By Gabriel Banda
Friday April 13, 2007 [04:00]
THE recent giving of Zambia National Commercial Bank, widely known as ZANACO, to Rabobank raises issues around economic processes, governance, democracy, and justice. The deal was done under the protest of minority shareholders, MPs, some members of government, and much of the public. Throughout the process, many people have noted that, except for the defective but pre-determined direction of de-Africanisation of the bank and Zambia’s economy demanded by the IMF-World Bank dictatorship, there is little justification for the privatisation of ZANACO, or the way it was done.
The textbook reasons for privatisation do not apply. Even at the time of transaction and the April 3, 2007 agreement announcement, ZANACO has been known as big, strong, and widespread. It was a major competitor to big external banks.
Concerns about the Rabobank deal include the pathetic price, reportedly around $8.2 million only, paid for 49 per cent shares, closed nature of the transaction, an undemocratic process, possible opportunities lost to local people, and impact of after effects of the transaction on various aspects of life. Goal posts were adjusted to enable Rabobank get more than the legal 25 per cent limit allowed to one shareholder.
The ZANACO transaction is a sign of limitation in the process of democracy. ZANACO is an enterprise public-owned and, thus, the public has the right to make comments and suggest direction. MPs have the right to promote the public interest and, if necessary, reverse negative transactions.
Sadly, to move on an unpopular path, in line with IMF and World Bank policies being imposed and thriving through dictatorship, the ZANACO transaction side-passed the public and some representative institutions.
ZANACO has been owned by the public, through their government. The transaction affects the public. ZANACO was not supposed to be a closed decision of few individuals. They do not personally own the bank.
It was not good enough to assure the public that they would be told the details after the transaction was sealed. The details should have been known before the deal was sealed. With a wide range of ideas, this would enable errors to be corrected before harm was done. Transparency is important for the prosperity of democracy and business.
We have not learnt from poor privatisation. With the disputed mines prices and agreements in mind, many people believe the ZANACO price has not been fair. It seems an underestimate in terms of the assets, size, strength, profits, and opportunities of the bank. The price, based on old figures, seems not to reflect true worth.
And banks and businesses keep on changing hands. What is the position of Rabobank acquiring controlling shares and then selling to another business, which may eventually move into another direction, leaving Zambia without expected support?
The ZANACO transaction could have been helped by continuous disclosure as it proceeded. When people are surprised by outcomes, it is easy for some to speculate about the process. But transparency limits suspicion and loss of confidence.
Complaints about some privatisation include: low purchase prices, redundancy of workers, poor work and environmental conditions, changing of business, and little tax benefits to the public as the conditions favour the buyer. The public purse has also unfairly taken on debts and liabilities of the privatised businesses. Sometimes public enterprises are re-capitalised only to be sold at a low price.
Some have knocked out local business competitors through buying them and dismantling the machinery or business, or disusing buildings, so that there is no local production. They then bring in products produced elsewhere and use Zambia just as a market. That should be prevented from happening in a situation like ZANACO’s.
As mentioned in our column of December 2, 2004, the biggest in Zambia, ZANACO’s potential was that its services could go to some areas where private banks were not in or were withdrawing from. ZANACO could be affordable to many. And it could use the huge resources at its disposal to support ventures that would uplift the quality of life of people.
Many talented men, women, and young persons in rural and urban areas are in need of resources to help fulfil ventures in various fields but have problems with access to credit. Many external banks leave out such local potential. ZANACO could be useful. It can help transform Zambia’s economy. In fact, ZANACO has been giving dividends and profits to its major shareholder, the government. It was also able to help government and public institutions when in great need.
Sadly, ZANACO itself has not been doing the great work it could have been doing. Like private banks, it seems to hoard a lot of resources while people in need continue struggling. It should have been trying to make itself more relevant.
To many, it seems self-evident that, on many points,the ZANACO-Rabobank transaction is defective and unjust. It is another step in the bondage and exploitation of Africa’s people and resources while we watch.
Recently, an IMF advisor dealing with corruption is reported to have expressed surprise at conditions entered into over the sale of mines. Besides transparency, it must be a requirement that major financial and economic transactions are watched by institutions of anti-corruption. This limits suspicion and enhances citizen support for ventures.
Being proactive is helpful. It is costly to be reactive. As they say, prevention is better as curing can be more costly. As experienced in many places, it is also easier to monitor and rectify events as they happen than to try to rectify and rebuild after things happen.
Private sector without parallel presence from other enterprises such as publicly owned ones, and publicly owned firms without paralleling by private sector have in cases led to unfair practices against consumers and workers. It is no surprise that with the decline of state firms in Zambia, many private businesses are exploiting workers.
Some people point out that one way of dealing with monopoly, cartel, and exploitation by big private business is the building of public enterprises, owned by government, councils, cooperatives, and shareholding open to the wide public. These are also able to get involved in ventures the private sector does not.
Parastatals and publicly owned firms still exist in Europe and industrial areas of the world. From surface train companies, underground transport systems, buses, airlines, and oil companies and beyond, they range.
Observers point out that, even after the ones destroyed by the privatisation process, it is still possible to set up public enterprises. We believe nothing stops councils and cooperatives from starting ventures for the common good.
Many people are sure there could have been other ways and outcomes to the transition of ZANACO. Meanwhile, why do governments in Africa continue to listen to, and borrow from, that negative machinery of bondage, poverty, social instability, and death - the IMF-World Bank machinery, a duet whose defective programmes the maker of evil is proud of? Many of us believe: no further loans from World Bank and IMF.
gabipost at zamtel.zm