Maravi

Matale explains Zambia's privatisation 'mess'

Matale explains Zambia's privatisation 'mess'
By Bivan Saluseki
Sunday December 16, 2007 [03:00]

ZAMBIA'S privatisation programme ranks as the biggest fraud in economic history, discloses former Zambia Privatisation Agency (ZPA) director James Matale. Matale served as director from November 1992 until he was fired in September 1994. He says the destruction of the public enterprises during the Chiluba regime that accounted for over 80 per cent of economic activity was an act of unprecedented vandalism.

"It surpassed even the destructiveness of the definitive Attila the Hun. Zambia lost economic investments and assets accumulated over a period of 100 years," he says.

"A large proportion of the famous K7 billion debt was attributable to investments in assets and operations of the public enterprises. For instance, with the destruction of Zambia Airways, Zambia lost the entire stock of civil aviation technology that she had acquired over 30 years at a great cost. I think that, in the fullness of time, when all the numbers are finally tallied up and the last statements recorded, the Zambian privatisation programme will rank as the biggest fraud in economic history."

So what went wrong with Zambia's privatisation programme?
Matale offers a rare insight into this monster of a programme whose benefits some Zambians have been questioning over the years.
Matale explains that the programme faced resistance and opposition from several critical stakeholders.

He also explains that there was a deliberate effort by powerful business interests in the government to treat enterprises and assets lined up for privatisation as goods fallen from the back of a delivery truck.

The donors too had their own invisible hand on the process.
Now, Matale explains some of the problems the exercise experienced.

He also talks about his life and constant dismissals and subsequent loss of friends who used to hang around him when he was in such big positions.

Q: I would like to welcome you to this interview. We have heard so much about Reverend Matale and hardly about you. Can you give me a brief background of yourself?

A: Thank you very much. I readily recall that one of the conceptual meetings leading to the establishment of The Post Newspaper was actually held in this house in 1990. My names are James Matale. I was born in Namwala where I also did my first three years of school at Nanzhila Primary School. Thereafter, I went to live with my uncle who was a teacher. I did Standard 2 at Nalutanda Primary School in Monze, Standard 3 at Mangwele in Namwala and part of Standard 4 at Nteme Primary School in Monze. In 1961, my uncle joined the First King's African Rifles and was transferred to Zomba in Malawi. I finished Standard 4 at the then Cobbe Barracks Primary School in Zomba, where I also did my Standard 5 and part of Standard 6. I came back to Zambia and finished Standard 6 at Tug Argun Barracks Primary School in Ndola.

I did Form 1 and 2 at Roan Antelope Trust Secondary School in Luanshya before transferring to Saint Mark's College at Mapanza, Choma, where I finished Form 5 in 1968. I regard myself as a Mapanzanite where I was in class with friends like Honourable Emmanuel Hachipuka, Dr Davison Kwendakwema, Hans Sindowe, Timothy Simakoloyi and Dr Nicholas Lubaba, to name just a few. My close friend Nicholas Lubaba is a material scientist with a PhD from the University of Sheffield in the UK. He has a passion for agriculture and is currently a sharecropping peasant farmer in Kasisi. The design of our system which successfully converts rocket scientists into peasant farmers is probably not correct!

Apart from making friends in many parts of the country and beyond, one of my treasured dividends of itinerancy is that I have Tonga on my Standard 2 certificate, Nyanja on my Standard 6 certificate, Bemba on my Form 2 certificate and French on my Form 5 certificate.
I came to the university in 1969 originally to pursue a course in electrical engineering. After a stint in the schools of natural sciences and engineering, I relocated to humanities and graduated with a Bachelor of Arts degree with economics in 1974.
Q: What about your family?

A: Yes I am married to Reverend Suzanne Matale. We married in 1982 and have four children.

Q: Where are they and what are they doing now?
A: The four children are literally scattered to the four winds. There are two in America, one is working and studying, the other just finished his engineering studies at the University of Mississippi Ole Miss. The eldest and last-born are in South Africa. The eldest is working in IT (Information Technology) while the younger one is still in school.

Q: You are in a Christian home. You are married to Reverend Matale who is the Secretary General of the Council of Churches in Zambia (CCZ). Tell us more about yourself in terms of Christianity.

A: We are members of the African Methodist Episcopal AME Church. The AME Church not only satisfies my spiritual needs but also meets my ideological, social and cultural orientation. The AME Church is one of the oldest black churches in the world that preached liberation theology. The AME Church has been closely associated with the freedom and liberation struggles of men and women of colour throughout the world. In Southern Africa, including Zambia, the AME is the church that provided spiritual and moral succour to the freedom fighters and liberation movements. I am sure that some of the nationalist freedom fighters still alive will attest to this.

Q: Could you also tell me when you met Reverend Matale?
A: We met when we both worked for the then Nchanga Consolidated Copper Mines NCCM. But we married after she left the mines and joined the then Loggie Investments, presently Landmark Limited.
Q: The Reverend has to balance being a wife, being a worker and also pasturing a congregation. Considering her position in CCZ, have you ever felt left out, that some of the decisions she makes do not please you?

A: Suzanne is a very strong person. She pursues all her roles with passion. I am happy for her achievements. She has been the breadwinner in the house since I met my Waterloo in 1992. It has been an extremely difficult period for us but she has somehow managed to keep the family motivated and alive. So far, there has been no position that she has taken in her many roles that have been at conflict with my own views or positions.

Q: Can you tell me about your working career and particularly ZCCM where you were one of the senior people. How did you leave ZCCM?
A: I started work in government after university and following a one-year course in government administration at NIPA (National Institute for Public Administration). I am a very proud graduate of NIPA. After NIPA, I was posted to work in the then Ministry of Rural Development as a cadet economist in the Planning Unit. After an eventful short period, I answered an advertisement for a job with the newly established Development Bank of Zambia DBZ.

I was employed by DBZ as an Assistant Projects Officer. DBZ sponsored me for a course in development banking and project appraisal at the University of Bradford, UK. I am an ardent supporter of Bradford City.

In 1977 I answered an advertisement for a position of executive assistant with NCCM and was employed as a secretarial assistant. Then I went into sales and marketing. Upon the merger of NCCM and RCM to form ZCCM, I was transferred to the Executive Office as Executive Assistant to the Chairman and Chief Executive. In 1987, I was sponsored for an MBA in Geneva. I am an alumnus of the Institute for International Management Development IMD, now of Lausanne, Switzerland. The IMD is consistently rated by the Financial Times as the best business school in Europe and second-best in the world.

Upon return from studies, I was promoted to the position of Senior Manager and subsequently transferred to the Directorate of Development as Deputy Director. I was responsible for the Small-Scale Mining Unit with copper at Kansanshi, emeralds in Ndola Rural, marble in Lusaka and gold projects in Mumbwa; the Mining Enterprises Trust, for the resettlement of retired and retrenched miners in agricultural and small-scale industrial activities, and the then Parts Manufacturing Facility PMF which was modelled on the excellent precedent of Les Ateliers de Likasi operated by Gecamines of the Congo. ZCCM intended to establish plants to fabricate up to 60 per cent of its spare parts requirements, thereby cutting down the cost of production considerably.

I think Kansanshi Mine has a very interesting chequered history. It was the first copper mine that was discovered in Zambia in 1899 and experienced several closures and re-openings. I am happy to note that Kansanshi is now one major operation. How I wish somebody could chronicle its phases.

I can say without any hesitation that during the 15 years with ZCCM, I worked with merit and the highest level of integrity. Actually, I was looking forward to the inscribed Omega watch as a 20-year long service award. I also kept a set of ZCCM neckties as souvenirs that I intended to wear in retirement and old age. Instead, I was fired in 1992. I do not know what to do with the new ZCCM ties still in their covers!

Q: You are the only director that was fired by the MMD at that time.
A: Actually, I think I enjoy the dubious honour of being the only senior person who was fired because all other senior persons that the system did not want were first suspended before being retired for whatever reasons.

Q: What were the reasons they gave for your dismissal?
A: The then Acting Director of Human Resources told me verbatim that “the Acting Chairman and Chief Executive is not comfortable working with you... He has decided to terminate your services with immediate effect. ... He has given you the option to resign in order to protect your name”. I refused the option to resign because I had done nothing for which I would be ashamed of, nor breached any company regulation or any law. The letter of termination did not even bother to state any reason for the termination of services. In the state of dispossession and disgrace that I have been since then, this letter has remained one of my treasured possessions. I just do not know who to bequeath it to on my expiration!

I can state that until that day of 18 February 1992, I had a very clean disciplinary record with ZCCM. You can see Bivan that by a twist in fate, I got the boot instead of long service and merit watch!
I took the matter to court expecting to be reinstated the next day! However, the matter took forever to be disposed in the Industrial Relations Court. In 1994, the court easily found for me but judged that I should be deemed retired.

ZCCM appealed to the Supreme Court but failed to file their papers within the stipulated time. After one year, I applied to the court to dismiss the appeal for lack of prosecution. The court granted them an additional one month. After one month, they were again granted one week. After that, that is when they submitted their papers.

The Supreme Court still ruled that there was no merit for the appeal and confirmed that I should have been deemed retired.

Q: How did you take your dismissal? Where you disappointed?
A: Well, first of all, there was absolutely no reason for the summary dismissal. I was familiar with all the rules of the game. ZCCM had several options for separation. These included retrenchment, early retirement or retirement on medical grounds. Dismissal was reserved for specified serious breaches of discipline. I never breached any of the specified rules for them to have fired me.
Q: I understand you are one of the people behind the formation of MMD.

A: Well, my claim to that is that I was one of the people that supported the founding of the Economics Association of Zambia in 1986 with some colleagues from the University of Zambia from the former Economics Club of Lusaka. One of the objectives of the associations was to widen the economics and development debate beyond the bounds of the university by engaging the public at large.

The labour movement was identified as one constituency that could be cultivated to think more broadly about the larger issues of economic development as a more viable strategy for achievement of better conditions of service for their members who then numbered about 500,000 against the entire population of some seven million people. Bivan, if you talk to honest trade unionists, they will confirm that indeed lectures and presentations by members of the Economics Association at several labour fora and meetings opened their horizons to larger issues, including democratic governance.

When Aka (Akashambatwa Mbikusita-Lewanika) became chairman of the Association in 1989 or thereabout, he put more wind in the sails, culminating in the Garden House meeting on multiparty options of July 1990. After that meeting, things moved rather rapidly in the political direction. Aka was compelled to relinquish his chairmanship of the Association in order to protect its technical and professional integrity from the political movement that it had nurtured.

A number of our colleagues from the Association took active political positions and went into government after the elections of October 1991. Those of us who remained in the Association were happy for the friends in government as we believed that those ideals of democracy, good governance and economic development, that were the daily subjects of debate in the intelligentsia circles, would now occupy centre stage.

When the MMD was formed, there was a call for contributions to the secretariat. I am aware that one friend surrendered his house to serve as secretariat while another contributed his second-generation Amstrad personal computer.

The Amstrad was basic and inadequate so I surrendered my NEC PC that was used at the secretariat to process correspondence and documents such as the manifesto and the programme of action. The computer was returned to me after the elections of October 1991. Only the other day I was showing your colleague Amos Malupenga the PC, which is now obsolete.

Q: But one would think that for a person who helped MMD, they should have protected your job and not fire you.
A: No. I don’t think that I helped the MMD as such. I think that I was helping the larger cause for change and development, whether it was the MMD or not. We were mere agents of creating the environment for change.
Q: What happened after ZCCM?
A: Well, in fact let me say, when they fired me I thought that it was a mistake. As I have said, I thought the court would order that I went back the next day. I was really surprised to find that it took so long to prosecute a case.

In June 1992, I was surprised to be told that my case was listed for hearing in March 1993. When I realised that the case would be prolonged, I applied for the advertised position of director of the Zambia Privatisation Agency ZPA. After three interviews, I was given the job of director in November 1992.
Q: How many years did you stay at ZPA?
A: I was at ZPA for 20 months until I was fired again on 8th September 1994.

Q: What are the reasons they gave?
A: Again surprisingly, there were no reasons. When I took ZPA to court for unfair dismissal, they said that an American consultant had instructed the Board to fire me. When the report of the consultant was tendered in court they could neither find the chapter nor verse with that order. Then they fished around for reasons, including the argument that since my contract had not been written, I was on a master and servant contract in which they were entitled to fire me at their pleasure.

The first court found for me but on appeal, the Supreme Court strangely found for ZPA. I understand that this judgment of the Supreme Court is a celebrated precedent that all students of law now study. Neither my lawyer nor I could interpret the judgment against the grounds of appeal, the facts, the submissions and pleadings in the court.

I actually instructed my lawyer to appeal against the judgment because I felt it was for another person. The lawyer informed me that Supreme Court judgments were final, as in ‘finito’. I could not believe him so I asked him to appeal to Parliament. He informed me that that option was abolished decades ago.

So, against the lawyer’s advice, I wrote a four-page letter of protest to the Chief Justice. In his half paragraph response, the then Chief Justice merely reaffirmed the finality of Supreme Court judgments. Absolutism of the Supreme Court evokes in me fears of the return of infallibility and the divine right which ended with the Revolution of 1789. Elsewhere in the world, law and justice are closely related. In Zambia law and justice do not even live on the same side of the Equator. I think that law in Zambia is continuously being used as a tool for malfeasance.

There is clearly a case for the creation of courts of justice to cater for ordinary people who crave justice and courts of law for the lawyers and judges to practice legalisms.

Q: Privatisation has remained a big talking point in Zambia with some people saying that it was rushed.

A: Privatisation was the most important economic reform and adjustment programme that was intended to address stagnation that had afflicted the economy due to lack of capital for reinvestment, expansion, importation of raw materials and working capital.

It was an awesome burden to be in charge of the programme that should have turned round the economy on the basis of the existing economic and social infrastructure. You know at the time of privatisation, Zambia had considerable economic infrastructure and assets inherited from nearly 100 years dating from the periods of colonialism, federation and independence.

I was aware that the economic success of the government depended on how well the privatization programme was executed. I was fortunate to have had Mr John Mwanakatwe as chairman of the Agency. We shared a vision of a successful privatisation that would meet the expectations of Zambia for a successful economic turnaround. We also shared high levels of maturity and integrity. I used to muse that after achieving good results with privatisation, I would be awarded a medal for meritorious service! I got the boot, instead. (Sighs)
But, during those early days of privatisation, the programme faced four principal dangers:

Firstly, the programme faced resistance and opposition from several critical stakeholders. I estimate that support for privatization in the government at high levels, including Cabinet, was probably less than 50 per cent. ZIMCO and other holding companies were against privatization and often used their best endeavours and privileged access to the high echelons of government to undermine and frustrate privatization.

For instance, ZIMCO often questioned valuations by independent accounting firms in preference for its own valuations which did not meet the requirements of the law and were almost unprofessional. Demonstrations were even planned against me for the valuations of ZAMEFA (Zambia Metal Fabrication).

We rejected the price of less than US$ 18 million that the shareholders in ZAMEFA were prepared to pay for the government shares. Do not ask me what they subsequently sold ZAMEFA for. If I had sold ZAMEFA and the mines at the prices that have been reported, they would have had a perfect excuse for hanging me publicly. ZIMCO and other holding companies surprisingly also appeared to facilitate and encourage asset stripping of state enterprises under their charges.

Secondly, there was a deliberate effort by powerful business interests in government to treat enterprises and assets lined up for privatisation as goods fallen from the back of a delivery truck.
Thirdly, there was pressure from quarters of the donor community to fast- track the programme and for specific assets in the privatization portfolio.

Some donors were clearly frustrated by the elaborate processes that ensured that the enterprises were properly privatised to meet the provisions of the law, including transparency and integrity. (He mentions the countries which mounted pressure but begs that they should not be named)

The humdinger was that the social, economic, political and legal environments were not correct for the rapid mass privatization envisaged by the Zambian programme. To be honest with you, the economy did not have the capacity for rapid privatisation that some donors agitated for.

I often used to joke that accelerating the programme was akin to pushing the proverbial Yugo down the hill!
In those early days, we tried to balance the contending forces and interests to achieve what we felt were in the best interests of the Zambian economy. But the counter forces were more powerful; Chairman Mwanakatwe was politely shoed to head the Constitutional Review Commission and I was booted out.

I am aware that after my dismissal, considerable resources were poured into privatisation to fast track the programme. The handiwork of pushing the privatization process beyond the capacity of the economy has now been acknowledged, even by the former Minister of Commerce, who was responsible for the programme, as a serious error. That must be the understatement of the new millennium. It is a strange system and culture where our leaders are willing and keen to take profit but not the responsibility that goes with it.

The destruction of the public enterprises that accounted for over 80 per cent of economic activity was an act of unprecedented vandalism. It surpassed even the destructiveness of the definitive Attila the Hun. Zambia lost economic investments and assets accumulated over a period of 100 years.

A large proportion of the famous K 7 billion debt was attributable to investments in assets and operations of the public enterprises. For instance, with the destruction of Zambia Airways, Zambia lost the entire stock of civil aviation technology that she had acquired over 30 years at a great cost.
I think that, in the fullness of time, when all the numbers are finally tallied up and the last statements recorded, the Zambian privatisation programme will rank as the biggest fraud in economic history.

Q: Your dismissals, there must surely be reasons why you were treated like that.

A: As I have explained, there have been no official reasons that have been given to me. But parallel sources have provided me with lots of reasons. I do not think that there is a single crime in the criminal procedure Act that I have not been charged with.

I have heard that I was implicated in the shredding of confidential documents at ZCCM; I have been accused of complicity in an assassination attempt of a ZCCM official; One charge is that I was not a ‘Mutale nkonko’ enough. I understand that most of these lies against me were generated by the security services. After ZPA, an influential donor spread lies that I was corrupt.

I also recall that a lot of the men and women who went into government were full of malice and prejudice. Current revelations also clearly show that some were even criminals. The public power which they assumed since 1991 afforded them the opportunities to put into practice their private malicious agendas.

I have also observed, coincidentally, that all the people involved in my persecutions were subsequently rewarded with inducements, promotions and appointments. If I had not done probability theory at school, I would have concluded that my persecutions had a grander design.

Q: So what happened to you after the ZCCM and ZPA episodes?
A: I thought that the first dismissal was a mistake but after ZPA, I realised that they really meant to hurt me, for what ever reasons. So, I retreated into myself. I tried my hand at operating a small-scale footwear enterprise that my wife had started with one sewing machine in 1985.

We slowly built up the capital of the footwear enterprise so that by 1993, it was probably the best capitalised small-scale enterprise of any Zambian. SIDO consistently used it as a model small-scale enterprise. The facility had capacity for up to 250 pairs of shoes per day. I even had dreams and illusions that within 15 years, we would be exporting ladies’ shoes to Italy. We understood that an Italian woman rummaged through at least 167 pairs of shoes before picking the next. We intended to position our pairs on that fabled 168th shelf.

But as you know, the economic environment of the 90’s was extremely hostile to local manufacture. We could not compete against imports of second-hand and new shoes. It was incredible to find on the market new shoes from China priced at K8000 when our leather costs alone were twice that. We could also not raise working capital because interest rates then stood at over 150 per cent. I tried to find partners for the enterprise, but nobody then was interested in local manufacture in Zambia.

As you are aware, Bivan, a lot of local companies, including large, well-established ones closed down.
I closed down the shoe facility. SEDB subsequently sold our equipment worth over K300 million at that time for K50 million to recover its rental debt of K 9 million and distributed the balance to its lawyers as costs.

Q: That sounds heartbreaking.
A: Well yes. I am actually angry. Anger is a legitimate form of expression. I am angry for failure to achieve what I set out to contribute to myself, my family and society at large. You will also appreciate that one is justified to be angry if one cannot meet school requirements for his children or buy a favourite toy for a grand child.

I am also angry at what I consider as betrayal by workmates, friends, colleagues, employers and my superiors. In 1991, 42 per cent of the value my balance sheet was composed of friends, family, and colleagues at work and in society. After November 1991, the value of that investment had evaporated in the manner of the South Sea Bubble of 1720. In 1991, this empty driveway was as busy to vehicular traffic as the Straits of Malacca to shipping vessels. Some of the people I invested my trust even thrust daggers in my back.

Julius Caesar would probably have exclaimed ‘et te Brute!”
I am also angry at the injustice that I have experienced over the past 17 years. Even the courts of law had to invent laws to prejudice my justice, as if there were not enough laws on the statutes of this country to deal with commonplace cases of unfair dismissal.
Q: Is there something you knew which made people a bit scared of you?

A: Nothing that I am aware of other than malice. I am aware that a lot of lies have been written about me in secret memos. It is like giving a dog a bad name to justify hanging it; they crafted lies to justify their impunity actions against me. You know that Iraq, the cradle of modern civilisation, is currently being bombed back to the age of Babylon to justify the lie that it possessed WMDs (weapons of mass destruction).

Q: Are these the same lies which KK warned us about in 1991?
A: Probably. It may not be a lie, but it is not true that state enterprises were loss making. Audited accounts of most parastatals showed that they made profits. But what constitutes profit to a government that has social and economic responsibilities to its citizens? And yet the untruths about the state enterprises were used to close them down. It may not be a lie but it is not true that the Zambian managers of state enterprises were unqualified and incompetent.

Man for man, tonne for tonne, I could wager a case of Dom Perignon against a box of matches that the men and women who managed public enterprises then were more competent than those in evidence today in both the private and public sectors. There was a lot of investment in human capital and capacities in all fields. For instance, at ZCCM, we learnt all that was to be known about the markets, the metallurgy, the engineering, the politics, etc, of copper. In other words, the best mining engineers for Zambian ore bodies are Zambians; the best metallurgists for the Zambian ores are Zambians. And yet in 1991, we were told that foreigners knew better than we did! Zambia may actually be living a lie.

Q: This reads like the story of falling from grace.
A: Absolutely! I think that the challenge is to fashion a constitution and laws that will enable the government to govern but which will also protect ordinary people against the caprices of those in authority.
Q: Do you have any thoughts on the constitution debate currently doing the rounds.

A: Zambia is actually the oldest independent country in central southern Africa. Not only do we not have a constitution but we seem not to know even how to make one! Secondly, I must express disappointment that the CRC missed an opportunity to frame a constitution that was original to address the unique governance, legal, social and development needs of Zambia. We chose to be conformists by drafting a constitution that could suit any global candidate.

Q: Do you have an end tale to this interview?
A: No. Because I think that stories like this should be allowed to run themselves into folklore and the sunset.

Labels: IMF, JAMES MATALE, KANSANSHI MINING PLC, NEOLIBERALISM, PRIVATISATION, World Bank

posted by MrK @ 10:12 AM