Service Madness

The world is raising the bar on service levels in an effort to mitigate against the possible loss of business due to the impact of the global credit crunch.

Financial institutions are looking at innovations in product design so that they can lend out money but at the same time minimize the risk element that was ignored in the last few years which finally led to the crisis that we now find ourselves in. To this end, shiny new brochures are suddenly showing up on the service counters, branded T-shirts and caps are handed out, mugs and pens are issued with the opening of new accounts, all in an attempt to woo customers in with public relations efforts.

Restaurants have started to offer specials where the customer pays one fixed price for a meal but is allowed to eat multiple rounds of servings. This gimmick is practiced all over the world and attracts flocks of new customers who always want a good deal.

Some fuel stations offer a soft drink with every purchase of fuel of K100,000 or more. Most fuel stations try to offer windscreen cleaning, oil checking, and tyre pressure balancing as a standard service to set themselves as the fuel station of choice for local residents.

Even the contract hawkers that walk the streets of Lusaka and the Copperbelt knock at office doors selling camping lights, fly swatters, and storage bins, on a special offer system where you buy one and get one free.

The name of the business game in 2009 is to improve the service levels, keep the prices stable, and push for more turnover.

One curious observation in the cities, is that although there are these great efforts to keep businesses afloat, the fundamental support system to get the customers into the desired business premises is not addressed.

The business doors may open at 08.00hours, the staff may be pleasantly dressed, the premises may be squeaky clean, but there are no parking spaces available for driving customers to enable them bring their cash to the cashiers.

A quick look along Cairo Road in Lusaka reveals that most of the parking spaces are 'reserved' for the directors, managers, and staff of the very same businesses that are trying to attract customers. Where do the customers park?

In the developed world, directors and staff will either park at the back of the premises, or in out of the way parking areas so that the parking spaces for customers in front of the business premises is available to the public.

In Lusaka, there is now a budding industry for reserved parking barriers popularly known as 'visenke' to block every available parking space in the Central Business District. Businesses still wonder why they are not getting the customers that they expect after putting so much effort into upgraded in-premises service and freebees.

It is quite obvious that upgraded service must go all the way. It starts with the customer being facilitated to come to the business premises before the onsite service can begin to take effect.

One can imagine the anxiety and hassle of getting to any of our local radio stations located at the south end of Cairo Road for an early live show at 09.00hours. The guests will have to circle the area like vultures for at least thirty minutes before any kind of parking is found. Strangely enough, parking on the pavement in this area seems to be permitted and encouraged, but parking on the pavement in areas north of the Post Office building, attracts the wrath of the Lusaka City Council traffic wardens that clamp your vehicle and demand a K240,000 fine.

It is refreshing to note however, that Barclays Bank has recognised this difficulty at their new Premier Banking Centre at Elunda Park located adjacent to the Addis Abba round about. The car park at the entrance to the premises is reserved for customers and the top bosses and staff have to park on the gravel embankment along side the road. The customer is for once coming first.

2009 promises to be the year that will challenge service levels in all businesses. The current service level madness of ignoring the customer in favour of business bosses will impact on balance sheets, and top people will lose their jobs both in the private sector and the public service.

Businesses that will put the customer first, operate more efficiently, set a conservative profit margin, and deliver the goods, will survive the current global economic crisis and may even prosper.

Published on 21 April, 2009

Energy Paradox

The recent National Indaba and subsequent North South Corridor Conference in Lusaka paid special attention to the development of physical and soft infrastructure as a primary vehicle for social and economic development.

In the many discussions, a key common issue came out very strongly as a ‘have to do’ item. The general consensus was that electricity was a basic requirement for any economic or social development to really take root. Information and Communications Technologies demand electricity as the prime driver for accessing these technologies. Air Travel is dependent on electricity to operationalise navigational and communications systems.

It therefore becomes necessary to consider the Energy Paradox in respect to the role of electricity in the development paradigm.

The Energy Paradox requires one to think very carefully about the whether electricity is generated as a commercial product, to be sold at a profit, and the excess capacity then directed towards social and economic development for the country. On the other hand, one may want to view electricity generation as a socio-economic product that is produced at cost effective rates, to be used as a catalyst for development, and the excess capacity is then sold commercially to neighbouring countries in a revenue earning endeavour.

The two schools of thought decide how electricity in particular, and energy in general, will be treated by each country. The choice of view may be biased by whether a particular form of energy is available in abundance or not.

For example, in some countries of the Middle East, petroleum fuels cost less per litre than water. In other dry and resource scarce states, electricity is purchased at premium prices because it is imported from distant lands, and has to be transmitted thousands of kilometres to households and factories.

The Energy Paradox therefore takes into account where the energy comes from, what it is used for, and how it impacts on both social and economic development. In addition, the Paradox considers the impact of other factors such as access to sea ports, types and forms of natural resources, and availability of alternate sources and forms of energy.

Many eminent, eloquent and professional speakers at both the National Indaba and the North South Corridor Conference treated energy as just another resource, without linking it to the various development plans of the country and the goals for social and economic development. The buzz words relating to energy were ‘cost reflective tariffs’, ‘attract investment into the sector’, ‘political will’, and ‘collaboration’. No mention was made in respect to ‘efficient production’, ‘efficient operation’, ‘removal of conflict of interest’, ‘fledgling industries’, ‘comparative advantages’, ‘accountability to the nation’, and ‘investing in the future’.

Zambia and all the other countries in the region run public owned electricity generation and distribution companies. The tax payers essentially own these public institutions and yet the managements of these companies do not see it fit to be accountable to the public.

ZESCO is currently seeking a 66 percent tariff increase and appears to be angling for one time lump some hike in tariffs, but may also settle for a 22 percent per annum tariff increase over three years.

The question that most citizens pose to ZESCO and its management is; why does ZESCO continually request for tariff increases when the company is so poorly managed? Much of the electricity distributed is not properly invoiced for. Much of the revenues for electricity distributed are not collected. Many institutions are supplied electricity on fixed rates which are well below the revenue receipts that ZESCO would have realized if the connections were metred. ZESCO has a top heavy management structure that eats into the revenues far more than the production staff of engineers and technicians. A good case in point is the investment by management in a feasibility study for Kafue Gorge Lower power station that cost the tax payer USD 6 million, or ZMK30 billion. This study to be carried out by the International Finance Company (IFC) was specifically to obtain a USD1.5 billion loan for the project that eventually fell through due to ‘investor pull out’. Hopefully, ZESCO has not parted with the cash because it now serves no purpose. If ZESCO has made this pay out, then the tax payer has lost this huge amount with no recourse to the World Bank or IFC, and almost zero value for the study which will not be acceptable to any other financier, due to the non competitive nature of the process that led to the IFC being given the job. Furthermore, beyond the Western financiers, there is a whole world out there in the East where cheaper financing and more cost efficient studies and assessments can be solicited. ZESCO does not seem to be too interested in those options.

Zambia needs to remove the wool from her eyes and recognize that Electricity is an essential input into our social and economic development programs. ‘Cost Effective’ needs to replace ‘Cost Reflective’. Effective suggests that we want to get things done and move ahead. Reflective suggests that we want to pay the bills even when there may be inefficiencies and down right incompetence in the system.

Electricity for all will go a long way to fighting deforestation due to charcoal burning. Electricity at the right price will go along way to reducing the country’s import bill for petroleum fuels, as many machines can use electricity as a fuel substitute, and eventually our railway systems can also run on electricity.

A cursory look at energy companies around the world will reveal that the majority of these institutions are state owned, state run, and state controlled, because of the strategic nature that these institutions have, and their impact on development. The existence of Energy regulators is clear testimony that Energy development and management cannot be left to the whims of private investment, but must be closely monitored and the relevant investments must be made to ensure that the growing economy is supported and facilitated. Interconnector systems between countries are accompanied by ‘Pricing Agreements’ that are negotiated to ensure that industries in both countries are not undermined by exorbitant pricing structures.

Let us make no mistake. The world today is engaged in a scramble for natural resources, food, and energy. It is the responsibility of every country to ensure that these three aspects of development are sensibly harnessed and made to work for the well being of its citizens. In this respect, let us all understand that there should be no paradox about energy. Energy is a catalyst for uplifting the lives of all the citizens in any country, and as such, tax payer’s money should be invested in this fundamental national resource.

Published 14th April, 2009

Comesa Customs Union

Last week, the Mulungushi International Conference Centre hosted a Regional Stakeholder Workshop on the COMESA Customs Union under the theme 'The Customs Union we Own'. COMESA plans to launch the Customs Union by mid 2009.

The first observation was the thin turn out of Zambian stakeholders on an initiative that will have great impact on the private sector. The few Zambian faces in the room were mainly employees of COMESA. The gurus of Zambian business from ZBF, ZACCI, ZNFU, ZAM, TCZ, ZCGA, MAZ, ZCSMBA, HCAZ, and so on were conspicuously absent. It may be that they were not invited, or that this workshop was not considered important enough to be attended beyond the official opening by the Zambian Minister for Trade, Commerce, and Industry.

Minister Mutati emphasised the importance of developing the COMESA Customs Union, and that the Union would create an African market of close to 400 million people. This would be the world's second largest Customs Union only beaten in size by the European Union.

The Minister highlighted that the development of the Customs Union should be seen as an opportunity by member states rather than a threat, and that the Union would provide for a level playing field for all COMESA countries.

The COMESA Secretary General focussed his address on the benefits of a Customs Union to individual states, the region, and the capacity of the region to trade with the rest of the world. Mr Ngwenya highlighted similar initiatives around the world and underlined the challenges that African countries faced in arriving at a consensus on a workable Customs Union that would encompass the biggest majority of sovereign states.

The stakeholder meeting kept in mind that the COMESA Customs Union will be a stepping stone to the larger goal of eventually developing the African Customs Union as prescribed by the African Union.

The meeting considered the transition from a Free Trade Area to a Customs Union and discussed the benefits, opportunities and challenges.

The meeting further looked at ways of consolidating the regional market through the promotion and enhancement of a regional trading and investment environment. To this end, Infrastructure, Agriculture, Manufacturing, and Trade facilitation were discussed.

A discussion on unlocking the potential for growth through regional liberalisation of Trade in Services was tabled. This issue considered the free movement of people within the Customs Union as a component of enhancing and facilitating Trade in Services.

The meeting discussed the roles of the multilateral trading systems such as the WTO, the EU-EPA's, and the USA AGOA initiative, on the performance of the Customs Union and possibly how these different instruments would assist in consolidating the rules and regulations governing the operation of the COMESA Customs Union.

Much reference was made to the forthcoming North South Corridor meeting scheduled for this month, as a possible vehicle for soliciting financing for the development of various infrastructure programs in the region. References were made to the building of new roads, the rehabilitation of old roads, the building of bridges, the rehabilitation of the railway networks, and the development of information technology networks by the use of Fibre Optic cabling within the region and interconnecting with under sea intercontinental cable systems.

Several challenges were acknowledged, and included import revenue sharing amongst member states, trade policy harmonisation, enforcement mechanisms, harmonisation of trade related laws, rules of origin issues, rigidity and protection of Common External Tariffs from domestic pressures, the convergence of sensitive lists by member states, and issues of standards and quality.

The COMESA Customs Union appears to be easier to talk about than to physically implement, given that member states are at different levels of development and industrialisation thereby presenting a myriad of different circumstances for protection of domestic industry, ability to effectively manage and enforce the rules and regulations, and establish an even playing field for uneven economies.

Three discreet issues come up for the stakeholders to consider amongst the many other important considerations discussed.

What opportunities are open to table a COMESA Currency for the region, much in the same way as the EU adopted the Euro? This issue would work towards developing that level playing field with a currency that was pegged at the same rate against other foreign currencies in all COMESA countries. As with the EU, some countries may opt to use their own currencies until they were ready or convinced that the COMESA currency would benefit their domestic economy.

Secondly, due to the differing development levels and needs of each of the COMESA member states, could we not start with a short list of goods and services that all member states agree to form the basic trading products within the Customs Union, and later expand this list through regular reviews and assessments which would bring about consensus? In a period of five to ten years we may find that more than 90 percent of the goods and services traded in the COMESA states will be within the Customs Union. This mechanism would provide for the COMESA secretariat to mentor and hand hold some states with programs and systems that will prepare the various countries to trade within the Customs Union regime.


A third consideration is to look for development resources wider than our current horizons which tend to limit our sight to the Bretton Woods institutions and Western countries. Can we not also consider engaging the Asian Tigers and the two emerging giants namely; China and India for infrastructure development financing?

The smaller East African Community and Southern African Customs Union have played their part and are being absorbed by the COMESA Customs Union and possibly the SADC Customs Union. Eventually, the desired goal is to absorb these two giants into the African Economic Community by 2025.

Published 7th April, 2009