December 13, 2002

Discussion on privatisation of remaining parastatals

The Zambian Government has once again found itself in a dilemma over the privatisation of the remaining parastatal companies.

To privatise Zambia Electricity Supply Corporation (ZESCO), Zambia Telecommunication Company (Zamtel) and Zambia National Commercial Bank (ZNCB) as demanded by the Bretton Wood institutions - International Monetary Fund (IMF) and World Bank or not to, as urged by among others, parliamentarians and trade unions.

Pressure is indeed mounting with the IMF threatening to delay or withhold about $1 billion in debt relief if the Zambian Government does not dispose of ZNCB. After having disposed of the "goose that used to lay the golden egg" - Zambia Consolidated Copper Mines (ZCCM) and other parastatals - about 200 of them, Government is expected to decide the fate of the three most important remaining State enterprises.

But not so fast, the case of Roan Antelope Mining Corporation of Zambia (RAMCZ) and the pull-out by Anglo-American Corporation (AAC) from Konkola Copper Mines (KCM) are still fresh, if at all one can afford to have them dry-up. The negative impact of the somewhat unsuccessful disposal of the former ZCCM assets have left the Copperbelt Province and indeed Zambia in an almost comatose state. It is not surprising therefore that Copperbelt Minister Patrick Kafumukache recently called for the slowing down of the privatisation process. Col Kafumukache said Government would now be cautious this time around with the privatisation programme because it had caused a lot of misery to the people. He said the programme had brought about economic hardships because it was done in a hurry, without assessing its impact. Well, one would sympathise with Col Kafumukache, after all, his province has borne the full brunt of the negative effects of the IMF and World Bank policies.

Other than the ZCCM catastrophe, there are other former State utilities that have simply folded-up because of the economic policies of the IMF and World Bank. Despite the apparent and visible signs of the negative impacts of the liberalisation policies, the two Bretton Wood institutions have hailed Zambia for what it calls "a successful" privatisation programme. In fact, the late Finance minister Ronald Penza was selected as one of the two best finance ministers in the world largely because of the rate at which he conducted the privatisation process. What is not certain, however, is the criteria used to determine success. Is it the pace at which the programme has been conducted or the ability of these companies to improve both the economic situation of the country and the social welfare of its people?

After all, as Sir John Chapman said "economic advancement is not the same thing as human progress". And in any case, economists usually know a lot about what makes producers tick, while they know almost nothing about the motivation of consumers. Worse still, as Aaron Leverstein said: "Statistics are like bikini. What they reveal is suggestive, but what they conceal is vital." It might therefore be said the mere fact that the Zambian Government has been able to privatise most of the firms within the shortest possible time does not necessarily mean that the programme has been successful. The other country that is said to have been "kissing" the IMF policies in the morning, afternoon and evening is Argentina - It currently lies in a coma, with the economy particularly the financial market in a state of disaster.

That aside, however, Government is expected to move fast, to either privatise the country's three choicest utilities or heed the advice of the parliamentarians and trade unionists who recently called on them not to give-in to pressure from the IMF and World Bank. Although Government has expressed willingness to privatise Zamtel, Zesco and ZNCB in the past, statements coming from its senior officials have been rather contradictory. While others have said it is not safe to privatise the three utilities, the voice of those calling for the disposing off has equally been strong. In March 2002,Communications and Transport Deputy Minister Willie Nsanda said it was not safe to privatise Zamtel because it was the only mode of communication system that served citizens in and outside Zambia. He said, with the liberalisation policy in place, investors could work alongside the equipment, the way Telecel and Celtel operate rather than privatising it.

And in the same month, Energy and Water Development Minister Kaunda Lembalemba maintained that Government would not privatise Zesco because it was the backbone of Zambia. The minister said privatising Zesco would be a big mistake that would cost the Zambian people and the Government. "We could maybe only concession some shares but complete privatisation of the company is out. Besides the matter has to be discussed by Cabinet and thereafter Parliament. So Zesco shall remain Government-owned," he was quoted to have said. But Finance Minister Emmanuel Kasonde said it was dangerous to suggest that because 19 companies out of 253 had not performed well, the whole privatisation process was a failure.

Well, the Parliament that Mr Lembalemba alluded to, on December 4 moved a motion calling on Government to halt the privatisation of ZNCB. The motion was sponsored by mainly opposition members of Parliament and strongly supported by two MMD backbenchers. Moving the motion, Chipata MP Matthew Mwale said a clear message should be sent to the IMF and World Bank that the people of Zambia had rejected the sale of ZNCB. Mr Mwale argued that privatisation had failed and that the bank with 41 branches across Zambia was a strategic institution meant to serve the Zambian people.

And seconding the motion, Mbala MP (MMD) Gaston Sichilima said Zambia had experienced enough lessons to stop privatisation and cited cases of investors taking away assets of sold companies to neighbouring countries. Munali MP Edith Nawakwi, who is also former Finance minister in the Chiluba administration said ZNCB was still profitable as it closed with over K600 billion deposits each day. The other MPs who supported the motion included Kabushi MP Neddy Nzowa, Kawambwa MP Africa Chungu, Luena MP Chrispin Sibetta and Emmanuel Hachipuka. But Finance Deputy Minister Patrick Kalifungwa recently said on the British Broadcasting Corporation (BBC) Africa Network Programme that they are still consulting with the Zambian people on the path to take as regards the privatisation of ZNCB. He however said it would not work well for the country to lose the $1 billion from the IMF as the effects on the economy would be disastrous.

With pressure mounting on the Zambian Government from the IMF and World Bank as well as parliamentarians and trade unions on the other hand, it remains to be seen which way the "pendulum" of privatisation will take, especially concerning ZNCB, Zesco and Zamtel. (The Times of Zambia, Ndola)

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