Taking Stock

The year has come an end and most people use this time to take stock of the year in an effort to make some assessment of achievements and failures.

In business this is even better reflected by the sizes of bonuses given to workers. No bonuses means business has been bad through the year. A small bonus suggests that the business ran sustainably and some motivation is given to the workers to encourage better performance in the upcoming year. A large bonus generally signifies that the business has performed very well and both management and workers go away for the season’s holidays with fat wallets and happy faces.

It is important however, to look back at the last twelve months and pick out weaknesses, threats, strengths, and opportunities for the business. This analysis should be done not only by businesses, but even by government and the public at large, in workplaces.

The current world economic order demands that governments and their private sectors should continuously reflect on their strategies as the global and regional economies evolve and bring up new challenges and new opportunities.

The Information and Communications Technology (ICT) sector is a good example of a rapidly evolving sector. Investors in this sector must keep stock of what is going on in the sector within the domestic environment, and what new technologies are being rolled out in the more developed world which will soon affect business on the home front.

Zambia in particular faces some interesting challenges when we take stock of the changing economy during 2009. Copper prices have risen from a start of year low of around USD3,000 per tonne to a year end high of almost USD8,000 per tonne. The ongoing rainy season has so far produced fairly consistent rain fall in most parts of the grain growing areas thereby promising another bumper harvest of maize and other cereal crops. In 2009, Zambia and many other regional states signed up as members of the COMESA Customs Union. The closed Luanshya Mine and Albidon Nickel Mine were taken over by new investors during the year. A local airline shut down operations after operating for only a few years. Two prominent political parties entered into a political compact in readiness for the 2011 general elections. The privatization of ZAMTEL has been firmly decided and an option for new shareholding has been floated both in Zambia and abroad. The Zimba to Livingstone road stretch is still being worked on with motorists continuing to use the buses rather than their own cars to spare their vehicles unwarranted damage. The new economic zones have been talked about and pledges from investors have been registered during 2009. South Africa is putting final touches on the upcoming 2010 world cup preparations. The last twelve months have been punctuated with ZESCO power failures and fuel shortages, with Indeni being abandoned by its French equity partner.

This stock take of events and options offers Zambia some opportunities to develop some short and medium term strategies for business development in the country.

The rising copper prices challenge us to seek new opportunities on how we can best employ the copper taxes on diversifying the economy. In this vein, we must look at how we can use the economic zones on the Copperbelt to add value to copper through processing and the manufacture of finished goods for export. In addition, higher copper prices impact on other subsidiary industries that support the copper mining sector. These subsidiary industries have the potential to reengineer themselves to become more efficient and cost effective partners to copper mining companies. Value addition to copper is open both on the Copperbelt and in Lusaka where two new economic zones are being developed.

In the face of the COMESA Customs Union implementation within 2010, Zambia should be considering massive investments in food processing and packaging to supply the domestic economy and the region. Food availability has always been a challenge for developing countries and Zambia has the potential to become the food basket for the region.

The looming implementation of the COMESA Customs Union converts sovereign and protected markets that are currently the preserve of individual member states, into one giant zero tariff market of over 200 million people. The zero tariffs between members states means that countries with strong manufacturing industries will sell to their neighbours with no tariff or quota restrictions. For Zambia, this threat of being a market for our stronger neighbours should propel us into investing in manufacturing in a big way. Our banks and government should be in the forefront of financing, facilitating, and motivating manufacturing for the country to benefit from the Customs Union.

Although for the economy it is good to see new investors take over the mines in Luanshya and Mazabuka, for the general population and other economic activities, this means more power cuts, rationing, blackouts, and a disruption to life in general. No short term plans have been put into the public domain on how Zambia will manage energy in the forthcoming years. No new electricity generation units have been ear marked with supported investment, and no backup plans for fuel disruptions have been put in place to keep industry and national productivity on course.

It is hoped that the Zimba road will soon be repaired and normal traffic can start to run to the tourist capital. The 2010 world cup preparations in Southern Africa are in advanced stages but Zambia is still not seeing the opportunities. We have not made any special concessions for 2010 visitors to the continent in respect to Visa fees and easy access into Zambia. Our banks have been sluggish in deploying Point Of Sale (POS) units in as many business houses as possible so that any foreign visitor can easily spend his or her money in Zambia. Our hotels, motels and lodges have not offered their accommodation on special world cup rates to attract visitors to Zambia. We have not entered into special arrangements with other airlines to absorb as many world cup fans as possible via Zambia.

Although we all acknowledge that 2010 is a pre election year for Zambia, it is hoped that the focus will remain on building the economy and that we will use all the opportunities that are before us. If Zambia is distracted by electioneering, politicking, and pleasing the masses for votes, then the lessons of 2009 will not positively affect the economy and the country will throw energy and resources into pleasing voters in the short term while the country prepares to go into an economic recession in the medium term because we would have ignored the opportunities and allowed the threats to thrive.

Published 29 December 2009