Bailing out the mines
Written by PCM, Essex, UK
Monday, December 22, 2008 8:55:45 AM
The appeal by Luanshya MP Kambwili for the government to consider bailing out private mining companies in order to save jobs is well-intentioned, but it is not advisable due to the following reasons:
1. No one can predict when the current global financial crisis will end and whether copper prices will get back to their pre-2008 levels. Therefore, it would be very risky for the Zambian government to guarantee loans to any mining company.
2. The mining companies currently operating in Zambia are foreign-owned and managed. They are new entities with unproven operational and credit histories. It would make more sense for their offshore parent companies to arrange any bail-out financing.
3. Comparisons with the USA are unfounded. The beneficiaries of American government assistance have distinctly American identities and have been major contributors to the US economy since the early 20th century. In fact, the US auto industry is in jeopardy partly due to high expenditures on employee welfare, which the new Zambian mining companies have avoided.
4. The attempted bail out of Banani by Zanaco during the Chiluba administration should be a painful reminder of the danger of giving unconditional financial assistance to foreign companies. The consequences of bailing out the new mines will be even more catastrophic than the Banani saga, especially if the price of copper continues to decline.
5. The mining companies have not been accommodating on the issue of royalties and windfall taxes even though the price of copper during the past five years has been significantly higher than their most optimistic projections. Furthermore, despite the numerous concessions given to them, including highly-subsidised electricity, there is credible evidence that some companies have been misrepresenting their profitability to the Zambian public. Their reluctance to make realistic contributions to the treasury has deprived Zambia of the much-needed income, which could have mitigated the effects of mine closures and job losses. It will not come as a surprise if in future they use the current economic crisis as a valid excuse for refusing to pay any taxes at all.
6. Some mining companies have unilaterally closed down, scaled down operations and laid off workers without prior consultations with the workers' unions or the government. This is inconsiderate and will cause social upheaval and serious damage to the country's economy.
The global economic melt down will test many governments' abilities to innovate and survive. Zambia must not wait for the usual IMF/World Bank solutions because they do not have them now. To start with, Zambia needs to be less tolerant of foreign speculators masquerading as investors, who close down mines at the slightest hint of recession in the Western economies, thereby destabilising Zambia's economy. It is time for Zambia to regain control of its mineral resources; starting with increased support to small-scale copper mines owned by indigenous Zambians. The government can provide financial and material support and also facilitate linkages between these low-cost, labour-intensive operations and the Chinese-operated processing plants near Chambishi to make them viable. This outgrower type of arrangement has worked in other countries and will create new opportunities for retrenched miners and redundant mine contractors.
We cannot continue to depend on so-called experts from failed economies to provide solutions.
http://www.postzambia.com/content/view/2961/64/
Teta, local governance
Written by Eustace Chamulonde
Monday, December 22, 2008 8:54:47 AM
One cannot but wonder how local government minister Benny Tetamashimba wants to stamp his authority, albeit unnecessarily, over the city and municipal councils in the country by postponing mayoral elections when they have been long overdue.
I would have been happier if the minister could use the same energy and make council officials rid the rubbish heaps piling up at markets, with Chisokone in Kitwe being one of the worst. Better still prodding the councils and water utilities to completely eradicate from most of our townships and nearly all the shanty settlements of the human excreta floating in every pond of water, especially in the rain season. This will be a cause worth the drive the minister is exhibiting.
These are but some of the issues for which getting emotional over and spending so much time on will earn the ministers the much-needed kudos.
However, this, I am sure, is not a priority for the minister knowing it may not put him in the limelight as he seems to always want to bask in the spotlight, but usually unfortunately and regrettably over wrong choices and decisions he loves making.
The petrifying rubbish heaps at Chisokone market and other markets around the Copperbelt are potential causes of cholera.
We seem not to have a formula to contain the disease, especially during the rainy season when cleanliness is the simple answer and the rubbish heaps at markets are not doing us any favour.
What has happened to the ‘Keep Zambia Clean’ campaign started by Sylvia Masebo? Could it be right to assume that the idea died the moment Sylvia left the ministry, in typical Zambian style of completely overhauling of programmes left by a predecessor when offices change hands?
There are a lot of needy areas requiring the attention of the local government ministry and surely the issue of postponing mayoral elections should be the last item on the agenda of the minister’s priority list.
http://www.postzambia.com/content/view/2955/64/
Diversifying our economy
Written by Raphael Mukuka, Sydney, Australia
The current low copper prices and global financial
Monday, December 22, 2008 8:56:56 AM
The current low copper prices and global financial crises are challenges that should provoke us to shift our attention to other industries that can hold the nation in such turbulent moments.
To survive, we will need to diversify our industries and focus on areas that will bring development and create more jobs urgently.
The 2008/2009 farming season also presents another daunting picture for our food reserves that threaten hunger and despair in the minds of Zambians. You cannot talk about farming without identifying key commercial farmers who will feed the nation.
A lot of farmers we have are struggling subsistence farmers who fall far short of feeding the nation and this is why we have food shortages because there are not many commercial farmers.
What are the statitsics of commercial farmers growing maize? We need to know so that we know what amount of food to expect rather than expect miracles. It’s the duty of the government to ensure we have enough food and set up reserves in case of shortages.
In Zambia, it’s becoming common that for any product not manufactured locally, the quickest solution is to import. Other countries have developed because of necessity but for us, even when we have resources we would rather sell abroad and import by-products.
We need to broaden our minds and invest in other areas of development. In Zambia, when someone is retrenched or retired, they will opt to start a taxi business or grocery shop. This is lacking in ideas and a retrogressive approach to development as it will not bring any reasonable capital growth.
The government needs to lead people in a manner that will provoke us to develop the country. There should be a clear programme to acquire land for farming and infrastructure development. Someone needs to set up stand plans for construction to avoid shanties mushrooming everywhere.
It’s sad that we import a larger percentage of our food, clothing and simple machinery that can be made locally. This simply means that all our hard-earned income is developing and sustaining other nations as we continue importing.
The government needs to steer the nation in making policies that will revive industries by deliberately making loans and grants available to local manufacturers so that they can embark on starting producing some of the things we import.
Just before privatisation, we had some industries running and that was our foundation that was sold and buried away. I recall companies like Lenco that used to make coach bodies and others.
Where do you expect our technicians and engineers to work if we don’t have viable industries? We will lose out on advancing in technology and end up passing all our graduates to neighbouring countries and lose out on technology income to develop and feed the nation.
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