Mozambique Corridor

The recent opening of the Chipata-Mchinji railway link opens up some new and exciting opportunities for the private sector players in the three three affected countries namely; Zambia, Malawi, and Mozambique.

Although the Chipata-Mchinji railway link is only 24 kilometres long, it provides connectivity into the Malawi railway network and further connects Zambia to the northern Mozambique railway network.

The Malawi railway network runs for 797 kilometres from Mchinji in the north to Nsanje in the south. Midway between Salima and Blantyre the railway line forks to the east and heads into Mozambique via the town of Cuamba. The Malawi railway network touches Lilongwe, Salima and Senga along Lake Malawi, and Blantyre the commercial capital. There are no railway lines in the northern part of Malawi.

In Mozambique, the railway system is generally confined to the northern part of the country. The Cuamba line coming in from Malawi runs about 900 kilometres from the Malawi border at Entre Lagos to the port of Nacala on the Indian Ocean. On route is the major town of Nampula and the seaside town of Lumbo.

The railway line from Nsanje in Malawi enters Mo

zambique via the junction town of Vila de Sena where the railway system then goes up north and down south. In the northern direction the railway extends for about 300 kilometres to Vila Moatize very close the Tete the provincial capital of Tete province. Tete is only about 150 kilometres from the Cahora Bassa dam. Towards the south, the line runs for about 400 kilometres from Vila de Sena to the port city of Beira via Inhaminga. Interestingly though, Vila de Sena is also located on the banks of the Zambezi river that pours out of the Cahora Bassa dam and heads south east to the Indian Ocean. This offers an option for river barges and other marine vessels to transport goods and people to and from the ocean along the Zambezi river.

The Chipata-Mchinji railway link therefore offers railway and marine transportation links to the port of Nacala, to the central and northern parts of Mozambique, to the Zambezi Delta midway between Beira and Quelimane, and to the port of Beira.

The options for cross border trade and more substantial exports and imports are now much wider for Zambia, Malawi, and Mozambique.

Zambia’s access to the railway and waterway networks of Malawi and Mozambique should trigger some new ideas for business and trade as all three countries sign up to the COMESA Customs Union and are challenged to be more productive, more efficient, and open up more opportunities.

Currently the port of Nacala exports sugar, tobacco, peas and tea to the rest of the world. This port handles imports fertilizer, oil based fuels, and containerised shipments. A passenger service currently runs thrice per week ferry people from Blantyre in Malawi to and from the port of Nacala.

The rail line from Moatize to Beira has focussed on transporting coal fro the mines in the Tete province for export across the Indian Ocean.

The private sector in Zambia, Malawi, and Mozambique now have the option to use the Nacala Corridor and Beira route to spread regional trade in the Growth Triangle formed by the three countries.

Key opportunities lie in the movement of bulk products such as cement, mealie meal, and other processed dry foods.

The motivation for Zambia to extend the railway line from Chipata to Petauke and then through to join the Tazara railway network at Serenje becomes more interesting as an effort to remove the road transportation from the rest of Zambia to Chipata. This 300 kilometre railway line will integrate the Mozambique, Malawi, Tanzania, and Zambia railway networks.

The net result will be that big trucks will no longer be the best way of transporting goods across the country because the railway system will do a better job and much cheaper.

The Zambian government has considered a project to build a dry port in Chipata as mechanism for storage of goods that are either to be exported or for goods to be imported. It is imperative that this infrastructure is built as soon as possible to support, promote, and facilitate trade via this new railway linkage.

It is quite clear that competition leads to lower prices and high levels of efficiencies. To this end, it is important for Zambia to have as many routes to the oceans as possible to generate the necessary competition amongst bulk cargo movers such that the exporter or importer gets the best deal. Goods will move across the region efficiently and at affordable costs as the transport infrastructure is developed.

This new door to the ocean adds to the competition amongst our traditional routes wherein Dar-es-Salaam competes with Durban and Walvis Bay. The addition of the ports of Nacala and Beria intensifies the completion in respect to costs, efficiencies, safety, and accessibility.

This philosophy is embraced in the North South Corridor that aims to develop a communication and trade infrastructure network along the Great Rift Valley and beyond. The goal of this program is to foster regional integration which brings about social and economic connectivity amongst neighbouring countries.

The private sector in Zambia is now challenged to take advantage of the new route to the south east coast of Africa and prevent the Chipata-Mchinji railway link from becoming the proverbial White Elephant project that has been the fate of many regional collaboration initiatives.

Published 31 August 2010

Quick Money

There are two ways of doing business: The well prepared and strategic way that encompasses research, business plans, relevant paperwork, and then implementation; or the crisis way of quick explanations, problem information, and urgency in resolving the bottlenecks.

Experiences show that very few business people and companies go the strategic way and carry out their businesses in an incremental and predictable manner. The majority of Zambians especially in the micro, small, and medium business sector tend to react to business challenges rather than to plan and respond to the ever changing business pressures.

If one speaks on behalf of the majority reactionary business practices, it becomes necessary to carefully understand the various processes of acquiring financing, and the impact and consequences of each option of doing business.

Reactionary decision making in a business motivates the business person to rush off to the bank and seek support. The banks have very clear guidelines when doing business, and even clearer guidelines when lending out money to customers. Banks initially want to know what service the customer is seeking from the bank. The banks then check the balances of the customer’s account and look into the history of transactions that have taken place in the last three months or so. The next step is for the banks to request a business plan from the customer which highlight the company’s strategy to liquidate the intended debt. Finally, the banks request some security which may cover savings, life insurance policies, monthly salary and other receivables, immoveable property, and other assets.

These demands are not easy to put together and therefore appear to be monumental tasks to any business person that is in a hurry to access quick money. Today, banks typically offer loans, overdrafts, and leases at interest rates of about 30 percent per annum. This is the cheapest form of money available and the terms can be renegotiated if the customer is performing very well in the eyes of the bank. Banks in general are concerned about the viability and sustainability of the customer in an effort to reduce the possibility of default and to support the customer to build the business from one level to the next in a manageable manner.

For many Zambian companies, the banks appear to be too demanding and too slow in making money available to an institution or person that wants to transact quickly, so they look elsewhere for a quicker deal.

The next port of call for the average business person is the Micro Financing Institution (MFI). MFI’s tend to be much more flexible than banks because they are not as demanding in paperwork, but on the other hand, they provide quicker money at typical interest rates of 120 percent per annum. This is 4 times more than the worst bank interests rates on the market.

MFI’s usually want to know what the customer wants to use the money for and requests a short term and abbreviated business plan. MFI’s also require some security and will willingly take salary pay cheque remittances, moveable property such as cars and machinery, immoveable assets like houses and other forms of buildings or land, and any other income that can be reasonably proven.

MFI’s are generally more focused on the quality of the business plan to show capacity to pay back and often use some form of security to mitigate against possible default. MFI’s will typically respond to a customer s request within a few days and quick money is put on the table once the formalities have been addressed. The options for renegotiating the terms are limited and the MFI’s oversight in monitoring customer performance is imbedded in the lending agreement.

Many Zambian companies use this route to access quick finance and begin to develop an understanding of the rudiments of borrowing money and the necessary process that have to be undertaken. Many companies also recognize that the cost of money from MFI’s is too high for investment into plant and machinery or medium term programs because the interest rates will quickly outgrow the principal amount borrowed. MFI financing is therefore predominantly used for short term trading that covers not more than one month to keep the interest payments within the 30 percent bracket.

There are a good proportion of Zambians that consider the MFI’s too slow to release money and therefore look for an even faster mechanism to obtain quick money. These business people come out of the sunlight and go into the shadows to find a Money Lender typically known as a Loan Shark.The money lender will make quick money available at their low interest rates of 180 percent per annum, but predominantly offer loans at 365 percent per annum.

Money lenders generally offer quick money within 24 hours but require only a brief explanation about the use of the money and demand tangible security in the form of moveable and immoveable assets valued at typically three times the amount to be given in the quick loan request. The rationale is that a money lender becomes more comfortable that the customer will do everything in his or her power to pay back the loan before risking the loss of the pledged property that is three times more valuable than the loan taken. Clearly the motivation to pay back is based on the bigger loss that the customer would make if they defaulted.

Money lenders are not keen to renegotiate the terms of the loan agreement unless it makes substantially more profit for them. In addition, money lenders tend to secure the loan given with a sales agreement between the customer and the money lender for the property surrendered as security, but include a buy back clause that enables the customer to clear the debt owed and redeem ‘their’ property. This mechanism basically gets the customer to sell the property to the money lender, and the money lender is obliged to sell back the property (by way of cancelling and tearing up the sale agreement) to the customer when the customer pays back the principal with the accumulated interest.

The money lender therefore does not have to go through any litigation if the customer defaults on the loan agreement, but simply carry out the change of ownership process and liquidate the security to recover the money owed.

Money lenders provide the quickest cash in the financial markets, but the risks taken by the customer are higher than any other form of borrowing. Many people have lost homes, vehicles, farms, premises, and machinery because they did not meet the terms and conditions of borrowing quick money from the money lenders.

The lessons to be learned are that any quick money comes with heavy risks. The risk of heavy interest rates and the risk of losing the security pledged in order to obtain quick money is real, and it can be the recipe for a disastrous life thereafter.

Published 16 March 2010

Teaming Up

Zambia has registered annual GDP growth of 5 percent or more over the last 5 years. Inflation has come down to single digit figures from around 15 percent to the current 9.8 percent.

Copper prices have gone from USD2,000 per tonne to recent figures of USD7,400 per tonne.

It is quite clear that there is some economic boom out there for some sectors of the economy. Why does the rest of the economy not experience this positive change and growth?

There may be several reasons for this, but it is quite obvious that a management system for growth is not firmly in place. Economies grow through strategic management such that the gains received from boom areas are used to stimulate other sectors in an effort to open up opportunities across the economy.

For example high copper prices generally lead to more investment in the copper industry, which then leads to increased construction and expansion of the mining activities. More mining suppliers are engaged in business, more trucking is done, and growth is registered wider. This form of growth however, is consequential growth based on the natural pressures and demands that increased mining activities generate in the economy.

A more managed and coordinated growth can be stimulated by strategic planning and investment by the Government and the private sector. This teaming up effort requires some basic shift in the economy, such as copper prices going up to trigger some strategic investments, and quickly impact on the broad based growth of the economy.

The opportunities for local value addition open up and the options for local manufacture and supply of sub components can become a reality. The number of other support services to the mining sector covering transport, accommodation, services, storage, security, sub contracting, office logistics, human resource training, banking, insurance, and many other areas of business can be targeted for local companies to engage in. These options can be promoted rather than letting them fall into place by accident.

The 2010 World Cup is another example of an anticipated boom that begs for strategic planning and teaming up amongst Government, the private sector and other stakeholders to bring about economic growth and open the country to a massive tourism explosion. In this case and at this point in time, the various organizations and Government organs impacting on tourism need to team up, and team up fast before the kick off in the next few months!

Zambia opens up for trade to the region by the end of the second quarter when the COMESA Customs Union is finally implemented. An urgent response must be put in place to ensure that the country benefits from the union. The response required should not be a written letter to member states, but the rapid teaming up of all stakeholders in Zambia to analyze, assess, and form a plan of action on how Zambia and Zambians can gain from this opportunity of a regional market of over 200 million people. The teaming up effort should not end at simply drawing up plans, but should go all the way to committing resources against an implementation strategy so that Zambia can engage in meaningful trade with other member states. The net result should be that Zambian industry grows, Zambian labour is productively employed, and the domestic market share grows beyond the eight borders into neighbouring countries.

If ever there was a time when the teaming up effort is demanded by the country, it is now. At the private sector level it should now be a matter of urgency that all business associations begin to share notes and collaborate for the benefit of the broader private sector. It is absolutely necessary for the private sector to engage Government to highlight the opportunities and challenges for Zambia as a member of the Customs Union. It is paramount that Government Ministries and departments coordinate with each other on economic development issues so that they compliment each other. It is in the nation’s interest for all opportunities to be researched and exploited in the quest for economic growth, job creation, and the economic security of the nation.

2010 presents challenges because it is a pre-election year. There is the risk with each successive day that public attention will begin to focus more on the 2011 tripartite national elections, at the cost of ignoring Zambia’s economic and social development challenges in this crucial year.

The country will have to strike a balance between national focus on considering and strategizing on the economic challenges on the one hand, and the rhetoric and campaigning in preparation for the elections next year on the other hand.

The much touted Public Private Partnerships is now being put to the test. The difference though is that it goes beyond public and private, but extends to every NGO, every religious organization, and every political party.

The need for teaming up this year cuts across all levels of the economy. It also cuts across all political party interests. In fact the need to team up affects all the people of Zambia irrespective of their activities and station in life.

Published 2 March 2010

Third Time Lucky

Today President Banda leaves for China on a state visit in response to an invitation from that country’s head of state.

This event will mark the third encounter in the last seven years between Zambia’s head of state and the leadership of China.

The first recent encounter was the state visit of Late President Mwanawasa to China in 2003 which was later reciprocated by a state visit to Zambia by President Hu Jintao and his entourage during his African tour of 2007.

The net impact of the two encounters was a pledge by President Hu Jintao for China to slash Zambia’s debt by 8 million dollars, invest around 800 million dollars in the Chambishi Economic Zone, build two rural schools, construct a hospital for malaria treatment, and the building of a new football stadium in Ndola.

Slowly the pledges are crystallizing into implemented projects but the impact on national development is too small for such a significant partnership with the world’s largest exporter of goods and services.

Zambia may be third time lucky if today’s visit can be strategically arranged to put Zambia’s key development hurdles on the agenda in Beijing.

China is the world’s biggest developer of hydro electric power stations. Zambia has lost its competitive advantage of being a country that is self sufficient in electricity at relatively low tariffs. In order to address this situation Zambia can negotiate with China to develop the vast hydro electricity potential across the country. This sector requires investments in the order of around 6 billion dollars. The higher production of electricity in Zambia will enable the country not only to steer away from the use of petrol and diesel for industry and transport, with surplus electricity being marketed to the neighbouring countries. This would be a useful engagement with China in an effort to invest in the future of Zambia’s economy and address the energy requirements of the growing Chinese investments in the mining and steel sectors.

China has the world’s widest railway network and boasts the cutting edge Mag Lev shuttle train which floats on a magnetic track at speeds of up to 480kms per hour. Zambia can dialogue with China on a program to overhaul and resuscitate the defunct operations of our railway network such that a meaningful investment is made into the rail transport sector. If the Zambian railway system can be made to operate efficiently, many of the huge trucks carrying cargo on our roads today can be eliminated and the lifespan of our roads can be extended probably by another 10 years. In addition, both India and China use rail transport to move people across the country in a very extensive way thereby making it the number one choice for cost effective travel.

China has a very successful track record in the agriculture sector and therefore can be a very useful partner in bringing Nitrogen Chemicals of Zambia back to life. Food security is a key aspect of state sovereignty. With China’s support Zambia can make food security and food surplus a living reality as fertilisers and other inputs are efficiently manufactured at NCZ.

The plight of Mulungushi Textiles in Kabwe should be addressed during the state visit so that the company can secure re-investment and Kabwe can begin to convert Zambia’s cotton into finished products for both domestic consumption and export.

Imports from the south are brought to a slow pace due to the cumbersome operation of the pontoon at Kazangula which connects Zambia to Botswana. The solution is to build an all weather heavy duty bridge that will support the high volume of traffic between the two countries. There again, is an opportunity for Zambia and China to do some good infrastructure development work that will support the growing economy.

Tourism is high on the agenda in Zambia’s development program. In order for tourism to really deliver it is necessary to build proper airports that will allow tourists to fly into Mansa, Siavonga, and along Lake Tanganyika in the Northern Province. Airports that can handle commercial aircraft flying in from South Africa and other neighbouring countries will escalate the tourism traffic into the country. Airports not only provide efficient access into the country, but also provide quick access to the tourism sites across the country.

The state visit to China can either be one that the President and his entourage have great time eating, drinking and seeing good things, or it can be a strategic series of discussions and negotiations that will ultimately bring useful development investments into Zambia.

Hopefully, the President and his team will focus on the latter. Hopefully the state visit to China will be third time lucky wherein the best interests of Zambia are not only focussed upon, but tangible results will be seen by the people of Zambia in the near future.

Published 23 February 2010

Fuel Hike

A fifteen percent increase in the price of fuel can be compared to a currency devaluation, when the impact on domestic productivity is assessed.

Having said that, currency devaluation may make imports costs more, but it conversely also makes exports cheaper to the foreign markets thereby stimulating higher export earnings. Fuel price hikes only benefit the oil marketing companies while the rest of the economy has to brace itself to receive the kick in the gut.

Any increase in fuel prices hits different businesses in different ways. The least affected businesses are those that import a product and sell it on the local market. The net effect of increased fuel prices affects the cost of importation via air or road as in the case of landlocked Zambia. This extra cost is usually added to the market price of the commodity and the end user, also known as the consumer, pays the higher price. Technically, a fifteen percent fuel price hike results in a fifteen percent price increase of imported products.

The impact of a fuel price hike on the four strategic sectors of our treasured Fifth National Development Plan (FNDP) namely; Agriculture, Manufacturing, Mining, and Tourism, is much more complex and can have a multiplier effect on the increased cost of doing business.

Agriculture requires fuel for transporting the seeds, fertilizers and other inputs to the farms. Higher fuel prices make these inputs more expensive. Fields have to be ploughed and harvested using tractors and other machinery that use fuels. This is another area where the cost of production goes up. After harvest, the produce requires to be transported to the urban areas or milling companies for processing. The higher cost of fuel makes this exercise more expensive. Finally, the produce such as maize and other grain crops will need to be distributed into the various markets around the country. The cost of fuel has a final bearing on the consumer price of the commodity to the average person.

Manufacturing is undermined in much the same way as Agriculture because the majority of our industry uses raw material imported form other countries and then follows a similar process as that of processed agricultural products. The multiplier effect and impact of increased fuel prices can easily be analyzed throughout the various stages of a manufacturing business in Zambia.

Mining today requires that ore is extracted from the ground at one site and transported by trucks to the processing centre which is generally a relatively long distance from the extraction site. Thereafter, the ore is processed and the metals or other selected products are batched and packed for export. Finally, the mined product is exported by road or rail out of the country to the nearest sea port for physical removal from the continent and destined to outside processing markets. Increased fuel prices add to the cost of doing business at each stage and the end product either has to fetch a higher market price to cover the increased costs of production, or as in the case of globally traded commodities such as copper, the exporter is forced to absorb the loss and therefore tighten the business operations to the extent that the business may cut corners in respect to salary increments, safety measures, health services, and allowances. These cuts are generally the ingredients for industrial disputes which often lead to production shutdowns and further losses in the mining industry. In the case of Zambia, there is potential for the country to fuel inflation and plunge the GDP growth goals from 7 percent to levels below 5 percent. This may not be a risk that a growing and promising economy may want to take.

2010 offers another opportunity for Zambia to propel the tourism sector to become possibly the highest earning sector of the country, even surpassing mining. The recent earlier opportunity was the collapse of the Zimbabwean economy which dominated the tourism market in this sub region. Increased fuel prices in Zambia now place Zimbabwe in a more competitive position for tourism as the Zimbabwean fuel becomes much cheaper than that of Zambia. Tourism investments require food and other products to be delivered to the lodges and hotels across the country. These deliveries are done by road where fuel is the driving force. Tourists have to move from one tourist site to another by road, rail, and air. These are all fuel based transport systems. Tourists have to come in and out of the country using transport systems that are fuel based. The various tourism products and events are all fuel based as game drives, boating, and even rafting support, all use fuel to get things done. Zambian tourism starts to get more expensive to foreign, regional, and local visitors to the extent that other options are chosen and Zambia loses. Zimbabwe starts to get back their lost market and the impact of 2010 World Cup on Zambia will be only the pictures on television and the media reports of how other countries in the region raked in huge profits as a result of strategic planning.

So, fuel price hikes actually undermine our own development programs. Fuel price hikes actually undermine any development activities that a country may wish to undertake. In fact, fuel price hikes tend to motivate the private sector to move away from manufacturing, processing, and developing exquisite services in the country.

Fuel price hikes generally persuades any business minded person to put his or her investments into trading activities where the impact has a relatively lower effect, and leave the adventurous business of manufacturing and processing for more stable and predictable days out there somewhere in the future. This prospect is very real for Zambia, and the impending COMESA Customs Union implementation this year either motivates Zambian companies to rise to the challenges and opportunities offered, or through non supportive measures such as fuel price hikes, highlights the imminent threats posed by the more strategic and pro active regional economies in such a way that the Zambian private sector actually retreats to the safe trading grounds that buy and sell anything and everything made in the Customs Union irrespective of which country produces the commodities. What is Zambia’s strategy? Where do we want to go? What do we want to achieve? How do we intend to do it? Who are the players? Will fuel price hikes support our economic and social development goals?

Published 19 January 2010

Holiday Year

Its back to work and back to school for the nation during the month of January. A stroll through the busiest supermarkets highlights that cash is only being spent on school books and other requisites, basic food stuff such as mealie meal, cabbage and kapenta, rentals, ZESCO pre-paid power vouchers, and as always, talk time.

The butchery, alcohol, and confectionery sections of our supermarkets are deserted as the impact of reduced disposable income is experienced in reduced sales. Although it looks like the holiday season is over for Zambians, in fact the holiday season is just beginning for visitors to Africa who want to attend World Cup 2010.

Maputo is vibrating to the building excitement of the World Cup, Harare is running at full speed to capture the overspill from South Africa, Gaberone is upgrading roads to the South African borders, and other countries in the sub continent are face-lifting airports or introducing new tourism packages to mop up the spare cash that will flow into the region within the next few months.

The momentum in Zambia seems to be mainly on the free tickets to the World Cup being offered in the BP ‘Buy Fuel’ program and a few other corporate initiatives that have focussed on the 2010 soccer bonanza.

There have been many discussions and suggestions made on how Zambia can benefit from the 2010 Holiday Year. There is now need for the country to come out of the holiday spirit and engage into the business spirit by looking at the opportunities and acting rather than talking so that at least some deliberately developed benefits come to Zambia rather than the default crumbs that we have so often allowed ourselves to scramble for.

The immigration department could immediately embark on a customer care and support training program to become much more tourist friendly and accommodating in manner and action. This single act can attract twice as much tourists into Zambia than we currently do. Furthermore, visa on demand services at a much lower cost than is currently charged will multiply the number of visitors to Zambia during the 2010 holiday year.

The Kuomboka ceremony and other traditional ceremonies will be take place at the prescribed times during the year. Zambia can link these cultural events to the 2010 World Cup and expand the tourism potential to the extent that soccer focussed visitors will be exposed to our heritage and traditions during the year.

Zambia boasts of having over 15 national and game parks. The opportunity to develop holiday packages such as the 2008 ‘Destination Luapula’ is right at our doorsteps. Many foreign visitors will not know exactly what Africa has to offer them during their visit to the continent. It is up to us to create and fashion some sustainable packages and products that will thrill the visitors and also be sustainable for future tourism after 2010.

White water rafting was publicly acknowledged when the legendary ‘Kunta Kinte’ came to launch Sobek many years ago. Today, white water rafting on the Zambezi is no longer talked about and seems to have faded into oblivion. Zambia has the new opportunity to resurrect this tourism product which can be the most exhilarating experience of rafting to be found worldwide.

South Africa has traditionally built camping sites throughout the country for both domestic and foreign visitors to experience a cost-effective holiday within her borders. This can be true for Zambia too if we can develop some camping sites in all the provinces where some tourism wonders and opportunities can be identified. Government can allow a window for duty free imports of camping tents and equipment to attract investment for the 2010 holiday period.

The private sector is always available to invest where a good return can be made, and the banking sector is currently desperately looking for good projects and businesses to finance as the several new banks jostle for a market share in an economy that is not growing fast enough.

The time has come for possible the first public private partnership to kick off. Let us see private business and government get together in earnest during the months of January and February so that some quick decisions can be made on how to tap the resources of World Cup 2010.

Let us all keep in mind that 2010 is a holiday year for the rest of the world in so far as the World Cup is concerned. For South Africa and the Southern African sub continent 2010 is our year to reap the spoils of world class soccer.

Published 12 January 2010

Big Or Efficient?

The last few years have provided some insights into how large corporations are run worldwide. The strongest sense of ownership has been in the minds of the top management executives who are generally detached from the major workforce and stay out of reach of the shareholders.

The recent financial crisis shows us how big corporations have left themselves exposed to the extent that only government bailouts could save them. It is quite evident that internal monitoring and control systems did not work as efficiently as expected because the tell tale signs of a crisis did not trigger any responses.

In some cases, large corporations were knowingly exposed to financial risks by the top executives, in an effort for the executives to continue to enjoy affluent life styles. These signals have been echoed when management of bailed out corporations in the USA and the UK worked towards paying themselves bonuses out of tax payer’s money.

Essentially, the big corporations often become independent, non accountable entities that dance to the tune of the controlling management of the day. These companies become less efficient, they tend to focus on cutting costs in areas where production should be most encouraged, and there is an unclear sense of ownership by neither the general workforce nor the management. This development is similar to that of building a government with the pressures of political expediency and cronyism.

Even the best organized big corporations are not easy to manage during times of crisis. The successful investments in Dubai have shown the world how oil money in a desert country can build a vibrant trading economy. As the global crisis unfolded across the world, even Dubai could not stand alone. The end of 2009 saw Dubai reeling as large corporations began to crumble quite rapidly to the extent that a huge cash injection of USD 10 billion was solicited from Abu Dhabi to keep the Dubai trading haven afloat. Only time and good management will tell if Dubai will survive the credit crunch.

Small and Medium Enterprises (SME’s) across the world have undergone the same pressures to survive. Often there is not enough available cash to keep the businesses afloat. The businesses are generally too small and therefore have a low production output that renders them un-sustainable. Many SME’s do not follow any best practice standards and therefore capture very small markets. SME’s tend to find themselves quite remote from the suppliers of their raw materials because they are typically located in small industrial parks whilst suppliers usually operate in developed industrial estates. These and other reasons may be the basis on which the majority of SME’s collapse within three years of starting up business.

Medium Sized Companies (MSC’s) offer a model that can be both efficient and sustainably productive to levels above the minimum thresholds. MSC’s typically employ between 100 and 200 workers. In the most prolific economies of the world, MSC’s are usually owner run and managed with the husband taking care of operations and production, while the wife looks after finances and marketing.

The industrial city of Shenzhen in China takes full advantage of the value of MSC’s. Industrial parks housing about twenty MSC’s are normal. Some parks focus on production of inputs for other parks. Other parks produce the finished goods for the consumer. The close proximity of supplier and processor in addition to easy access to the mega port of Shenzhen provides the basis for a cost effective and efficient strategy for mass production for export.

The city of Shenzhen has even gone a step further. Many MSC’s have built worker’s dormitories within the vicinity of the factories to allow for cheap housing and to reduce the cost of worker’s transport to the factories. The vibrant high tech economy of Shenzhen has created an attraction for young people from all over China to move there in search of jobs, opportunities to develop, and to build their futures.

The reality is that even in the face of the global economic crisis Shenzhen is still rapidly growing and expanding every day. Businesses have had to tighten up somewhat, but trade, production, and exports are constantly and sustainably increasing.

Zambia’s new economic zones can offer options for large multinationals to invest. Alongside these large investors MSC’s and SME’s must be supported, facilitated, and encouraged.

The focus on big companies often costs the country much more than to develop MSC’s that are more stable, more efficient, better run, better managed, more productive, and above all, are locally owned.

The MSC for many developed economies is the backbone of the country. The Asian Tigers, the successful economies of Korea, Japan, China, and India, are all strongly founded on a vibrant and aggressive MSC base.

Developing countries must re-address the question of attracting big businesses or efficient companies to develop a sustainable growing economy.

Published 22 December 2009

Mines Suppliers

Local businesses on the Copperbelt that commonly refer to themselves as Mines Suppliers have emerged from tough times during the period of low copper prices.

The copper mining industry slowed down in 2008 and many suppliers found themselves discarded as suppliers to the mines as mining activity rapidly contracted in many mining operations, and in some areas such as Luanshya and Mazabuka, the mining operations came to a complete halt.

Dialogue with former mines suppliers at the time, revealed that many local companies had to shut down their business activities and look for other ways of earning a living and keeping family and children in rented houses and at schools. The Copperbelt was glum and the economic mood was one of despair.

A post-mortem of the mines suppliers’ predicament brought up some interesting information that characterised the sector.

It is quite evident that many mines suppliers thrived on the prolific spending by the mining companies in respect to transport, raw material, spare parts, machinery, out sourced maintenance, and several other services. This phenomenon generated a lavish life style amongst the mines suppliers such that many companies were relatively reckless in their spending patterns. This was evidenced by the number of luxury vehicles on the Copperbelt, the influx of speed boats, motor cycles, and quad bikes for recreational purposes, and the large number of people travelling for the Copperbelt to South Africa that necessitated as many flights out of Ndola as they were from Lusaka en route to Johannesburg.

Nightclubs, bars, guesthouses, and restaurants enjoyed the patronage of Copperbelt residents who exhibited lavish expenditure patterns on drinks and food as a result of the cash flow emanating from the mines suppliers.

The mines suppliers seldom put money aside in savings to cater for rainy days because they believed that the mining industry would always be there to offer business each day.

Very few mines suppliers considered diversification to spread their business risks. The thinking was that any other business was either too complicated or the profits margins were too small. Again, mines suppliers saw the mining sector as an all weather industry that would always be there for them.

Most mine suppliers invested in nonperforming assets that also depreciated in value very rapidly. State of the art music systems, luxury motor vehicles, and cutting edge ICT products were the main targets for excess cash in the hands of mines suppliers. The conversion rates for these assets into cash would seldom be better than 50% value.

Within six months into the mining sector slump Zambia experienced mines suppliers going bust and many supplies having to survive on borrowed resources. Vehicles were being sold at give away prices, children were being relocated from upmarket schools into Government schools, and recreation was being relegated to Shebeens.

In 2009, the mining industry has taken a turn for the better and copper prices have more than doubled on the world metal markets.

The mining companies have become somewhat cautious in their spending patterns and have in some cases, engaged consultants to perform price verifications for commodities and supplies quoted by mining suppliers. This has had the impact of reducing the profits made by mines suppliers even though the mining companies are expanding at unprecedented proportions.

Furthermore, many mining companies are demanding extended payment plans for goods supplied by the mines suppliers thereby compelling the suppliers to find outside capital to finance the imports. The income becomes more irregular and is disbursed in tranches, and the cost of money becomes dependent on the options offered by the banking sector.

Currently, mines suppliers are back in business and are challenged to rethink their futures. One hopes that the ‘ego patting’ exercise will not kick in whereby mines suppliers want to prove to the Copperbelt that they are in top form by recklessly spending on trivial luxuries.

The experiences of 2008 should be motivation to re-strategize such that the profits that are realised from this new copper boom are usefully invested in productive activities that will support the mines suppliers in times of difficulties.

It will be good to take a leaf from the employees on the Copperbelt that today will focus on how to make their companies more profitable and sustainable, than to dwell on yearly salary increases that are not performance related.

It is said that ‘It is forgivable to make a mistake once, but to repeat the same mistake signifies incompetence’. The mines suppliers are now being put to the test and the game is one of ‘do or die’.

Published 6 October 2009

Linkages

This is an interesting time of the year as the budget for 2010 is being discussed within Government circles, and Sixth National Development Plan (SNDP) is being formulated to cover the period 2011 To 2015.

The private sector and civil society are also articulating their aspirations and hopes for 2010 as snippets of the budget are released to the public.

The question a reasonable manager will ask in the midst of all these dialogues is, what are the linkages between the budget goals and the investment being made in the economy to realise these goals? What are the linkages between the Medium Term Expenditure Framework (MTEF) covering 2008 to 2010, and the national budgets? What are the linkages between the MTEF and the Fifth National Development Plan (FNDP)? What are the linkages between the FNDP and our Vision 2030 goals?

Results based planning demands that these linkages be in place and that they are strongly established such that they become benchmarks for Government monitoring and evaluation, and where required, generate interventions that keep the plans, projects, and programs on course.

With these ideas in mind we can all step back and look again at the current dialogue that is going on in respect to Zambia’s economic development agenda.

If we look at the recently released Green Paper articulating the MTEF 2010-2012 and the budget for 2010, we note that last years budget was developed on the theme ‘Enhancing Growth through Competitiveness and Diversification.’ It will be interesting to see how last years theme will link with this year’s theme that is yet to be officially announced. Hopefully, there will be some natural linkage that will describe in one phrase what the economic game plan for 2010 will be.

The 2010 budget looks to continuing to enhance rural development and key sub sectors including tourism, agriculture and manufacturing. The manufacturers look to Government to support their development and growth through reduction, and in some cases, removal of taxes on inputs and raw materials for manufacturing. They also call for a rationalisation of some imported products that land in Zambia cheaper than the importation of the sum of the components that the products are made of. This situation promotes import trade and discourages local assembly or manufacturing.

Calls were made for zero rating all inputs for products that are Value Added Tax (VAT) exempt, because the current scenario is that the import VAT component only adds to the cost of the final product to the end user. Manufacturers clearly call for provisions in the budget that will place the manufacturing sector as a significant contributor to the economy as per the aspirations of the FNDP and the Vision 2030.

Similar expressions have been articulated by investors in the Tourism and Agriculture sectors.

The budget however does not have clear linkages to support this view. Investments will be made in developing infrastructure covering roads, hospitals, and schools in an effort to stimulate growth and development, but the main issues presented to the Government by the private sector are yet to be addressed. The expectations are that the 2010 budget will respond to this challenge since Government has stated it will target new growth opportunities and diversify exports in the agriculture, manufacturing and tourism sectors.

The 2010 budget does however, look to opening up new farming blocks which directly links to the aspirations of the FNDP and Vision 2030. The concern with this endeavour that currently focuses on the Nansanga Farming block, is that the articulated goal is to attract foreign investment into Zambia without placing much emphasis on supporting and facilitating Zambian farmers into the program. It will be folly to expect Zambia’s aspirations to be met by only foreign investment. Will the 2010 budget address this concern?

Government seeks to promote agriculture through programs that will support irrigation, livestock development, fisheries development, inputs for small scale farmers, and provision of the relevant extension services. One cannot help but conclude that this focus is considered small scale farmer targeted, and commercial farming still attracts more Government attention.

It may be useful to recognise that in many parts of the world including India and china, the small scale farmer is the heart and soul of agriculture production and domestic food security. Again, the linkages between all forms of farming and the goals of our FNDP and Vision 2030 should be clearly noted and strategic investments in developing these linkages must be made. The calls by the farming sector for Government to zero rate all agriculture equipment, machinery and inputs is therefore a serious call to be considered in the 2010 budget.

It is encouraging to note that government expects to formally operationalise the Warehouse Receipting System for selected agriculture produce. This is a very positive benchmark towards stimulating food production in the country to achieve self sufficiency in a sustainable manner.

Mining has been on the negotiation table much of 2009 and the proposed investment in the Mines Safety Department is not only very welcome, but stands out as an indictment on how irresponsible we have conducted ourselves as a nation in protecting our people working in the mining industry. This new endeavour links in with the mandate of the Ministry of Mines and the goals of our vision for safe mines development in the foreseeable future.

The Government plans to recapitalize the Zambia Wildlife Authority (ZAWA) and develop the roads in the National Parks and Game Management Areas. This is long overdue as Government investment in developing the tourism sector which is supposed to be one of the main economic pillars of the FNDP and the national economic diversification program.

The MTEF articulates that Government plans to expand electricity generation in order to support private sector growth. Although there is emphasis to attract private sector investment in the electricity generation sector, case studies across the world clearly show that this sector demands public investment much like in the case of road construction. There is a social economic dimension to both road building and electricity provision. The desired goals of the fiscal budget, the FNDP and even Vision 2030, are largely based on the premise that there will be adequate electricity to support domestic consumption, commercial activities, and industrial production nationwide. To this end, the cost of electricity becomes a direct factor impacting on the price of the goods or services produced by the Zambian based private sector.

The linkages between the aspirations of all our economic and social development plans and the cost of electricity does not seem to be acknowledged by our economic planners and least of all by ZESCO. ZESCO continues to market the Cost Reflective Tariff argument as the basis for attracting private sector investment. No attempts are being made to rationalise and streamline the high cost of running the company which may be the reasons why the tariffs are being revised upwards every few months. The sums are simple; the higher the electricity tariffs, the higher the cost of production, and the slower the economy will grow.

Government must give this issue more serious thought and be wary of the new free market thinking on strategic energy resources, if Zambia is to avoid a parallel energy crisis much the same as the current economic crisis that the world is currently experiencing. It is worth recognising that the economic mess that world is in today is because of the advice of some seemingly clever, free market sub prime economic wizards, that looked smart at the time.

ZESCO will do well to focus on managing the current electricity capacity by innovating ways of bringing the public on board to use electricity more efficiently, wisely, and sparingly, rather than to always look for a way to increase their revenues at the tax payers cost.

Caution must be taken when looking at the expectations of revenues in the 2010 budget. Domestic revenues are pegged to be K11.5 trillion from K9.3 trillion in 2008. This is a tall order as this expectation is not linked to the current slowdown in domestic private sector businesses.

The revenue projected in 2010 in respect to Grants is K 13.8 trillion as compared to K12.8 trillion in 2009. Again, how do these figures link to what is going on in the developed world where these grants are sourced from? There is a high possibility that these revenues will not be realised as our cooperating partners struggle with the economic pressures in their own countries.

Zambia has a growing informal sector that now rivals the formal sector. How can we link this to financing the fiscal budget? What options are there for a graduated flat tax to be paid by informal enterprises? How are we linking the 2010 budget with the new COMESA Customs Union initiative to ensure that Zambia emerges a winner? How positively placed will Zambia be when we sign the Interim Economic Partnership Agreement with the EU later this year?

Government has described how it intends to right-size itself so that the Civil Service will become respondent to the private sector needs and rightfully become the link to enhanced economic development and prosperity. Hopefully the 2010 budget will articulate this program more lucidly.

It is important to capture the final message that is passed on to the country in the MTEF and Budget 2010 Green Paper. A challenge is thrown to the private sector to take advantage of the newly created opportunities by Government to create wealth, by fully and aggressively participating in the development agenda of the nation.

The private sector is further challenged to rise up and expand its capacity so that it can ably participate in Government programme of rebuilding the country.

The response to these challenges is squarely based on how meaningfully Government can link its programs to address the concerns and requirements of the private sector.

Published 22 September 2009

Building Zambia

Our Commerce Minister Mutati and his team are working double time to market Zambia to the outside world. President Banda joins the effort whenever possible by inviting foreign investors at most public gatherings, and on his visits within the region and abroad.

Recently Commerce Minister Mutati commented on the initiative to develop the Lusaka East Multi Facility Economic sub Zone that will include the creation of the New Airport City in Chongwe district. The urgency to roll out the project was reported as the reason that the China Minister of Commerce would be visiting Zambia to discuss the implementation of the sub zone. At some point a group of Chinese Multi Facility Economic Zone (MFEZ) experts presented a conceptual master plan for the sub zone to illustrate the initiative.

In an effort to support and facilitate the new sub zone and Airport City development, Minister Mutati stated that Zambian Government was ready to make the necessary changes to the legal framework.

This news comes with excitement and enthusiasm but one cannot help feel some unexplained reservations.

The Parliamentary committee that attended the MFEZ seminar in China, and the Shanghai Yangpu Forum, extracted comments on some issues that may help to bring out the source of the unease and discomfort experienced by many Zambians.

At this seminar Chinese representative Zhou Zhen Bang said China will involve local people in the development of the Lusaka economic sub-zone whose first phase is expected to be completed over a period of two to three years depending on the infrastructure to be built.

Another Chinese delegate Su Yunsheng said under the master plan, the New Airport City is expected to accommodate over 100,000 people while other parts of the city will be for industrial and commercial activities.

Currently a Zambian delegation is in China attending the Third International Forum on Yangpu Development. The forum is organised by the United Nations and focuses on South-South Global Assets and Technology Exchange (SS-GATE). The forum, which opened last week, attracted nine other African countries and aims to promote economic development in developing countries.

SS-GATE president, Haisheng Wang said that countries like Zambia will get the chance to find new sources of investment during the forum.

The unease amongst the Zambian people seems to emanate from lack of ownership by Zambians, in projects that are based in Zambia, and affect the lives of many Zambians.

The sentiments can be paralleled to those in Lesotho where many Chinese firms have set up businesses but are not well received by the Basotho people on the ground.

General discussions with the citizenry indicate that the basic issue is one of lack of equity by the local people.

This phenomenon is not new to Lesotho. It is one that is often considered by any investor. Businesses usually want to be accepted by the community in which they operate.

To this end, businesses will put resources into social investments for the benefit of the community and include the development of play parks for children, investment in schools and clinics for the general community, and the holding of staff events to motivate productivity and corporate identity. Shoprite for example has gone out of its way to motivate Zambian producers of fresh vegetables, meat, and poultry to supply the multinational chain store with local products. As a result, there is very little public resistance and distrust of the development agenda of this investment, and Zambian suppliers will be the first to defend the economic opportunities that are offered to the local community of this supermarket chain.

The public sector will do the country a good turn to follow this blueprint as Zambia markets the investment opportunities to the outside world.

These new initiatives of MFEZ’s and Foreign Direct Investment (FDI) promotion require support and backup of Zambians on the ground, through engagement and dialogue. Furthermore, many Zambian businesses may not have the capacity to compete with foreign investors who come fully financed by their Governments or parent companies and with overseas sales contracts already in place. There are however, many opportunities for Zambian businesses to engage with the new foreign investors by offering local inputs and services to the larger corporations. Zambian businesses can be forewarned about the impending activities of the incoming investors and begin to forearm themselves with new equipment and human resources to deliver goods and services in the economic value chain that should be established.

Many developing countries have ignored these basic facts and found themselves in a situation where foreign investors import all products to support their businesses which include stationery, uniforms, furniture, and even labour.

In addition, other developing countries experience situations where the local people become hostile towards foreign investment and deliberately campaign to frustrate the investment, thereby resulting in a shut down and pullout of otherwise useful business to the economy.

A strong case therefore exists for our public officials in Government to ensure that all the economic development initiatives which are of great cost to the taxpayer, should be complemented by similar marketing efforts to the people of Zambia.

At the end of the day, Zambians will eventually inherit the earth here. Leaving the Zambian private sector out of the equation is parallel to leaving one’s own children out of the family economic development program. If more of the family that are engaged in the process, the more likely we are to experience fruitful and sustained development. The chosen few tend to only look out for themselves and eliminate the greater majority from participating in developing the nation.

Lesotho has learned some hard lessons, the United States is rapidly closing up to foreign trade with the east, Zimbabwe is a good case study, while countries such as India, China, and the Asian Tigers have all embraced their local people in building their future quite successfully.

Many collaborating partners out there have often lamented to us, that the responsibility of economically developing Zambia belongs to Zambians. No amount of economic aid and foreign support can replace the necessity for Zambians to be in the forefront of building Zambia.

Published 8 September 2009

Dry Ports

The MOFED Tanzania wholly Zambian Government owned cargo clearing
company based at Dar-es-Salaam port, plan to open Dry Ports at the
Nakonde and Chirundu border posts to increase the handling of cargo.
This is a positive innovation that should have developed years ago by
both Government and the private sector.

Clearly Nakone and Chirundu are Zambia’s busiest border posts for both
imports and exports. However, as Zambia looks to set herself up as the
region’s natural trading hub, several other opportunities for dry
ports are available at Kasumbalesa, Kasangula, Katima Mulilo, and
Mchinji.

These border posts are already fairly active ad can be stimulated for
trading activity by the introduction of dry ports to facilitate cargo
handling and settling.

Evidence on the ground already informs us that the Democratic Republic
of Congo (DRC) is a lucrative market for Zambian food exports and for
South African finished products. Many trucks pass through our borders
every day with cargo destined for the DRC without leaving much income
to Zambian companies with the exception of fuel.

Dry ports aimed at servicing the DRC will house cargo sourced from the
south, and stimulate some value addition services such as re-packaging
and final processing where necessary, before being re-exported to the
DRC. The basic warehousing of cargo makes the products readily
available to the customers across the border such that delivery times
are kept to a minimum and reliability of access to goods is
established within Zambia.

These are the attributes of a good trading partner.

Since Mofed handles cargo at Walvis Bay in Namibia and Beira in
Mozambique, a compelling motivation exists for the development of dry
ports at Katima Mulilo and Chanida near Katete on the Mozambican
border with Zambia.

Private investment in dry ports is not new to Zambia as evidence is
seen at the former Lido Drive In Cinema dry port installation on the
Kafue road. The dry port ran for a few years and was later dismantled
for unknown reasons.

Opportunities exist for dry ports to be established at Kapiri Mposhi
where Tazara and Railway Systems of Zambia link up. This is also a mid
way point between Lusaka and the Copperbelt thereby providing access
to at least one third of the population.

Dry ports promote enhanced trade as goods can be kept in bond in close
proximity to the targeted markets. Money is therefore primarily
invested in stocks, while taxes are only paid once the goods are sold
and removed from bond.

The dry port concept will fast develop Zambia into a trading hub for
our neighbours namely; DRC, Angola, Namibia, Botswana, Zimbabwe,
Mozambique, Malawi, Tanzania and Burundi and Rwanda across Lake
Tanganyika.

This ten country market should be the focus for Zambia in respect to
easier regional trade.

Mofed may be the flagship for market penetration within the region
for Zambia, but the choice and character of the private sector
partners in this program will go a long way towards establishing a
competitive atmosphere in the sector such that other players from the
private sector can be encouraged to invest and rapidly build the
trade network across the country which will no doubt contribute to a
higher GDP for Zambia.

Options for dry ports at the four international airports are also
possible. Many high value but small products are usually marketed
through airfreight corridors. These products include ICT items,
jewelry, cosmetics, and electronics. In many countries of the world
airports are natural targets for dry port initiatives. Transportation
to different destinations across the country is made much easier from
one airport to another.

The threat however, is that efforts to monopolize this sector will be
made by pioneer investors with the goal of cornering the market and
making as much money as possible at the cost of trade expansion for
the greater majority.

Government and the relevant line Ministries will do well to keep an
eye on the development of this dry port program and put in place
measures to attract more players and open up the opportunities to as
many investors as possible to encourage competition for the benefit of
both the country and the consumers.

Increased trade is usually the basis for other economic activity to
take off. Trade is the activity that tests the business waters before
serious long term investments are considered. Trade is a confidence
builder in the economy which is then followed by industry and real
estate that are medium and long term investments.

Mofed may lead the way now, but the future economy must be based
private sector investment for sustainability, competitiveness, and
re-investment. We must not ignore this basic goal.

Published 11 August 2009

Rural Tourism

The four day holiday that catered for the Zambia International Trade Fair also opened up options for many Zambians to go out of town to visit some of the less exotic tourism sites across the country.

The average Zambian looks to go out fishing at nearby rivers and lakes as a worthwhile outing due to the fact that apart from a good clean holiday, one can also bring home a bag of fresh fish to supplement the food basket.

There are countless spots along the shores of our many lakes and banks of our all weather rivers where fishing tourism takes place every weekend. A good case in point is in the Mala area close to Namwala in the Southern Province.

The Kafue river in this area is a beautiful site with natural vegetation and countless cattle. The river is filled with fish of all shapes and sizes that include Bream, Silver Barbel, Vundu, Black Barbel, and the not so pretty Dog Fish. Beginners go out there with just a musing interest in fishing, and after catching thirty fish or more, soon become die hard fishing enthusiasts.

The bird life along the river is vibrant with huge Fish Eagles and Storks punctuating the skyline, while smaller Gulls, wild Ducks and Doves criss-cross the river all day.

Visitors to this area go primarily for the fishing and carry with them camping tents, boats, fishing rods and lots of food and drink. The more enthusiastic tourist will carry portable shower units and toilet systems, and some of the most attractive boats to be seen.

Unfortunately after a long weekend in this rural setting, what remains after all the visitors have gone, is plenty of refuse, plastic bags and bottles, and unsightly and smelly holes in the ground.

Therein lies the opportunity for rural tourism to take off in a meaningful way for the local villages to participate actively, and to benefit strategically from the visitors that hail from our towns and cities.

By engaging the local Chief, Chiefteness or Headman in a rural tourism program, the local people can be the first tour guides to the best fishing spots on the river or lake as determined by their own everyday experiences. Furthermore, purpose built boat launching ramps can be carved out of the soil tapering into the waters so that speed boats can easily be launched.

The current camping fees charged can be expanded to include an ablution fee if the local people can build some quality toilet and shower blocks along the river banks and lake shores. A refuse collection mechanism can be established by the local residents to ensure that the sites are cleaned after the visitors have gone, and this too can attract a small fee. The local culture and traditions should be integrated into the rural tourism program by the provision of drummers, dancers, story tellers, dugout canoes, and some local hired help to make the visitors comfortable, and keep them entertained in the evenings when fishing is no longer possible.

There are many opportunities for local baskets, mats, crafts, and other traditional ornaments to find markets among the visiting tourists each weekend. Some ideas around food preparation would find new customers amongst the visitors.

It is clear that a partnership that includes the Government, the local traditional administration, the private sector, and the many visitors that want to enjoy time out in the clean air, can go a long way to towards developing rural tourism that will embrace all the parties and create a win-win situation for all.

Too often we wait for the big investor to show us opportunities that stare us in the face every day, purely because we fear to take the first step and invest in our own back yards.

Rural tourism does not demand large investments, nor does it require state of the art products. Rural tourism is designed and developed on the resources that are available, and should be interlinked with the lives, cultures, and traditions of the local people in that particular area.

Much of the Japanese and Chinese economy was built on small investors working together to eventually create the economies of scale that allowed them to become significant players in the global economy.

Hopefully, Zambians will adopt a similar strategy modelled on our own peculiarities to make rural tourism a vibrant part of the tourism sector, and eventually evolve into major developments as Zambia becomes more attractive for tourism to both local and foreign tourists.

Published 14 July 2009

Disclosure

Last week the World Bank conducted some ongoing dialogues on their intending new Disclosure Policies.

There has been recognition that the policy of placing information and documentation on a Positive List for disclosure to the public has not been that beneficial to both the World Bank and its customers in the developing world.

The new thinking is to opt to disclose literally everything that the World Bank is engaged in, and instead develop a Sensitive List that would protect the interests of the World Bank and its borrowers, by keeping certain information Privileged and Accessible to selected parties. The Sensitive List would include incomplete contract negotiations, and information which if released to the public, would do undue harm to either the World Bank or any of its customers.

Beyond this new open door policy for access to information, the World Bank is considering the frequency of sharing information with the public as a possible mechanism, that will enrich the development dialogue in both the World Bank’s ranks, and in the borrower countries themselves.

This new thinking about Disclosure of information in respect to Quantity and Time, fits in snugly with Zambia’s own challenges of information sharing.

Within Government circles, there has been an admission that as a country, we have not done very well in sharing information amongst the concerned stakeholders namely; The Government, Civil Society, and the Private Sector. Only recently has the private sector been able to access information on the new Economic Zones that are sprouting up on the Copperbelt and in Lusaka.

Many initiatives within COMESA and SADC are generally shared with the public as press releases rather than open dialogue during the decision making process. Contracts and Agreements are not readily available for public consumption or scrutiny, thereby leaving the Civil Society and the Private Sector out of the debates and dialogues that would enrich the Governments knowledge on the subject, and result in better decisions for the benefit of all Zambians.

For example, the Mining Development Agreements which were signed between the Government and each mining company, are supposed to be public documents, but one would be at pains to access a copy of these documents which impact on the well being of the nation.

The spirit of the current Zambian National Constitution is to ensure that all Contracts and Agreements that are of a developmental nature, should be accessible by the public through the Ministry of Justice, which is the custodian of these documents. At this point in time, public access to such documents at the Ministry is almost impossible.

There is an old adage that goes as follows: ‘Information is Power’. One might argue that ‘Knowledge is Power’. However we paraphrase this we can conclude that ‘Enlightenment is Power’, as this encompasses both information and knowledge.

Until now, many multilateral institutions such as the World Bank, and many Governments have seemingly worked on the understanding that ‘Our Power is based on what we let you know’. This may also be motivated by ‘the less you know, the fewer questions you will ask’.

One hopes that the new thinking on Disclosure of information will be considered in the spirit of development and accountability. To this end, inviting criticism and comment on any issue can only be good for both the World Bank and their customers in the developing world.

The best decisions are those that are made after much open deliberation, dialogue and have been subjected to public scrutiny.

The challenge that the World Bank and our Governments now face, is who decides what information should be withheld from the public? What information if put in the public domain, would result in harm to the World Bank, or harm to the Government?

Disclosure is a tall order for institutions that have traditionally behaved in a secretive fashion. A meaningful Disclosure program will do wonders for both social and economic development in any institution or country.

Published 9th June 2009