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RICH ZAMBIA POOR ZAMBIANS
The Need for Radical economic Reforms for Zambia
By Choolwe Muzyamba
Zambia, a country blessed with abundant natural resources and arable land, plenty of water bodies and favorable climatic conditions yet its population is still entangled in a vicious circle of unimaginable suffering. Poverty in Zambia is still a huge challenge; most of the population is still struggling to live a decent life. With the soaring food prices, housing, electricity and water bills. One wonders what the significance of the much talked about economic growth is,which is estimated at 7%GDP for the year 2011, making Zambia one of the fastest growing economies in the world.
Zambia’s Rosy Economic Indicators
Zambia’s GDP in 2010 was 6.6% indicating a growth in GDP from 6.4% in 2009. Agriculture, tourism, construction, manufacturing and mining are driving growth which is expected to expand by 6.5% and 6.7% in 2011 and 2012 respectively.
Overall, primary industries performed well in 2010 with agriculture growing by 7.6%. In 2011 and 2012 agriculture growth is projected at 3.2% and 4.6%, respectively. The largest contribution to 2010 growth came from maize production. The harvest reached 2.8 million tonnes compared to 1.9 million tonnes in the previous season. Zambia is Africa’s biggest copper producer and the mining sector’s big recovery was due to improved global copper prices. The sector is estimated to have grown by 7.4% in 2010.
Manufacturing, which historically has contributed about 10% of GDP, grew by 2.5% in 2010. The government has made substantial progress in infrastructure construction and has invested in manufacturing through the establishment of Multi Facility Economic Zones. Tourism, which was hard hit by the financial crisis, is expected to rebound strongly with estimated growth of 25% in 2010. Construction was expected to expand by 10% in 2010 and maintain double-digit growth in the next few years.
Monetary policy focused on sustaining stability by maintaining single digit inflation while ensuring adequate liquidity for the growing economy. Annual inflation declined to an estimated 7.9% at the end of 2010, down from 9.9% in December 2009. Annual food inflation declined sharply from 8.0% in December 2009 to 2.8% in September 2010.
THE REAL PICTURE ON THE GROUND
The analysis by FSRP shows that the number of poor rural households in Zambia went up by about 1%, from 88.7% to 89.6%. The authors conclude that, “the results indicate the challenges that Zambia faces in her poverty reduction quest recording very minimal poverty reduction over the seven years period”.
Income inequality also remains very high in Zambia. Levels of inequality remain very high, with the Gini coefficient, having increased from 0.64 in 2001 and 2004 to 0.67 in 2008. The conclusion is inescapable,
The gains from general economic growth in the country are not helping close the inequality gap. If these findings are corroborated by other studies then they have very important policy implications. The question remains, what kind of investments are required to close the inequality gap and raise the majority of rural Zambians out of poverty.
Zambia’s Cosmetic Mining Sector
All the mines in Zambia are in foreign hands, yet 80% of Zambia’s revenue comes from the mining industry. So in short, Zambia’s economy is largely run and controlled by foreigners. Towns housing the mines are in ruins, infrastructure is in a dilapidated state and the local people are living in abject poverty yet on a daily basis their land produces millions of dollars.
Zambia has, till now, shied away from benefit sharing. This has resulted in the country’s richest regions (Copper belt, Solwezi, Sinazongwe, Maambaect) – holding most of its minerals – becoming the homes to extremely poor people. Mining in Zambia has, contrary to claims, done little for the development of the mineral-bearing regions of the country. This has led to this disturbing situation am calling rich lands, poor land owners!
WAYFOWARD
1) We need to fight the foreignization of Zambia’s economy. We need a mining policy which aims to strike a balance between making the best use of the economic benefits for the country and Zambian citizens, while allowing investors to earn competitive returns.
2) Mining industry should be run by a partnership of Government, Local Investors and Foreign Investors
3) A law should be passed to force Mining companies to not only rehabilitate existing infrastructure but also construct new roads, schools and hospitals. If a tiny country like Guinea can have a Mining Act dictates that owners of private land will receive 20 per cent of the total royalty paid for mining leases on the land. Why can’t we do the same? South Africa’s Mineral and Petroleum Resources Development Act includes provisions that give local communities powers to benefit substantially from mining projects. And Peru follows a system of royalty tax, payable to the Central government, which is then distributed among local administrations and communities. Surely, towns housing mines should be seen to benefit.
4) There is need to renegotiate the current tax regime and have one which is more inclined to benefiting Zambians as opposed to one which shows our fear of losing foreign investors.
5) Government should have a substantial hand in the running of the economy (We need to do away with the notion of “government having no business in business”)
6) The government should start subsidizing the production of goods produced by locals and not subsidize consumption
7) The government should only borrow to invest in infrastructure that will build the productive capacity of Zambia e.g. Borrow to build a factory to finish copper into cathodes, ammunition and wires etc. (not where they borrow to consume)
“Generally there is need to understand that unless the country can evolve an inclusive growth model, there will be no development at all.”
Posted by
dumbo
November 14, 2011 at 6:55 pm
I need to do something about my reading culture. I failed to read the whole article. Anyone to summarize?
OrgasmTembo
November 14, 2011 at 10:55 pm
Not to worry; bazungu bamakamba ati if you want to hide anything from a black man, hide it in a book; could that be the case with you brother? Elo reading is not just reading for the sake of it; there is what we call analysis of what has been written to see if it can be localised. C’mon boss, just do the reading.
chipo
November 14, 2011 at 7:15 pm
Lol
JK
November 14, 2011 at 7:16 pm
I totally agree with the analysis, but it requires a very strong political will from the government to address such issues(policies) which have always favored the foreigners.
Current Investment Laws need to be amended to favor Zambians and not always foreigners
Keen
November 14, 2011 at 7:17 pm
The best thing I have read today!
@Dumbo – we will drop the ‘o’ when thinking about you from here on.
“A law should be passed to force Mining companies to not only rehabilitate existing infrastructure but also construct new roads, schools and hospitals. If a tiny country like Guinea can have a Mining Act dictates that owners of private land will receive 20 per cent of the total royalty paid for mining leases on the land.”
The same thing should be applied to areas near Game Parks. Once the locals take part in the take (instead of the white foreigners only) they will automatically understand why conservation of wildlife is necessary and it will be more effective than any schemes used today.
Excellent piece.
ZRA Commissioner
November 14, 2011 at 7:17 pm
With Immediate Effect, all ZRA Officers should now be in possession of a valid Marriage Certificate and surrender their firearms at Kafue River Bridge roadblock before proceeding to Siavonga with their ATMs
Saying as it is
November 14, 2011 at 7:22 pm
Sensible. I think the recent budget addresses some concerns you raised to alleviate poverty. e.g most of the social spending and farming subsidies now on will be paid for by a rise in mineral royalties and a debut $500 million Eurobond. Already miners are mourning about this, but there is no choice if Zambians have to see betters days ahead of them. As for borrowing, Zambia always borrows for development projects never consumption. Consumption is often subsidised by donor money. The other few items Zambia has borrowed was to settle balance of payments (external debt)through the IMF. That is why our external debts are manageable and we hope PF keeps it that way for us until 2016!
OrgasmTembo
November 14, 2011 at 11:01 pm
Point of correction: RB borrowed for consumption; did you see the expenditure 6months prior to elections? Imagine; even if you are to build infrastructure, how can you do it in 6 months? if Zambia has chaps that could have “passion for the land”; we would have had 3 lanes each way, Livingstone Nakonde, Chipata Kasumba Lesa;
Saying as it is
November 14, 2011 at 11:49 pm
Expenditure 6 months prior to elections is a totally separate issue. MMD was so desperate to win the elections hence the misappropriation of funds. I wouldn’t be surprised to learn that the money actually meant for development projects is the one being used to settle Chanda Chimba’s scandalous bills? I agree with you we need sensible Zambians with passion for the land not headless chickens.
Keen
November 14, 2011 at 7:50 pm
Zambian’s consciousness of this robbery by foreigners is rising.
If the govt does not move with the people and do this, governing will be impossible.
Zambia and all its natural resourcs are for Zambians.
They are not for Asians. They are not Americans. They are not for the Europeans.
These resources belong to us and its injustice for corporations to continue this robbery while the people they exploit remain in abject poverty.
Zambia is for ZAMBIANS. PERIOD.
The government needs to pay attention to the people of Zambia and what they are saying.
Brainee
November 14, 2011 at 7:59 pm
The Kolwestans cannot understand this language
Martyr
November 15, 2011 at 10:02 am
Id!ot you are the only ape here.
mo pablo
November 14, 2011 at 8:03 pm
Foreign sme’s should be welcomed, unlike the current situation were most foriengers asume that their permits will expire anyway so let’s externalise monies! I know of a many that do this because of our strict immigration laws. Let’s integrate peoples of all cultures ie like the usa. Zambian imigration laws need serious amendment. And also last but not least we need culture classes to make people accustomed to each other. Ps we are all homo sapieans. Zikomo.
Michael
November 14, 2011 at 8:09 pm
A 5-7 year economic boom is not sufficient reverse 30+ years of an economic diminution — a Depression! Whomever wrote this article is childish or just plain biased. Even here in the US the great recession ended in 2009 on paper & yet we are still recovering form it today.
steven M
November 14, 2011 at 8:27 pm
Mr Muzyamba this is what the people in Govt need when they are making investment policies. This is the best most enlightening & educative article I ve read on this site.
Pls keep posting such and the Govt must listen and act.
Chips
November 14, 2011 at 8:27 pm
Nice article. Mr sata knowing yo courage u can definately do it. Dont follow there people who believe in theory. Theory en practical are 2 separate entities. Grab some of the mines en run them as government especially kcm. We believe in presdo. Time is now.
Anani Koffi
November 14, 2011 at 8:33 pm
This is the first time we have a president so we shall do it.
tommy
November 14, 2011 at 9:27 pm
Let’s be thinking like this Zambia will flourish nice piece bra!
Copala Swag
November 14, 2011 at 9:30 pm
I will begin by saying thie belief that a foriegner will develop our country is colonial.I lived in the mines and more than 80% of my life has been in CB.When i go back in the days we had the best infrustracture we are all talking about CB was the best town and all thing we see now in lusaka apart from the malls CB had.Even now depsite all the buidings hospitals are in a delapidated form if you went their you shud ba able to see those traces.
SPORT: is one of the sectors i would like to mention here.Our national’s poor performance in all sports descipline is not as a result pipo are not paying attention or comitted but everything went with ZCCM.It hurts me alot.Our President then FTJ had no interest at heart for a future Zambian.
INFRASTRUCTURE: This is a shadow of its self believe me if we had correct people running the mines CB would have suppased LSK today but its the otherway round roads and social amenities those of us enjoyed will be bed time stories we will be telling our children coz non exist now, its unfortunate.Investers like mopani copper mines shudnt be tolerated they are selfish and greed and they are here for nothing but make money and they say all this, unfortunatly we have given them a tax holiday til 2020.We have killed ZR and now our roads are suffering we keep repairing them now and then.Our development is in circles its like a pendulum.
Zambians lets move forward and ensure these people pay and lets not spare them remember copper is a wasting asset.Once its gone we will never have it.
Its sad indeed..!!
Wanu Ngwee
November 14, 2011 at 10:24 pm
INVESTORS COME INTO ZAMBIA WITH MONEY AND TECHNOLOGY FOR INSTANCE TO MINE THE MINERALS THAT BELONG TO US. SO, WHY ARE INVESTMENT CONTRACTS DRAFTED IN WAYS THAT SUGGEST THAT WHAT INVESTORS COME WITH IS WORTH MORE THAN THE MINERALS THEY COME FOR? IF THE VALUE OF OUR MINERALS WERE FAR LESS THAN THEIR MONEY AND TECHNOLOGY THEN THEY WOULD NOT COME TO ZAMBIA! THEREFORE AT THE VERY LEAST, THIS COUNTRY DESERVES NO LESS THAN 50% OWNERSHIP IN THE MINES! MUGABE HAS DONE IT AND EVERYONE THOUGHT THEY WOULD PULL OUT OF ZIM YET THEY JUST CONDEMN HIM IN NEWSROOMS WHILE THEY EXTEND THEIR EMBASSIES IN HARARE! THEY THREATEN TO PULL OUT? PULL OUT AND GO WHERE? BELIEVE YOU ME IF THERE WAS ANYWHERE ELSE TO GO THEY’D GONE THERE BEFORE COMING HERE! LET’S SHOW THEM WE OWN WHAT WE HAVE. BUT THIS CALLS FOR ALOT OF POLITCAL WILL. THE PROBLEM IN ZAMBIA IS THAT THE SPIRIT OF PATRIOTISM DISAPPERED WITH CHILUBA’S MMD. THESE DAYS SENIOR GOVT OFFICIALS SIGN AWAY THE COUNTRY COZ THEY’VE A FEWW THOUSAND DOLLLARS TO BENEFIT, SO SAD…..
Wanu Ngwee
November 14, 2011 at 10:34 pm
WE ZAMBIANS ARE TOO FEW FOR OUR COUNTRY’S LAND SIZE, AND A PROPER QUANTIFICATION OF ALL OUR NATURAL RESOURCES WOULD SHOW YOU THAT IT’S ****** AND UNEXCUSABLE FOR US TO BE SUFFERING THIS WAY – WE’VE BEEN CARELESS WITH OUR RESOURCES AND CANNOT BLAME GOD AT ALL. I REMEMBER ONE YEAR WHEN WE IMPORTED MAIZE FROM LIBYA WHICH IS IN A DESERT ON THE PRETEXT THAT THERE WAS A DROUGHT HERE. HAS THERE EVER BEEN A DROUGHT IN ZAMBIA THAT DRIED OUT OUR ZAMBEZI, KAFUE,LUANGWA, LUAPULA RIVERS AND THE MWERU, BANGWEULU AND TANGANYIKA LAKES? HONESTLY WHAT DID GADDAFFI THINK OF US?
Martyr
November 15, 2011 at 10:03 am
not body reads sh!t written in capital letters.
Wanu Ngwee
November 15, 2011 at 2:26 pm
MARTYR WHO TOLD YOU THE WRITINH IS IN CAPITALS?
Wanu Ngwee
November 15, 2011 at 2:27 pm
MARTYR, WHO TOLD YOU THE WRITING IS IN CAPITALS?
George jere
November 15, 2011 at 12:41 am
The 1968 economic reforms in Zambia transferred wealth to the Zambian people.80% of the economy was nationalised.over a period of 30years copper production plummeted from 500000 metric tonnes to 270000 metric tonnes.The economy shrunk by 50% over that period and Zambia moved from the fourth richest country to the fourth poorest country in Africa.In the past 20 years Zambia registered positive growth mainly due to private investments.
Wealth can only be shared through the creation of more wealth.The Mugabe doctrine of killing every rich person in order to share wealth is an act of uncontrolled madness.Just look at the poverty next door to realise the folly of such a policy.
if a country like Britain can have all major car companies owned by foreigners ,it’s because of the modern trend economic policy ;let them invest and create more jobs for the common Briton .
G.Jere .Swindon UK
James007
November 15, 2011 at 5:52 am
When Sata tells us that without KK and his team we wouldn’t have had certain infrastracture. He talks about the patriotism and vision that existed then, that should now, because we have at the helm a student of that great man. There are no liberation wars now, so all our resources should be spent on uplifting the standard of Zambians lives. Foreign investment is only good in a win-win situation and not the when owners of the natural resources are held at ransom by theoretic analysis of what will happen if there govt. participation in business. Let us govt taking active roles in mining by deliberately letting any of the mines that might come up, be run by Zambians.
pf the boat peddler
November 15, 2011 at 7:28 am
JAMES 007 thanx my man i see sense in your comment keep it up.. gentlemen lets get united and put zambia on the right track.. and wether we like it or not pf is in power so help by doing your part.. yes we need win win situation at least no one is insulting today
C-Jay
November 15, 2011 at 9:15 am
One BR, thumbs up! I have always said govt of the MMD shudn’t have taken pride in Zambia being a lower middle income country. That graduation jst exposed their weakness to make the poor benefit frm the gains, coz, how can the economy be grwoing alongside poverty levels? That means inequality is increasing, only a few individuals benefiting frm the gains! How can we have lower income countries have better social services than a so-called lower middle income country? In short, the graduation frm lower income to lower middle income just exposed the weakness by the MMD govt by failing to equitably distribute the gains frm growth! Simple exaxmple: we are three of us, initialy we have 15 pin, 20pin and 30pin, average=21.7pin. My income reduces to 10pin, the other increase to 35pin and 45pin respectively, average=30pin! Shud I be happy that the average has risen to 30pin?
Iyee
November 15, 2011 at 9:30 am
Excellent article. I personally think government should put the people of Zambia first and let the so called investors plough back in areas like roads, health, street lighting, sport etc. Instead of collecting mineral loyalties and going pockets of people we do not know at 6%, i feel 3% of these monies must be channelled into development of the copperbelt for instance FQM should develop Ndola and Solwezi, KCM should do the same for Chililabombwe and Chingola while Mopani will sort out Mufulira and Kitwe and any other towns that they operate in. The Chinese should sort out Luanshya. The the other 3% will obviously provide for the remaining sectors of the economy. If these investors do not follow this then i am afriad they should be asked to leave and government shoul take over the running of the said mines period.
the don
November 15, 2011 at 10:30 am
this is a good article but i would ask the writer to do more research. for instance, mines pay land rates to councils in which they operate. for instance, chililabombwe council is payed K700m by KCM EVERY MONTH AS LAND RATES!! How that money is misused is what makes people think that mines dont pay anything to the councils. mines were once in govt hands but collaped due to mismanagement. unless we change our culture, even if we got back the mines, we will still come up with new excuses.
Zedman
November 15, 2011 at 10:31 am
As Africans we need to unit to prevent the under valuing of our resources by some of the arm twisting investors. Neo-colonialism is still intact!It uses both local and international forces. African leaders and all the people (white,black,Asians i.e. all those who want Africa to be their home) regardless of political affiliation should come together and negotiate with true/well meaning investors. As individual countries we can have our economies being choked deliberately one by one from cape town to Cairo, to the point where, we shall accept whatever little is offered by greed local and international investors.
Jomie
November 15, 2011 at 1:15 pm
U-turning on everything.
Jomie
November 15, 2011 at 1:30 pm
Good reading. What lets Africa down is our leaders with narrow vision if at all they have. Also corruption where they are given some millions of $ in their personal accounts by these multinationals to allow them to own and mine evrything. Untill we put in power selfless leaders, we will always be wondering why we cant do the right thing when we know it. A lower version of this type of thinking is the creation of provinces to improve ones own people when there are provinces that need more help.
Mainza
November 15, 2011 at 4:21 pm
Good article indeed. However we need good policy makers (political will) to spearhead good policies which will be the foundation of real development which will be appreciated by every Zambian. Yes Zambia is a land of plenty yet citizens are in deep poverty due to CHELELEBULA type of leaders.
Kentceo
November 16, 2011 at 6:12 pm
Well articulated,I wish this type of knowledge is what all those in decision making position have,then we can no longer be worrying about poverty or our country being under developed. eg.I wonder if all the Mp’s would fully understand this simply written article. It’s a shame
Joseph
February 7, 2012 at 5:08 pm
Yes. The politicians ought to be patriotic and allow locals to take part in the mines national cake! Why not tell Investment centre to give partnership with locals as a requit to obtaining mining rights, as well as at the processing level.