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