COMMENT - This is how they re-write history:
While the coronavirus pandemic added to Zambia’s woes, its debt problems started years earlier. The government borrowed heavily since 2012, ignoring warnings from the IMF of growing debt distress risks.
Actually that's not what happened. It was the IMF that encouraged the government to borrow Eurobonds instead of collecting a Windfall Tax from the mines.
“The mission congratulates the authorities on the successful launch of Zambia’s first Eurobond. The mission also welcomes the decisions the authorities have taken for the use of these funds in 2012 and 2013. Using this commercial financing to finance high priority capital spending including the repayment of a short-term debt to finance roads infrastructure development reflects prudent fiscal management. Source: IMF, 2012
The 'warnings' only came a few years ago. The government took Eurobond debt instead of a Windfall Tax on the mines, I presume because of some corrupt agreement between the parties. Either way, where they were once owed billions of dollars in taxes, they now owe billions of dollars in Eurobond debt, plus interest. That makes it odious debt, and it should be scrapped. Back in 2012 I blogged:
(STICKY) Chikwanda describes advocates of windfall tax as lunatics. - MrK
(YAHOO, BLOOMBERG) Zambia Default Sets Tough Tone for Talks With Bondholders
Matthew Hill and Taonga Clifford Mitimingi
Sat, November 14, 2020, 12:03 PM GMT+1·4 min read
(Bloomberg) --
Zambia is squaring up for a bruising encounter with foreign bondholders after saying it can’t pay interest on one of its Eurobonds, making it Africa’s first sovereign default since the coronavirus pandemic struck.
A refusal by bond investors on Friday to grant debt relief to the government sets the tone for tough restructuring negotiations with a diverse range of creditors from pension funds in Europe to state-owned Chinese banks that Zambia owes almost $12 billion.
“A default could make an orderly and timely restructuring more challenging,” said Samir Gadio, head of Africa strategy at Standard Chartered Bank Plc in London. “A prolonged default may see some investors unwind non-performing bonds,” battering down prices that are already below half of face value, he said.
Holders of Zambia’s $3 billion of Eurobonds rejected a request to suspend interest payments for six months, and the grace period for an overdue $42.5 million coupon lapsed Friday, triggering a default.
That gives holders of all three securities the right to demand immediate repayment. While it’s unlikely they’ll take that route, Zambia could find itself locked out of international capital markets for years while it struggles to reduce its debt load and address fiscal challenges. General elections scheduled for August add another layer of complication.
“I would expect debt-restructuring talks for the Eurobonds to be very difficult and I would expect them to be protracted,” said Phillip Blackwood, adviser to Sydbank, which manages and advises portfolios with Zambia Eurobonds.
The default will make Zambia’s “financial conditions even tighter for a place where financial conditions have already been tight for quite a while,” said Gustavo Medeiros, deputy head of research at Ashmore Group, which holds Zambia’s dollar bonds. Local currency notes already have yields as high as 33%, and the kwacha has lost nearly half of its value against the dollar this year.
Equal Treatment
Zambia couched its request for an interest freeze as part of the Group of 20’s so-called Debt Servicing Standstill Initiative, an agreement between rich nations to suspend interest payments owed to them by poor countries. The government said it was asking all its foreign creditors, including private lenders, for the same relief.
China Development Bank last month agreed to defer interest payments. While that covered a small portion of the debt, it created a precedent that made it difficult to pay bondholders.
“The government is strongly committed to pursue a constructive and very transparent dialog with all its creditors,” Finance Minister Bwalya Ng’andu said Friday, adding that the state had no choice but to build arrears.
No Example
Bondholders, however, were concerned any relief they granted would be used to service debts to Chinese lenders, which account for more than a quarter of Zambia’s external liabilities. They also want more transparency and a credible economic recovery plan, preferably with the International Monetary Fund’s endorsement.
Other governments shouldn’t see Zambia as an example for how to approach debt restructuring, said Simon Quijano-Evans, an economist at Gemcorp Capital in London.
“Zambia can’t be used as a comparison to other countries, simply because it failed to approach the IMF over several years and failed to be transparent,” he said. “Other countries like Angola and Ghana did exactly the opposite and are thus in a much better position than Zambia.”
While the coronavirus pandemic added to Zambia’s woes, its debt problems started years earlier. The government borrowed heavily since 2012, ignoring warnings from the IMF of growing debt distress risks.
Some Eurobond investors, including Blackwood, argue that Zambia’s troubles only emerged in the years after it tapped international markets, and turned to China for funds. The nation sold its first dollar bond in 2012 and the last one in 2015.
“From Eurobond holders’ side, this is not about an unwillingness or otherwise to forgive debt,” he said. “It is clear to Eurobond holders that the debt problems escalated when the bilateral loans accelerated, after the Eurobonds were issued. The nature of those deals quickly caused problems for the country.”
(Updates with investor comment in the seventh paragraph.)
Labels: DEBT, EUROBONDS, IMF, World Bank
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COMMENT - The World Bank is an ideologically driven organisation, that is heavily influenced by
the Rothschild barons.
(CDEV) Chart of the Week #3: Why the World Bank Should Ditch the "Doing Business" Rankings—in One Embarrassing Chart
1/18/18
Justin Sandefur and Divyanshi Wadhwa
Last week the World Bank's Chief Economist, Paul Romer, told the Wall Street Journal the Bank had manipulated its own competitiveness rankings to undermine Chile's socialist government, and hinted Chile might not be alone—then he retracted the claim. Romer's conspiracy theories probably aren't credible, but neither are the Doing Business numbers.
Download the data and replication code here (zip file).
The Doing Business index is one of the World Bank's highest profile publications, ranking countries on the ease of registering property, paying taxes, and clearing other regulatory hurdles. The Bank boasts that countries often design reform programs specifically to improve their rankings, and Rwanda has a whole ministry devoted to that purpose. Clearly, the Doing Business indicators carry some weight.
So when Paul Romer, the World Bank chief economist and a perennial contender for the Nobel Prize, told the Wall Street Journal that he had lost faith in "the integrity" of the process behind the numbers, people took notice (see the New York Times, Bloomberg, Mother Jones, Quartz, etc.).
Chile's peculiar fall and rise and fall again
Romer hinted at a political conspiracy. "I want to make a personal apology to Chile," he said. Questionable methodological changes had caused Chile's ranking to plummet when socialist president Michelle Bachelet was in office, rise again under her conservative successor Sebastián Piñera, then turn around and fall again when Bachelet came back to power in 2010— all due to methodological tinkering and almost no underlying changes in Chile's actual laws or policies.
To illustrate Romer's point, we went back and compared the official rankings published by Doing Business with our own attempt to re-create rankings using a consistent sample of countries and methodology from 2006 through 2018. (First we compiled the older Doing Business rankings from PDFs, as they've been conspicuously expunged from the historical data on the Doing Business website. And then we downloaded the indicator-by-indicator data from Doing Business to create our own fixed-methodology rankings. The full data and code are linked at the bottom of this post.)
Chile's Doing Business Rank
Source: Justin Sandefur and Divyanshi Wadhwa, based on data from www.doingbusiness.org and World Bank “Doing Business” reports, 2006-2018.
The bottom line: Chile's socialists have good reason to distrust the World Bank.
The World Bank’s defense: it wasn't politically motivated, just… a very unreliable index?
Despite what the Chilean numbers show, on Monday the World Bank CEO Kristilina Georgieva sent a letter to Chile's Minister of Finance pushing back. "It is unfortunate that Mr. Paul Romer," she wrote, "has questioned the Doing Business rankings, in particular for Chile. This is not the view of World Bank management."
On Tuesday, Romer posted a "clarification" on his own blog:
In a conversation with a reporter, I made comments about the Doing Business report that gave the impression that I suspected political manipulation or bias. This was not what I meant to say or thought I said. I have not seen any sign of manipulation of the numbers published in Doing Business report or in any other Bank report.
Here is the full response from Augusto Lopez-Claros, who ran the Doing Business initiative until last year.
All of which seems to leave three possibilities: (1) the Wall Street Journal grossly misquoted a senior World Bank official; (2) the World Bank CEO managed to rein in her rogue Chief Economist; or (3) Romer was just wildly speculating while on the phone with a reporter, and never had any direct evidence of political interference. Most people we've spoken to assume the correct answer is the last one.
Also, to be fair to the Doing Business team, if you replicate the graph above for various other countries, in most cases the disparities are not nearly so large (see graphs below).
Conspiracy or not, the numbers still aren't credible
Never mind the accusations of political motivations, the Chilean data alone is damning, showing massive movements in rankings due to changes in methodology, not reality.
1. The goalposts keep moving
A core element of the recent "credibility revolution" in empirical economics is a push for researchers to pre-commit to a methodology, before they look at their data, so that the results can’t influence their methodological choices. That’s the opposite of how Doing Business works. And as our colleagues Vij Ramachandran and Alan Gelb note, the firewall between Bank lending operations and research is too weak in these cases.
Perhaps nobody set out to target Michelle Bachelet deliberately. But that was the result, and it was deemed acceptable. Hypothetically, if the World Bank team had made innocent methodological choices and discovered they launched Chile to #1 in the rankings instead of #57, surely they would have revisited their methods. Did they not revisit any methodological choices on the basis of their impact on the ranking? Of course they did. Were they genuinely blind to the likely effect on countries’ scores when deciding to introduce new measures? Of course they weren’t—even if there was no deliberate plot to penalize anyone in particular.
2. The measures are unreliable
The graph also highlights a number of complaints that have been voiced for years. As an external review noted in 2013, the numbers jump around too much. The aggregate country rankings involve judgements about what makes a "better" business environment, that have little grounding in research or evidence, and the review panel recommended dropping the aggregate rankings altogether. Doing Business "makes far-reaching observations based on data gathered from sources with a relatively narrow perspective," the external review noted. Somewhat damningly, “improvements” in a country's Doing Business score don’t reliably predict any change in responses to the World Bank's own survey of businesses about the ease of doing business.
3. The index starts from an extreme ideological premise
At a more philosophical level, the index measures the costs of government regulation but none of the benefits of those regulations. It's an extreme libertarian stance, out of step with much of the World Bank's other work. Viewed through the lens of Doing Business, corporate taxes are a pure bad, with no consideration of the benefits that come from raising tax revenue. Safety regulations and minimum wages are pure bads because they slow down business, with no consideration of the benefits to workers or customers. On almost all dimensions, a Hobbesian state of nature would get the best possible Doing Business score.
Regarding this latest scandal, it's kind of funny to think the Doing Business project was somehow exposed this week for secretly trying to undermine progressive governments. That ideology was baked into the design of Doing Business from the start. But now is a good time to change course. In response to the latest debacle, World Bank management has announced a new independent review of Doing Business. Hopefully they’ll use this opportunity to develop a more balanced and constructive stance on how developing countries should regulate markets—beyond a simplistic message of cutting red tape and letting the market rule.
Labels: IMF, NEOLIBERALISM, World Bank
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COMMENT - Excellent article. Even more, it is already known that if there is this level of economic violence, pushed to a head by austerity measures, there are going to be what the
former World Bank Vice Chairman Joseph Stiglitz has called the IMF Riots.
(LUSAKA TIMES) IMF Bailout: A Strangulation of Zambia’s Future
October 23, 2016
Fellow countrymen and women, comrades and friends, allow me to first echo the wise words of the revolutionary icon Thomas Sankara. “Debt is a cleverly managed reconquest of Africa.” “He who feeds you, controls you.”
Once again, our leaders today have failed to think. They were employed by the Zambian people to think wisely on behalf of the nation. They were voted to improve and safeguard the welfare of the Zambian people. They were not employed to contract gigantic loans from the International Monetary Fund (IMF) or any other lending institution. Even at gun point, I refuse to accept that borrowing money from the IMF at the detriment of Zambia’s future is part of their mandate. Their mandate is to think of alternative sustainable ways to resuscitate the economy, as opposed to rushing to the IMF for a bailout that strangles the country’s future especially the poorest citizens. A government that cannot think of alternative ways to regrow the economy apart from borrowing from these money-lending institutions is not fit to hold public office. It is now clear, our ministers are appointed, not to think on behalf of the ministries they lead, but to ceremonially occupy such positions while shamelessly enjoying free housing, transport, electricity, airtime, state security and gallivanting around the globe at the expense of taxpayer’s money.
the IMF promotes a fertile ground for breeding poverty, making it impossible for poor countries to eradicate poverty and realize food security
.
I am struggling to understand why our politicians have failed to comprehend that the so called bailout package from the IMF has never been a viable and sustainable option to resuscitate an ailing economy. You do not need a PhD, bachelor’s degree, diploma, or certificate to understand the ramifications of an IMF bailout package. A simple perusal through the conditionalities attached to such a bailout package should enable even a rural dweller, who has never been to school, to understand that the IMF bailout is a well-calculated scheme to keep the poor poorer.
There is no rocket science involved in understanding that the IMF discourages you from subsidizing your own farmers. In this regard, the IMF promotes a fertile ground for breeding poverty, making it impossible for poor countries to eradicate poverty and realize food security. The IMF further emphasises reduction of government funding to health and education, a condition that goes counter to the campaign championing access to education and healthcare for all. Such a condition further strangles the country’s efforts to build a productive human resource pool. It is simple. If you don’t fund your education system, then the country’s capacity to produce its own skilled manpower – teachers, nurses, medical doctors, lawyers et cetera is substantially curtailed. In the long term, such skills will have to be sourced externally at an astronomical cost on the country’s treasury. Moreover, privatization and liberalization, which are a hallmark of the IMF, have the potential to completely decimate domestic industries. Fellow Zambians, you will agree with me that we have been yearning for a Zambia with the capacity to produce its own goods and services. The IMF is here to shatter this dream. Surely, with all these real-life practical examples, it is shocking to see our ministers, some of them very educated, failing to understand that the IMF is here to perpetuate poverty. Our dream to become a politically and economically independent country will remain an illusion as long as we embrace institutions like the IMF and the World Bank.
Fellow patriots, allow me to conclude by stating one logical fact. Should Zambia accept this IMF bailout, it is the elite politicians that should bear the burden of austerity measures. Ordinary Zambians have suffered enough already. As part of austerity, the republican president should be relocated to another modesty housing. This may sound crazy to most of you because you are accustomed to seeing a republican president living a lavish lifestyle in state house. It cannot be disputed that the country spends astronomical sums of money in trying to sustain state house.
Moreover, it is immoral to continue enjoying a lavish life in state house while your citizens are dying of hunger induced by austerity measures from the IMF. Unless an international trip will add value to the country’s well-being, the republican president and his ministers should not gallivant around the world. It is important to note that most of the international trips are totally irrelevant to the suffering common man. Additionally, the use of a private jet aircraft on international trips should be abolished. We should also scrape off free entitlements such as housing, fuel, electricity, transport et cetera from our ministers. Most importantly, the ridiculously big and expensive ministerial cars which guzzle unreasonable litres of fuel should be auctioned and cheaper cars purchased in their place. There are many other ridiculous entitlements that we need to scrap off from our public office bearers. Politicians too, need to share in the burden of austerity.
By Peter Mubanga Cheuka
Labels: AUSTERITY, IMF, JOSEPH STIGLITZ, NEOLIBERALISM, World Bank
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(LUSAKA TIMES) PF Government , IMF reach deadlock over bailout
COMMENT - The IMF goes to town. They want charges to go up, and that is after the massive devaluation of the Zambian Kwacha through Eurobond debt and other borrowing
leading to record inflation - with full knowledge and approval of the IMF and World Bank - they are complicit in this crime. This is not an economic policy, this is a hit. And the only thing the PF government of President Lungu can say is - let's wait until after the elections? This is criminal. Oh by the way, they are speaking in euphemisms because they're crooks. This is a massive transfer of resources from Zambian people to the IMF/Eurobonds. I say: scrap ALL the debt, throw the crooks in jail and take back the mining companies' stocks. Makes ZCCM great again, and completely transparent to the public. Use the profits to get into copper manufacturing using local copper only. Diversify into agriculture and infrastructure. That is the only way forward, not this neoliberal austerity and global economy garbage.
(LUSAKA TIMES) PF Government, IMF reach deadlock over bailout
March 18, 2016
President Edgar Lungu has asked the International Monetary Fund to offer an emergency bail out to his government but only start implementing the needed austerity measures after the August elections.
President Lungu through Finance Minister Alexander Chikwanda made the plea when he met an IMF mission team that was in Zambia over the last two weeks.
The IMF is however not willing to offer emergency financing to the Zambian government before the country’s authorities submit a detailed technical report on how it will stabilise the economy.
This led to a deadlock and the much expected deal was not agreed at the end of the mission.
Impeccable sources who attended part of the consultations with the IMF team revealed that President Lungu was begging the IMF to relax its terms and allow his government to start implementing key austerity measures after August.
The sources said President Lungu contended that implementing a full set of austerity before the August elections will make it impossible for him to secure re-election.
Among the key measures the IMF team is demanding that government implements includes the removal of fuel subsidies, a serious reform of the Farmer Support Programme, introduces cost reflective power tariffs and a slowdown in infrastructure spending.
And in an End-of-Mission statement released on Friday, the IMF said the Zambian government indicated that strong near-term measures are being evaluated and that, at the IMF/World Bank Spring Meetings in mid-April, they would provide further guidance on the policy direction and reforms, and their plans for an IMF-supported program.
“Government finances are under immense stress. Expenditure is running far above budget, in large part as a result of fuel subsidies and contracted emergency electricity imports that together are estimated to cost the treasury about US$660 million a year at the current pace (equivalent to 3.2 percent of GDP). At the same time, domestic and external financing options have become more limited along with rising interest rates. Mounting domestic arrears are adding to concerns about debt sustainability,” the IMF said.
It added, ““tightening of monetary policy has been effective in stabilizing the exchange rate but tight liquidity conditions have contributed to persistent under-subscription of treasury bills and bonds. However, there is little scope to loosen monetary policy as long as fiscal imbalances are not addressed. A key challenge going forward will be to normalize activity in the interbank foreign exchange market while avoiding a return of last year’s extreme volatility in the exchange rate.”
The IMF said its mission and the Zambian government reached a shared understanding of the challenges and risks associated with the current economic situation.
“The authorities stressed that, notwithstanding the upcoming general elections, they are committed to addressing the budgetary pressures, including moving to cost-reflective energy pricing, and scaling back on discretionary spending while safeguarding social protection programs. They indicated that strong near-term measures are being evaluated and that, at the IMF/World Bank Spring Meetings in mid-April, they would provide further guidance on the policy direction and reforms, and their plans for an IMF-supported program,” it said.
“The mission is confident that Zambia’s current economic challenges can be overcome with resolute policy action, allowing a resumption of growth in line with the country’s abundant potential. In particular, a package of measures that makes clear that the fiscal pressures are being tackled would boost market confidence and pave the way for increased investment and growth. However, delays in implementing corrective measures will only worsen the situation, increase the adjustment cost and postpone the recovery.”
Labels: EDGAR LUNGU, EUROBOND, IMF, MMD, PF, World Bank
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Under the Radar
The Haiti-Greece Connection
July 29, 2015
By Max A. Joseph
Debt is an instrument of control and other insidious motives that have been in use since ancient times. Its potency painfully felt when the debtor becomes insolvent.
European Union member and bankrupt Greece may be thousands of miles away from United Nations-occupied and destitute Haiti, but the distance doesn’t preclude these two countries from experiencing similar issues inherent to the brutal nature of the global order.
Under a narrative that exculpates perpetrators and vilifies victims, these two countries are portrayed as unsuitable to their neighborhood and, by extension, unworthy of sympathy from their more affluent and powerful neighbors. Succeeding generations of Greeks, like their Haitians counterpart, will have to deal with the nasty consequences associated with being an insolvent nation. It certainly does not help that the institutions equally responsible for the Greek debt crisis – Europe Central Bank, the giant international banks and the IMF– are the ones formulating the solution.
Let’s start with Greece, a country of 10 million inhabitants and a national debt of $380 billion. As a member of the world’s largest economic bloc, the country certainly possesses many advantages that may be appealing to lenders. However, were these “advantages” sufficient enough to warrant such vote of confidence in its ability to repay this massive debt? Absolutely not; despite a highly-educated workforce, Greece is essentially a developing economy that relies mostly on tourism and agricultural exports.
It will never be able to pay off this enormous debt.
Because the global economy is interwoven, the Greek debt crisis remains a threat to global prosperity seeing that it could usher a domino effect, engulfing other heavily indebted and much larger EU economies. That being said, shouldn’t the international lenders shoulder part of the blame and absorb some of the losses that come with Greece’s inability to fulfill its contractual obligations?
In a normal situation that would be the reasonable thing to do but in the arcane world of international finance, such mundane solution is anathema because portion of the debt are essentially investments made by states and private pension funds on behalf of retirees. Though most of the debt is nominally owed to EU governments and banks, their true ownership might be retirees from Cleveland, Ohio; Marseille, France, Manchester, England, or Munich, Germany. These retirees no doubt will not be asked to take smaller retirement checks because of bad decisions by mutual or hedge funds and banks or the Greeks’ inability to pay.
Predictably Alexis Tsipras, the Greek prime minister, was fighting a losing battle despite the popular support expressed in the July 5 referendum in which almost 62 percent of his countrymen convincingly rejected the burdensome conditions of the EU lenders and the IMF. As recently as the beginning of the twentieth century, Greece would have been invaded and occupied by national armies seeking to collect on behalf of their respective banks. Fortunately for the Greeks, that primal approach to collecting debts has been in hibernation, meaning not completely abandoned, under the 1944 Bretton Woods Accords, which created the ultimate mechanism (IMF and World Bank) for a collective and more effective control of international finance by the western powers.
Likewise Haiti, a perennial outcast in the international arena and current holder of the unenviable title of “poorest country in the western hemisphere,” was not so lucky. Its path to poverty — perpetual political turmoil and insolvency, though wholly different than that of Greece– is consistent with the characteristics of international relations. July 28 marked the hundredth anniversary of Haiti’s first occupation by U.S. Marines on behalf of U.S. corporations, which lasted nineteen years (1915-34.)
Whereas Greece’s monstrous debt originated with bad decisions by that country’s leaders and greedy international lenders, that of 1915 Haiti in contrast was the end result of bullying and robbery by France.
To sum it up, the sacrifices made by the more than one hundred thousand slaves that perished during Haiti’s war of independence (1791-1803) were nullified when France, with the backing of England, Germany, Spain and the U.S. navies, imposed a huge indemnity on the young republic in exchange for a formal recognition of its self-liberation. Apparently NATO (North Atlantic Treaty Organization) informally existed prior to its founding in 1949.
Adding insult to injury, Haiti was forced to borrow the money from French banks at an exorbitant rate, which inevitably bankrupted the country. The National City Bank of New York, aka Citibank, would later acquire the deed to that loan from under the U.S. occupation whose premise (the Monroe Doctrine) could not tolerate the presence of a European competitor.
When a comprehensive account of the April 1825 naval blockade of Haiti and subsequent U.S. occupation of that country on July 28, 1915 is finally written, preferably by non-western historians, these two episodes will rank among the most severe punishments ever meted out on a defenseless little nation by predatory powers.
Ever since ancient Greece was yanked from the Ottoman Empire by the British and resurrected in 1830, it has been unable to find it’s footing in a neighborhood infested with predatory powers. Haiti, which came into existence in the course of a hard fought struggle against slavery and colonialism, has been in a corresponding situation since its inception in 1804. Until small countries like Greece and Haiti find a way to extricate themselves from the grid, they can expect more of the same.
About Latest Posts
Max A. Joseph Jr.
Max A. Joseph Jr. is a small business owner and consultant who writes about politics.
Labels: DEBT, GREECE, HAITI, IMF, World Bank
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(NEWZIMBABWE, SAPA) SA’s Zille and ‘rented black’ fallout
Change of heart ... Agang SA leader Mamphela Ramphele
02/02/2014 00:00:00
by SAPA
COMMENT - From ms. Ramphele's page at Wikipedia: "In 2000, Ramphele became one of the four Managing Directors of the World Bank. She was tasked with overseeing the strategic positioning and operations of the World Bank Institute as well as the Vice-Presidency of External Affairs. She is the first South African to hold this position." No country deserves to be headed by a World Bank employee. - MrK
AGANG SA leader Mamphela Ramphele has proven she cannot be trusted to see a project to its conclusion, DA leader Helen Zille said on Sunday.
That's after Ramphele reneged on an agreement to become the DA's presidential candidate. "We have been through many false starts," she said in a statement.
"When Dr Ramphele insisted on Monday that we go public on Tuesday to announce her acceptance of our offer of the DA's presidential candidacy, we accepted that she had finally made up her mind."
Zille said Ramphele had reneged on the agreement to be the Democratic Alliance's presidential candidate at a meeting on Sunday despite the party negotiating in good faith.
Confusion arose on Friday over Ramphele's joining the DA.
According to a joint statement issued by Ramphele and Zille on Friday, the Agang SA founder would be welcomed into the DA at a press conference in Johannesburg on Monday.
However, following the joint statement being issued, a message from Ramphele was uploaded onto Agang SA’s website.
"You may have by now seen 'joint' statements issued by the Democratic Alliance in which it is claimed that I will be accepting DA membership on Monday," she said.
'Cat and mouse'
"This is not true. Nor did I agree to any such statement. It is Agang SA's position that the technical committee must first complete its work. I am leader of Agang SA, and Agang SA will continue its work to restore the promise of our freedom."
Zille on Sunday said Ramphele was playing a game of "cat and mouse" telling the media one thing, Agang supporters another thing and the DA another.
"It is not clear what her objective is, but whatever it is, it is not in the interests of the South African people," she said.
"By going back on the deal … just five days after it was announced, Dr Ramphele has demonstrated - once and for all - that she cannot be trusted to see any project through to its conclusion."
Labels: HELLEN ZILLE, MAMPHELA RAMPHELE, NEOLIBERALISM, World Bank
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Malupenga hails BRE's good relations with govt
By Angela Kabamba in Mongu
Tue 14 Jan. 2014, 14:01 CAT
WESTERN Province permanent secretary Amos Malupenga says the Barotse Royal Establishment and other provincial interest groups' fruitful inter-connectivity with the central government is highly commendable.
During a World Bank-organised stakeholders' consultative workshop on the Western Province's climate resilience programme at Mongu's Country Lodge yesterday, Malupenga said the Barotse Royal Establishment (BRE), the private sector, civil society organisations and other interest groups in the province had forged a strong and fruitful relationship with the central government.
He observed that the selfless contributions to the birth of the US$36 million grant given to the Zambian government, through the World Bank last year, to strengthen the agramme in Western Province was greatly appreciated.
Malupenga noted that besides the unified approach, technical and financial support the World Bank was providing, the onus was now on the stakeholders to commit themselves to duty over the climate resilience programme.
He said the project's objectives were fundamental in the continued efforts to improve the state of canals that run through Limulunga, Mongu, Nalolo and Senanga districts, especially for purposes of transportation and agriculture.
Malupenga, however, implored the workshop participants and other stakeholders to take into account the inputs from communities who have lived and experienced the changes or outcomes that canals can bring about in people's lives.
Malupenga said the workshop should provide a space participants to highlight and make key choices for future management, maintenance and sustainability of the canals, adding that a key component worth noting for any successful developmental intervention was to ensure that stakeholders took ownership of the planning and implementation processes.
Last year, finance minister Alexander Chikwanda signed a US$36 million grant agreement of which US$5 million was a loan on behalf of the Zambian government while World Bank country representative Kundhavi Kadresan signed on behalf of the World Bank.
The six-year project aims to strengthen the national institutional framework for climate resilience and improve the adaptation capacity of poor vulnerable communities in the Barotse flood plains of which about 130,000 people or 25, 800 households would benefit.
Labels: AMOS MALUPENGA, BAROTSE ROYAL ESTABLISHMENT, BRE, World Bank
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(STICKY) KCM owner mocks zambians and govt
By Chiwoyu Sinyangwe and Gift Chanda
Thu 15 May 2014, 18:20 CAT
COMMENT - I hope this is the final push in showing the people and politicians where Zambia's copper wealth is disappearing to. How can anyone justify paying one cent in 'donor aid', when the money lost through the IMF/World Bank's privatisation dwarfs donor aid inflows. Zambia and Africa don't need donor aid - they need to get paid. Africa is not supported by the West, Africa is and has been supporting the West for 400 years. Time to stop. We want development, paid for by our own natural resources.
Let's also remember who was for the Windfall Tax before they entered office in 2011, and who is against it now:
(STICKY) Chikwanda describes advocates of windfall tax as lunatics
Also check out: ZAMBIAN-ECONOMIST - Copper Colonialism: Vedanta In Zambia
More on Vedanta's hiding profits here.
(ZAMBIAN ECONOMIST) Zambia is Mocked by Vedanta
Saturday, 17 May 2014
(LUSAKA TIMES/THE POST) Flashback: IMF, World Bank pressured govt to privatise mines – Nawakwi
By Chiwoyu Sinyangwe and Chibaula Silwamba
Friday November 02, 2007
(LUSAKATIMES) Video of Anil Agarwal, bragging about the billions of dollars he has dragged out of KCM, Zambia and Africa's largest copper mine. On YOUTUBE.
KONKOLA Copper Mines owner Anil Agarwal has mocked the Zambian government over the paltry amount of money he paid to buy the mine, which is now giving him millions of dollars in profit.
And ActionAid Zambia economic justice project officer Patrick Nshindano says Agarwal's mockery is very disheartening.
In a video released by activists from Foil Vedanta, Agarwal, who is Vedanta boss, boasted of raking in US500 million per year when he only bought the mine for US$25 million.
KCM is currently reported to be battling with operational challenges.
Agarwal mocked the Zambian government for giving him VVIP treatment when he came to acquire the asset and eventually becoming majority owner of KCM at the current 69 per cent.
Speaking to the Jain International Trade Organisation in Bangalore, India between March 22 - 23 this year, Agarwal told the cheering crowd how he bought KCM for a song, rather than the US$400 million asking price.
In the 3:58-minute video, a bragging Agarwal describes his surprise at receiving a VIP welcome to the Zambian Parliament, and ridicules the then Zambian president Levy Mwanawasa for claiming that Vedanta would improve the lives of Zambians, especially those in Chingola and Chililabombwe.
Agarwal reveals how he duped late president Mwanawasa on their first meeting that 30 members of his delegation missed the connecting flight out of Johannesburg into Lusaka, when in fact he had only travelled with one engineer from his firm.
Agarwal boasted that KCM was giving him US$500 million every year in profit, plus an extra US$1 billion.
In recent years, KCM has touted to dismiss close to 2,000 workers from its mining units to cut down on labour costs and improve its profitability.
Vedanta had continued to claim that they were making losses or a minimal profit at KCM.
The mining unit claims declining ore grades at its mining units and high operational costs on the backdrop of high labour and energy costs was hurting the country's second-largest copper producer.
Below is the excerpt Agarwal gave in Hindi:
"Seven to eight years back, hunger remains to do big work. Pondering what to do...how can we let life go in vain? I saw it in the paper FT Financial Times. (Agarwal drinks bottled mineral water). There was largest copper mine in Africa. That copper mine was up for sale. That government was privatising it. I got quite interested in it. I asked few people; they replied, 'Aren't you ashamed?' 'What ridiculousness you are talking off?' I told them 'Where is the problem in talking?'
'Speak to them let us see...' Then he saw it, it was a big deal. I have a friend in McKensey - Ranjit Pandit. I went to him, asked him to make papers. 'Make the papers beautiful, professional.' Papers were prepared. We kept it at US$400 million. In pocket we do not have US$4 million!... bid for US$400 million! US$25 million ... US$25 million that we had, ha ha ha... Take chance in life definitely! All people sitting there... Take chance! If you won't take chance, nothing will happen (Clapping, Whistling...)
Why we are different - different because we take chances. I told you we have to take chance. Then we said 'US$25 million we will give you cash and US$375 million we have to invest in making the machines running'. We forgot the matter, and suddenly in about a month or so, we received calls; they invited us. We called up and inquired. They confirmed: 'This company is yours'... 'Really?' I took one of our engineers and went to Johannesburg and further changing flight there to Lusaka.
When we arrived there, we were surprised to receive VVIP treatment there, red carpet, entire government machinery has arrived at airport to receive us. Surprised seeing such arrangement, we asked someone. 'It's all for you sir'. 'How many people you have in the delegation team?' Ministers, VVIP vehicles, cavalcade...'
We were told 'You will be going to the Parliament today; and
President's place as well... Where are your people? It's necessary to meet the President.' Repeatedly, we were asked 'Where is your delegation?' I asked 'What delegation? We are the delegation only'.
We were taken to the President. The President... 'Your Excellency, we are 30 people in our delegation. But they missed the flight at Johannesburg.' (Audience laughs). 'Can you wait till tomorrow? They all will come'. 'No no no. The Parliament is tomorrow, we have to decide today. Key is ready. Are you ready?' 'I am ready, I am always ready. I will handle it'. (Laughing).
And they came, what a Parliament House! First time I saw... I had held a bead necklace (in the name of God RAM) and kept chanting, moving ahead. With my smiling face. When I sat there with my man, the President came and sat by our side. He told the entire Parliament that what great people we are, and our empire and that 'they (KCM) will make our lives gorgeous. And they will make schools, make hospitals and blah-blah... We just kept watching, chanting God's name there. All you make, what we make! Ah ha ha ha ha ha ha.
We took over the company. It's been 9 years, and since then, every year it is giving us a minimum of US$500 million plus US$1 billion every year… it has been continuously giving back. It's a matter of taking a chance. I will keep telling you stories. We had oil company. They told us no one else can buy oil company..."
Agarwal's 'motivational talk' has angered Foil Vedanta, which had previously released figures from Vedanta's annual reports showing that the company made US$362 million in 2013.
Vedanta chief executive officer Tom Albanese disputed this during his visits to Zambia last February, repeating the previous claim that KCM was making a very low profit or a loss due to high operational costs and higher taxes.
But Nshindano, from ActionAid Zambia, said the statement from Agarwal was disheartening.
"It is saddening even that an investor can brag that he was given red-carpet treatment without taking into consideration what kind of importance that project has for the people of Zambia," he said.
Nshindano urged the government to move in to ensure Vedanta accounts for its operations.
"Definitely, the government needs to move in and ensure that the right corrective measures are taken to see to it that Zambians benefit from the mine," he said.
He also said the Zambian officials that negotiated the sale of KCM owed Zambians an explanation on why a company worth billions was sold to Vedanta Resources for peanuts.
"We sold this asset in a hurry but we now needed to ensure that it benefits us," Nshindano added.
The London Stock Exchange-listed Vedanta made a profit of US$26 million from KCM for the three-month period October to December 2004, effectively recovering the purchase price in just three months.
A few weeks ago, a protest at the Zambian High Commission in London called on Vedanta and the Zambian government to release KCM's annual reports, containing the official figures on profits and tax payment, which are currently kept secret.
They also suggested that Vedanta should be forced to pay the fine of US$2 million served by Zambian courts in 2011 as compensation to 2,000 claimants poisoned by major pollution of the Kafue River in 2006, and stop ongoing spills affecting Chingola residents.
In addition, they joined the calls of KCM employees and former employees in Zambia, who are demanding that retrenched workers be properly compensated.
The government came under heavy attack from prominent citizens, the mining area's chamber of commerce and the Zambia Congress of Trade Unions (ZCTU) for allowing the mine to be sold for peanuts.
Stakeholders questioned the deal and the competence of the negotiating team.
On its part, Vedanta Resources has been awarded an eight-year tax relief.
Labels: IMF, KCM, MINING, SUNIL AGARWAL, TAX EVASION, VEDANTA, World Bank
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SAPs and the Build up to the Rwandan Genocide
Thomas Hauschildt, Mar 31 2012
This project evaluates the impact of structural adjustment programmes (SAPs) on the economy and subsequently social environment of pre-genocide Rwanda.
The first research aim is to evaluate the development and characteristics of neoliberal theory and SAPs (Auerbach, 2007, pp.34-35). The cornerstones of neoliberal policies are the International Monetary Fund (IMF) and the World Bank and the origin and purpose of both institutions will be assessed (Rowden, 2009, pp.53-56). Arguments made by the IMF and the World Bank in favour of these programmes will be opposed by arguments made by advocates of the dependency theory and world system theory (Kelly, 2008, pp.320-321; Wallerstein, 1980, pp.66-69).
The second research aim focuses on the causes and impacts of the SAPs on the Rwandan economy. The SAPs will be presented in a wider context which will include demands for democracy and a peace process between the Rwandan Government and the Rwandan Patriotic Front (RPF) (Andersen, 2000, pp.450-452).
The third aim provides the nexus between the SAPs imposed on Rwanda and ethnic mobilisation. The focus will be on two aspects of the Rwandan economy. First, the division of labour will be evaluated. This is essential as the SAPs were perceived as favouring the Tutsi dominated private sector (Storey, 1999, pp.53-55). Second, the issue of land scarcity and agricultural commercialisation will be assessed as Rwanda suffered a severe socio-economic imbalance (Uvin, 2001, pp.81-83).
The conclusion will summarise that SAPs, in combination with demands for democratisation and peace negotiations, did not consider the implications of the reforms for the socio-economic and political environment. The disregard for the wider implications supported radical ideologies which were responsible for the genocide.
The structure of western capitalism was first evaluated by British philosophers and political economists in the seventeenth and eighteenth century (Peet, 2009, p.4). In the eighteenth century Adam Smith (1776), cited by Rothschild (1994, p.319), emphasised the “invisible hand of the market” which would enable growth by focusing on demand, competition and trade. This approach became known as classical liberalism. The early and mid-twentieth century was shaped by depression and war. Benefits of capitalism remained in the hands of the entrepreneurs and the employees demanded more rights and increased benefits in return for their labour (Peet, 2009, p.6). Keynes argued that governments have to intervene in the market in order to spread the benefits of market economies among all classes of society. This approach became known as the “New Deal” in the US and its policies were implemented from 1932 on (Niemi & Plante, 2011, p.414; Peet, 2009, p.6).
In 1944 the Allied countries met in Bretton Woods to discuss the post-war economic order (Rowden, p.2009, p.53). Their aim was to implement institutions which could finance the rebuilding of Europe and oversee international trade and finance to avoid a financial crisis in the future. Keynes is often accredited with the establishment of the IMF and World Bank. However, Keynes did not suggest the IMF and World Bank in the form the institutions were finally set up. He was rather focused on maintaining trade balances between states. The IMF was established to ensure a fixed exchange which tied currencies to the US Dollar and gold standard (Rowden, 2009, pp.55-56). The World Bank was to finance the reconstruction and development of the European economy. From the mid-1970s on Keynesianism was opposed by neoliberals who advocated the ideas of classical liberalism and argued in favour of privatisation of state-run enterprises and deregulation of the market (Peet, 2009, p.9; Palley, 2004, pp.1-2).
Palley argues that neoliberalism is based on the assumptions that factors of production, such as labour and capital, are automatically allocated in the most efficient way. Von Hayek, the most influential critic of Keynesianism, argued that the freedom of individuals to pursue their own ambitions and limited possibilities for governments to interfere in the market are essential for economic growth (Peet, 2009, pp.10-11). In the 1970s it became evident that Keynesianism was not able to solve problems of stagflation and businesses and corporations started to support neoliberal ideas of deregulation (Peet, 2009, p.12). Further, the ideological conflict during the Cold War period increased the support of neoliberal ideas. Individualism was associated with a free society. Collective action and limitations on the market were related to communism (Palley, 2004, p.3). The administrations of Thatcher and Reagan adopted neoliberal policies in the early 1980s and many Western governments followed suit (Auerbach, 2007, p.33). The IMF changed its purpose and was now tasked to support developing states by providing financial support in the form of loans (Wayenberge, Fine, Bayliss, 2011, p.6).
During the time of Keynesian policies, developed states tolerated and even encouraged state interventions in developing states (Babb, 2005, p.200). However, the emergence of neoliberalism led to a change in development policies. The key characteristics of neoliberal development policies were laid down in the Washington Consensus (Auerbach, 2007, p.37 in Roy, Denzau, Willett). The policies of the Washington Consensus demanded financial deficits which are not higher than affordable. Further, expenditures were supposed to focus on benefits, health, education and infrastructure. In addition tax collection had to be more efficient, trade had to be liberalised and controls for exchange rates had to be removed. State owned enterprises had to be privatised and incentives for foreign direct investments (FDI) had to be established (Auerbach, 2007, p.37).
During the 1970s many developing states were unable to service loans taken during the oil crisis in 1973/74 (Rowden, 2009, p.65). The IMF agreed to the restructuring of the debt if the debtor states implemented SAPs. Further, the IMF demanded that in the future multilateral and bilateral aid was only to be paid after the approval by the IMF. States which were unwilling to implement SAPs were threatened with the withdrawal of future support by the IMF and World Bank. Other donors, such as multilateral institutions, bilateral donors and private banks, followed the guidance by the IMF and denied financial support if the IMF advised against it (Rowden, 2009, pp.66-68). Critics, such as Lapeyre (2004), cited by (Rowden, 2009, p.66), opposed these measures and argued that SAPs lead to a loss of state autonomy. Fiscal policies were dictated by the IMF and World Bank and states were unable to choose their own development policies. However, Reagan and Thatcher made clear that market liberalisation was the only alternative and donor agencies, central banks and many developing states believed in neoliberal policies (Sachs, 2005, p.81; Rowden, 2009, pp.68-69). Further, many developing states adopted these measures in the hope of becoming members of the World Trade Organization and in order to attract FDI.
Neoliberal policies are opposed by advocates of the dependency theory and world system theory. During the decolonialisation process after World War II advocates of the modernization theory argued that all states follow the same path from poverty to modernization (Rowden, 2009, p.57). Due to poverty and slow or non-existent development towards the end of the 1960s it became clear that former colonies could not follow the development path which was taken by developed countries in the past. Dependency theory draws its ideas from Marxism and argues that the intrastate division between the proletariat and bourgeoisie equals the interstate relations between the core and the periphery (Kelly, 2008, p.320). Proponents of the dependency theory, for example Prebisch (1950) and Frank (1967), wrote that former colonies became economically and politically dependent on their former colonial powers. Subsequently, the dependence of periphery states on the core states is the main characteristics of the global economy.
These claims were further developed by Wallerstein (1980, pp.66-69) who supported the world systems theory and argued that the periphery is exploited by the core states of mainly North America and Europe. The world system theory claims that the global economy is characterised by a well developed core based on high technology and a highly skilled labour force which requires a periphery from which it can extract surplus (Chirot & Hall, 1982, p.85). Advocates of both theories argue that developing states have to resist a post-colonial system of trade and finance in which states of the periphery serve the role of commodity producer and provider of cheap labour. Otherwise the states of the periphery will not be able to move towards industrialisation and remain dependent on the states of the core (Rowden, 2009, p.57).
Harrison (2010, p.36) writes about the impact of neoliberal policies in Africa and argues that socio-economic recovery was not achieved to date. Harrison (2010, p.39) cites Chazan et al. (1999) who writes that by the end of 1980s thirty six states in Africa implemented SAPs and ten years later the economy of twenty nine African states were still shaped by adjustment programmes. Harrison (2010, p.39) describes SAPs as the “development orthodoxy for the continent”. In some cases the SAPs considered country specific circumstances, but the key elements of all SAPs remained the same and mirrored the policies of the “Washington Consensus”.
The implications of SAPs and demands which accompanied these became evident in Rwanda in the early 1990s. The Rwandan Genocide of 1994 during which 800,000 Tutsis and moderate Hutus were killed has been widely covered in the media and in academic work (Kamola, 2007, p.571; Magnarella, 2005, p.816). However, the implications of an economic crisis and subsequent reforms in the early 1990s were hardly mentioned (Chossudovsky, 1997, p.111). The post-colonial economy of Rwanda was dominated by coffee exports which made up eighty percent of the state’s export earnings (Chossudovsky, 1997, p.114). In the early 1980s the supply of food per capita decreased due to environmental degradation and further population growth (World Bank, 1991a, p.v; Storey, 1999, pp.49-50). Furthermore, in 1986 the commodity prices for coffee started to decrease due to overproduction and Rwanda lost nearly two thirds of its revenue generated by coffee exports (Kamola, 2007, p.583). The GDP per capita fell by nearly 30 percent and poverty increased from 40 percent in 1985 to 53 percent in 1992 (Uvin, 1998, p.54; World Bank,1994, i). The civil war between the Hutu dominated government and exiled Tutsis in Uganda who established the RPF and attacked Rwanda from 1990 on further deteriorated the financial situation of Rwanda (Magnarella, 2005, p.812; Uvin, 1998, pp.55-56).
Financial resources were focused on the war effort and the displacement of large numbers of the population further decreased agricultural production. In order to maintain its expenditures the Rwandan Government had to increase its foreign debt significantly (Kamola, 2007, p.584; Prunier, 1995, p.159). Moreover, farmers were guaranteed by the government to receive a fixed amount for their coffee production. This amount was decreased by 20 percent in order to reduce government spending (Kamola, 2007, p.584). As a result many farmers replaced their cash crops with food crops as the sale of coffee did not cover the investments anymore.
In 1991 Rwanda received $90 million of loans from the World Bank (Uvin, 1998, p.58; Kamola, 2007, pp.583-585). In return the Rwandan Government had to agree to the implementation of SAPs. Fiscal discipline was expected, the government had to privatise large numbers of state owned enterprises and markets were to be liberalised. Despite the increasing socio-economic imbalance the World Bank recommended that the focus should be on cash crops rather than food crops in order to increase export earnings. The World Bank argued that the earnings could be used to purchase food – “once you have income you can buy food” (World Bank, 1991a, p.vi; p.xi). Coffee exports were supposed to be increased, inter alia, by a devaluation of the Rwandan Franc.
However, the devaluation led to an inflation of nearly 20 percent in 1992. According to the World Bank (1991b, p.4) the benefits of structural adjustment loans would include increased employment in the private sector. Moreover, the civil service was considered as ineffective and had to be reformed (World Bank, 1991b, p.16).) Fees for education, water supply and medical care were raised and sales tax was increased (Uvin, 1998, p.58; World Bank, 1991b, p.6). Despite these measures the Rwandan foreign debt increased further. Uvin (1998, p.59) argues that the SAPs are not responsible for the financial pressure on many Rwandans since the majority of them were never implemented. However, this argument is opposed by a report in which the World Bank (1997, p.12) claims that most of the reforms were indeed implemented by the Rwandan Government.
To assess the implications of the IMF and the World Bank in the build-up to the genocide it is essential to widen the scope of this evaluation. This is necessary in order to include the demands for democratisation and peace negotiations which were made in return for financial aid (Andersen, 2000, pp.447-450; Uvin, 1998, p.59). Andersen (2000, p.450) argues that the establishment of a democratic system is necessary to establish stability and to promote development. Nonetheless, it is of significant importance to choose the right timing in order to ensure political unity during the peace process. Opposing views during a peace process may destabilise the consolidation process. Due to the pressure of the IMF and World Bank a new Rwandan Government was formed in 1992 and the opposition parties increased their power (Adelman & Suhrke, 1996, cited by Andersen, 2000, p.449).
Radical parties, such as the “Coalition pour la Défense de la République” (CDR) and the “Mouvement Démocratique Républicain” (MRD), were established and openly presented their anti-Tutsi ideology. Both parties played a significant role in the spread of hate speech and the preparation and implementation of the genocide (Andersen, 2000, p.449). In addition, as part of the peace process the then-President of Rwanda Habyarimana agreed to a power sharing deal with the RPF. The CDR and MRD accused the government of not being determined enough to oppose the RPF and gained significant support amongst Hutu elites (Prunier, 1995, p.128). However, to meet the demands of the Rwandan Government and the donors at the same time proved to be an obstacle Habyarimana could not overcome. Andersen (2000, p.451) described the conditions made by international donors as “a match igniting the conflict”.
In order to establish a link between the genocide and the SAPs it is necessary to assess these in the wider context of the Rwandan labour market and the resource scarcity which occurred in Rwanda (Storey, 1999, p.51; Uvin, 2001, pp.81-83). Middle and upper level positions in the public service and the military were only available to Hutus and due to government sponsored discrimination Tutsis focused mainly on the work in the private sector (Storey, 1999, p.51; Prunier, 1995, p.75). As part of the democratisation process a new liberal party emerged and the common perception was that this party was dominated by Tutsi businessmen. Hutu extremists claimed that Tutsis attempted to set up a commercial elite in Rwanda in order to redirect funds to the RPF (Storey, 1999, p.51). However, most of the businessmen in Rwanda were Hutu and the large majority of Tutsis had the same living standard as Hutus (Woodward, 1996, cited by Storey, 1999, p.52). The nexus between SAPs and the division of labour is, in the social context of pre-genocide Rwanda, to be found in hate speech which established perceptions rather than facts. As mentioned before, SAPs demanded increased support of the private sector and cuts for the public sector. Therefore, the perception was that Tutsis were favoured by the SAPs and many Hutu elites in the public sector feared to lose their employment and subsequently influence.
Uvin (2001, p.82) argues that resource scarcity can be assessed using the Malthusian argument according to which land scarcity and overpopulation lead to conflict or famine. This argument is supported by a statement made by the Ogata, the UN High Commissioner for Refugees (Berry & Berry, 1999, quoted in Uvin, 2001, p.82). Ogata argued that the conflict in Rwanda was based on a severe imbalance between the size of the population and available land. Land scarcity has to be considered in reference to the SAPs as the IMF and the World Bank demanded that the agricultural sector should focus on cash crops, e.g. coffee and tea, in order to increase revenues. The amount of food crops was to be reduced, but the decline in commodity prices did not create the revenues Rwanda hoped for. The statement: “once you have income you can buy food” (World Bank, 1991a, p.vi; p.xi) did not apply in Rwanda as income did not increase. Subsequently, the imbalance between the amount of food available and the population increased further (Magnarella, 2005, p.817).
Wood (2001, p.64) argues that especially in poorer states ethnicity plays a significant role in economic and social differentiation. Poverty, overpopulation, land scarcity, possible famine and competition for power offer fertile ground for the ideology of Lebensraum. This ideology is advanced by extremist forces in order to accumulate resources which are currently not available to their people. This ideology was implemented in Rwanda to describe Tutsis as invaders who are responsible for the socio-economic imbalance. Prunier (1995, p.160) writes that the combination of low coffee prices, the war and SAPs only further damaged an already weak economy and increased the financial pressure on many Rwandans.
The development policy of the industrialised states changed with the emergence of neoliberal policies. Neoliberals argued in favour of the liberalisation of markets and decreased influence of the government. Development policies became enshrined in the Washington Consensus which argues that SAPs would lead to economic stability. Government spending was to be reduced, privatisation of government owned enterprises was demanded and the currency was supposed to be devalued in order to increase exports. Advocates of the dependency theory and world system theory claimed that neoliberalism is not suitable to foster development, but instead increases the dependency of the periphery states on the core states. In the case of Rwanda it is evident that SAPs worsened the economic situation of Rwanda. Further, the SAPs had significant effects on the wider social and political environment. Demands for democratisation and peace negotiations led to the emergence of radical parties which took advantage of the fears of many Rwandans. People feared poverty, job loss and a famine in addition to a civil war. The causes of the genocide are multiple and no direct link can be established between the demands made by the IMF and World Bank and the genocide. However, in hindsight it is evident that demands for SAPs accompanied by demands for democratisation and peace agreements did not consider the wider political and social context. These factors helped to create an environment in which Hutu radicals found a significant number of Rwandans who supported their ideology which subsequently led to the genocide.
Bibliography
Andersen, R. (2000). How multilateral development assistance triggered the conflict in Rwanda. Third World Quarterly, 21(3), 441-456.
Auerbach, N. (2007). The meanings of Neoliberalism. In R. Roy, A. Denzua & T. Willett (Eds.), Neoliberalism: National and regional experiments with global ideas (pp.26-50). New York: Routledge.
Babb, S. (2005). The social consequences of structural adjustment: Recent evidence and current debates. Annual Review of Sociology, 31, 199-222.
Bayliss, K; Fine, B.; Van Wayenberge, E. (2011). The Political Economy of Development. The World Bank, Neoliberalism and Development Research. London: Pluto Press.
Chirot, D. (1982). World System Theory. Annual Review of Sociology, 8, 81-106.
Chossudovsky, M. (1997). The globalisation of poverty: Impacts of IMF and World Bank reforms. London: Zed Books.
Harrison, G. (2010). Neoliberal Africa: The impact of global social engineering. New York: Palgrave McMillan.
Kamola, I. (2007). The Global Coffee Economy and the Production of Genocide in Rwanda. Third World Quarterly, 28 (3), 571-592.
Kelly, R. (2008). No “return to the state”: dependency and developmentalism against neoliberalism. Development in Practice, 18(3), 319-332.
Magnarella, P. (2005). The Background and Causes of the Genocide in Rwanda. Journal of International Criminal Justice, 3, 801-822.
Nienmi, W. & Plante, D. (2011). The Great Recession, Liberalism, and the Meaning of the New Deal. New Political Science, 33 (4), 413-427.
Palley, T. (2004). From Keynesianism to Neoliberalism: Shifting paradigms in economics. Received, October 15, 2011 from http://www.thomaspalley.com/docs/articles/selected/Neo-liberalism%20-20chapter.pdf
Peet, R. (2009). Unholy Trinity: The IMF, World Bank and WTO. New York: Zed Books.
Prunier, G. (2002). The Rwanda Crisis, 1959-1994: History of a Genocide. London: Hurst.
Rothschild, E. (1994). Adam Smith and the Invisible Hand. The American Economic Review, 84 (2), 319-322.
Rowden, R. (2009). The deadly ideas of neoliberalism: How the IMF has undermined public health and the fight against AIDS. New York: Zed Books.
Sachs, J. (2005). The end of poverty: How we can make it happen in our lifetime. London: Penguin Books.
Storey, A. (1999). Economics and Ethnic Conflict: Structural adjustment in Rwanda. Development Policy Review, 17, 43-63.
Storey, A. (2001). Structural adjustment, state power and genocide: the World Bank and Rwanda. Review of African Political Economy, 28 (89), 365-385.
Uvin, P. (1998). Aiding Violence: The development enterprise in Rwanda. West Hartford: Kumarian Press.
Uvin, P. (2001). Reading the Rwanda Genocide. International Studies Review, 3(3), 75-99.
Wood, W. (2001). Geographic Aspects of Genocide. A Comparison of Bosnia and Rwanda. Transactions of the Institute of British Geographers, 26(1), 57-75.
Wallerstein, I. (1980). Capitalist World Economy. London: Cambridge University Press.
World Bank (1991a). Rwanda – Agricultural Strategy Review. Retrieved November 24, 2011, from http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK= 64193027&piPK=64187937&theSitePK=523679&menuPK=64154159&searchMenuPK=64258544&theSitePK=523679&entityID=000009265_3960929124407&searchMenuPK=64258544&theSitePK=523679
World Bank (1991b). Rwanda – First Structural Adjustment Programme Project. Retrieved November 24, 2011, from http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64154159&searchMenuPK=64258544&theSitePK=523679&entityID=000009265_3961001071959&searchMenuPK=64258544&theSitePK=523679
World Bank (1994). Rwanda – Poverty Reduction and Sustainable Growth. Retrieved December 10, 2011, from http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/1994/05/16/000009265_3961005150245/Rendered/PDF/multi0page.pdf
World Bank (1997). Rwanda – Emergency Reintegration and Recovery Credit. Retrieved December 10, 2011, from http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2000/02/24/000009265_3971023104010/Rendered/PDF/multi_page.pdf
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Written by: Thomas Hauschildt
Written at: University of Portsmouth
Written for: Global Political Economy
Date written: 12/2011
Labels: GENOCIDE, IMF, NEOLIBERALISM, RWANDA, SAP, World Bank
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PAYE threshold increase to affect revenue - Kadiresan
By Gift Chanda
Sun 20 Oct. 2013, 14:00 CAT
THE World Bank says the Zambian government’s decision to increase the PAYE threshold by 36 per cent will have a significant dent on revenue receipts.
And the World Bank has hailed plans by the government to impose a two-year freeze on wages in the civil service, saying the move should help
moderate the rising wage bill.
What is the World Bank doing to raise the demand side of goods within Zambia? Oh I forgot, they are still stuck on stupid (or should I say - CORRUPTION) with their supply side economics. - MrK
Commenting on the 2014 national budget, the World Bank said it recognises the government’s efforts to control the wage bill expenditure, the fiscal deficit as well as generate higher revenues next year.
The government, which has increased the annual threshold of exempt income by 36 per cent to from K2,200 to K3,000 per month - or K36,000 from K26,400 annually - plans to impose a two-year freeze on wages and hiring in the civil service, as it targets to narrow the budget deficit to less than 6.6 per cent of Gross Domestic Product (GDP) next year and free up fiscal space for spending on basic social services and infrastructure investment.
“These steps will enable the government to maintain and grow its expenditure on priority activities and at the same time allow it to consolidate its fiscal position,” World Bank country representative for Zambia, Malawi and Zimbabwe, Kundhavi Kadiresan said.
“However, under the current fiscal pressures, the government’s decision to increase the PAYE Pay as You Earn threshold by 36 per cent will make a significant dent in revenue receipts.”
She, however, noted that the planned two-year moratorium on public wages was likely to help moderate the rising wage bill.
“The hiring freeze however has to be balanced in social sectors to ensure that the provision of basic services is not compromised,” she said.
Kadiresan said Zambia faces enormous development challenges led by high poverty levels amidst high economic growth and increased budgets for health, education and social safety nets would help improve opportunities for human capital development by the poor.
“We expect that special attention would be paid to implementation of social sector programmes, and service delivery will be improved to achieve the budget’s intended objectives. In addition, timely release of resources allocated should enhance intended budget outcomes,” she said.
She also noted the scaling up of social cash transfers requires capacity enhancement at the Ministry of Community Development, Mother and Child Heath for effective implementation.
“This capacity would include building up systems such as a holistic targeting mechanism and a single beneficiary registry,” said Kadiresan.
Labels: KUNDHAVI KADIRESAN, NEOLIBERALISM, PAYE, World Bank
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Kalyalya lauds govt over infrastructure projects
By Kabanda Chulu
Thu 15 Aug. 2013, 14:00 CAT
THE government should be supported for undertaking huge infrastructural projects such as roads because they will result in increased economic activities, says World Bank Africa Group I executive director Denny Kalyalya.
During a tour of World Bank-funded projects such as the construction of the Chiawa Bridge across the Kafue River and rehabilitation of the 70-kilometre road between Lusaka and Chirundu, Dr Kalyalya said investments in roads, bridges and related infrastructure would result in big transformation in people's lives.
"We are happy to partner with the government because these projects which they have embarked on will open up the country to regional markets since they will provide important links to the outside world," said Dr Kalyalya.
"These are milestone projects that will result in transformation of people's livelihoods and they will also result in increased economic activities because tourism will be enhanced and farmers will have access to ready markets but I also urge local people to take ownership and not vandalise these structures being put in place."
Chilanga district commissioner Edith Muwana said road construction in the area has resulted in job creation.
And Chirundu district commissioner Maxwell Syamalimba said construction of the bridge across the Kafue River had been a dream for the people of Chiawa.
"Using the pontoon to get either side of the river is a method that is laden with challenges. It is time consuming, costly, unsafe and can only be done between 06 hours and 18 hours, and if someone falls sick in the night it becomes a problem because the only hospital is in Chirundu," said Syamalimba.
"This bridge will put an end to all these problems and there is no doubt that agriculture and other economic activities will be enhanced when these projects are commissioned."
And Road Development Agency manager for road rehabilitation and maintenance projects Nicholas Mulenga expressed satisfaction with the construction works being done by the contractors.
"With the current pace of works, we expect project commissioning to be on schedule and we are happy with the scope of works being undertaken," said Mulenga.
The Chiawa bridge is being built by China Henan International Corporation while Arab Consulting Engineers were contracted to carry out detailed re-design services and site supervision for construction of a composite steel bridge.
Labels: DENNY KALYALYA, MAXWELL SYAMALIMBA, ROADS, World Bank
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(LUSAKATIMES) World Bank is wrong to support the removal of fuel and maize subsidies-HH
Time Posted: June 6, 2013 9:03 pm
United Party for National Development (UPND) leader Hakainde Hichilema says
the World Bank is wrong to support the removal of fuel and maize subsidies by the Zambian government.
Mr Hichilema has since challenged the World Bank Zambia office to prove him otherwise on the removal of subsidies by government.
He says those praising the removal of subsidies including high commissioners and ambassadors accredited to Zambia are being misled by the PF government.
And Mr Hichilema says the high cost of mealie meal and the instability of the kwacha against major foreign currency since the PF Government in 2011 is an indication of failed PF economic policies.
He points out that when the PF government took over power in 2011 a bag of mealie meal was costing K36, 000 kwacha, while the current price is stands at K70, 000.
Mr Hichilema adds that he is still waiting for a reply from President Michael Sata to his letter of 21st May, 2013 in which he raised concerns over the removal of subsidies.
He was speaking on 5-FM’s the Burning Issue this morning.
He explains that subsidies are part of any society, pointing out that big economies including the United Kingdom and the United States of America all have subsidies in place.
Mr Hichilema says the issue is not whether or not there will be subsidies, but how and where to apply subsidies.
The UPND leader states that to debate that the subsidies are not necessary is a sign of ignorance which says obtains among most PF officials.
He adds that subsidies are the future of any society and would help preserve jobs in the country.
Labels: FARM SUBSIDIES, HAKAINDE HICHILEMA, World Bank
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(CHRISTIAN SCIENCE MONITOR) East Africans told to resettle: Are these 'land grabs' or progress?
By William Davison, Correspondent / June 5, 2013
COMMENT - This has everything to do with the World Bank's commodification of land in Africa. They specialize in making entire regions into giant money vacuum cleaners for Wall Street and the City.
In Ethiopia, a plan known as 'villagization' has freed up vast tracts for foreign corporations and brought a storm over methods of development at the World Bank.
A 15-hour drive west from Ethiopia’s capital past coffee forests and jigsaw fields brimming with cattle and people, the road leaves the high country and enters the Gambella region — an expanse of flatter bush and forest with rich grasslands and rivers.
The land is sparsely populated; locals are taller and darker than their upcountry compatriots. Most are of Nuer or Anuak ethnicity. The Nuer, whose statuesque men display parallel horizontal markings on their foreheads, herd cattle and grow maize in the water-blessed expanses.
Gambella, long ignored if not invisible, has recently become a battleground over development, modernization, and human rights – one creating a furor inside the World Bank, which approved programs worth $920 million in Ethiopia last year.
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Ethiopia’s effort to resettle local farmers into main villages while also leasing land to foreign corporations or wealthy Ethiopians has put Gambella under scrutiny for charges of violent forced relocations.
Now the issue is coming to a head: Ethiopian authorities since 2010 have embarked on a plan known as “villagization” to move some 45,000 households. The plan takes scattered families and consolidates them into fewer settlements. It is sold as a scheme for better schools, clinics, cleaner water, and, authorities say, more democracy.
Yet simultaneously Ethiopia is trying to lease up to 42 percent of Gambella – a state the size of the Netherlands – for agricultural investors. India’s Karutui Global Ltd and Saudi Star are the most prominent. Both have started huge farms for export of rice and other crops. Saudi Star is owned by Ethiopian-born Saudi billionaire Mohamed al-Amoudi and is the nation’s largest single investor.
The result is a bitter dispute in which NGOs like Human Rights Watch (HRW), and local people, some of them now in Kenyan refugee camps, allege that villagization mirrors previous brutal resettlement campaigns. They charge the government with Stalin-style collectivization that has increased poverty, carried out by beatings, rape, and killings. They say forced relocation occurred to clear land for investors.
The government denies all allegations. Former regional president Omod Obang Olum oversaw the plan in Gambella and says it was voluntary and successful. Some 35,000 families were gathered to 100 new or enlarged villages, putting them closer to roads and services.
“You’re going to transform the economic structures, the social structures, even political structures,” Mr. Omod affirms. “It’s an area for good governance, not only development.”
The situation is a dilemma for Western donors in Ethiopia who deliver over $3 billion a year. They trust Ethiopia, Africa’s second most populous nation, for growing the economy, building infrastructure, and reducing poverty.
Yet the essentially one-party state’s use of authoritarian methods to quash dissent and affect radical change has put institutions like the World Bank and UK overseas aid programs into a difficult spot. Ethiopia is infamous among NGOs for its repressive tactics and restrictions on media and open expression.
In coming weeks the Bank must decide whether to enable a panel to further investigate allegations of funding involuntary or forced resettlements (see sidebar below) of local people.
The aid program financed by the Bank and other donors pays up to 60 percent of teachers, nurses and development workers in Gambella.
Also, a London law firm on behalf of a “Mr. O,” an Anuak man in a Kenyan refugee camp, is suing the UK Department of International Development for helping fund the means by which he alleges he was tortured and forced to flee Gambella.
There is little doubt that civil servants indirectly taking World Bank and UK development funds have staffed the resettlement sites. But donors say the poor would have suffered if the funding was withheld.
Mass land appropriation is a very new trend in Africa. (See accompanying print story on Masai lands in Tanzania under bitter dispute.) But the controversy around opening up land for corporate use is hardly restricted to this continent, but can be traced across the equator, to Cambodia and Indonesia among other places.
Land is marketed for mining, farms, tourism, suburbs, and multi-purpose crops like palm oil.
The core question: Are these crass “land grabs,” or a messy yet progressive move?
Today the scale and speed of land deals are larger and faster, says a Western expert with Ethiopia experience, and the interests of people are brushed past in the competitive market.
“In Ethiopia part of the government may be interested in land rights. But it doesn’t stand a chance against the agriculture and commerce wing,” the expert says.
The degree to which mass displacement has been used to turn around commercial farms is unclear. One village in a Karuturi farm remains unmoved. Mr. Omod says commercial agriculture and resettlement in Gambella are designed to achieved “accelerated development.”
The government of Ethiopia has said however it will not cooperate with a larger look at the issue by donors.
Government like a father?
The village of Pulkoat lies off a sweltering Gambella road that leads to next-door South Sudan. After dusk, Nypuk sits outside her sturdy new tin-roofed hut. She is a mother of three and one of tens of thousands who relocated. She gives a more affirmative account, at least to a Western reporter:
Some three years ago Nypuk walked four hours from her old village to a new home here. Previously, people couldn’t “grow enough food,” she says. “We have been moved by the government so we can be close to the road, so we can get development quickly.”
Pulkoat has a water pump. A school is being built with contributions from the community. A maize grinder was provided but is broken. Planting is hard as the area is covered with tangled scrub common to Gambella. “It’s very difficult to cut down with an axe,” she says. “We expected the government to come and cut down the trees.”
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Villagers are expected to play their part by rebuilding huts and clearing land, things that the government cannot afford to do, says Omod.
Despite drawbacks, Nypuk, says the village is an improvement: “Even if some services are not perfect we believe God will give them to us.”
She describes her decision to relocate in paternal terms of the state and people. “Since the government is like a father, you accept whatever he says,” is her view.
Questionable track record and bad memories
Resettlement has a notorious history in Ethiopia. A decade after unseating Emperor Haile Selassie in 1974, Col. Mengistu Haile Mariam’s military junta responded to the famine that inspired “Live Aid” – by trucking people hundreds of miles from drought zones to Gambella and other fertile climes.
An estimated 50,000 died in transit, or in new locations, from starvation and disease. The socialist government then separately conducted its own form of villagization. The idea was “to streamline distribution of basic services.” But it was also a counter-insurgency tactic causing mass suffering, according to historian Bahru Zewde.
The current government took power in 1991 after a 17-year rebellion. Ten years later it began its own resettlement, and encouraged at least two million people to move, mostly within their own regions.
Rather than reducing hunger, settlers’ lives became harder. The rushed plan was botched and services were not provided, a US government report found.
Now the same type of approach is being applied to Gambella, a place so wild that conservationists recently found what may be Ethiopia’s only remaining elephants and giraffes during aerial surveys.
A visit to Gambella does not yield the graphic findings HRW reported as villagization went into full swing. In several stops, no one said they saw killings or beatings – a story heard in refugee camps.
HRW says research in Gambella won’t reveal abuses as people are scared to talk. Yet in the village of Pokedi, locals did feel free enough to describe a slaying of civilians by soldiers last year. They describe 11 soldiers who came in search of insurgents behind an attack on the Saudi farm.
“They never said anything, they just arrived and started shooting,” says a resident. Five men including three security officials were killed.
Omod denied any innocent people suffered in counterinsurgency operations against Anuak rebels who murdered 19 highlanders on a bus. Workers from a sub-contractor of Saudi Star were also killed by gunmen a month later.
What is evident in Gambella is that resettlement has failed to deliver services and that the challenges of relocating may have made many people’s lives harder.
Officials who tout their achievements cite Tegni village as a model. Tegni does have a school, clinic, corn grinder, and water. But the land given to each of the 159 Anuak families is uncleared forest that most of them feel helpless to develop.
The “basically successful” resettlements faced delays in Gambella due to poor infrastructure, inefficient officials and low-grade contractors say minister of federal affairs Shiferaw Teklemariam. “The planning, the implementation and the follow through were not as strong as you would expect,” he added.
Karmi, a new site, is dishevelled. There’s a school but no kids playing and few women cooking. People fled to Gambella town after highland soldiers intimidated them following the bus shooting, said Ajulu Obang as she tied strips of bark together for a bird trap. In Karmi, as elsewhere, people felt they had no choice but to move.
For Nypuk, who earlier compared the state to a parent, moving from her old village had a practical element since not to move could bring officials to ostracized her: “The government will think that you are people opposing the government.”
World Bank draws fire over funding in Ethiopia
By Robert Marquand
The World Bank's $30 billion annual budget makes it the world's top aid giver – and impoverished Ethiopia is a top World Bank recipient, receiving billions.
Part of those funds, which meet the needs of a US ally in Africa, come from US taxpayers.
But all may not be well: The World Bank's executive board is divided over whether the bank inadvertently aided forcible relocations of families in Ethiopia.
The case is sensitive enough for the board to balk on whether even to allow its own watchdog monitors to examine the case.
Last fall, about the same time the bank bestowed $600 million to Ethiopia for salaries for local officials, many of them in the Gambella Region, a small California-based nongovernmental organization, Inclusive Development International (IDI), wrote the board a complaint citing "credible evidence" of "gross human rights violations" in Gambella and copied new bank president Jim Yong Kim.
Many of the same people in Gambella that the bank helps are also part of a coercive resettlement program called "villagization," the NGO said, representing ethnic Anuak refugees.
Since 2006 the bank has given $1.4 billion for a program that covers salaries.
The Ethiopian government, since Human Rights Watch called it out last year, has denied any links between those receiving bank funds and villagization, a program it says in any event is harmless and useful.
In the development world, the World Bank is influential, sets standards and rules, and has an internal inspection panel that reviews complaints of harm and lack of accountability.
IDI said Ethiopia's denial is laughable. It urged the bank to use its investigative panel.
On Feb. 8 the panel did find grounds for a look, citing "conflicting assertions and differing views" on who is being helped by bank aid, and saying the "context" in Gambella is one in which bank aid and villagization are happening at the same time and "may mutually influence the results of the other."
Officials in Ethiopia and at the bank have denied any overlap of salaries and officials. Ethiopia says it won't cooperate with a panel.
That puts the bank in a dilemma. It delayed making a decision at its last board meeting, on March 19, to hear an Ethiopian presentation. Since then it has said nothing.
A World Bank spokesperson, asked when a decision might be made, told the Monitor: "Executive directors rescheduled the discussion of the Ethiopia ... project originally set for March 19, 2013, at a date to be determined. As is standard procedure in Inspection Panel cases, World Bank staff are not authorized to comment prior to the Board discussion."
For the World Bank to squelch a look at possible violations would harm its credibility, say activists. "Human Rights Watch remains hopeful that the government of Ethiopia and the World Bank board of executive directors will support the Inspection Panel investigation," says Jessica Evans of Human Rights Watch's Washington office. "The complaint raises serious concerns of violations of bank safeguards and human rights that deserve full investigation."
An official at one London NGO says, "The question is whether the bank will end up covering for the Ethiopian government's bad behavior. That would be a terrible blow."
Labels: ETHIOPIA, LAND REFORM, LAND RIGHTS, World Bank
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World Bank partly to blame for bodies taxing private sector - Scott
By Moses Kuwema
Wed 20 Feb. 2013, 13:10 CAT
VICE-President Dr Guy Scott says
the World Bank is partly to blame for the many quasi-government institutions that depend on taxing the private sector for their income. And Vice-President Scott says Zambia has a disjointed situation as far as interest rates are concerned.
During a meeting with visiting World Bank directors at his office and in response to a question from one of the directors Piero Cipollone, who wanted to know if the government trusts the indicators of doing business in the country and what they thought of them, Vice-President Scott said the cost of doing business in the country was vexed.
"If you are running a supermarket, you are likely to get inspections from four or five organisations coming to make sure that you are not selling stuff past its sell-by date, ZABS, the council. There is enormous explosion of quahogs of quasi or autonomous organisations type of things and depend on their income upon taxing the private sector and claiming that you are an environmental danger, health danger, and that you are over-charging or under-charging, you are violating the competition Act." There is a big issue in restructuring and you guys are partly to blame.
I mean over the years, it is you who have been saying 'let us have a project', we need a new institution to do the project, we don't want to work with these corrupt fellows here in this ministry department. We want a new whatever and then after three years the project closes and it becomes a predator on the system. I think that needs a careful survey," Vice President Scott said.
Vice President Scott said in Zambia, about 70 licences were required technically to do business.
"To actually be legal in Lusaka, you take about two years to set up your business because of all the people that are demanding licences off you, wanting to do inspections off you and I think that needs to be cut. I think it needs to be a bonfire of quahogs. We are part of the way there. It is interesting, you set up an institution to facilitate business and the first thing it will do is take the money that you give it…taxpayers' money and start building real estate for its offices and then for rent. And then you set up a real estate company, you have not set up anything else," Vice-President Scott said.
And Vice-President Scott said Zambia had one of the highest interest rates in the world.
He said most Zambians ought to have their own houses through mortgages but that this was not the case because of the short period of repaying.
"The only mortgage you can get is a 10 year one at 18 per cent or something like that, which you cannot afford. We have this bizarre structure which could be as a result of lack of competition. You would have thought that the current trade would have brought it down, through people coming in and having their money banked here, that would generate some competition and bring the rates down, but we are not seeing this," he said.
And in response to another World Bank director Rudolf Treffers who wanted to know how the Zambian government could use agriculture to reduce rural poverty, Vice-President Scott said the realistic opportunities for agriculture were there but could not be determined from the boardrooms.
He said there was need to be practical and also have practical entrepreneurs or innovators to support the government programmes.
Meanwhile, Treffers said it was important for his organisation to have a physical feel of how the situation was in this country.
Labels: GUY SCOTT, REGULATION, World Bank
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