Privatization

Zambia is still grappling with the task of finding suitable investors to inject both finances and other resources into the operations of old public companies that once were the backbone of the economy and are now threatened with liquidation or receivership.

These once flagship factories, industries and processing units, stand helplessly while their assets deteriorate each day that goes by due to lack of maintenance.

A quick look at the infrastructure that was put into many of these public companies indicate that even though three decades ago Government investment was in the region of between one and five million US dollars, the current value of similar investments would be at least ten times more.

It is therefore interesting to note the lethargy in our attempts to attract investment into these sleeping giants, such that when an acceptable investor is found and the deal is signed, the easy way to make money out of these enterprises is usually to asset strip the company and sell the premises and machinery to various buyers at a very good profit.

One challenge that faces us in turning this scenario around is to do some useful preparatory work that will be useful to would-be and prospective investors, and for the benefit of getting the best deal possible for the people of Zambia whilst ensuring sustained operations.

Basic information in respect to all public companies should be made available to the general public via the various Government institutions and the Zambia Development Agency. The annual books of accounts are usually printed in the local media for the public to see what the performance of these companies have been over the years. If this public information is by law in the public domain, one wonders why any interested party or prospective investor must be harassed with demands of letters of ‘expression of interest’, and various documentation, even to just get a basic appreciation of the nature of the companies to be privatized. Just across the border into South Africa, all public companies have their profiles, prospectuses, and final accounts published in the media or displayed on their web sites for all to see. More detailed information is given on the basis of some official contact and correspondence to determine the nature of the request for information.

In Zambia, we still operate on the old ‘command’ system where information is a privilege and not a right in respect to public institutions. There are many investors out there that do not have the time to investigate the business options around the world and prefer to use consultants to do the leg work and sift the good opportunities from the bad ones. How do we facilitate this when our sales and marketing regime for investors is so rigid?

We have seen several new banks indicate their desire to set up business in Zambia. The Bank of Zambia has posted all the forms necessary to apply for a banking license on their web site. There is no hidden information and their doors are open to anybody who cares to knock and be supported and facilitated as long as they are able to comply with the investment criteria required. The due diligence is carried out after the applications are made such that when a license is issued, it is done so with a full appreciation of the capacity, profile, and commitment of the investor. As a result of this pro-active and facilitative attitude towards investment into the financial services sector, we are told that they may be as many as five new banks opening doors within the next twelve months. Now this is the way to attract and support investment into Zambia.

The Zambia Development Agency needs to take a leaf from the Bank of Zambia and change its mind set from being guarded and withholding, to one of being supportive and facilitative, so that many more investors can become more interested in focusing on the opportunities that Zambia has to offer.

Currently, important industries such as Maamba Collieries, Nitrogen Chemicals, Zambia Railways, and several more lie idle and unproductive probably because we are demanding too much from the many enquirers who often are agents for the real investors whose focus is not only in Zambia, but the whole world.

The Zambia Development Agency must develop investment prospectuses for all companies that are up for privatization. The publicly disclosed accounts should be made available, and some research should be carried out on what similar investments would currently cost so as to entice prospective investors to put their money in our already installed companies.

The economy is beginning to pick up and our target for a GDP growth of 9% per annum is reachable. It will not happen by accident. It can happen with well designed and implemented investment programs that will attract both local and foreign investment into all sectors of the economy.

The first major hurdle is to provide services to businesses. This requires a re-engineering of Government and public institutions towards serving the public and facilitating investment by the provision of relevant information. The goal of the creation of the Zambia Development Agency was to put five individual institutions under one roof so that more efficient services could be provided to the public and to investors. The private sector both in Zambia and outside are anxiously waiting to experience the improved service that promises to bring development and prosperity for all.

Published 24 June 2008

Drug Trade

Last week the Deputy Minister of Health Dr. Lwipa Puma launched the Pharmaceutical Awareness Week in the wake of global recognition that essential drugs for the treatment of common killer diseases such as Malaria, Tuberculosis and AIDS are manufactured with varying degrees of efficacy, efficiency and potency.

Reports indicate that the annual drug trade in Africa is worth over USD 20 billion. Of this business, estimates of between USD 4 billion and USD 6 billion are considered to be of sub standard production that either do not treat the diseases effectively, or actually promote the disease in the patient.

Further information shows that these sub standard drugs are marketed predominantly in poor or developing countries where the capacity of the regulatory authorities in respect to drug quality is weak, inefficient, or non existent.

The mere fact that poor and developing countries have a cash constraint on their ability to purchase quality drugs, presents the perfect trading environment for cheap, substandard drugs that buyers perceive to be better than having no drugs at all.

As a result, many people in Zambia and elsewhere die needlessly, diseases are prolonged due to insufficient drug treatment, many productive hours are wasted in hospitals and clinics, and there is a developing misery amongst sick people and those that are responsible for looking after the sick.

Basically, the misery affects us all. We all, in some way or another, care or look after some relative or friend that is afflicted by some sickness.

The drug trade in Africa has degenerated to a level where sick people are reduced to consumers of chemicals rather than drugs, and the medical and funeral professions are inundated with customers that follow the ‘death chain’ to the grave yard.

It may be useful to link the end of the Pharmaceutical Awareness Week with the beginning of a new Pharmaceutical Quality program across the nation. We are challenged to look at our capacity as a nation, to analyze and assess the quality of all drugs manufactured and imported into the country for public consumption.

If we cannot test the drugs adequately, then we must invest in new laboratory equipment and human resources to ensure that capacity is developed for this life saving public service.

We cannot count on morality and ethics to save lives. Effective regulation, monitoring, assessment, inspection, and quality control are paramount, and the only way of protecting the public from dangerous and sometimes poisonous administration of pseudo life saving drugs.

The Ministry of Health must immediately institute investigations into the quality of all drugs in the country. The private sector must be held accountable for quality of manufactured and imported drugs that constitute their business. In addition, the Government procurement system for drugs must be assessed and investigated for possibilities of harmful drugs being procured for public hospitals. Our collaborating partners must be held accountable for the quality of the drugs that they supply to the people of Zambia through the many health support programs in the country.

Too often, the culprits are the very ones that purport to be benevolent with an agenda for doing public good.

It is important to streamline the drug procurement and production processes such that opportunities for quality control checks are built in and mechanisms for halting dangerous drugs from entering our environment are put firmly in place.

We often swing from one extreme of totally liberalizing the drug trade without any enforceable inspections and assessments, to one of total control and single door management. In both cases people either die from poor quality drugs, or die due to lack of access to any drugs whatsoever. The end result is the same, death.

We must arrive at a workable mechanism of processes and regulations that support and facilitate the provision of quality drugs to our people in an efficient and timely manner.

The poor graciously consume whatever drugs are handed out to them, and take the drugs with hope and trust. The more affluent prefer to be given a prescription by the doctor and search for quality drugs in the many chemists and pharmacies because they know that there are varying qualities of drugs on the market. The rich that do not trust the local medical service industry, get on the first plane heading south and book themselves in at a hospital in Joburg.

The sad thing is that for every rich person there are 100 middle class people, and 10,000 poor people who are at the mercy of whatever drugs they can lay their hands on.

The equalizer comes when there is an emergency. At that point poor, well to do, and rich find themselves in the University Teaching Hospital or any other Government run Hospital. In that world there is no choice of drugs that will be administered. Everybody gets the same treatment.

Published 17 June 2008

Business-Phobia

There is Phobia season around the world and there are several manifestations of the phenomenon around the globe that are usually condemned by the open hearted and comfortable.

Since 911 the phobia in the United States has been in respect to Arabs and the popular perception that every Arab is a terrorist.

The phobia in the United Kingdom for several decades now, and in France in more recent times, is that of the perception that all citizens of the ex-colonies are rushing to enter and stay in the UK and France respectively, and become a burden on the social security systems in these countries.

The phobia in Israel in the last twenty years is that every Palestinian is a probable suicide bomber.

The recent Xenophobia in South Africa which has led to brutal violence in the densely populated townships and left many foreigners from neighboring countries dead on the streets is another example of a fresh and developing phobia much closer to home.

One might argue these perceptions one way or the other, and debate the good reasons for and against the paranoia that feeds into the development of some kind of phobia, but the common person on the street has a general appreciation of what the underlying issues are.

For many normal people, the basic generator for Xenophobia and ‘Businessphobia’ is ‘the perception of being threatened or discarded’. The threat of being attacked, being overrun, being sidelined and so on generate a violent survival instinct in most people to the extent that the basic animal survival instinct takes over from the rational and civilized behavior that we have all subscribed to in our National Constitutions and the many resolutions of the United Nations.

What has been quite consistent is that if this ‘animal instinct’ is allowed to surface then mindless destruction is evidently unleashed on everybody irrespective of whether they are players in the equation, or merely bystanders finding themselves in the wrong place at the wrong time.

We are witnessing miniature versions of what is happening in South Africa in our developing perceptions of foreign investors and outsiders from our communities invading our traditional business areas. This threat of being discarded or sidelined in business generates ‘Businessphobia’ which can escalate if ignored.

We must take precautionary action to nip the problem in the bud by ensuring that the greater masses of citizens are supported and facilitated in developing their businesses and enterprises such that the economy develops and evolves through hard work and innovative initiatives.

This action is necessary in the form of more information to the private sector about the prospects and opportunities that the two new Economic Zones in Chambishi and Lusaka respectively have to offer to Zambian businesses. At the moment information is being shared with investors from China, India, Malasia and possibly several other countries whilst the local domestic investors are not included or targeted in the marketing exercise.

The effective contribution of the Citizens Economic Empowerment Commission will be another tool to quell the development of ‘Businessphobia’ as Citizens and their businesses will be supported and facilitated in a transparent and accountable manner.

The current exercise of re-writing the Zambia National Tender Board Act and the introduction of a Public Procurement Authority can go a long way towards cementing the stability in doing business with Government in a manner that maintains harmony and professionalism.

The improvement of our licensing regime to levels that make it more private sector supportive with an element of tighter scrutiny in respect to reserved sectors for nationals and quality of foreign investment is another anti ‘Businessphobia’ intervention that will be welcomed by the private sector.

The active role of the Zambia Competition Commission in ensuring that active competition is promoted and encouraged will go a long way towards guiding businesses to be more efficient and cost effective when selling their products and service to the general public.

The facilitation of the private sector to invest in social services that will serve the community reduces the burden on Government to single handedly provide for the nation. This is demonstrated by the private sector led passenger transport sector which has grown over the last decade and now spans the entire country.

The private sector can play a very pivotal role in stemming the possibility of Xenophobia in Zambia and in so doing stem ‘Businessphobia’ through careful and thoughtful planning and interventions in collaboration with Government.

Tens of thousands of people are fleeing South Africa and returning to Mozambique, Zimbabwe and Malawi. One other choice for many of these people is to focus on the next best option in the region which happens to be Zambia. What measures are we putting in place to deal with this possible influx of labour and the probable relocation of businesses into our economy? Are we looking into the options for Joint Ventures to ensure equity for Zambians? The Zambia Development Agency is likely to be swamped with a wave of investors that will want to move in fast. Is ZDA ready for this? Do they have a responsive action plan? The next few months may be the proverbial ‘calm before the storm’ and possibly the eruption of ‘Businessphobia’.

Published 3 June 2008