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 9th 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 10th 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 10th 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
No comments:
Post a Comment