour unions.

These collectives provide individuals with interactive opportunities to share ideas and values, and help to develop consensus on issues impacting on their lives. They also provide a concentrated capacity to challenge the more powerful entities of Employers, Boards, and Authorities in negotiations on decisions and activities that are of interest to all stakeholders.

Through this process, a balance can be achieved between the demands of economic development, and those of social and cultural development. A development program that does not embrace the values, traditions and cultures of the community is likely to bring conflict, skepticism, lethargy and even hostility that will make the entire initiative unsustainable.

Sen criticizes the choice-based facet of economics on grounds that our choices can be biased by sublime and direct mental conditioning and other mechanisms that can be used to sway our reasoning, thus providing the scenario of ‘free will’, but essentially achieving the results as determined by the powerful and dominant players.

A case therefore exists for communities and labour to become powerful. A key requirement is information on the various issues with a wide selection to cover both pros and cons. Additionally, the freedom to provide labour is enhanced by the quality of the labour itself.

Zambia must make special effort to upgrade the quality of labour from essentially school leavers, to skilled artisans, technicians, engineers, accountants, analysts, consultants, etc. The improved quality of labour will increase the capacity of Zambians to choose where they employ their labour, and widen the freedoms to work locally, in the region, or abroad. The enhanced quality of labour will have a direct impact on increased productivity, and consequently a direct impact on incomes, thereby giving the individual a wider set of choices, options to exercise preferences, and opportunities to follow both cultural and traditional values.

No institution can function positively and sustainably without human labour. Machinery requires setting up, tuning, and servicing to remain functional. Human labour needs basically the same requirements but must be motivated through a form of equity and belonging in order to achieve sustainable growth and well being.

Zambia is challenged to consider labour as a resource that can be exported into the region and further abroad in favour of earning foreign currency. This is essential in the current situation where there are insufficient industries and economic activity to absorb the thousands of Zambians pouring into the labour market each year. Africa is challenged to become a major contributor to the ‘Trade in Services’ discussion at the World Trade Organization because huge opportunities can be exploited in the continents agenda to develop Tourism, Agriculture, Mining and Services which are all labour intensive.

Published 8 May 2007