Maravi

Diversification on the Copperbelt

Diversification on the Copperbelt
By Editor
Monday June 02, 2008 [04:00]

The potential of the mining industry to improve Zambia’s economy should not be underestimated and undermined because to do so would be suicidal. The curse of being born with a copper spoon is the most common explanation of Zambia’s poor economic development. But we believe that this curse is just a big hoax to wish away a more serious analysis of the reasons for Zambia’s poor economic management. The fact that Zambia is endowed with copper resources is a big asset that the country could have used to develop not only the mining industry, but also the other sectors of the economy.

And for this reason, we urge those in government to take seriously the issue of economic diversification on the Copperbelt to sectors such as agriculture and tourism. The advice given on this score by British High Commissioner to Zambia, Alistair Harrison deserves our government’s most serious consideration. And there is no need to pretend, as Copperbelt minister Mwansa Mbulakulima is trying to do, that we are on course with diversification. We are not on course with diversification on the Copperbelt – we are very far away from even making a good start.

There is clearly no need for us to move away from mining to develop other sectors. We can develop other sectors like agriculture and tourism while increasing and improving our country’s mining activities. Two thirds of Kenya is arid and the country has no mineral resources to write home about, but this has not stopped Kenyans from developing a broad-based agricultural sector as well as an impressive industrial and tourism sector.

There is no reason that being mineral-rich should result in an inability to farm or nurture a dynamic industrial structure. In fact, a developed mining sector like Zambia's could easily be the motor for a fast-growing economy.

A large mining sector has resulted in a concentration of population on the Copperbelt. This population, if it were well paid, would have the potential to generate an increased demand for various agricultural and industrial products. The sophistication of the industry would also generate skills that could be used in the other industries. Furthermore, demand for industrial equipment would produce a large enough demand to justify local assembly and later manufacture of industrial equipment.

A good illustration of this is the mining industry's demand for pumping equipment. Pumps of different sizes and capacities are used in almost all operations of the mining industry. Pumps are also in prime demand in various manufacturing industries as well as in agriculture. However, despite the demand for pumps, Zambia does not produce pumps. This is not because there is not a large enough demand for pumps, but rather because certain positive policies have not been taken to encourage such a development.

While the mining industry has been an integrative force in almost all aspects of Zambian life: high urbanisation rate, multilingualism, inter-tribal marriages, heavy drinking habits and so on, it has never been used as the integrating force in the economy.

There are many reasons for this gross omission.

First, the mining industry has always been treated as an external part of the economy.

Second, the dominant position of large international firms in the industry re-enforced the alienation of the industry from the rest of the economy. Consequently, the large mining corporations were left to fashion and determine the country's mining policy. In turn, this re-enforced the view on the part of the government - both colonial and post-colonial - that the industry was only good as a foreign exchange milk cow.

The original sin was committed during the early 1920s when the colonial government gave huge mining concessions to large companies only. In spite of protests from the settler community who had been excluded from participating in the industry, the large mining houses consolidated their hold on the industry by sponsoring policies and pieces of legislation that made it difficult for small mining enterprises to enter this sector of the economy.

In addition, the large international mining corporations fostered a culture that treated the industry as a net exporter of metals without the need to go into semi-fabrication. Unfortunately, this culture became dominant even after the industry was nationalised. In spite of the huge mining activities and the complexity of the technology required, the Ministry of Mines is one of the smallest ministries in the country and possibly, also the least powerful.

While the Zambian mining companies inherited the power that was exercised by the international mining companies, they also inadvertently inherited the corporate culture and strategies of these international firms.

The more poignant examples could be summarised as follows: only mine copper, cobalt, lead and zinc; procure inputs from external suppliers; only export ingots and wire-bars without moving into semi-fabrication; consistently undermine the power of the ministry and by all means never let yourselves be integrated with the rest of the economy.

On the part of the government, the mining industry has always been treated as a special one to an extent that most Zambians, including policy-makers, are ignorant about it. The mystique associated with the mining industry turned into a sacred cow. ‘Touch me not,’ became the industry's clarion call. It was certainly the goose that laid the golden egg.

Labels: DEVELOPMENT, ECONOMY, MINING

posted by MrK @ 6:18 PM