Mining companies are being dishonest, says Dr Mudenda
Mining companies are being dishonest, says Dr MudendaBy Amos Malupenga
Sunday February 17, 2008 [03:00]
The mining companies are pushing their luck too far by insisting that they will not pay new taxes to be effected by the government, economist Dr Gilbert Mudenda has observed. Dr Mudenda observes that the mining companies are being dishonest by maintaining that they will not respect the new taxes because they are covered by the development agreements they signed with the government almost a decade ago.
“The understanding is that you make your money and you should be protected but if you get windfall gains, you also need to be willing to share,” Dr Mudenda says. “If you stand by the law, then the other people will also begin to take unilateral decisions. In the budget of last year, there was an announcement that there will be negotiations.
Those negotiations didn’t take place because some of the mining companies refused saying, ‘no, look at the agreement, we are not here to discuss, go and talk to our shareholders’. Now, that is actually being rude because how do you get shareholders of a company to a meeting? The people who are running the mines are running on behalf of the shareholders.
So you have to negotiate with them and then they can go to their shareholders. So there has been an unwillingness on their part because they believe that they have these agreements on their side and they can go to court.”
Question: My first question is: Who is Gilbert Mudenda?
Answer: Well, I was born a long time ago in November 1949 at Macha Mission Hospital in Choma district where my both parents were teaching. Later, my father joined the church but my mother continued teaching.
My father went for seminary training in Zimbabwe, so I joined him with my younger brother the year I started school. But because it was a new place, I was taught at home. My mother used to teach me before going to Bible school.
Q: How did she do it?
A: Because she was a teacher so she would teach me at home, leave assignments and checked my work when she came back from school. That’s how we used to do it. When we returned to Zambia, I started my primary school. Then I went to Macha, central for upper primary.
Q: Which year was this?
A: I started school in 1956. I went to upper primary in 1959. I finished in 1963 and went into secondary school at Choma Secondary School in 1964. That was just before Zambia’s independence. I stayed there until Form V when I finished in 1968.
In those days, people used to finish school and go to work. I had applied to go to the army but my parents refused. I tried to join the merchant navy because we used to have a ship in Dar-e-Salaam but it didn’t work. My third choice was income inspection. So I went to Ndola for training.
Q: Why did you initially want to join the army?
A: It was just for the uniform. In those days, if you stopped school in form two, you joined the railways. But then I thought the army was good. My parents were pacifists, so they didn’t like that and I succumbed. So I went for training as a tax inspector in Ndola at what has now become ZRA (Zambia Revenue Authority).
It used to rain in the morning, during lunch hour and when we were knocking off. So I got so fed up with that.
When my FormV results came out, I qualified for university and I went to the University of Zambia (UNZA).
Q: What did you go to study at UNZA?
A: In those days, we had this quarter system. If you had two credits in science and maths then you went into natural science. It took me almost two weeks to move from natural science into social science because I didn’t like natural science. When I got into social science, the quarter was full so I had to do education, hoping I would switch. I was doing history, political science and French for beginners hoping that in the second year I could say, ‘I can’t teach French’. This was in 1969.
Q: Any peers you can remember who were with you at UNZA?
A: Oh, lots of them! We were called a class of 69. I think that year we were about 300 people into first year. We had people like Mathias Mpande, the former UNZA vice-chancellor Professor Mutale Chanda, James Matale, Professor Manenga Ndulo; it was a group and fortunately most of them are still around. There is also Jacob Chisenga on the Copperbelt.
Q: So how did you proceed?
A: From there, I tried to wriggle out of education but then they said political science was now a teaching subject so I had to continue. But to teach civics, I also had to do economics. That’s how I got to doing some economics courses.
We were supposed to finish in 1972 but we finished in March 1973 because of the strikes.
Q: Oh, even that time this problem of strikes was there?
A: Yes, indeed.
Q: What was the problem this time?
A: We had a big strike when the French were selling jets to Angola. Most of our strikes were political. We stormed the French embassy, we stormed the British High Commission over sanctions in South Africa, so they closed the university for some time.
The late Ronald Penza was in the same group but he was expelled with other members of the students union for those strikes. So he ended up finishing a year later. There was a group of people who finished a year later.
After finishing university, I was posted to Namwala Secondary School where I was teaching as a young teacher. I taught there for two and half years.
Q: What subjects did you teach?
A: I was teaching civics and history because I maintained my history and political science. Then I decided to go for further studies and one of my external examiners was in the Hague, Institute for Social Studies. I applied to do development studies. At that time, I got a place but there were no scholarships.
So I walked over to Freedom House because I was active in local politics and I ended up as a constituency secretary and chairman.
I got a letter from the UNIP regional officer there recommending me to do development studies, saying this country needed development. When I got to Freedom House, they said they no longer gave scholarships. I was referred to the Ministry of Finance where I found ten scholarships sitting there.
But I was told those scholarships were not for education unless I transferred from teaching to national planning because the scholarships were for national planning. I just wrote a letter of transfer asking to be transferred. I was transferred to development planning and proceeded to do my masters in social sciences at the Institute of Social Studies in the Hague in Netherlands. It is quite a prestigious institute for social science.
During that time, I used to give lectures to people coming to Zambia at the Tropical Institute in Amsterdam and UK. Then somebody was looking for someone to teach volunteers in Tanzania. So after I finished, I went to Tanzania at the Danish Volunteer Training Centre, near Arusha where I spent three months before coming here to Zambia. When I came here, I worked for national planning and we did quite a good work.
Q: In what capacity did you join national planning?
A: I was an economist in the regional planning department. I was in charge of Eastern, Northern and Luapula provinces, doing the plans that went into the national plan and also looking after various projects. That was quite exciting for me.
But I was not quite happy with the way we planned. There will be a statement that the economy will grow by so much; it was an assumption. And I said, ‘look, if we are to assume that the economy will grow by so much, let’s look at the sectors, what needs to be done in agriculture to get to there’. The planning tool is an input and output table and we didn’t have the input and output table, so I sort of took on the director and the permanent secretary then Dr Simonda.
He was not very happy with what I said. He said, ‘but this is just to give hope to the people’. Then I said, ‘if that is the case, let’s stop doing all this planning. Let’s just write a national prayer to give hope to the people’. He was quite unhappy with that statement.
At that point, I decided that maybe I needed to go back for studies. That’s how I applied to my former institute. They said ‘ok, you come we are organising a workshop, come and attend this workshop’.
So I attended the workshop with Dr Jacob Mwanza who was then UNZA vice-chancellor and Dr Muntemba who is now working for UN. The arrangement was that I would work as an assistant lecturer and do my doctorate at the same time. So Dr Mwanza said, ‘but why do you want to do such a difficult thing, why don’t you come to the university and teach and after two years we will send you for your further studies’.
I thought that was a better option. I applied and I started teaching at the university in the department of Development Studies. By then it was called a Department of African Development Studies. That was in 1978. I taught there for two and half years then I applied to go for my PhD. I applied to four universities - Sussex, East Anglia, Bradford and another university in Wales.
The acceptance letters started coming from my fourth choice, then my third choice and my second choice. When I was leaving, I was actually supposed to go to East Anglia. But during the week I was to leave, I got an acceptance letter to Sussex. I really wanted to go to Sussex because it was at the centre of development studies. So I had to go.
There, I was in the School of Mathematical and Physical Sciences but doing science and technology policy in developing countries in the Science Policy Research Unit. My work there was on the development of technology in the mining sector in Zambia. Because it was copper mining, I had to read materials from Congolese mining, Chile and Peru. I could still read French and as such materials from Congo were not difficult to read. However, I had to go for evening classes to learn Spanish to be able to read the Latin American documents from the mining sector.
I came and did my research in Zambia. I had quite a good time because that time ZCCM had become a consolidated company and I managed to go round to all the mining establishments except for Nampundwe. I went down all the big mines and seen their processing plants. I conducted a lot of interviews and worked in the archives.
It was very interesting to see that, for example, most of the people who had been working under Anglo America and writing in the mining journals; they were the people who ended up in the head office. When I talked to the Zambian mining engineers, I said ‘why aren’t you writing in the mining and engineering journals?’
I found that quite frustrating because they knew their plants and what modifications they had done but all those were not written down. We were the first ones to do a large scale copper leaching, solvent extraction and electro winning (SXEW) plant but that technology was not even patented. That was Zambian technology. The Chileans just employed a lot of those expatriates who worked in Chingola to set up their leaching plants.
The initial mining groups were quite innovative but towards the end, they lost it in the sense that they were not doing exploration; their research and development was hived off and put into the UK. In Zambia, that capacity was quite reduced.
Anyway, I finished my doctorate in 1984 but in Sussex they give you a doctor of philosophy. It is a senior PhD and it is called DPhil. I got here at the beginning of 1985 and continued teaching. I was teaching a course in technology and development and most of my students were sent to all these parastatals; Chilanga Cement, Lenco, Kafue Textiles and Nitrogen Chemicals to look at the technology in that sector and see how that technology could be improved, adopted and how you could begin to use certain local inputs to domesticate in the economy.
I was also teaching a course in social functioning of engineering in the School of Engineering. We had to deal with, or explain why we train an engineer, to interface the engineer and his role in society so that he doesn’t just build the bridges and houses but he had to build bridges and houses for people. That was very interesting to teach and I found the engineering students very attentive and more interesting to teach.
Q: Could you tell me some of the people you taught at the university?
A: There are many and some of them are holding very high position in government and outside. I think they will be embarrassed if I mentioned their names because they are big people. Let me just say they are many, don’t you think so?
Q: No, just mention. For example, I know that you taught my boss, Fred M’membe in the first year and I don’t think he will be embarrassed if you mentioned that you taught him.
A: Do you think so?
Q: Yes, because it’s him who told me that you taught him and he found you to be a very good and effective teacher; that you simplified your lectures so much that it was easy for everyone to follow. In fact, he holds you in very high esteem as a teacher and friend. He was telling me how you helped him establish The Post’s printing press and also worked with him closely during the early days.
Actually, his view is that we have wasted you as a country. He feels the country is not benefiting much from your brilliance. Of course, he doesn’t blame it on you. He thinks that those who are supposed to recognise your brilliance for the benefit of the country are not doing that.
A: Yes, it’s true I taught Fred. I hope I am not embarrassing him.
Anyway, towards the end of 1987, the economy started getting really terrible. I remember our salaries got to something like US $40 a month.
Q: As PhD holders and lecturers in the university?
A: Yes! And I said ‘this is not on’. So, with Dr Caleb Fundanga (the Bank of Zambia Governor), we started a consulting company. We started doing some consultancy work. At that time, we were bachelors and living together. Dr Fundanga had also just come back from his PhD studies. When he was courting his wife, we were actually sharing a house as bachelors. We stayed in a house at the far-end of Handsworth (in Lusaka). Now it is used as a police post.
Later after Dr Fundanga joined government, I also left for Zimbabwe to start a SAPES Trust, a regional organisation doing social science research, publishing, organising seminars and workshops. We were the publishers of a Southern Africa Political and Economic Monthly magazine.
I had taken leave from the university and went to set up this institution with my colleague Dr Ibbo Mandaza who I worked with, was still working in government. After a year and half, the thing was set up. I came back home and continued being a trustee and continued working on certain assignments but I was based here.
From that time (early 90s), I started working from here (his residence in Lusaka’s Roma Township). When I was building this place, I started looking for offices. I found that offices were very expensive to rent so I built an office block here at my residence.
Q: Was this around 1990?
A: Yes. Mostly, I was very active in consultancy work doing evaluation of development projects. That time donors were very anxious to know what the impact of their work was.
So we were quite busy for a long time. Now I think there is a bit of donor fatigue and I think they think they know what they need to do so they don’t need much advice. So I am actually in a sort of semi-retirement although I do a bit of work from time to time.
I diversified into sawmilling. I am still chairman of the Lumber Millers Association of Zambia. These are the people into sawmilling business. NGO work also kept me busy. I was a trustee of MISA Zambia for a long time. I chaired the Southern Africa Media Development Fund (SAMDEF) for quite sometime.
From a financial institution perspective, that is a good example of how to support free media in Southern Africa. That model is now being copied. It has been taken to West Africa as well as East Africa. We can even replicate this model to develop businesses in developing countries.
Q: As I walked around your premises here, I noticed that there is very powerful and modern carpentry workshop…
A: Yes, but that is my wife who runs the carpentry workshop. She started using timber from the sawmill to make various wood products: they call it value adding in Zambia. But my view of value adding starts from the time you select the tree in the bush, cut it, transport it and so on. But in Zambia, we think that when we make products like tables and benches, kitchen units then there is real value addition.
We don’t do huge volumes here. In the trade it is called bespoken items; what people actually want. They would say, ‘give me a bench like this and instead of having side tables, you make the armrest wider so I can put my drink on it; so it is used both as a table and armrest’. It is this kind of creativity that we are doing.
Q: Did your wife study carpentry works?
A: No. She is an economist. She also did project planning. She has a masters degree in project planning. She worked for SIDO and UNDP for a long time. Of course, she has some business idea. The issue is not knowing the carpentry but how to organise the business. But once you are organising the business, you will learn from your carpenters certain standards that a table is this high etc.
Q: Before I ask you to comment about Zambia’s economy, could you give me details about your family? I mean your wife and children…
A: My wife is Elizabeth Phiri. She is Chewa and her mother is Shona. I have four children altogether. This is my second marriage. The first two children were from my first wife who died in a car accident. I then married Elizabeth who also gave me two children. The big one is Kiki and finished her degree in Cape Town University. She is working in Lusaka with Motor Trade.
She is a finance person there. The second born is Muchanga. She is in the United States. She was at Banani and did very well and got a scholarship. I hope she will get another scholarship because she wants to do architecture. Then there is the only boy; Gilbert jnr. He is at Chengelo in Mkushi doing grade eleven. He is a sportsperson. He plays rugby, football and basketball and doing well in class. The last one, Tafara, is a girl who is at Chudleigh House School doing grade nine.
Q: Talk about your political life, before we discuss the economy…
A: My political life is very wide. But I am now retired. When I was working in Namwala, I got involved in politics. That time there was only UNIP and we believed so much in development. We tried to do a district development plan for Namwala. At that time we had district officers who knew their job. We got them together using the governor. My involvement was from this technical side that we needed to do certain things to improve our people’s welfare.
When I came here, I wasn’t involved in politics because my political conviction is quite on the far left. We used to have a Journal of African Marxists, which was an original idea in those days. The journal come out in 1981 and continued to the early 1990s. It was a very radical journal. I come from a very socialist orientation and a Pan Africanist.
However, I also believe that we need to make money because we can’t share poverty.
So we have to develop and ensure that people are getting good money; everybody should be well off. That’s my belief. That stance sometimes put me in trouble with the leftists, the purists who said they just wanted revolutions. Yes, we want revolutions but we also want wealth.
So I didn’t do much politics. But on the Pan African level, the institution I was working for and founded in Zimbabwe is quite left oriented; we got the best of African intellectuals to get together to discuss ideas. When the MMD started in 1991, it was quite something that we had waited for.
Q: How did you participate in that?
A: I was a single parent at that time because my first wife had just passed away so I couldn’t move. I didn’t even move for work. I just used to work from home. I even ended up being a type-setter which I learnt when I was doing the magazine.
But I was involved in the MMD secretariat, in discussions and in production of documents.
At that time, computers were not that common. I had a small computer and that is where the MMD manifesto and documents were produced. Of course, I was involved in getting people like Guy Scott to be part of what was happening.
I was together with Guy Scott at Sussex University. When he came on holiday we met at the Pope Square meeting. After that meeting, Guy Scott got very worked up and I encouraged him to join the movement. He decided to join in and we had to introduce him to all the guys to get him into the political system. There were a lot of people involved. At that time, a lot of us had nothing to fear, or to lose. It was time for change. But after MMD got in, I thought I didn’t want to run for any position.
Q: Before you proceed, could you just tell me how you manoeuvred within the MMD because one of your friends told me earlier that you the intellectuals strategically placed Mr Mwanawasa in the vice-presidency position…
A: Yes, towards the end. You see, within MMD there was the so called the secretariat group. Most of the colleagues from the university were the ones in that group including Aka and Derrick Chitala who were quite instrumental.
We used to have meetings and produce this propaganda stuff and we started getting people. Then at Garden House, the old politicians came in. At first they said they didn’t want positions; they just wanted to help us the new guys. Then there was a trade union movement coming in. What we didn’t know was that these old politicians and the trade union people were actually politicians in the sense of the word.
We were a group that wanted change and we were brave enough to start it. But when it came to the convention, we found that in fact most of our people lost to these ‘politicians’. At the convention, the majority of people I voted for lost to people who were not known. Stan Kristafor came and said ‘God has sent me to stand’. We just laughed, we thought he was crazy but he ended up wining the position of information and publicity chairman.
Most of the credible people lost at the MMD convention because we didn’t realise that there was a very serious born-again group who we didn’t think were actually part of serious faction. That group was actually influential.
But we should give credit to Frederick Chiluba. Chiluba is a politician through and through. He volunteered to be chairman for mobilisation because he said he was a trade unionist and had the means to travel around the country. And what he did effectively was to go to any town, call the trade unionists and formed a district or branch. So most of the people who came to the convention were actually trade unionists but we thought they were just people in the districts so he got the MMD presidency quite easily even if he announced his candidature at the last minute.
It was also easier for Chiluba to win because the trade union movement didn’t want him to continue leading the union movement so they thought it was a chance for them to kick him up stairs so he could leave them alone. I think both ways worked in his favour.
After that, what happened was that the movement did transform itself into a real political party. All the active people went into Parliament and government. The few of us who remained were party of the research forum.
Q: Why did you resolve to support Mr Mwanawasa for the position of vice-president?
A: That one came towards the end. As the secretariat group, we felt the need to support people who would win. We knew that Chiluba was going to win the presidency but we needed to get somebody strong who would control Chiluba. But we didn’t understand that once you are president, nobody can control you.
We thought Mwanawasa was strong because if you remember that time he took UNIP to court several times; he got a lot of injunctions against them. He did a lot of work in the legal area. He defended the movement and also caused trouble to UNIP because of those several injunctions he took to court. He worked very closely with Eric Silwamba and Vincent Malambo as lawyers.
We also proposed to put Brig Gen Godfrey Miyanda as secretary general so he could get the voice from other people. We also put our man Derrick as vice to Miyanda. That’s what we did towards the end when we saw that we were being overwhelmed by these people, the politicians and trade unionists. We tried to salvage the situation.
After that, there was the issue of appointments in government. But most of our people found themselves in the minority. That is why at one point you heard this issue of the young Turks. These were trying to push it back to the original vision of the original MMD. But by that time, I think we had lost.
After that there was a move to break away from MMD to start something else. We started the National Party and I was active in that. Well, that issue was also abandoned. The UPND came about and I thought it was a good idea to get a stronger opposition. I was in the UPND management team but I left after sometime because I saw that the people who were there actually did not disagree much with what was going on in the other camp.
Q: What was the other camp?
A: The MMD. I thought these people in UPND just wanted to replace the MMD. That’s why I told you that I have retired from politics because I find politics to be very boring. It is dishonesty. Now, we don’t even have ideological differences. I believe that a political party must have an ideology, it must believe in something. It must have a programme. If you look at what is happening now, all the political parties have the same ideology.
We don’t have a leftist party and we don’t have a real conservative party. We are in the middle; very bad social democracy which we don’t even understand properly. So how do you anchor a political party when you have no ideology? That’s why you end up having parties identified with persons, not ideologies. You mention any party in Zambia; it’s always aligned to an individual and that is not very health for democracy; not even for politics because people do not have a valued system which they want to protect. They are just a club versus another club. But that’s not interesting.
I will be 60 in a few years time and I think that it’s time that you young people started doing these things. We have struggled for too long.
Q: Talking about the economy and coming from that background where you were to come up with ‘prayers’ to give hope to the people, what do you have to say about the Fifth National Development Plan? Do you see anything different in this plan or is it still a question of giving hope to our hopeless people?
A: Yes, it is. But let’s put it in context. When MMD came to power they thought planning was a socialist thing. So they abolished planning, some people from NCDP got swallowed up in the Ministry of Finance. Now, 15 years down the line, they realised that we needed to have a plan. We used to have these plans done by the World Bank and IMF which were just short term. Actually, they were just a financial management tool but not a comprehensive plan.
I think the only comprehensive plan we have had in Zambia is the second national development plan. You have a look at that plan, you will see the projects that needed to be done in all districts although some of them have not been done. We had things on power and if we had been planning, we wouldn’t have these power shortages we are having now with Zesco because Zambia can generate electricity.
There hasn’t been planning for power generation. The thing they are putting in Itezhi-tezhi now; Itezhi-tezhi was done in the 1970s when I was working in Namwala. The civil works were already done for power generation and since the mid 70s, they have not put turbines there. All you need is to put turbines and you generate power.
Q: Isn’t Zesco aware that all that is required is just to put turbines?
A: They are aware because that is a Zesco dam. Even if we over-produced power, there is no harm because we can export it and earn foreign currency.
Coming back to the Fifth National Development Plan, you come from a time when you have not been planning. Most of the planners have been retrenched. James Mulungushi, the permanent secretary in charge of national planning, used to work for NCDP (National Commission for Development Planning) and he is quite a good planner but now he does not have the people to do the planning. These people ended up with different working groups, not the officers whose job it is to do sector planning. Anyway, given what they had to do, it is a good effort. But those are not the plans that this country should continue with.
Q: What sort of plans should this country embrace?
A: Let’s have very serious central planning. Agriculture should have a plan; all the other sectors should have their own plan. When you put these together, you should see how they interlink and how one sector feeds into the other. That’s the exercise to do. We might not need to go back to the input and output table but part of the input and output table will at the end help to guide you to say ‘if you want to grow by so much, you need to grow in this and that sector by so much so that together you have an integrated system.
You see, the civil service is run in departments but if you get a director who is a civil servant in most cases, chances are that, that person has risen through the system. The permanent secretary might move from one ministry to another but the directors are professionals.
But instead of putting them together to start interacting, we have a tendency of putting permanent secretaries together.
We need to put together these people who advise permanent secretaries so that we have a more integrated approach or system so that they share information. As it is now, you cannot share across ministries. You have to go through the PS and minister.
Now, if you get two ministers talking about power and agriculture, it might happen that those ministers know nothing about power and agriculture. So you will end up with a decision coming out of there which will not be quite relevant. I think we need to professionalise planning, to get the professionals to work. Politicians make policy decisions, they have to be good policies and those policies will have to be turned into instruments and those instruments are technical in nature and they need to have this support. There are also ministries which have several departments and yet the departments don’t talk to each other.
We need long term-planning. Ok, we have this vision. But that vision is also an expression of hope, an aspiration. However, we need to say ‘to get there, what are the steps’ and we should outline those steps.
It will be interesting if you read the South African budget. In there, the minister will say, ‘this budget is part of this plan, last year you gave me so much money to do ABCD; this is what I have done with your money. And in this year’s budget we are moving from this step to that step, towards that step’.
But if you look at our budget here, it is a stand alone. Every year, the minister goes there and says these things.
The review is not a real review because it says this grew by so much but how much resources were put there? We don’t go back to the resource envelope to say ‘this is what was put in to do ABCD and this is what we have done’ or if you have failed you work on that so that it is corrected in the next budget because you have a target to meet, not to have stand alone budgets.
Q: What are your views on President Mwanawasa’s announcement concerning the new tax regime for the mines?
A: I have two things; Firstly, everybody knows that those agreements and tax regimes in those agreements are totally unfair for Zambia. We have read in the press that former finance minister Edith Nawakwi said that they were advised by the World Bank that the price of copper would not go up.
But that is totally wrong because historically prices of metals go up and down. There is no such thing as that this price will remain at this level because technology changes. Why are copper prices going up? It’s because of developments in China and in India. If you are doing construction, if you are doing electricity or energy, all those things need copper. Copper will not be substituted completely although aluminium can substitute copper in some applications.
You can’t say the world or other countries will not grow therefore copper prices will not go up. That’s fallacious and it was wrong to have accepted that prices of copper will not go up because even now you can google on copper prices from 1950 up to now, you can.
The initial mining groups were quite innovative but towards the end, they lost it in the sense that they were not doing exploration; their research and development was hived off and put into the UK. In Zambia, that capacity was quite reduced.
Anyway, I finished my doctorate in 1984 but in Sussex they give you a doctor of philosophy. It is a senior PhD and it is called DPhil. I got here at the beginning of 1985 and continued teaching. I was teaching a course in technology and development and most of my students were sent to all these parastatals; Chilanga Cement, Lenco, Kafue Textiles and Nitrogen Chemicals to look at the technology in that sector and see how that technology could be improved, adopted and how you could begin to use certain local inputs to domesticate in the economy.
I was also teaching a course in social functioning of engineering in the School of Engineering. We had to deal with, or explain why we train an engineer, to interface the engineer and his role in society so that he doesn’t just build the bridges and houses but he had to build bridges and houses for people. That was very interesting to teach and I found the engineering students very attentive and more interesting to teach.
Q: Could you tell me some of the people you taught at the university?
A: There are many and some of them are holding very high positions in government and outside. Some of them are working as permanent secretaries. I think they will be embarrassed if I mentioned their names because they are big people. Let me just say they are many, don’t you think so?
Q: No, just mention them. For example, I know that you taught my boss, Fred M’membe in the first year and I don’t think he would be embarrassed if you mentioned that you taught him.
A: Do you think so?
Q: Yes, because it’s him who told me that you taught him and he found you to be a very good and effective teacher; that you simplified your lectures so much that it was easy for everyone to follow. In fact, he holds you in very high esteem as a teacher and friend. He was telling me how you helped him establish The Post’s printing press and also worked with him closely during the early days.
Actually, his view is that we have wasted you as a country. He feels the country is not benefiting much from your brilliance. Of course, he doesn’t blame it on you. He thinks that those who are supposed to recognise your brilliance for the benefit of the country are not doing that.
A: Yes, it’s true I taught Fred. I hope I am not embarrassing him.
Anyway, towards the end of 1987, the economy started getting really terrible. I remember our salaries got to something like US $40 a month.
Q: As PhD holders and lecturers in the university?
A: Yes! And I said ‘this is not on’. So, with Dr Caleb Fundanga (the Bank of Zambia Governor), we started a consulting company. We started doing some consultancy work. At that time, we were bachelors and living together. Dr Fundanga had also just come back from his PhD studies. When he was courting his wife, we were actually sharing a house as bachelors. We stayed in a house at the far-end of Handsworth (in Lusaka). Now it is used as a police post.
Later after Dr Fundanga joined government, I also left for Zimbabwe to start SAPES Trust, a regional organisation doing social science research, publishing, organising seminars and workshops. We were the publishers of a Southern Africa Political and Economic Monthly magazine.
I had taken leave from the university and went to set up this institution with my colleague Dr Ibbo Mandaza who I worked with, was still working in government. After a year and half, the thing was set up. I came back home and continued being a trustee and continued working on certain assignments but I was based here.
From that time (early 90s), I started working from here (his residence in Lusaka’s Roma township). When I was building this place, I started looking for offices. I found that offices were very expensive to rent so I built an office block here at my residence.
Q: Was this around 1990?
A: Yes. Mostly, I was very active in consultancy work doing evaluation of development projects. That time donors were very anxious to know what the impact of their work was. So we were quite busy for a long time. Now I think there is a bit of donor fatigue and I think they think they know what they need to do so they don’t need much advice. So I am actually in a sort of semi-retirement although I do a bit of work from time to time.
I diversified into sawmilling. I am still chairman of the Lumber Millers Association of Zambia.
These are the people into sawmilling business. NGO work also kept me busy. I was a trustee of MISA Zambia for a long time. I chaired the Southern Africa Media Development Fund (SAMDEF) for quite sometime.
From a financial institution perspective, that is a good example of how to support free media in Southern Africa. That model is now being copied. It has been taken to West Africa as well as East Africa. We can even replicate this model to develop businesses in developing countries.
Q: As I walked around your premises here, I noticed that there is very powerful and modern carpentry workshop…
A: Yes, but that is my wife who runs the carpentry workshop. She started using timber from the sawmill to make various wood products: they call it value adding in Zambia. But my view of value adding starts from the time you select the tree in the bush, cut it, transport it and so on. But in Zambia, we think that when we make products like tables and benches, kitchen units then there is real value addition.
We don’t do huge volumes here. In the trade it is called bespoken items; what people actually want. They would say, ‘give me a bench like this and instead of having side tables, you make the armrest wider so I can put my drink on it; so it is used both as a table and armrest’. It is this kind of creativity that we are doing.
Q: Did your wife study carpentry works?
A: No. She is an economist. She also did project planning. She has a masters degree in project planning. She worked for SIDO and UNDP for a long time. Of course, she has some business idea. The issue is not knowing the carpentry but how to organise the business. But once you are organising the business, you will learn from your carpenters certain standards that a table is this high etc.
Q: Before I ask you to comment about Zambia’s economy, could you give me details about your family? I mean your wife and children…
A: My wife is Elizabeth Phiri. She is Chewa and her mother is Shona. I have four children altogether. This is my second marriage. The first two children were from my first wife who died in a car accident. I then married Elizabeth who also gave me two children.
The big one is Kiki and finished her degree in Cape Town University. She is working in Lusaka with Motor Trade. She is a finance person there. The second born is Muchanga. She is in the United States. She was at Banani and did very well and got a scholarship. I hope she will get another scholarship because she wants to do architecture. Then there is the only boy; Gilbert jnr.
He is at Chengelo in Mkushi doing grade eleven. He is a sportsperson. He plays rugby, football and basketball and doing well in class. The last one, Tafara, is a girl who is at Chudleigh House School doing grade nine.
Q: Talk about your political life, before we discuss the economy…
A: My political life is very wide. But I am now retired. When I was working in Namwala, I got involved in politics. That time there was only UNIP and we believed so much in development. We tried to do a district development plan for Namwala. At that time we had district officers who knew their job. We got them together using the governor. My involvement was from this technical side that we needed to do certain things to improve our people’s welfare.
When I came here, I wasn’t involved in politics because my political conviction is quite on the far left. We used to have a Journal of African Marxists, which was an original idea in those days. The journal come out in 1981 and continued to the early 1990s. It was a very radical journal. I come from a very socialist orientation and a Pan Africanist. However, I also believe that we need to make money because we can’t share poverty.
So we have to develop and ensure that people are getting good money; everybody should be well off. That’s my belief. That stance sometimes put me in trouble with the leftists, the purists who said they just wanted revolutions. Yes, we want revolutions but we also want wealth.
So I didn’t do much politics. But on the Pan African level, the institution I was working for and founded in Zimbabwe is quite left oriented; we got the best of African intellectuals to get together to discuss ideas.
When the MMD started in 1991, it was quite something that we had waited for.
Q: How did you participate in that?
A: I was a single parent at that time because my first wife had just passed away so I couldn’t move. I didn’t even move for work. I just used to work from home. I even ended up being a type-setter which I learnt when I was doing the magazine.
But I was involved in the MMD secretariat, in discussions and in production of documents. At that time, computers were not that common. I had a small computer and that is where the MMD manifesto and documents were produced. Of course, I was involved in getting people like Guy Scott to be part of what was happening. I was together with Guy Scott at Sussex University.
When he came on holiday we met at the Pope Square meeting. After that meeting, Guy Scott got very worked up and I encouraged him to join the movement. He decided to join in and we had to introduce him to all the guys to get him into the political system. There were a lot of people involved. At that time, a lot of us had nothing to fear, or to lose. It was time for change. But after MMD got in, I thought I didn’t want to run for any position.
Q: Before you proceed, could you just tell me how you manoeuvred within the MMD because one of your friends told me earlier that you the intellectuals strategically placed Mr Mwanawasa in the vice-presidency position…
A: Yes, towards the end. You see, within MMD there was the so called the secretariat group. Most of the colleagues from the university were the ones in that group including Aka and Derrick Chitala who were quite instrumental.
We used to have meetings and produce this propaganda stuff and we started getting people. Then at Garden House, the old politicians came in. At first they said they didn’t want positions; they just wanted to help us the new guys. Then there was a trade union movement coming in. What we didn’t know was that these old politicians and the trade union people were actually politicians in the sense of the word.
We were a group that wanted change and we were brave enough to start it. But when it came to the convention, we found that in fact most of our people lost to these ‘politicians’. At the convention, the majority of people I voted for lost to people who were not known. Stan Kristafor came and said ‘God has sent me to stand’. We just laughed, we thought he was crazy but he ended up wining the position of information and publicity chairman.
Most of the credible people lost at the MMD convention because we didn’t realise that there was a very serious born-again group who we didn’t think were actually part of serious faction. That group was actually influential.
But we should give credit to Frederick Chiluba. Chiluba is a politician through and through. He volunteered to be chairman for mobilisation because he said he was a trade unionist and had the means to travel around the country. And what he did effectively was to go to any town, call the trade unionists and formed a district or branch. So most of the people who came to the convention were actually trade unionists but we thought they were just people in the districts so he got the MMD presidency quite easily even if he announced his candidature at the last minute.
It was also easier for Chiluba to win because the trade union movement didn’t want him to continue leading the union movement so they thought it was a chance for them to kick him up stairs so he could leave them alone. I think both ways worked in his favour.
After that, what happened was that the movement did transform itself into a real political party. All the active people went into Parliament and government. The few of us who remained were party of the research forum.
Q: Why did you resolve to support Mr Mwanawasa for the position of vice-president?
A: That one came towards the end. As the secretariat group, we felt the need to support people who would win. We knew that Chiluba was going to win the presidency but we needed to get somebody strong who would control Chiluba. But we didn’t understand that once you are president, nobody can control you.
We thought Mwanawasa was strong because if you remember that time he took UNIP to court several times; he got a lot of injunctions against them. He did a lot of work in the legal area. He defended the movement and also caused trouble to UNIP because of those several injunctions he took to court. He worked very closely with Eric Silwamba and Vincent Malambo as lawyers.
We also proposed to put Brig Gen Godfrey Miyanda as secretary general so he could get the voice from other people. We also put our man Derrick as vice to Miyanda. That’s what we did towards the end when we saw that we were being overwhelmed by these people, the politicians and trade unionists. We tried to salvage the situation.
After that, there was the issue of appointments in government. But most of our people found themselves in the minority. That is why at one point you heard this issue of the young Turks. These were trying to push it back to the original vision of the original MMD. But by that time, I think we had lost.
After that there was a move to break away from MMD to start something else. We started the National Party and I was active in that. Well, that issue was also abandoned. The UPND came about and I thought it was a good idea to get a stronger opposition. I was in the UPND management team but I left after sometime because I saw that the people who were there actually did not disagree much with what was going on in the other camp.
Q: What was the other camp?
A: The MMD. I thought these people in UPND just wanted to replace the MMD. That’s why I told you that I have retired from politics because I find politics to be very boring. It is dishonesty. Now, we don’t even have ideological differences. I believe that a political party must have an ideology, it must believe in something. It must have a programme. If you look at what is happening now, all the political parties have the same ideology.
We don’t have a leftist party and we don’t have a real conservative party. We are in the middle; very bad social democracy which we don’t even understand properly. So how do you anchor a political party when you have no ideology? That’s why you end up having parties identified with persons, not ideologies. You mention any party in Zambia; it’s always aligned to an individual and that is not very health for democracy; not even for politics because people do not have a valued system which they want to protect. They are just a club versus another club. But that’s not interesting.
I will be 60 in a few years time and I think that it’s time that you young people started doing these things. We have struggled for too long.
Q: Talking about the economy and coming from that background where you were to come up with ‘prayers’ to give hope to the people, what do you have to say about the Fifth National Development Plan? Do you see anything different in this plan or is it still a question of giving hope to our hopeless people?
A: Yes, it is. But let’s put it in context. When MMD came to power they thought planning was a socialist thing. So they abolished planning, some people from NCDP got swallowed up in the Ministry of Finance. Now, 15 years down the line, they realised that we needed to have a plan. We used to have these plans done by the World Bank and IMF which were just short term. Actually, they were just a financial management tool but not a comprehensive plan.
I think the only comprehensive plan we have had in Zambia is the second national development plan. You have a look at that plan, you will see the projects that needed to be done in all districts although some of them have not been done. We had things on power and if we had been planning, we wouldn’t have these power shortages we are having now with Zesco because Zambia can generate electricity.
There hasn’t been planning for power generation. The thing they are putting in Itezhi-tezhi now; Itezhi-tezhi was done in the 1970s when I was working in Namwala. The civil works were already done for power generation and since the mid 70s, they have not put turbines there. All you need is to put turbines and you generate power.
Q: Isn’t Zesco aware that all that is required is just to put turbines?
A: They are aware because that is a Zesco dam. Even if we over-produced power, there is no harm because we can export it and earn foreign currency.
Coming back to the Fifth National Development Plan, you come from a time when you have not been planning. Most of the planners have been retrenched. James Mulungushi, the permanent secretary in charge of national planning, used to work for NCDP (National Commission for Development Planning) and he is quite a good planner but now he does not have the people to do the planning. These people ended up with different working groups, not the officers whose job it is to do sector planning. Anyway, given what they had to do, it is a good effort. But those are not the plans that this country should continue with.
Q: What sort of plans should this country embrace?
A: Let’s have very serious central planning. Agriculture should have a plan; all the other sectors should have their own plan. When you put these together, you should see how they interlink and how one sector feeds into the other.
That’s the exercise to do. We might not need to go back to the input and output table but part of the input and output table will at the end help to guide you to say ‘if you want to grow by so much, you need to grow in this and that sector by so much so that together you have an integrated system.
You see, the civil service is run in departments but if you get a director who is a civil servant in most cases, chances are that, that person has risen through the system. The permanent secretary might move from one ministry to another but the directors are professionals.
But instead of putting them together to start interacting, we have a tendency of putting permanent secretaries together. We need to put together these people who advise permanent secretaries so that we have a more integrated approach or system so that they share information. As it is now, you cannot share across ministries. You have to go through the PS and minister.
Now, if you get two ministers talking about power and agriculture, it might happen that those ministers know nothing about power and agriculture. So you will end up with a decision coming out of there which will not be quite relevant. I think we need to professionalise planning, to get the professionals to work.
Politicians make policy decisions, they have to be good policies and those policies will have to be turned into instruments and those instruments are technical in nature and they need to have this support. There are also ministries which have several departments and yet the departments don’t talk to each other.
We need long term-planning. Ok, we have this vision. But that vision is also an expression of hope, an aspiration. However, we need to say ‘to get there, what are the steps’ and we should outline those steps.
It will be interesting if you read the South African budget. In there, the minister will say, ‘this budget is part of this plan, last year you gave me so much money to do ABCD; this is what I have done with your money. And in this year’s budget we are moving from this step to that step, towards that step’.
But if you look at our budget here, it is a stand alone. Every year, the minister goes there and says these things.
The review is not a real review because it says this grew by so much but how much resources were put there? We don’t go back to the resource envelope to say ‘this is what was put in to do ABCD and this is what we have done’ or if you have failed you work on that so that it is corrected in the next budget because you have a target to meet, not to have stand alone budgets.
Q: What are your views on President Mwanawasa’s announcement concerning the new tax regime for the mines?
A: I have two things; Firstly, everybody knows that those agreements and tax regimes in those agreements are totally unfair for Zambia. We have read in the press that former finance minister Edith Nawakwi said that they were advised by the World Bank that the price of copper would not go up.
But that is totally wrong because historically prices of metals go up and down. There is no such thing as that this price will remain at this level because technology changes. Why are copper prices going up? It’s because of developments in China and in India. If you are doing construction, if you are doing electricity or energy, all those things need copper. Copper will not be substituted completely although aluminium can substitute copper in some applications.
You can’t say the world or other countries will not grow therefore copper prices will not go up. That’s fallacious and it was wrong to have accepted that prices of copper will not go up because even now you can google on copper prices from 1950 up to now, you can see how the prices have been fluctuating.
And what the mining companies are doing is dishonesty. The understanding is that you make your money and you should be protected but if you get windfall gains, you also need to be willing to share. If you stand by the law, then the other people will also begin to take unilateral decisions. In the budget of last year, there was an announcement that there will be negotiations. Those negotiations didn’t take place because some of the mining companies refused saying ‘no, look at the agreement, we are not here to discuss, go and talk to our shareholders’.
Now, that is actually being rude because how do you get shareholders of a company to a meeting? The people who are running the mines are running on behalf of the shareholders. So you have to negotiate with them and then they can go to their shareholders. So there has been an unwillingness on their part because they believe that they have these agreements on their side and they can go to court.
Now, the announcement the President made in Parliament; what we hear is that in the Lumwana project, they lost US $300 million on the stock exchange after that announcement because people started selling. Now, if you are running a company, do you want to have a run on your shares because you are being unreasonable? Or do you want to discuss so that you can get a fair thing so that you can take that and there is no one to run on you?
In a way, the mining companies have taken a very unhealthy stance and that prompted the other people to react. They said ‘ok, we have done our research and you will be making so much money, these are the agreement and this is the decision we are going to make’.
If you go to court and hope to get your money from there; that is a different thing. But what happens to your facility? I think the two need to sit together and find the way forward because to tell you the truth, the mining companies are making money. In a way, they are just pushing their luck.
It’s the same for diamond mines in Botswana. Anglo American were trying to say ‘no, we will move’ and they said ‘go, there are a lot of companies that want to come’.
Q: Do you see some mining companies here abandoning their projects, in the face of this development?
A: Well, unless they just want to prove a point. If they abandon their projects, others will come and pick them up because copper is still very attractive, cobalt is doing very well, manganese is doing very well. By the way, we have very good manganese in this country and the price is now good. There is plenty of manganese is Mansa and Mkushi. People are coming also for iron ore, we have very good iron ore.
The only problem is the distance to the sea and harbour. So if these mining companies were to leave, many others will be falling on each other to come and pick them up. If they want, they can be bought off the stock exchange market where they list. By the way, they are not listed here. They are not even trading. Why is it that they are not trading their shares on the stock exchange here?
Q: What are your comments on the general outlook of the Zambian economy, with all that has been said and observed?
A: To tell you the truth, the Zambian economy will look good on paper. People say, why is this not in my pocket because a mineral resource economy does not put money in peoples’ pockets. It’s only people who supply and people who are employed who benefit from that boom. But you and I don’t work for the mines.
Whereas you have economies like Kenya; they are into coffee, tea, vegetables etc. You ask, who are doing all these things? They are small scale people, small scale farmers. So when they export, the money goes into people’s pockets. Here, when you tax a company the money goes into the treasury. The question is, how does the money move from the treasury into people’s pockets?
It comes indirectly when the government builds a school, road, etc. So if we start making money from these assets, we need to start seeing where this money can be invested, stimulate employment to support new businesses and improve agriculture. Agriculture is still the biggest sector to improve people’s livelihoods.
Q: That said, is it morally right for the government to continue making such pronouncements as the economy has grown?
A: From a technical point of view, no! The economy will grow but it doesn’t mean that once the economy is grown the people will benefit, no. The two don’t go together.
Q: As a layman, I would like to believe that if my father’s economy has improved, I will see that economic growth by out standards of living in the house…
A: Yes, by the way you are living; you are eating good food and doing this or that. But if your father doesn’t give you pocket money, yours will remain the same. Are you with me?
The question is, how does the revenue that the government gets translate into not only public good? They do the roads; yes, we need to have good infrastructure. But you go on the roads and see who is using those roads. You go to Chirundu, you will see that the same people who refuse to pay tax are the ones transporting their huge commodities which are destroying our roads. It’s not the villager in Chirundu who uses the tarmac. For him, it is neither here nor there if there is tarmac.
Of course infrastructure development is good in the sense that it makes the movement of goods easier. But as part of the construction industry, it also employs a lot of people. Now, if we just build the road and we don’t plan development, what happens? Look at the colonialists; they built the rail line, I mean the old rail line – the Cape to Cairo line - and took all the land along the rail line and declared it state land.
They settled people there to start farming, to make this infrastructure viable. If you get to Choma, from town up to my village, there is about 25 kilometers and there is no village there. All that land was taken for the development of farms, commercial farms that will feed into the rail system. People will do maize, beef and transport it to the Copperbelt. You can see that the infrastructure is now being used.
Now, we don’t plan it that way. In fact, even all these resettlement schemes we do are terrible. There is no infrastructure. We did Tazara and our villagers there just look at it without any plans at all for that whole corridor.
So the economy can grow technically in terms of volumes, but in terms of equity, in terms sharing it could be neutral. Look at the economy in Botswana. Botswana has been growing, their GDP is higher from diamonds and minerals. But the geni co-efficiency, which shows the gap between the rich and the poor is one of the highest in the region. The small villager is not affected by this money that is held here even when the economy is growing.
Q: As we conclude the interview, may I ask you to talk about your lifestyle.
A: Which one?
Q: I am interested in discussing your whisky intake.
A: Oh, I like my whisky.
Q: Yes, I have heard a lot of people say that you are a very brilliant fellow but sometimes you allow the whisky to take the better side of you. Just how much do you imbibe?
A: I do imbibe quite a lot. But I think this year I have made a resolution that I am getting old and there are some unfinished business which I need to do. There are a lot of papers I have written that need to be put together. So I am taking it a lot easy on the whisky. Whisky is good but I now drink it more on social occasions.
By the way, I don’t drink from public places. In most cases, I drink at home or when we visit friends. Maybe it’s because in my younger days I used to drink but then stopped. When I started drinking it was from homes. You know in Europe there are drinking places next or near your neighbourhood; you have a local pub. So after you work and before you sleep, you drink a bit.
Holland was beautiful because you could work until midnight, so we would have two or three before sleeping. UK was terrible because you either had to study or drink. Here, I used to go to clubs but I no longer do that. I used to play tennis but I stopped. So I don’t walk to Arcades to have a drink there. It’s either there is a party here or a friend has one, that’s when I drink. But actually, whisky is a nice drink, it’s a good drink.
Q: What does it do to you?
A: It makes me talk more. Yes, you talk a little more and your mind is racing. When you are very drunk, you just sit and listen. But there is a stage where your faculties are loosened.
Anyway, as you grow old you find that if you drink, you suffer the following morning from hangover. You see, the more you grow the more severe the hangover because your body is not as strong. So age is also a moderating factor because when we were young, we would not feel anything the following morning. When we were boys, we would drink the whole night and work the following morning without feeling anything.
Q: Can you finish a bottle of Whisky alone?
A: No, I can’t. But I have finished a bottle of Whisky with a friend and that was too much. It was actually bad. And the following morning, I was very sick. We managed to finish the bottle because we were talking and without realising, we had increased the speed at which we were drinking.
Before I did my masters degree, I did a diploma in international relations and diplomacy. You know in diplomacy, they teach you all sorts of crazy things; that when you are in public and are drinking, just sip and hold on to the glass. But this is very unZambian because as Zambians, when we drink beer and you don’t sip beer. You take a mouthful. So when you take on the whisky, you want to take a mouthful.
Q: Can you do without whisky?
A: Yes, I can. In fact, this week I haven’t had a whisky. I can really do without whisky sometimes. If I am working and I have deadlines to meet, it means I can’t touch the whisky until I
Labels: GILBERT MUDENDA, PROFILE, WINDFALL TAX
posted by MrK @ 9:19 AM
1 Comments:
Dr Mudenda is right on mark on the issue of taxing the mining companies and where the money goes. Whoever came up with the idea of windfall tax, it's really good for Zambia. I just went through Quantum's latest annual report in which the company discussed the new changes to Zambia's tax regime; the company noted that the changes would result in "higher tax payments"...and "are likely to discourage investment" in new and existing facilities (in Zambia). In the report, the company also refers to the agreements that it has with GRZ which "provide for stability in the regulatory environment and provide for arbitration in the event of a dispute". What struck me about this observation by the company is that it was pretty one sided, nothing about how the country is benefitting from Quantum's investment in a positive way. I guess all they care about is their profit, which is not surprising...they are, after all, there to make money. It just struck me as a little cold, that's all. Well, it's business I guess. (The mining companies seem to say "Let's bleed Zambia dry but God forbid if the country gets a little cut out of our profits"!!) Just as well, they are being taxed. That aside, I still think the company will continue investing in Zambia despite their statement in the annual report. Africa is the focus of this company's operations, after all. So it's all good for mother Zambia! I also hope Zambia cultivates this relationship with Quantum all things considered. The company is getting bigger and bigger with its acquisition of a scandinavian mining conglomerate. In the long term, Zambia can only benefit more as long as this company stays in Zambia and keeps making profit and paying this windfall tax! yep, good ol' Mwanawasa got it right, definitely. But the money paid needs to directly benefit the people of Zambia! (Posted by a Zambian living abroad)
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