Business After Mwanawasa

23^rd August marked a very important day for me yet again. This time it was the day when our late President Dr Levy Patrick Mwanawasa’s body arrived at the Lusaka International Airport after a ten hour flight from Paris, France.

The people of France had returned our fallen hero back to Zambia to be put to eternal rest at home. The French Airforce Airbus touched down at 09.00hours witnessed by a solemn crowd of Government officials led by the Vice President, and a large complement of the Diplomatic Corps.

The mood on Saturday was unified. The nation wore dark clothes signifying a dark day in the history of Zambia. Many citizens and friends crowded the Airport to receive the late President and many more people lined the Great East Road route from the Airport to Mulungushi International Conference Centre to catch a glimpse of the Hearse and to pay their last respects to our departed President as his motorcade slowly proceeded towards the Conference Centre. Nearly all the vehicles on the roads drove around with full headlights switched on in the traditional way of signalling a funeral procession. Indeed, the nation was in full mourning and united in one purpose; to lay our late President to rest in the most respectful manner that we know.

At the Mulungushi International Conference Centre, the Armed Forces silently stood at attention while their late Commander In Chief was driven passed. The casket was placed in the Main Conference Hall where he was set to Lie-in-State. It was appropriate that the Mulungushi International Conference Centre was selected as the first stop for the late President, because although the venue provided for many members of the public to pay their last respects, it is also the venue where the late President dialogued and made many national decisions that would affect Zambia’s economy. This venue was his somewhat public office where everybody and anybody would interact with the late President and his Government.

The day’s events were extremely moving, and the rest of the country will no doubt be accorded the same opportunity to pay their last respects as the late President’s body is taken from province to province across the country.

Since the announcement of the death of our President on 19^th August 2008, the media has been asking questions about what legacy did he leave in respect to economic development? What happens to business now? How will his demise affect investment in Zambia? What are the prospects in the post Mwanawasa era?

The truth is nobody can foretell the future. But one thing is for sure, Zambia shall continue in one form or another. The world has not come to an end here.

Much as we mourn and acknowledge our bereavement in respect to the passing on of our late President, we must continue to live and improve our lives.

The late President was a champion of Regional Integration as evidenced in his pronouncements in his role as Chairman of the Southern African Development Community (SADC). Late President Mwanawasa supported the work of the Common Market for East and Southern Africa (COMESA) and was an advocate for the Free Trade Areas. Those of us that remain behind are challenged to continue with this legacy of working with the SADC, COMESA and the African Union to unify the continent and create a One Africa economy. Business in Zambia recognises that opening access for Zambian companies into the region will benefit the country and allow the companies to grow much bigger due to the larger regional markets.

The late President stood to attack and eradicate corruption in Zambia. The Task Force on Corruption and the various Capacity Building programs in public institutions must continue their noble work and serve the nation with the same vision that the late President held. The development of business in Zambia is dependent on clear and meaningful systems in all Government offices so that the private sector can predict what level of service they will receive. Businesses are cognisant that corruption eventually destroys an economy as we have seen in parts of West Africa, South America, and South East Asia. The short term gains of corruption are soon eradicated by the long term and irreversible losses.

It must be granted that the death of any incumbent President will cause some discomfort to the economy as a sense of uncertainty sets in. Private Business is very sensitive to political upheavals and is quite quick to pull out if uncertainty prevails for too long. Zambia must not let the late President down by causing unnecessary political tension that would lead to investor flight out of the country. A stable Government must be maintained. The Vice President must carry out his functions as Acting President diligently throughout the 90 days provided for by the National Constitution. The ensuing Presidential Elections must be managed calmly and professionally to continue to give confidence to business that Zambia is the place where to do business.

Zambian businesses must do their part too. Yes, we expect that Zambians will mourn the death of the late President. As we do so, we should continue to run our businesses and expand and create wealth and jobs as our contribution to the memory of the late President. The success of the Zambian economy will no doubt be the success of the late President’s policies.

Life and Business during Mwanawasa was a challenge. Life and Business after Mwanawasa will be a challenge too. The loss of our President ends one chapter in Zambia’s history but also marks the beginning of a new era for development. Zambia has a development plan (FNDP) and a vision (Vision 2030). The new administration will have to consider the country’s future and continue the work that was started by the late President and possibly improve on these national programs for development. The balance between budgeting for consumption and budgeting for development is always a critical mechanism. The hidden liabilities in incurring national debt must be clearly outlined to avoid getting into the debt trap once again. The challenge of spreading development across the nation and into the rural areas has always been a difficult one. The negotiation of domestic development against the impact of regional integration must be constantly monitored and intervention programs must be put in place to put Zambia in a position to benefit from the integration process rather than become a victim of it.

Businesses after Mwanawasa will be as a result of our own choosing. We can dwell on the demise of our President and fold our arms and withdraw, or we can appreciate the good work he did and set out to do, and opt to continue his legacy with vigour and dedication to his memory. The choice is for those of us that are still living. We are faced with the proverbial glass. Is it half empty? Or is it half full?

Published 26 August 2008

EU And Business

The Zambia Federation of Employers recently ran a workshop to discuss the various opportunities for the European Union (EU) to support Zambian businesses.

The EU has traditionally funded infrastructure development projects in Zambia such as the ongoing program to rehabilitate the Zimba to Livingstone road that currently prevents many Zambians and tourists from visiting the tourist capital for fear of wrecking their vehicles. The impact of a useable road between Lusaka and Livingstone will be to enhance the number of visitors to Livingstone therefore bringing in more business to the tourist economy. Businesses in the Southern Province will definitely improve once this road is repaired. This project has been on the drawing board for several years now and the initial cost of works has now doubled due to delays and procrastination in implementation. The usual reasons for these delays are due to EU complex funding procedures and Government bureaucracy in moving the implementation process. The escalating costs clearly reflects that time wasted, is money wasted.

The EU is also heavily engaged in funding road rehabilitation between Katete and Chipata in the Eastern Province. Again, this road link to Malawi and Mozambique is an important access route to the Indian Ocean and our trading partners in the Eastern part of Southern Africa. The current efforts to open up the Nacala Corridor in Mozambique and other business opportunities between Zambia and Mozambique will not result in much, if the road network to the East is not viably useable.

The EU has supported the Health and Education sectors for many years and several schools are now land marks of EU presence in the local economy. There are some problems coming out of the support to the Education sector as is evidenced by schools infrastructures being used as holding pens for goats, pigs and chickens in some areas. This phenomenon discourages the EU from rendering support to this sector as the goals of the support are not being met by their Zambian partners. The challenge on the Zambian side is to ensure that the infrastructure set up for schools is indeed used to educate our children and not be used a s kraals for livestock development. On the other hand, it can be argued that the form of education that is prescribed for Zambia may not be the most beneficial to the majority of the Zambian people. We may want to re-asses the education curricula to encompass some life skills such as Agriculture Science, Wood Work, Health Science, and other subjects which will empower our youth with useful knowledge to help them through life. This is important when we consider that every year we throw about 200,000 Grade 12 graduates onto our streets to survive with no prospects for further education. Relevant education is therefore an aspect that we must consider as we evolve our education system in Zambia. The EU has opened a window for support to the private sector through the funding of Private Schools and Private Medical institutions in a move to complement the efforts being made by Government to provide social and developmental services across the nation. The EU has invested 7 million Euros in the recently completed Soweto Urban market project in Lusaka, but concerns about the maintenance and economic use of this infrastructure produces some anxiety amongst the stakeholders.

Water and Energy are two key sectors that EU support is now focused on. Currently six to eight water projects run by Non Governmental Organizations (NGO’s) are received funding from the EU and the options are open for the various Water Companies to apply for support. The Itezhi-tezhi Hydroelectric Power project is receiving 100 million Euros of funding from the EU to embark on the power station being built by the state enterprise Zambia Electricity Supply Corporation Limited (ZESCO) in partnership with Tata of India. The EU has put funds into Rural Electrification programs and supported Interconnect projects to distribute electricity across the country where possible. This support has largely resulted in farming communities being connected to the national grid to power their irrigation and processing equipment in the various farm blocks. The opportunities for Zambian businesses in this regard has been to apply for EU funding for Solar Energy development, Bio Fuel production and possibly Wind energy development through Windmill generators. These options have not been explored or exploited widely and aggressively by the private sector.

Some ten years ago, the EU funded the Agriculture sector by financing the building of a Horticulture and Floriculture export warehouse at the Lusaka International Airport. This facility has been a great asset to the Zambian Agribusiness sector and continues to be the conduit for Zambian exports of fresh vegetables and cut flowers to the EU markets in Europe. Chartered cargo aircraft fly in to ship Zambian produce out to the EU, and the entire operation is managed by the Zambia Export Growers Association (ZEGA) which ensures that a business perspective is always applied to the export facility so that the service can operate sustainably into the future. It must be highlighted however, that the cut flower sector has taken a heavy blow in Zambia with more than 60% of the investors in the sector closing down their operations. Many exporters have complained about the difficult funding package that they were given by the EU, others have complained about the volatile markets in Europe, and yet others have lamented about the impact of the US dollar to Euro relationship which has caused many foreign exchange losses for them. Another analysis shows the impact of other producers and exporters in Africa that are fighting for the same markets as Zambian exporters. Countries such as Kenya and Ethiopia have been able to take larger chunks of the cut flowers markets in Europe than Zambia has. One might reflect and consider that maybe, the cut flowers industry is not the most reliable industry to invest in as it is prone to many external factors in addition to simply, the change in fashion around the world. There may be a lesson in this experience for Zambia.

Some EU programs have just ended and there is an opportunity to assess the value of the programs in Zambia and whether we can improve on such programs in the future, or how we can take the model successes into our own development agenda.

The EU Mining Sector Diversification Program (MSDP) has come to an end and all the guests at the closing out ceremony went home with a CD containing the success story of the nearly 30 million Euro program. Many beneficiaries of the program will tell you that they enjoyed the trade visits to the USA, India, Canada, South Africa, China and several other countries over the years. But they will also tell you that they are no better off now than they were 10 years ago. In fact many people are more miserable now than they were 10 years ago because they were exposed to the opportunities out there, but here was no mechanism in place to take advantage of those opportunities. Countries such as Ethiopia, Botswana, Egypt, and Kenya make sure that once their people are exposed to some opportunities, the programs also invest in mechanisms to exploit those opportunities so that some tangible results can be realized from the programs. The MSDP program did not go all the way but stopped at exposure only. Today, many beneficiaries of the program have small loans totaling to about 9 million Euros which may not be paid back as the program has wound up and follow up will be difficult. Much of the information and knowledge collected during the program life cycle has only become useful public information after the program has closed out. The EU would have been more effective if they had launched some pilot projects in sectors that would have had a big impact on engaging local Small and Medium Enterprises (SME’s) and, become models for other private sector investors to emulate. Zambia has vast Marble deposits and these have not been looked at seriously. Zambia offers opportunities in Mining Tourism in the Amethyst Mines of Mapatizya outside Kalomo. This is where MSDP could have put its resources and left a legacy of profitable and sustainable development rather than this one of unpaid loans and a handful of CD’s. This experience is another opportunity for the EU to learn from the program failure and change the way it supports Zambia in the future.

Under the 9^th European Development Fund (EDF) Zambia was supported by an Export Development Program (EDP) which wound up early this year. The fact that the program concentrated on exports, by definition, excluded many Zambian SME’s from receiving support. It is a well known fact that over 80% of economic activity in Zambia is carried out by SME’s. SME’s are not export driven and therefore the EDP program did not help as much as it could have if it were designed to support the majority of Zambians. Loans were given out to businesses during the run of this program and as in the MSDP case; the chances of loan recovery after project closure are virtually nil. We are told that 4 million Euros left over from the EDP fund in cash and assets have been passed on to the Zambia Development Agency to support private sector development in the country. It must be acknowledged however, that any funding that was budgeted for under EDP, and was not disbursed within the program cycle, is an indication that the program did not deliver as expected

Currently, the EU is running a Capacity Building Program within Government, the Private Sector and the Social Sector NGO’s. There is much good being done through human resource development activities in Government. The Private Sector and other NGO’s are being funded in respect to program delivery, but not necessarily in the areas of sustainable service delivery to the membership. This weakness may be as a result of the ‘Donor’ syndrome which many of us suffer from including our collaborating partners themselves, but possibly also from the fact that the EU has traditionally supported development from a benevolent facilitative perspective which does not inject a spirit of self reliance and sustainability. This may be an area that the EU may want to redress as they continue to roll out their Capacity Building Program.

The 10^th EDF is placing 650 million Euros for Regional Infrastructure development such as bridges, border ports, roads and railways. This is welcome commitment to support the efforts of other financiers which include the African Development Bank, the African Development Foundation, and the World Bank. Under the 10^th EDF support to Zambia will be 50% towards Direct Budget Support, 15% towards RoadSip 2, and 15% to the Health sector. Zambia will have the flexibility to use the Budget Support funds as we see fit. The European Investment Bank will commit 50 million Euros to Private Sector Development in the Tourism and Agribusiness sectors in addition to others that may be put forward by the business community. Options to develop our Sanitary and Phytosanitary processes in respect to the export of agriculture products to the EU are open for funding.

Businesses are encouraged to engage with the EU Centre for the Development of Enterprises (CDE), EU-ProInvest, and indeed the EU Commission Headquarters in Brussels in order to solicit support for funding, capacity building and trade linkages.

Published 19 August 2008

Business Transformation

Last week Livingstone hosted the Joint Annual Business Conference collaboratively organized by the Zambia Institute of Chartered Accountants, the Association of Chartered Certified Accountants, and the Chartered Institute of Management Accountants. The theme of the conference was ‘Innovating for a Sustainable Future’. Under this theme, the spotlight fell on the challenges of ‘Transformation of Businesses for a Sustainable Future’.

Businesses in Zambia today are faced with many challenges in their quest to grow and remain viable for the foreseeable future.

The rapid pace at which information flows across the globe, and the constantly evolving technology age that we live in, offers no mercy to businesses that stagnate or ignore the demands of the market.

In Zambia, we have seen a proliferation of Fuel Stations along our roads and highways. The consumer demand now, is to be served within a few minutes of arriving at the pumps. If this demand is not met as expected, the motorist will drive off to the next Fuel Station for more efficient service. The Fuel Station proprietors that have responded positively to this challenge have embarked on a training program on customer response in order to meet the rising demands. This phenomenon is prevailing over Internet Service Providers, Mobile Phone Service Providers, Supermarkets, and Restaurants. The banking industry provides a special service that impacts on how the private sector is being serviced and facilitated in its quest for growth. With the advent of five new banks opening their doors to the public the scramble for better services to customers is on, and new innovative products are being marketed every day. The looming competition has already brought products such as personal loans and house loans on the market with very easy to apply guidelines.

Modern day business demands puts pressure on businesses to disclose the company’s business dealings to staff in an effort to empower the staff to make the company more productive. Any company that is looking to borrow money from the banks will need to acknowledge that Management Accounts are a basic requirement by the bank to ensure that the money made available to the business is being used for the intended purpose. Accounting staff are therefore required to have open access to the company accounts to provide the necessary information to the banks. Accountants are expected to keep a tight control on company income and expenditure in relation to fiscal budgets. To achieve this, companies must allow relevant staff access to bank accounts and documentation of all business dealings.

Successful private companies that are proprietor owned can only cross the barrier to corporate business if the systems in the company are predictable and pro growth. The systems must be universally understood, should have clear levels of delegation, and should have open systems for reporting. Staff must be held accountable, clear goals should be set, training systems must be in place, and methods for monitoring and evaluation must be constantly at work. Opportunities for re-engineering of the company and movement of obsolete stocks are constantly being looked at to keep the corporate vibrant and competitive.

Technology impacts greatly on modern businesses. The use of Local Area Networks, Virtual private Networks, Access Controls Systems, and Internet Banking are tools that can lunge a company way ahead of its competitors. In addition, Technology offers the opportunity to create new knowledge and services that keep a business viable and profitable.

Customer care is fast becoming the ‘big’ booster to many businesses. Customer care means quick response on issues, calendaring appointments and meetings, keeping useful knowledge about the service provided, transferring tasks to another colleague when overwhelmed, engaging in team work, being courteous, showing commitment to work, letting an issue go when the cost is too high and, effective communication. Customer care is a cross cutting service in all sectors of the economy and businesses, and in many instances either brings in new customers or pushes existing customers away.

Collaboration in developing economies is essential if businesses are to evolve from small and medium enterprises into large corporates. Strategic partnerships assist companies to share their business risks and burdens. Collaboration allows small companies to tackle big business and focus on regional trade. Consolidated imports from the Far East make the cost of the goods cheaper for each member of the consortium due to the lower bulk purchase pricing and large volume shipment discounts. The Newspaper vendors at the traffic junctions have had to collaborate or perish because the customers want to purchase three different papers from one vendor. The vendors sort out their accounts at the end of the day when all the newspapers have been sold.

There is always room for innovation and new products in the world of business. For instance in Zambia the option of integrating Tourism with Mining has not been explored. The option of turning Zambia into a hub for goods and services to supply the eight neighboring countries is only talked about but not acted upon. There are opportunities for developing Zambia into a regional telecommunications hub with options for building International Call Centers. Business opportunities abound in Cultural and Traditional Tourism beyond the well known Kuomboka Ceremony and a few others. Food security is a major concern for all countries and Zambia is no exception. Opportunities for growing large scale rice and fish challenge our minds every day. The processing of our local fruit has still not been established in any meaningful way.

Businesses are now challenged to get more involved in policy development and planning of the local economy. Zambia is plagued with the burden of European Union Economic partnership Agreements, SADC Trade Protocols, COMESA Free Trade Area rules and, the World Trade Organization global trade regime and rules. The private sector should be the instrumental player in all these negotiations but seldom turns up at the discussions. Decisions are made and documents are signed and the private sector is expected to comply. The business that intends to survive into the next decade will have to be an active participant in these negotiations so that the business interests are taken into account and decisions are made that will support and facilitate the growth of businesses. Currently, we see very little input from the private sector in the formulation of the National Fiscal Budget. The challenge is to develop sincere and strategic partnerships amongst the Government, Private Sector and Civil Society that will address the concerns of all three parties.

There will be much give and take but at the end of it all there will be consensus on the way forward such that private sector will forgo some issues but benefit on others. With time the businesses will flourish and meet the larger expectations of the National Vision.

At the top level, companies must be alert to issues of corporate failure that have been highlighted in the big corporate scandals around the world. The value of impartial Annual Audits cannot be over emphasized. The futures of businesses are usually reflected in the quality of the Audits done. The Audit reports are the single documents that are drawn up solely for the good and use of the Board of Directors and Shareholders of a company. Any compromise in this activity undermines the future of the company as we have witnessed in the Enron scandal and many others.

It is quite clear that the Accounting profession at all levels plays a pivotal role in facilitating the transformation of businesses such that they become equipped to grow in the face of global changes and various domestic pressures.

It can be argued that Accountants could be held singularly responsible for the success of businesses or the demise of a company because of the strategic positions that they hold from which all major business decisions are made.

The Zambia Institute of Chartered Accountants, the Association of Chartered Certified Accountants, and the Chartered Institute of Management Accountants are challenged by the nation to continue to collaborate, but more importantly, to promote their members to take up the responsibility of being in the forefront of business decision making.

This challenge is in line with the universal principle that states ‘Information and Knowledge is Power’, and the use of ‘Valid Information and Knowledge leads to powerful and appropriate decisions to ensure a prosperous and sustainable future’.

Published 12 August 2008

Business Dialogue

Last week’s Smart Partnership Dialogue at Mulungushi International Conference Centre effectively ran for one full week if we are to take the pre-Dialogue Rehearsals, Dialogue Resource Group meetings, and Secretariat work into account.

The turn out was quite overwhelming and accounted for between 400 and 500 participants. There was a lot of documentation handed out and many presentations were made to the participants ranging from our own Vice President and his colleague, the President of Uganda, to youth representatives from the region. Former Presidents, Prime Ministers, and Cabinet Ministers from several African countries put their views forward for dialogue and exchange of views on social and economic development.

Each successive day of the Dialogue was more challenging than the previous day and the pace was very fast. Many good ideas were shared and many hopes and aspirations were articulated for the betterment of the continent.

Some leaders were clear about their expectations and roles in achieving those expectations. President Yoweri Museveni was clear that Africa must desist from continuous discussions and move into gear to starting to take deliberate and decisive action. He highlighted that Africa cannot continue to boast of peaceful countries or democratic governance structures whilst her people continued to wallow in poverty. It was time to ‘manage’ the ‘talking’ and ‘engage’ the ‘doing’ with clear vision and purpose.

Several former Presidents echoed President Museveni’s sentiments and challenged the Dialogue Participants to be more pro-active and take ownership of their development programs such that their full commitment and investment would be summoned in order to realize the national social and economic agendas of the various countries.

What do we conclude as the effect of the Smart Partnership Dialogue on Zambia’s development agenda?

Clearly one positive effect is that we had one more large gathering of Government officials, some members of the private sector and some social sector NGO’s sitting in one room and discussing issues of national concern.

A hurdle that is always difficult to overcome, and was not successfully overcome at the Dialogue, was that of each participant wearing a particular ‘hat’ and failing to remove it and speak as an individual and citizen of Africa. This hurdle resulted in many contributions remaining in the same spirit of a conference or seminar with the hierarchies firmly in place although not verbalized.

Another positive effect is that of sharing experiences amongst countries so that lessons learned by one country could benefit another country. On the other hand, very few countries shared their mistakes where the more important and bitter lessons are learned. One or two bold current Heads of State were open to sharing their bad experiences in an effort to warn their brothers and sisters in other countries of the impending dangers and costs of making similar mistakes.

Private sector issues were raised quite effectively and some good documentation was circulated to ensure that the Participants appreciated the issues put on the Dialogue table. The difficulty was that the Dialogue reflected a very small percentage of private sector from the region and an even smaller representation from Zambia, the host country. This was not the intention of the Smart Partnership Dialogue mission therefore we must re-assess the mechanisms for engaging the private sector in preparations for future Smart Partnership Dialogues.

The Dialogue days were long and the Dialogue pace was aggressive. On the last day, a tour of the Zambia Agriculture and Commercial Show was made by Participants during a morning session. This visit to the Show was the first Participant to Business contact in an open free dialogue manner. Unfortunately, this type of contact is often too overwhelming in too short a time, so we cannot expect too much to come out of it.

Opportunities for refocusing the Smart Partnership Dialogue to include much more private sector participation need to be explored. Options for restructuring the format of the Dialogue to include several visits to business, industrial, agriculture, tourism, mining, and service sector investments need to be explored to provide a healthy mix of dialogue and productive action. Some possibilities of establishing new dialogue and engagement programs amongst the various stakeholders in each economy can be developed and concretized through the signing of Memorandums of Collaboration in an effort to ensure the establishment and continuity of new Smart Partnerships at a domestic and regional level.

Uganda is set for the 2009 Smart Partnership Dialogue thanks to the established Smart Partnership between President Museveni and the Dialogue Management Team. Hopefully, Uganda will improve on the Zambia experience and above all, get its Private Sector to participate in the dialogue overwhelmingly and effectively. In addition, we hope that Uganda will clearly map out what the role and goals of the Smart Partnership Dialogue will be in promoting the development of the nation for Ugandans.

The positive impact of Smart Partnerships does not happen by mistake. It is a well calculated and strategized mechanism that must deliver the outcomes that it will have been programmed for. Zambia must be very clear about what we want to get out of the next Dialogue in Uganda. We must spend some long hours planning and acting to ensure that we will achieve our goals. If we do not apply our minds to this basic fact, then going to Uganda will be wasting the tax payer’s money and our own resources for no good reason.

Published 5 August 2008