Sunday, June 10, 2007

Foreign investors

Foreign investors
By Editor
Sunday June 10, 2007 [04:00]

It is very important that our political leaders talk about things they are very clear about. It is not good for top political leaders to start making absolute statements about things they least understand. They should not try to explain that which is not perfectly clear to them.

While political leaders derive great experience from the exercise of their functions as leaders of state and government, they do not have the privilege of being – nor could they be – specialists in all economic and social spheres. They are basically politicians – in itself one of the most difficult tasks in today’s world – and above all they must be responsible ones.

Misguided enthusiasm is dangerous and doesn’t help us achieve anything. It is misguided enthusiasm to think that this country can do without aid and loans and just totally depend on foreign investment. People who are all over the world lobbying, struggling for increased aid to our poor countries are not fools.

Leaders of rich countries who are committing themselves to increase aid to our poor countries are also not fools. We will for a very long time need aid and other favourable loans to move our country forward. We need aid because of the serious imbalances that exist in the world today. We need loans – of course on favourable terms – because even if we were to receive all the foreign investment we need, the government would still need a lot of resources for infrastructure and social development. Moreover, we know that investors only go to areas, only invest in sectors, where the government has put in place the required infrastructure.

We should be grateful that there is a worldwide movement campaigning and lobbying for increased aid to our poor countries. And the results of this can now be seen in the attitude being adopted by the rich countries; they can no longer meet without having to discuss or say something about aid to the poor countries. This is a positive aspect: the present possibilities of a much more rapid development than even a few years ago due to the aid which some of the rich countries can provide under certain conditions. But of course, when it comes to aid, we must always be vigilant because it comes with certain conditionalities.

We shouldn’t forget that foreign investment is what has put our country and the rest of Africa where we are today. This country has known foreign investment for a very long time; it is not a new concept discovered by our President or some new economist. This territory was first colonised and governed by a foreign investor going by the name British South Africa Company (BSA).

This investor governed this territory from 1890 to 1924. And from 1924 to 1964 the thrust of the economic policy of the British colonial administration in this territory was anchored on foreign investment. All the mining ventures in this country were owned and operated by foreign investors. But what did they leave us in 1964? No schools, no hospitals, no proper economy or a well integrated industry – only unmitigated exploitation. They never attempted to create a local entrepreneur, national businessmen.

They didn’t leave us with Zambians owning mines or any serious business other than a few bottle stores. We should be very careful about parroting populist international economic concepts that have no relationship to creating wealth for the millions of our people that are now wallowing in poverty. Our President sounds very clever when he stands on international platform and calls for international investment. He appears to know what he is talking about. But what is the truth? Not too long ago, our government was pushed into reckless and mindless privatisation which according to the purveyors of the theory was supposed to lead to quick economic development and attraction of foreign investment.

The mines, our most precious national asset, were given away for a song under pressure from the international donor community and the multilateral financial institutions that pushed the agenda. What has this benefited the average Zambian on the streets? Has it given the Zambian government more money to spend on social services?

Has it resulted in more revenue for the Zambia Revenue Authority? It is important that when we talk about foreign investment that we should examine the real benefit; we should quantify the financial benefit that is coming into the economy. We should not allow ourselves to be blindfolded and promised magical solutions which do not arrive.

There is a lot of foreign investment that has gone into Solwezi and the north western part of Zambia today, what is it doing to make a Zambian a better person in 2007 than he was in 2006, 2005, 2004 or 2003? We need to get back to basics. We are not against foreign investment per se. Every country needs it. Even the United States needs it. We remember in 1992 when we attended an investment seminar for Zambia organised by the Carter Centre at Emory University in Atlanta Georgia. On the last day of the seminar, Ambassador Andrew Young told the seminar that the following week he was leaving for Italy to go and look for investors to come and invest in Atlanta Georgia.

You can imagine how we felt – this was a delegation of Zambian cabinet ministers, top business executives from Zambia and other stakeholders. We had gone to Atlanta Georgia to look for foreign investors and a top political leader of that state was telling us that he was also going to Italy to look for foreign investors.

Indeed, foreign investment is not bad. What is bad is the blind belief that foreign investment equals development. That is what we see in most of our leaders. They are sloganeering and parroting this song as an immutable dogma. How else can one explain their clamour for foreign investment whilst ignoring even some of their best local investment and investors?

Our President has got the time to fly all over the world at taxpayers’ expense in the name of looking for investment whilst ignoring investors in his own backyard. He doesn’t seem concerned at all at the plight of Zambian businesses. It does not matter that neighbouring countries are dumping products on the Zambian market which disadvantages Zambian manufacturing, jobs and wealth creation. He has time to entertain useless characters as long as they dress themselves in the cloak of foreign investor.

But he has no time to meet even for a minute the best, the most promising of our local business people. His government has no time to assist these people but they are always there for these so-called foreign investors who don’t come here with much money but the first thing they do is to borrow from the local banks on arrival. The government does not seem to care whether Zambian businesses are receiving help from financial institutions operating in the country.

It is not unusual to find Zambian businesses being turned down by financial institutions in preference for the so-called international investors. Deposits that are collected from government are lent to the so-called foreign investors and not to Zambian businesses. Our President must get as much aid as the country needs but he must also spend a lot of time developing Zambian businesses. You cannot run a country in which the biggest earners of foreign exchange such as the mines are the lowest payers of tax.

There is something wrong when the poor marginalised worker has to subsidise the operations of big mining houses through low wages, high taxation and poor working conditions. And when the worker strikes, our President is hired to speak for the mine owners and not for the striking workers who voted for him, whose interests he was elected to serve their interests but instead, he chooses to serve the interests of the trans-national mine owners. So here it is not only the local businessmen who have issues to raise with government but also the worker. It seems all of us – the worker, the local businessman and our political leaders – should be at the service and the mercy of foreign investors.

It is not our intention to criticise our President for the sake of it, but it is important that he examines his own record. He has been President for the last six years. How many Zambian businesses has his government developed? What have they done as government to help the growth of the Zambian entrepreneurship? It is this that would develop Zambia, not some pie in the sky foreign investors.

It is Zambian businesses, together with the Zambian workers, that will pay taxes to our government which taxes can be used to develop the abundant human capital that is now mostly untrained and uneducated.
In saying all this, we are not in any way trying to imply that foreign investment is not needed and should not be sought or attracted to our country. What we trying to say is that the same effort and energy that the government seems to have to pursue foreign investors and entrepreneurs should be directed towards finding and developing local investors and entrepreneurs.

We should always endeavor to engage foreign investment in a beneficial way. This is what everyone else in the world is doing: this is what America does when it seeks foreign investment, this is what the Europeans are doing and let’s try to understand what the Chinese, the Vietnamese, the Cubans and others are doing with foreign investment. They are not doing what we are doing; they are not engaging foreign investment to the disadvantage of their own economies and their own people, their own workers and business people.

In this year’s budget, the finance minister provided resources for changing people’s mindset supposedly designed to change the attitude of our people, to help them take advantage of the many economic opportunities that exist in our country. We are half year through this year, what has he done with this money?

We are not surprised, it is difficult for the Minister of Finance to spend this money because the first people who need to have their minds changed are the leaders themselves; change should start with the man in the mirror. They have no belief in themselves. They do not know how to push the country forward. They will not do anything unless the International Monetary Fund or the World Bank tells them it is good. These are people who even fail to celebrate their own successes because they are so confused that they don’t know when they are being successful.

Success is only success when their friends in Washington tell them they are successful. This is a very sad state of affairs. We need to do something about belief in ourselves – that we are and can be as good as everybody else in the world. Poverty should not be equated to lack of intelligence and lack of resources should not be equated to lack of ingenuity. We have everything we need to be a great nation – let’s exploit them to the full.

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At 3:44 AM , Blogger MrK said...

Zambia doesn't need aid, it needs to be paid.

If all the profits from the mines were paid to the state, Zambia would end up with twice as much money it gets today from all the aid combined.

In 2004 Zambia received $800 million in donor aid, but lost (I estimate) $1600 million in profits from copper and cobalt sales.

Zambia needs to get paid, not aid.


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