George Jere is a correspondent of UK mail magazine on economy and political
Affairs. A Matero boys school leaver and a graduate of a diploma in accountancy from Evelyn hone college in the 1980.
He worked as a senior in Peat Marwick & Mitchell (KPMG) and was a business consultant to Simba milling for so many years.
He left Zambia to UK in 2005 and lives with his wife and two adult sons as the managing Director of nkosimarketing.co.uk and recently incorporated GX Energy (Z), a company promoting renewable energy in Zambia dealing in Solar, Bio-Fuels, Waste and Hydro Energy.
History has the answers to this vexatious problem in Zambia, events tend to repeat themselves.
It was not a long time ago, year 1992 when one major mining company Anglo American abandoned us, Luanshya town was also abandoned, and a major economic upheaval beset the country, as copper prices plummeted.
A Painful restructuring process had to be instituted in Zambia under the HIPC (highly indebted poor nation).The people of Zambia had to make painful sacrifices for the next 10 to 15 years. Important to the success of Zambia’s restructuring process was the attraction of foreign investors to this country. And they responded due to the favorable liberalization policies we had instituted
for the first time in 40 years our copper production reached pre-independence levels of 700,000mt.GDP has reached 6to7% among the highest in the world. New towns like Solwezi have sprung up….and most importantly we are no longer classified a highly indebted nation.
Then we want to turn around today and blame the people (investors) who responded favorably to our call…amazing but it is happening …perhaps a preamble to Zambia’s economic reforms of 1968?
In the forefront of promoting the above allegation is Publish what you earn people (PWYP) a loose body of Christian organizations, trade unions and other civil societies. A discerning look at the PWYP composition reveals it is devoid of economists, financial analysts. Certainly one cannot expect a balanced opinion on financial affairs from such a group to begin with.
It is important to note that all public companies operating in Zambia are subject to independent audits by Zambian owned auditing firms. And the mining companies have mostly Zambian accountants who prepare their books.
According to the daily mail of 14/11/12 Mr. Sikamo a Zambian metallurgist with Chibuluma mine reviewed that it costs$7150 to produce a tone of copper. The current price is $7770 per tonne, meaning the mining net profit is a mere 8%.in lay mans term; the mine gets k8 profit from every k100 sold.
The World Bank report has also listed Zambia as a country with the highest operational cost and that include in the extraction of copper.
Now let’s examine the PWYP allegation and I quote:”From 2004 to 2006 Zambia’s mining tax was only 3.4% of gross sales…..”
Yes that is true because Zambia’s tax rate of 35% if applied to the 8% profit above Results in 2.8% or round off to 3 % tax to gross sales, comparable to PWYP findings of 3.4%of gross sales.
Ignorance is blissful and also dangerous. The PWYP is unwittingly inciting false feelings of injustice that the Zambian people are being exploited.
The assertion by the Deputy Minister Hon. Miles Sampa that Zambia is losing a third of its budget through tax avoidance can only amount to a figment of imagination whose sole aim is to alienate the very investors who are helping our country to move to a prosperous future.
Are we going on a road map to development and peace or to the hopelessness period of the first and second republic that blighted our lives to 27 years of negative growth?
Below are the factors at play in our country that I believe will determine the direction and future of Zambia.
After the demise of dictatorship in our country in 1991 Zambia embraced multi-party democracy.
Unfortunately this noble ideal was first tampered by our diminutive late president Chiluba who wanted to go for a third term.
Since then retrogressive policies such as restricting presidential candidates in political parties in Zambia crept in.
The likes of late president Levy Mwanawasa who preferred to stand alone in party presidential elections. The late even encouraged fellow politicians to kneel before him.
And for President Bwezani Banda he shouldn’t have been asked to wake up at all to come and lead our nation.
Peaceful resiliency by the Zambian people to strive for a better future is what led the Zambian people once more to elect a new party president in the name of Michael Sata.
The emergence of thugs on the political scene in the last 20 years is unfortunate. Recently a thug was even appointed as an advisor in one of the opposition parties. This is disturbing.
The Zambian people deserve better standards from politicians.
All parties in Zambia should have zero tolerance to any form of political violence
We should move forward by introducing a code of conduct for politicians.
Insults, alarmist statements, tearing of speeches etc should be nipped in the bud.
The press in Zambia can also help by exercising self censorship. My appeal, the moment the press stops peddling insults in their papers the culprits will in turn stop competing in this unsavory sport.
Standing regulations for monitoring the conduct of parties should be made stiffer in conformity with democratic ideals of a modern country. An independent body can be formed to work together with the registrar of societies. The conduct of PF in trying to encourage political dialogue should be praised. Opposition parties such as NAREP AND FDD should be commended for their political maturity and hopefully this should be emulated by other parties.
Political parties especially in Africa have a tendency to destabilize a nation. Who would have known that Kenya after so many years of peace would be rocked with violence by unproven allegations of vote rigging? I am of the view that Vote rigging is an impossible feat to achieve especially if one takes into account modern day electoral regulations.
NATIONALISATION OR FREE MARKET POLICIES?
..Our country today is at crossroads as to which roadmap to follow..
Recent nationalisation of ZAMTEL and the cancellation of the railway concession has sent shock waves and rocked investors’ confidence. They are just wondering who is next, a very sad state of affairs indeed.
Can the state run a business? The answer is an emphatic NO. A review of their performance in the past is a stark reminder that running a business shouldn’t be in the hands of the state.It is a complete joke. To justify my unsavory comment why it is a joke to run a business entity by government (parastatals): Just take a closer look at the picture I took recently whilst driving from Ndola to Lusaka.
On the picture you can see ZESCO pylons on both sides of the road hardly more than 20 metres from the highway.
It doesn’t take rocket science to predict that this is a disaster in waiting. ANY Highway is a busy road. The probability of a vehicle or worse a bus full with passengers careering of the road and hitting these high tension cables is imminent. Maybe it will require the electrocution of so many people to spur someone in ZESCO to reallocate the ZESCO pylons to more than 2km from the highway.
In fact some four people have already been electrocuted on this road in the recent past.
Unfortunately their station in life (sand dealers) didn’t attract enough public outcry or alarm ZESCO to reevaluate their bizarre decision to place high tension cables so close to the road.
Such poor decision making process in parastatals is endemic. It is a result of the way they are structured right from formation. The first thing a minister will do is to appoint a person he knows, a relative or tribesmen. Then the officers so appointed will in turn resort to the same system right through the organisational chart. End result of this nepotism is wrong personnel occupying positions of authority. The results are there for all to see as reflected by the bizarre decision of placement of ZESCO pylons.
When Zambia’s economy was 80 % in state hands, the parastatals used to pay only 20 % of taxes to our treasury. Treasury funds are used for social services and funding of the budget. And the scenario was, it was the 20% private sector that used to pay 80% of monies collected from taxable income. ZIMCO a state holding company never declared a dividend in more than 20 years of it’s existence .Evidence that the Zambian people never benefited from state enterprises.
…THE NEED TO CONTROL…
So why do people today advocate state control? One wonders despite all this compelling evidence that state companies cannot perform.The answer lies in political popularism and vested interests. It is a wicked call by politicians to effect nationalisation policies that has subjected mankind to the worst forms of poverty.
…THE CONSEQUENCES OF NATIONALISATION…
For example, after nationalisation the economy of Zambia shrunk by 50 % in the 27 years former President Dr. Kaunda was in charge. And a grim statistic for Zambia, our copper production in 1968 was 700,000mt. Production sunk to a mere 250,0000mt in 1991 when President Kaunda was kicked out.
In 1964 Zambia was the fourth richest country in Africa. And after the end of Kaunda’s disastrous rule Zambia was ranked the forth poorest country in Africa.
And Just take a look at what our neighbour president Robert Mugabe did to the economy with his nationalistic fervor. Displacing more than 400,000 farm workers in order to give farms to hundreds of politicians and senior army personnel.The confiscation of land can only be described as day light robbery in Zimbabwe. We had no indigenous farmers in Africa before the white man came. Therefore, to claim that indigenous people were displaced is a blue lie ;
Gathers of wood and hunting was our pre-occupation not farming.
….HAPPY WITH INDEPENDENCE?
I will be the first to admit that independence in Zambia in my view has lost essence.To fellow citizens who doubt my statement, I have this to ask on the conduct of our founding fathers in Africa:”Which one is more dehumanizing? Lack of political freedom or poverty?”
…….CHINA. CHANGE OF POLICY…
China a stalwart of state control of companies had to change economic policies 20 years ago from state participation to private sector ,…commonly known as capitalism. Because of this change china has witnessed a massive transformation of the economy to what it is today.
God forbid that in today’s economic environment some leaders are advocating unworkable systems such as nationalisation.Refusing to learn from past mistakes is the greatest betrayal of the masses they lead. Recent objections on state participation in the economy from the Christian council of Zambia (CCZ )are encouraging. Rev Susan Matale is dead right to object going back to the policies of nationalisation of the economy.
…A FEW EXCEPTIONS IN AFRICA-BOTSWANA …..
Smart governments like Botswana stayed away from state control of firms. From a Poor country whose only asset was cattle at the time of independence, Botswana today has the second highest foreign exchange reserves in the whole of Africa second only to south Africa.Successive leaders in Botswana since independence have realized the importance of welcoming private investments because at the end of the day the state collects 35% of corporate tax from every enterprise operating in their country. Money so collected is used to fund social services that transform the lives of its people.
My Ernest and sincere appeal to the Patriotic front government, continue with the privatisation policies of MMD. The PF government shouldn’t seek advice from former and current dictators who destroyed the lives of millions of their countrymen through bad economic policies. Full privatisation of the remaining companies such as ZESCO and railways is a must. They are crucial in turning the wheels of commerce into economic development. Current symptoms of power outages and a Nonexistent railway system in Zambia means state participation in this sector has lamentably failed.
Britain in the 80s faced the same problems and the politics of privatising power and railways systems in the country. The problem required a bold step by then prime minister Margaret Thatcher to sell these companies (railway, power) to the private sector. She dismissed idle arguments by former socialists that the industries were “strategic “to the country and shouldn’t be privatised.
“One wonders how strategic the state companies are when their woeful performance negates the very strategic role they are supposed to play.”
Today in UK it is a success story with so many private companies involved in the generation and distribution of power and railway systems.
I would like to discuss the role of Interpol in Zambia in relation to the clearance of all imported cars into the country. One would think Zambia in the fifth republic should be different from the Zambia that existed in the first and second republics.
The first time I heard of such calls was when Former late President Chiluba won a second term of office. Chiluba won with less than 50 % in his second term of office.
It is noted the calls emanated from people and interested groups who were completely dissatisfied with the outcome of Chiluba’s re-election. A closer analysis of the call for 51% reveals that the idea is unrealistic.
In today’s election outcomes, when there is not much to distinguish parties from one another it is practically impossible for any single party to muster 51% plus.
51% plus wins normally happens when people rise to remove a very bad government from power. The last time we had 51% win in Zambia was in the 1991 general election, when the unpopular and dictatorial government of Kaunda was removed from power.
In UK last elections, the country ended with a coalition government because no party got over 51%. More recently we had French elections that had to undergo a re-run because no party mustered 51%plus. It is important to mention that although a re-run achieved 51% outcome for the winner in the recent French election. It is a result achieved because a re-run is restricted to two parties. A result obtained by default.
The third candidate who dropped out in the recent French election vowed not to vote for any candidate in the re-run. Meaning the 51%was obtained from the remaining 70% of the electorate .Such an outcome cannot stand the test that the majority voted for the winner.
People should realise and accept that the outcome of a winner with less than 50% reflects the wishes of the people. The people voted to be governed by someone with less than 50% do not change the outcome by introducing a re-run restricted to an undemocratic system of two parties only.
Please note unless you restrict elections to two parties it is practically impossible to obtain 51% for a candidate to win.
For a third world economy like Zambia, it is absolute nonsensical to incur a re-run costs of elections. We have more pressing economic issues to address than pander to the whims of those who are distraught with election results.
The Zambian Community in the South West of England would like to announce the death of Mr. Davies Ezekiel Mwape, who passed away on Sunday, 19th February, 2012 at his home in Old Town, Swindon.
He is survived by a widow, Getrude Kunda Mwape, a nurse working in Swindon and three (3) children.
The funeral gathering is at the deceased’d residence at 2 Wesley Street, Swindon, SN1 3LF.
Arrangements are currently being made to ferry the body to Zambia for burial. Any contributions to assist the widow can be deposited in the Zambians in South West A/C No 46420260, SORT CODE 77-50-11 (Lloyd’s TSB Bank).
Further details can be obtained by calling mobile line on 07570054901.
Issued by Zambians In South West of England (ZISWA) EXECUTIVE COMMITTEE
I made a submission to national constitutional conference on 19th July 2010. But like many other documents submitted by various individuals or bodies in Zambia it suffered the familiar fate of gathering dust.
In light of the recent appointment of another constitutional revision committee by President Michael Sata in November 2011, allow me to Re-ignite the Debate by presenting my views on this emotive and vexatious subject of Leasehold Tenure and land ownership in Zambia.
1. Leasehold Tenure
The recommendation that land in Zambia should continue to be held under the system of leasehold should be questioned. From the outset, let me explain what leasehold means: the land in question belongs to the state; Individuals/bodies then lease or rent the land from the landlord (state). The title will be in the name of the state and the lessee (person renting) will be mentioned as a leaseholder.
The origins of Leasehold tenure came into being by a unilateral declaration of President Dr Kenneth Kaunda in 1975 Mulungushi economic reforms. The reasons advanced at that time, inter alia, land is God given; therefore to keep out speculation it should be held by the state. Such wisdom held strong as the wind of socialism held sway in many countries in the world. In the late 60s most Countries especially in Africa changed from Freehold to Leasehold systems.
The merits and demerits of leasehold system
To find out whether land should be held under leasehold tenure in today’s market environment, let’s begin by examining the merits and demerits of the system:
Under leasehold all land belongs to the state; issued under lease to individuals for a specific period. It is assumed that the management and allocation of land will be conducted in an equitable and judicious manner. The greatest weakness of this system: land becomes valueless. Yes, land has no value because it is owned by the state. This is will not make sense in the financial world. Land, a factor of production with no Value?
Accountant’s financial reporting in Zambia mentions the 1975 Land Act in their reports and goes further by stating that they are precluded from adding value to land because it is leased from the government. Accountants are right; the land value of the asset leased (owned) by individual/company is not mentioned at all in accounts.
Apart from distorting the financial position of the company; this irrational Leasehold Act of 1975 has a devastating effect on people/organisations capability to obtain funds for development.
Land valuation is a crucial key to economic development.
Although amendments were later made to the land act to put value on leasehold land: This amendment is futile in financial circles. It appears this time around the technocrats didn’t know what they were doing. How do you put value to a leased property, one may ask? Accountants/bankers cannot accept that valuation because the “bottom-line “; Land belongs to the state. It’s like attempting to put a value on a car you are leasing…THAT IS IMPOSSIBLE. No banker will give you a loan based on that security. Simply put, the asset is not yours.
A peasant farmer with 100 acres of land and with no improvements on the farm has no chance of obtaining capital (loan) because his biggest asset (land) under leasehold system has no value. Ask any modern financial institution in Zambia and worldwide, they will attest.
The Leasehold system has stopped Agriculture revolutions from taking root in most countries especially in Africa.
At international level, the effect has been felt in the former eastern bloc countries that had leasehold legislations’. As they embrace market economics, they are making Changes to these out-dated laws of leasehold land tenure systems.
The American Agriculture revolutions took place in late (16- 18th) century because immigrants to America, most of them penniless, obtained land from the relevant authorities for farming. And this land was obtained at nominal values. The freehold title was then deposited with banks (financial institutions) to enable them obtain necessary funds for development. A development which would have been not possible had land been classified as Leasehold.
CHANGE TO FREEHOLD SYSTEM
The right to own land can only be guaranteed to Zambians by changing the system to freehold. For those who advocate state control of land under leasehold tenure: remember what happened to the Mwembeshi farmers in Zambia in the the late 1970s who were displaced from their farms by the state.
It is only natural for individuals to own land under freehold tenure. People will be more responsible and plan long term because it is held in perpetuity. Moreover, I find it difficult to understand the rationale of reviewing someone’s tenure of land after the expiry of the lease in 14/99 years. After all, in most cases the renewal is given to the same person (existing tenant). To do otherwise after the expiry of the lease by allocating to another person would amount to injustice. So why do we still have this leasehold system, one may ask?
THE ADVATANGES OF FREEHOLD TITLE
Just by changing the law from leasehold to freehold you will immediately empower millions of Zambians who own land to become land millionaires. Because for the first time land will have a valuation.
In addition, with a government funded project in place that enables poor peasant farmers to acquire title this can only lead to accelerated economic development in Zambia.
How Land Ownership can be managed
Given Zambia’s land mass and small population, there is plenty of land for Zambians and investors to be allocated land in a judicious and equitable manner for farming and residential purposes; With Investors paying market prices.
What is required is an efficient land allocation system that takes into account the indigenous peoples interests.
Given the opportunity to acquire title, most Zambians inclusive of peasant farmers can lay claim to the land of their use/intended use.
The allocation of land at nominal rates can only be judiciously administered by the government through the relevant (municipal) bodies. Local authorities not chiefs will be better suited to allocate all land to Zambians. Chiefs can only recommend and not overrule such bodies. Should there be conflict of interest between the two parties; local authorities/government organs should prevail.
The current system is a recipe for chaos. Customary land which constitutes 80% of available land in Zambia should be abolished.
Just have a glance at the chaotic situation in land ownership in Lusaka district, the capital of Zambia. The revelation now is that Lusaka cannot expand because a chief (nkomesha) holds large tracts of Land.
The claim by chiefs that they own land in their personal capacity is absurd and should be dismissed because it lacks a historical legacy. Unless of course they claim that powers were conferred to them by God.
Chief’s today in Zambia can sell land and use the proceeds for their own personal use: Leaving nothing for the subjects. That has been the unfortunate practice of chief nkomesha.And she is not alone.
Never in our History did we have our own people giving such powers over land to chiefs. The colonialist demarcated areas for the purpose of administering/ jurisdiction and not for chiefs to usurp powers of land ownership from their own people.
…In Western Province….
In western province for example, land administration has had tragic consequences; High levels of poverty due to lack of economic development in the area. Title to land is strictly prohibited or unheard off.
This practice in western province can only be to the detriment of the indigenous people of that province. For without title to land, how can one invest in a project? Let alone obtain funds from financial systems for development.
Those Barotse plains would have been littered with sugar and rice estates by now.
Cries by rouble rousers and interested groups that the province has been neglected should instead direct their efforts and question the legitimacy of the litunga (chief) especially over land administration.
All mankind at one time were ruled by chiefs. Through the passage of time this was found wanting and led to the demise of such tribal systems (feudal systems).
Chiefs/kings today and around the world are ceremonial figures and shouldn’t have authoritative powers. That should be the preserve of an elected government.
..SADLY. In Western PROVINCE
Numerous project proposals have been turned down in the past by the Litunga (chiefs) establishment because of one sticking issue: any project proposal in the province should include the chief in his personal capacity as partner in the new Venture. World Bank has refused to sanction various development projects because as they rightfully stated;” a project should not be for the benefit of the individual”.
The unfortunate people of western province live in what can be classified as modern day serfdom.
This is indeed sad. That land will remain barren until the end of the world unless changes are made to land administration to that forgotten province.
The barotse land agreement can be respected but land should belong to the people of that province. It was an ingenious ploy by Lewanika 11 to usurp power over land from his people at the time of independence in 1964.
At independence, it is a well known fact that the lozi establishments got substantial amounts of money (millions) from the federation. Five decades later, there is nothing to show the people of western province how those funds were utilized.
Today the capital mongu can only boast one ZNPF building as development after 5 decades of independence…….something should be done
My PERSONAL EXPERIENCE IN WESTERN PROVINCE…..
Let me share with you my personal experience
In 2004, I was one of the beneficiaries of loans offered by World Bank to develop timber exports from western provinces. To the best of my recollections, out of the twenty or more successful applicants only a few or none had Lozi names (lozis are the predominant tribe in this area).It’s hard to imagine that the loans were intended for the development of the timber industry in their province!
The poor souls (LOZIS) could not participate because most didn’t have land title deeds to offer as security for obtaining the loan. In our discussions, they did lament over land administration in the province. The choking and corrupt practices of the indunas in western province are well known and can be documented,
..Should land ownership be restricted…?
The proposed restriction to land ownership by individuals is another bad concept.
Usage and not by decree should determine the size of land holding in Zambia.
Due to market limitations and the economies of mass productions in farming: the activity (farming) will always be confined to a minority of people. In most successful economies in the world less than 5% of the labour forces are farmers.
The vast majority of Zambians will use land for residential purposes. Therefore, the purported shortage of land am afraid is non-existent.
….should we follow the example of Zimbabwe…..?
The madness next door (Zimbabwe), hopefully will not filter to our country. It is tragic.
Robert Mugabe didn’t review to his people before confiscation the total hectares held by the poor white farmers in relation to the total arable land available in that country. At that time of confiscation only 20% of arable land in Zimbabwe was under cultivation; In Zambia it is currently at 10%.
It reminds me of a day in 2005 I accompanied my visiting friends from UK On a flight to Mfuwe (tourist resort) in a 4 seater plane. After passing chongwe town on our way to mfuwe; my friend (David) peeped down and remarked:”DO PEOPLE LIVE THERE!!!
What he saw…. are vast spaces of forest with no building in sight…… And that is true for Most of Africa. It is sparsely populated. Cries of shortage of land can only emanate from delusional characters. Or simply known as alarmists.
In the Zimbabwean situation, to grab “cultivated “Land and kill the occupants makes me cringe….. Ashamed to be an African.
Prior to the arrival of colonialist there was no farming in Africa. We were gatherers of fruits, hunters etc was the order of the day. Very few people were displaced by the settlers. A poignant point, Just look at the few claims brought to fore after the demise of apartheid in South Africa land resettlement programs.
,.. LAND HISTORY….
History is replete with unfortunate conquests of one race against another and within the same race over land matters. It’s not just against Africans as we have been led to believe. More recently, we have had Hitler of German thumping fellow whites (1940-45) as he tried to expand the territorial claims of his homeland Germany.
In southern Africa we have had Shaka, conquering any tribe he faced as he expanded the Zulu kingdom. No one argued with him. But He went on to stab people for no reason apart from the fact he devised a short stabbing spear! When his opponents threw theirs in combat.
Earlier on, I had alluded to the fact whether there was a genuine shortage of land in Zimbabwe prior to the confiscation.
Given the land mass in Zimbabwe of 150,757 square miles. The land that Mugabe confiscated can be computed: on average confiscated farms in Zimbabwe ranged from 300 hectares to 10000 hectares. A conservative estimate owned by white farmers in Zimbabwe can be estimated at 1000 hectares each for the 4000 white farmers: that would result in a shocking15, 444 square miles or 10% of the TOTAL LAND IN ZIMBABWE.
Even if one discounted for parks and inhabitable land, the land occupied by white settlers prior to confiscation was negligible….
This is evidenced by the fact most farms are situated on the line of rail. From chirundu to beit bridge, with absolutely nothing in the interior. The same is true for Zambia. Or the rest of Africa. Most farms as expected follow the line of rail/major roads. For obvious reasons to transport their goods. And in the whole of Africa it is only one single road that runs across any given country.
President Robert Mugabe’s vision of sharing wealth is twisted. His Doctrine;”Kill every rich person in order for the masses to share wealth.”(Sic) should be redressed in the interest of fair play and justice.
What can we do for Zambia….?
Land should be freely transferable to achieve optimum use and this is only possible under Freehold system.
No local/ foreign investor to Zambia will commit large investments without title to land.
Being an immovable asset, land will never be “stolen”. It is the usage not the ownership that is of long term benefit to the general populace.
With cost effective land rates charged by the state in place, there will be no need for confiscation of idle land. People will just surrender idle land because they will be unable to pay commercial land rates.
Lastly, all land should be vested in the President who will hold it in trust and on behalf of the people of Zambia; it will be held for the purposes of administering and allocation to interested parties. Due to mass movements of people in Zambia and inter marriages the question of tribal ownership is primitive and unjust; it is irrelevant in today’s Zambia.
I have read the budget as presented by hon.alexander chikwanda to parliament on 11 November 2011. An overview of the budget shows undoubtedly that it is growth oriented and was excellently presented. However, I feel the budget has some shortcomings in the areas affecting our treatment of investors and agriculture policies. And therefore, I wish to register my concerns as listed below under the following sub-headings:
Budget highlights and treatment of investors
It was rightly pointed out in the budget that economic growth was strongest in emerging and developing countries, inter alia,” The Lusaka stock exchange registered a net portfolio inflow of foreign capital amounting to $13 compared to a net outflow of $ 8.2m in 2010.The external sector surplus is projected to raise by 54.7% to $951million from $641 million mainly on account of high export earnings of copper.” Why then turn around and give investors a kick in the teeth by slumping unfair royalty tax?
The above budgetary revelations don’t sound like Zambia is being creamed off. To my disappointment, the minister of finance in his budget speech did not mention the important role investors have played and continue to play in the economy of the country. This is very discouraging especially against a background of unwarranted attacks from interested groups. Hardly, a day goes by without someone unleashing an insult in the mass media directed towards investors.
The fear / allegation that books are being cooked are totally unfounded as long as no tangible evidence surfaces. Most critics are ignorant of accounting methods. Mine transactions do not fall in the category of “brief case transactions”; transparency is all present from source (mining) to end user (London stock exchange).
Most activities due to their bulk nature are documented. In accountancy there is a system called double entry; meaning more sales means more money in the bank account etc; double entry means the books have to balance at the end of the day. One may ask how come there is no single accounting fraud that has been reported in the mining industry the world over, the answer lies in our history and here are my excerpts: I pity the PF, they are in charge of a nation that has gone through trials and tribulations ;the 27years of negative growth under KK (50% down in GNP);The first 15 years of Chiluba trying to reconstruct the Economy(he dithered on the sale of mines for 10 years);reconstruction/privatisation meant massive job losses initially; The first investors fled after incurring losses which led to more ghost towns like Luanshya;Copper production fell from 270,000mt a mere 220,000 mt.compare this with pre-independence levels of copper production of 500,000mt.
In the last 10 years Zambia has enjoyed growth due to the unmistakable invasion of outside investors; copper production has now surpassed the pre independence levels to more than 600,000. Employment levels rose in the second year of MMDs rule from 250,000 to the current 500,000 plus, the same figure as pre-independence level.
Today, the investors are being blamed for all the ills in the country!! C’mon we must have a short memory; this amnesia can only come from people with an axe to grind; people who have seen their expectations ruined by more than four decades of misrule. It’s an army of disgruntled people (rentrechees, failed politicians, unemployed workers, former dealers etc; coupled with unreasonable population explosion in our country you end up with a perfect storm.
The environment of persecuting investors was sparked of by Levy Mwanawasa (self taught economist) unfortunately. I experienced firsthand when he announced on state television on one of my numerous visit to Zambia. He announced that when he was reviewing mine agreements he personally noticed that Royalty tax was unbelievably low; then went on to increase the tax. What was missing from his announcement was a simple but most important statement. Did he receive advice from his economic advisors prior to that statement …the answer is a resounding NO. There is no economist worth his salt who can recommend the imposition of such a retrogressive tax. To add insult to injury he went on further to introduce another unreasonable tax called windfall tax. The poor investors were forced to withhold mineral tax payments; a blemish to his rule.
Former President Bwezani Banda tried to pacify the problem but didn’t do enough. To the contrary on the political front,Bwezani without any sense of shame unleashed William Banda with his thuggish tactics on the Zambian people. What was disturbing it was Mwanawasa who initially invited William Banda to the mmd party. Thanks goodness the people of Zambia yet again Rose heroically to defeat MMD in the last elections.
My humble advice to Sata, he should remain focused; the country needs a leader with a considered thoughtful decision making process. To refrain from antagonising investors; Growth in the economy should be his focal point for us to provide a better future for our children. You might notice I have not mentioned adults. For the simple reason that economic corrective policies take long to materialise; it was the privatisation of the economy 15 years ago by Chiluba that brought growth in the last 7 years of Mwanawasa rule. Let no leader cheat you that benefits are immediate; only a fool can believe such a statement .For us oldies we should have done our civic duty in the past by kicking out bad leaders in the shortest time possible…we missed our chance and we have no one but ourselves to blame.
Agriculture in Zambia
The funding of Agriculture in this year’s budget increased by 37.49 %( K 1. 68billion). A good chunk is going to maize subsidy and storage houses. Maize growing has been our Achilles heel since time immemorial. Successive governments have thrown money into this bottomless pit and the proposed maize subsidy falls yet again in that bottomless pit. ……why do we do this when we can see that successive governments have lamentably failed in the past? That’s the question any discerning person should ask.
The perennial problems of maize farming can be traced to the moment KK (self taught economist) decided to introduce maize growing among peasant farmers in 1968. Adherents to our economic history will review that the colonialist promoted high value crops be grown by peasant farmers; such as groundnuts, tobacco, beans etc.Peasant farmers grew enough maize on subsistence level only.
“Unheard of! Peasant farmers not growing our staple crop” ?KK screamed and embarked on a maize growing ventures that has tied us to endless problems up to today.
To a layman I have always had this explanation on the problems of maize growing: maize is a low value crop. A minimum of a 1000 bags will make the venture marginally profitable and easier to buy (collect). To advice peasant farmers who on average produce 50 maize bags is like advising a budding journalist to set up a newspaper business with 10 copies!The economies of scale won’t support such a venture taking off..Honestly, haven’t we had experts in all these successive governments to notice this anomaly? The MMD first manifesto addressed the issue, but Chiluba twisted the issue by continuing with maize subsidy. Subsequent presidents did the same. Maize subsidy is unwittingly, a fertile ground for government officers to misbehave. To promote maize growing among peasant farmers today should in my opinion amount to a criminal act; because you are consigning these poor souls to a life of abject poverty.
At current rates an average 3 acre peasant farm will produce 50bags k2.5m. And the venture is always a loss .Contrast maize growing with a three acre farm of tobacco .tobacco will produce 1.2 tonnes at$4 per kilo$ 4800 or a massive k23m!
These pressing issues relating to what peasant farmers should grow need addressing now. I feel the ministry of agriculture should be full of agriculture extension officers. Forget about high sounding phrases used by former socialists “like strategic” reserve. You don’t need storage houses. I used to laugh at the presence of those rural storage houses in rural areas. Those storage houses have a capacity of 5000mt with a value of$800000. And you expect one to leave that value in a remote rural area guarded by a lone security guard is in my view an act of breathtaking imprudence. That’s the reason why they have been White elephants all these years.
It was gratifying to note president Sata in his first address to parliament talked about the shift for farmers to grow produce suited to their situation.
To support the governments stand, we should Encourage own farm storage and if the country runs out of maize, millers will import maize. Let big brother south Africa do the storage…Be smart let them incur the abnormal cost of storage .Maize being a low value item cannot attract second storage costs and attendant transport costs. With an average storage cost of $5 per mt per month, only a mad person can store maize for more than a year. It will result in a 50% increase on world fob prices. That’s what happened to Robert MUGABE economy to go under in the 80s when he had maize stockpiles to last an incredible four years.
SNAPSHOT SOLUTION FOR ZAMBIA
I cannot agree more with the concluding remarks as expressed by hon. minister budget address and I quote:”107, Sir, we are not a government that basks in the empty glory of statistical euphoria, but one that seeks a transformational shift in society to make it a more just and equitable.” well spoken.
Equally, I am also wary of basking in the euphoria of criticism (armchair critic) but in my humble way seek to offer practical solutions to complement that macroeconomic policy as set out in the budget.
I believe the under mentioned policy changes can send our country on a path of accelerated economic growth:
1. Encourage more investors local and foreign. Don’t antagonise them. Remove unfair taxes. China today is the no 1 developing nations because of their friendly policies towards investors.
2. Build feeder roads/tar them in rural areas. Use monies saved from maize subsidy. Roads will open rural areas to economic growth.
3. Review budget items: reduce army; dissolve national service; Remove that irrational/embarrassing cost of building houses for former presidents housing(sic).close most embassies if not all, the ministry of foreign affairs can Perform the same functions from a central place home.
4 Improve government services by introducing time based work limits for all government departments.eg 1 day for formation of a company (it takes 5 minutes online in Uk).Obtaining Title deeds maximum 3 months .those civil servants who don’t meet deadlines should be fired .
5. Surely it is high time you knocked off three zeros from our currency. Why continue printing worthless currency such as coins or notes below k1000 .The citizens of Zambia are currently spending a disproportionate part of their time counting rather than thinking. In a country with single digit inflation it’s high time we made this change.
6. Pass a law to prevent our highways being consumed by mushrooming shanties and home-grown supermarkets. Specify a radius limit 1 to 2 km for buildings to be away from any highway. Failure to do so has resulted in our highway vehicles losing control and ending up ploughing into people or worse into sitting rooms. In the not distant future, if these buildings are not controlled you will end up limiting speed limits on most highway to 30km with consequent increase in transport costs for time lost. And future road repairs and expansion will be made impossible (no bypass roads)
7 The police in our country today is non-existent and beyond redemption (traffic section yes for obvious reasons).Staff review, to make the police more effective is long overdue
8 Please remove all car roadblocks including those guarding bridges (smith is gone) this has been a deterrent to transport and tourism growth.
9. Introduce cars clamping when cars are stationery for breaches of car licences/fitness. A good venture for the cash strapped councils. This will complement the removal of physical roadblocks.
10. Review the status of dodgy investors. From what I suspect they didn’t qualify by fulfilling the $40000dollars investment in cash or assets required by law in order for them to enter Zambia. Then most must have used underhand methods to get permits. Deport those that can’t show documentation or prove the $40000 invested and lock up the government officials who issued such permits
11. Give lengthy sentences to government officials who issue fake driving licences. Imagine the presence of a fake driving licence, fake passports etc…Snare them by baits.
12. Please change our land laws and make land freely transferable; introduce freehold in addition to leasehold for wildlife parks .all land should be administered by state bodies. Chiefs confined to advisory role.
13. Privatise the remaining big two; zesco &railways. Ignore idle concepts like “strategic “and more recently” non-renewable resource”. We have heard them before to justify why UBZ (sic) mines, etc should not be sold. The growth of these two once privatised with investors cash will dwarf the economic gains of the mining sector.
For some of us who have exceeded the expected life span in Zambia and witnessed the trials and tribulations of its people for more than half a decade; Had the privilege of seeing a young Michael chilufya Sata banned /prevented from entering politics (too sharp) for a decade; rebounding and turning around a hitherto moribund Lusaka council into a viable company; which was at that time a mean feat of epic proportions in a sea of hopelessness.
I can only trust him and his team and believe they are gifted with practical solutions and stand steadfast in the face of unreasonable demands from an expected restless populace.
Borrowing the Bemba adage “ubufi bulabwela” I believe Sata will rise above this human failing and lead the country into prosperity for the benefit of all people and most importantly the future of our children.