Maravi

Mutati under fire over RP Capital

Mutati under fire over RP Capital
By Mutale Kapekele, Fridah Zinyama and Kasapo Chibwe
Tue 15 June 2010, 04:20 CAT

COMMERCE minister Felix Mutati has insulted Zambians by his comment that they cannot understand the RP Capital valuation report for Zamtel, development activist Mulenga Chikwanka has charged.

And Professor Oliver Saasa yesterday said transparency and accountability demands that government should release the RP Capital valuation report unless there are compelling reasons not to do so.

Meanwhile, University of Zambia economics lecturer Webby Wake has said government was also partly to blame for the poor state in which Zamtel was due to its lack of settleement of billions of kwacha in bills to the entity.

On Saturday Mutati said Zambians would not understand the government’s sale of Zamtel from the valuation report and asked that they listen to the “rational explanation” from the government.

In an interview yesterday, Chikwanka said Mutati’s comment was insulting to the general citizenry and argued that it was necessary for the government to release the report for the citizens to analyse and understand the Zamtel sale.

“I find it insulting for Mutati to suggest that Zambians could not understand a report,” Chikwanka said. “It means that the government is suggesting that knowledge and access to information is unique to the MMD.

That is very disappointing; especially that it is coming from a minister who is held in very high esteem by most Zambians.”

Chikwanka said the government should make the valuation report available for the people to effectively participate in governance.

“What has happened is like a situation where a person engages a real estate agent to sell their property and then afterwards the agent makes a sell but refuses to release the real value of that property,” he said.

“That would bring about a lot of speculation and it’s like saying Zamtel did not belong to the country but the MMD. How do they expect the people to participate in governance without information? What type of government is this which thrives on people’s ignorance?”

And Professor Oliver Saasa said transparency and accountability demands that government should release the RP Capital valuation report unless there were compelling reasons for them not to do so.

“The public is sufficiently enlightened to understand what government did,” he said. “We do not want the situation of the mining Development Agreements to occur again in Zambia, as government withheld vital information which only became public after a few interested people read it and understood the implications for the country.”

Prof Saasa said it was important that such a situation was not created again by government allowing the few Zambians who can understand what the valuation report says and then simplify it for the ordinary Zambians.

“Those who are given an opportunity to serve the public should be servants of the public. After all, they are in such positions because of the public. Zamtel is a public institution which is owned by ordinary Zambians and any decision made concerning it affects everybody.

Government was acting on behalf of the public and if they demand to know what the report says, they should be obliged.”
Prof Saasa aid Mutati’s position that the public would not understand the RP valuation report was very misplaced and just showed that government had something to hide.

And Lantern Solutions Ltd managing consultant Dr Bwalya Ng’andu said the whole process of selling Zamtel had been shrouded in suspicion.

“The sale of Zamtel has raised questions and suspicions from the very beginning,” he said. “It is a matter of public interest that government releases the report, and if government has nothing to hide, let them release it to the public.”

Dr Ng’andu wondered why government was so bent on withholding the RP report from the public, adding that the public has every right to know what the report says.

“We have a right to know...and how much Zamtel was valued at,” he said. “Regarding the complexity of the RP report...I do believe that there are a reasonable number of Zambians who can read and understand the report. Those should be given an opportunity to do so.”

Dr Ng’andu added that as long as government was not forthcoming with information about the sale of Zamtel, suspicion and questions would continue to be raised about the sale of Zamtel.

Meanwhile, Webby Wake said it was unfair for government to put the blame on Zamtel employees accusing them of mismanagement of the company yet it owed the company billions of money for the services.

“Zamtel was grossly abused by government which is why it is in this state today. It is not because of mismanagement by employees that the company is struggling but rather because of government’s unsettled debt,” he said.

Wake said Zamtel would have been better off if the government had paid off its’ debt instead of selling off 75 per cent shares, as the money would have been used to revamp the company. He, however, observed that privatisation was welcome as it always helped in recapitalizing a struggling institution.

On the other hand, Wake noted that it would have been nice to continue having a public telecommunications company as a nation as well as a strategic industry in the hands of the public. He said Zamtel would no longer be subject to political interference as it was now in private hands.

“Privatization is welcome as it injects new capital in a company that is struggling. However, it can also prove futile depending on the intentions of the new owners. We do not know the plans that the new owners have nor do we know the terms of negotiations of the deal,” Wake said.

He explained that privatisation could prove futile in the sense that the new owners may have a different plan for the company or fail to carry out the original operations of the company and decide to pull out.

He cited an example of RAMCOZ and Zambia Railways as areas where privatisation failed as it was left up to the new owners to run the companies to their satisfaction and bring in development, which unfortunately did not happen.

“It is not always the case that privatization brings in capital. However, it can be forced on the new owners to bring in an acceptable level of capital or technology through negotiations by government,” he said.

Wake added that the new owners of Zamtel could decide to close the cell phone part of the company depending on the way they decided to run the company.
He said one could only hope that government realised its objective of bringing in new owners so that a repeat of the Zambia Railways scenario was avoided.

And Wake advised government to stop comparing Zain and MTN to Zamtel as government paid for the services it engaged from the two companies whereas it dealt on a credit basis with Zamtel.

“Government is in the habit of praising the other two telecommunications companies while berating Zamtel but it forgets that it pays for the services of the two whereas it credits the services it obtains from Zamtel,” Wake said.


He said the three companies could not be compared as they provided different services. He said Zamtel offered three services of landline services, cell phone services and internet services hence the large work force that the company engaged.

Wake further said the sell of Zamtel would have been more valuable if government had separated the company into two entities of landline service provider and cell phone service provider.

He said there was need for a strong regulatory framework to be put in place in which government would invest heavily as telecommunications companies got away with a lot of things that bordered on abuse of the customers.

“A strong regulatory framework is needed especially that Zamtel initially carried out the regulation of cell phone companies and is now getting into private hands,” he said.

He said Zambia had the law of free capital flows which meant that a company could bank its money anywhere it chose to as there were no restrictions as to where one wanted to bank its money. Wake said if the profits made by the company could be banked in Zambia, the money could be used for developmental programs.

“I hope there is a clause that can make the company a public limited company in much the same way that BP was done,” Wake said.

He explained that in a public limited company, the new owners could not just leave when they felt they were losing out on profits. He said a repeat of the Anglo saga was not wanted and advised that a clause stipulating that they could only leave if they found new owners to fill in be strongly considered.

Wake added that government should strive to make telecommunication competitive so that tariffs could be lowered.

Labels: FELIX MUTATI, OLIVER SAASA, PRIVATISATION, RP CAPITAL PARTNERS, ZAMTEL

posted by MrK @ 3:59 PM