Investment And Development

Recent reports from the Ministry of Commerce Trade and Industry highlight that Zambia’s Foreign Direct Investment will exceed USD3 billion by this year end.

It is quite evident that much for this expectation is targeted for the capital hungry mining industry with some measurable investments possibly going to the manufacturing and tourism sectors.

Many of our investment targets are based on memorandums of understanding or pledges made by prospective investors during our international marketing endeavours.

The only substantive investments that can be reliably reported on, are those that have actually taken place.

It is commendable that Zambia has now acknowledged the need to focus on private sector business development through the initiatives to develop One-Stop-Shop Customs units at the strategic borders of Kasumbalesa, Nakonde, and Kasangula.

Socio-Economic infrastructure which includes new bridges at border crossings and improved roads to facilitate investment and trade, are high on the government agenda.

The weakness in our economic development model is anchored on the sidelining of the SME sector, and the lack of acknowledgement of human resources as a tradable and marketable commodity.

Zambia is challenged to link the foreign direct investments to domestic businesses so that some form of equity in development is established to create a balance between foreign investment and local investment. This goes a long way to ensure sustainable business activity during the good times, and the bad times.

Zambia is also challenged to support and facilitate the SME sector to grow and engage with every part of the economy as is the case in most developed and developing economies.

Zambia is further challenged to re-consider our philosophy in respect to the value and role of human resources as an investment in national development.

Zambia is too pre-occupied with negative clichés such as ‘brain drain’ and ‘capital flight’ and is beginning to lose the ability to see the opportunities at our doorsteps which include the COMESA Customs Union, and alternate trading partners that are more in line with our own development agenda.

Discussions on the global economic status often categorize the world into several major camps.

The developed west is branded as sophisticated, technologically advanced, and possess the highest quality of human resources in the world.

The Asian continent is often labelled semi-sophisticated, over populated with low quality of human resources, and prone to natural disasters.

South America is painted as sub continent with vast natural resources, poor governance, wide spread corruption, and low quality human resources.

Africa is the continent that is still indirectly managed by past colonial rulers, possesses vast natural resources, has the poorest human resources on the planet, and is open for exploitation by all and sundry.

The Asian continent, and more specifically China, has turned these perceptions upside down as they do not subscribe to labels that undermine their social and economic development.

As a consequence, Asia and China in particular, have continued to attract investment and have developed exponentially to the level whereby Asia is the most productive continent on the planet.

China has even gone further to acknowledge that her vast population is just as important a resource as oil, gold, diamonds, or copper. The question is how does China exploit this resource in the global trading system?

While Zambia jealously takes stock of our mineral resources and the Western world tabulates the power of its technology and knowledge, China has acknowledged its over one billion citizens as an evolving resource that responds to the changing demands of the world.

This may be the one philosophy that accounts for China rising up to be the world’s top producer, the world’s biggest depositor of disposable foreign reserves, and the world’s most productive country.

As the rest of the world looks to bigger spending budgets at the personal level, China strategizes to be a producer of the cheapest labour on the planet. This strategy ensures that China stays ahead of the competition when it comes to production of goods and services because the cost of labour is kept as low as possible.

This is an interesting concept because the rest of the world looks to improving the lot for employees by ever increasing salary scales. This has led to the current scenario whereby most of the large conglomerates of the world have now moved their production bases to Asia so as to avoid high salaries and to increase profitability due to the low wages paid in developing economies.

The mechanism has actually played into the China development agenda very profitably. Low wages and a billion citizens has been one of the most productive elements of the national development program. With the addition of some FDI incentives, China has managed to rake in a huge amount of sustainable investments from the West and stands today as the fastest developing economy of the world.

The method in the madness of China’s cheap labour includes the government efforts to ensure that the cost of living goes down successively thereby having the same impact on employees as that of salaries going up. The major difference is that the cost of production remains low as the wage bill does not increase, and the cost of food, transport, and shelter goes down.

As long as China will consider her people as resources that give the country a comparative and competitive advantage, the social and economic future of the country is well set.

Zambia hosts a nation of capable people with potential to be human resources that can propel the country into prosperity. It is necessary to take stock and chart a strategy that encompasses the SME sector and the people as resources that have a useful role to play in delivering investment and development in the nation.

Published 24 August 2010