Doing Business

Last week saw the World Bank (WB)/International Finance Corporation (IFC) facilitated a local workshop on Doing Business in Zambia, as an effort to support the improvement of the Business Climate on which many investment decisions are made.

The WB/IFC Doing Business report ranks Zambia as number 116 out of 178 countries. This position puts Zambia towards the bottom of the list thus effectively profiling the country as a ‘No Go’ area.

Much of the information that was used to arrive at this ranking was not very representative of the facts on the ground, but the low ranking motivated some reflections on how best Zambia could improve her profile in facilitating increased investment and wealth creation with opportunities for more jobs.

Two major issues come out clearly when foreign assessments are made about Zambia. The first one is that there are perceptions about the investment climate in Zambia that both foreign investors, and possibly large local investors, will consider when thinking about investing in Zambia. The second issue is that there are many problems that need to be tackled and resolved to improve Zambia’s investment profile. Several problems can be resolved simply by re-engineering various processes and procedures in many public service institutions.

The issue of foreign perceptions challenges us to consider the impact on the local economy as many of these perceptions are highlighted on web sites across the world, and provokes us to correct any mis-conceptions and mis-representations that may have occurred. This challenge is open to both Government and the Private Sector. The provision of accurate information and access to proven specialists in various areas is essential towards dissemination of meaningful information to researchers and collaborating partners. Open, inclusive, and equitable dialogue at meetings and conferences ensures that views and concerns are captured from the primary source to avoid extrapolation and hypothesis on the many issues that describe Zambia as a place to do business. Experience shows us that our situation is usually very mis-represented at the international level so we have a huge challenge to put things right.

There is no doubt that there is always room for improvement in all our public service delivery institutions. We need to be constantly reminded that we can improve and that we are part of a competitive regional and global market. Our local public delivery systems need to benchmark themselves against the competition in the region and further beyond. Issues of clarity of rules and regulations, and the option of collaboration amongst Government agencies, have a direct impact on the barriers to doing business in Zambia.

Furthermore, many Government agencies are challenged to simply install Monitoring and Evaluation systems within their own processes such that the public are not lumbered with the daunting task of having to be the ‘whistle blowers’ or ‘complainants’ when systems are not serving the interest of doing business better, cost effectively, and more efficiently.

The Registrar of Companies and other Registration agencies need to take up this challenge within their institutions whilst other licensing agencies offer even more compelling options to audit their processes such that the opportunities for discretion by public officers are removed where possible.

There is a danger that we will be swayed towards ‘throwing out the baby with the bath water’ by trying to overhaul the entire public service sector which is a monumental task. The quest to change legislation, overlap responsibilities that belong to specific Ministries, and re-write the rules and regulations, is a long time program with many opportunities for the program to be abandoned or removed from the priority list with time. Improving the Business Climate in Zambia requires short term programs that are easy to implement, medium term programs that require more resources and time to be successful and long term programs that focus on major changes in mandate and issues that require wider public consensus.

The quick wins in improving service delivery will go a long way towards immediately pushing Zambia up on the Doing Business index which is highly respected in the global markets. The chances for the medium term and long term changes to be seriously accommodated will largely hinge on the successes and positive impact of our short term programs.

Published 26 February 2008

Manufacturing

The 2008 budget targets the private sector as the driving force for economic development in Zambia. In addition, the Fifth National Development Plan focuses Zambia’s economic growth on private sector investments in Agriculture, Mining, Tourism and Manufacturing.

On Friday February 8^th the Zambia Association of Manufacturers (ZAM) answered the Governments call for increased manufacturing by initially, formally launching the ZAM Secretariat in Lusaka.

The Governments of the Netherlands and Finland have extended their support to ZAM with a K1 Billion grant and other resources to assist in the quest to promote increased manufacturing and the creation of both wealth and new jobs.

After the fun and pomp that accompanies an official launch, ZAM will have to get down to do the serious work of dialoguing with the manufacturing companies around the country and come up with proposals to Government on policy development and other facilities that will lead to enhanced manufacturing in the country.

At the launch ZAM highlighted that it will put much effort in skills development to ensure that the manufacturing sector has the necessary human resources to support manufacturing at various levels.

Furthermore, the ZAM President looked to Government to support the manufacturing sector by the provision of incentives and opportunities for value addition in this sector. In addition, ZAM stressed the need for Government to improve the business environment for manufacturers and to attract new investment.

ZAM seeks Tax policies that should aim at strengthening investment in innovation and new technologies. At the support level, ZAM focuses on the need for the Zambia Development Agency, which is the port-of-first call for any investment coming into Zambia, to operate efficiently, expeditiously, and in harmony with other Government agencies so that investments in manufacturing can be promoted and facilitated at all levels.

Finally, ZAM expressed its desire to work with Government in establishing the Lusaka Multi Facility Economic Zone (MFEZ) which is currently being developed by the Japanese Government.

The obvious challenges for the new ZAM President, his Executive and the Secretariat are many and have to be faced head-on in addressing the issues contained in the President’s launch speech.

ZAM will need to be very decisive about what contribution it makes to the National Fiscal Budget each year to address the demands of its membership. ZAM will need to challenge the ZDA on the ambiguities of the ZDA Act which have resulted in some firms closing down and other would-be investments not taking off. ZAM will need to challenge the Government on the rules and regulations that will govern the Economic Zones which are currently cropping up in Lusaka and the Copperbelt without public awareness of the managing mechanisms. In this respect, the role of ZDA in taking charge of the MFEZ’s is a critical factor as ZDA has a division specifically set up for this purpose.

ZAM will be challenged to broaden its coverage by offering its membership and secretariat to the Small and Medium manufacturers which constitute more than 70% of manufacturing activity in Zambia.

ZAM will need to collaborate and co-operate with the many other business associations out there including the Zambia Chamber of Small and Medium Business Associations to spread its outreach across the country.

The impact of regional Free Trade Areas and Customs Unions as deliberated at SADC and COMESA have a direct impact on the future of manufacturing in Zambia. ZAM will find itself grappling with the demands of its membership and the consequences of regional integration on manufacturing. At the global level ZAM will have to participate in debate and dialogue with WTO issues affecting manufacturers in Zambia.

ZAM should look to the Zambia Bureau of Standards and the Zambia Weights and Measures Agency as allies in the manufacturing sector to ensure quality of products manufactured and compliance with package contents as required by law.

The ribbons have been cut, the doors have been opened, the offices are equipped with desks, chairs and computers, and now the serious work of delivering a service to the membership which must grow to national status, is the job at hand.

Welcome new ZAM, welcome new Secretariat, welcome new spirit, welcome new enthusiasm, and welcome new dialogue, debate, and demand for increased manufacturing in Zambia.

Published 19 February 2008

Corruption

Transparency International’s Corruption Perception Index places Zambia in an uncomfortably prominent position on the list where the indicator suggests that corruption is alive and well, and growing.

At the business level, it is interesting to highlight where corruption is making a big impact, and which areas can be drivers of change.

It is also important to note that at the lower levels, corruption starts off as a bread and butter issue of survival, but these seemingly harmless incidents become the foundation for doing business, and will grow to larger forms of corruption with time.

At the corporate level corruption has an immediate devastating impact. The selection of Board Members that will service the private agendas of the appointing agents can ruin an organization even before it gets its feet on the ground. The hand picking of top management individuals at the expense of professional assessment panels puts insincere personnel with low integrity into positions of power. The business is set on a course of patronage and boot licking from the word GO! Corruption is then institutionalized and the only direction for that business to go; is down.

At this level corruption will affect the lives of the employees, will result in the loss of huge investments, and will lead to the lack of credibility of the citizens of that community.

Accountability is an essential requirement if a business is to survive in this competitive world. A business must be accountable to its management for it to perform well. The management must be accountable to the Board of Directors if the management is expected to carry out its mandate. In this respect the Board of Directors must be accountable to the Share Holders, and the Share Holders must be accountable to the Government and Community at large. Accountability is also one of the biggest weapons against corruption. Since corruption is generally a closed door, behind the scenes activity, open accountability tries to flush it out and eradicate it from the system.

Corruption is always aimed at some form of gain to the individual. If that individual is an employee in a private company or in a public institution, then the corrupt acts are not aimed a protecting the organization whilst making a fast buck. The organization becomes a victim of the corrupt acts and the institution is eventually destroyed as it is continuously used and abused to serve the personal interests of the employees.

Where are some of the drivers of change in our economy? Which institutions can pilot the way forward towards a corrupt free economy?

At the macro level, public equity, accountability, clarity, and checks and balances are essential in the national constitution.

At the executive level, consultation, inclusion, accountability and recourse are important for systems to be respected and implemented.

At the operational level, some key public institutions and civil society collectives must take up the challenge of introducing a mind set that sees corruption as a detrimental practice for both social and economic development.

The Anti Corruption Commission (ACC) must perform the basic task of responding to all complaints even if there is no merit in the complaint. A response from the ACC is a sign of acknowledgement and that the matter is, or has been considered. That in itself is a basic win for the ACC in the fight against corruption. The ACC should have the laxity to investigate and prosecute any person in the private sector or in the Government if a case of corruption can be established. This develops a sense of confidence in the citizenry that the ACC is impartial and that there are no Sacred Cows. The ACC must have links to all public institutions with special emphasis on those that offer services directly to the public. This will also inspire confidence in the operations of the ACC and provide a natural watchdog service on behalf of the public in public institutions.

The Zambia National Tender Board (ZNTB) must put in place a responsive reporting system on the processing of tenders. This reporting system must be in the public domain for all to see. ZNTB must respond to all bidders with clear reasons why their tenders were not successful and provide an avenue for complaints that can be dealt with in an open and transparent manner. A complaints desk is in place at ZNTB, but until full information is made available to the public and bidders pro-actively, ZNTB will always be perceived to be biased in their operations and processing of tenders.

The Zambia Police Service (ZP) is the most active public institution in issues on corruption. If ZP cannot be trusted to arrest a suspect or investigate a case, then corrupt practices will be fueled, and will grow, as the perpetrators will be perceived to be above the law. The public usually interface with the Police on a daily basis on any issue that either breaks the law or impinges on ones civil liberties. The Police represent the face of the Government and its authority in every community. A perceived corrupt Police Service, or an inactive Police Service, only serves to promote corruption in any society. The public begin to sideline the Police and use corrupt means to resolve their cases.

Institutions of Education, starting from the home, can be essential drivers in the fight against corruption. At home, values, principles, and culture are taught to children at an early age. These virtues will usually guide children throughout their lives into adulthood and build the character of the person, and further, the character of the society. Parental teaching of right from wrong, and good from bad, are the basic ingredients of our character in later life.

This effort can be further complimented by additional teachings at primary, secondary, and tertiary education institutions whereby the linkages between corruption and its negative effects on society and the economy can be further elaborated.

Businesses in Zambia are dependent on sound rules and regulations, equitable and predictable systems and public services, and sincere and dedicated staff with a high sense of integrity. If all these characteristics are not in place, we will struggle to lift our economy and people out of poverty, and continue to be our own worst enemies.

Published 5 February 2008