Monday April 29, 2002


By Chanda Chimba III

The Post, Lusaka

EXPERTS have indicated that our country has made some amount of progress towards liberalisation and that Zambia has managed to stabilise the economy by controlling inflation. However, inflation is still at double digit levels and we have yet to see whether it will get to single digit levels in the next couple of years.But someone a few days ago told me that inflation is not condusive to attracting domestic investment. Since the local or resident investor will continue to be the greatest source of new investment, it is all the more reason that the government should have policies that encourage and promote domestic investments by among other things, stabilising inflation if significant investors are to come through. In this regard the new deal government will have to undertake deliberate measures to encourage investments so that the role of investment grants is targeted at specific activities in order that produc is enhanced among the local people. I for one have for sometime now aspired to set up a television studio or at least see one created to rival the mighty Zambia National Broadcasting Corporation (ZNBC).

But this still remains a very serious dream and for very obvious reasons.I am also sure that there are a lot of skilled and professional people around who are aspiring to set up this and that but are not able to do so perhaps because of not reaping the benefits of the investment we have seen over the last ten years. Zambia has always had domestic investors and there are still a good number today who are contributing significantly to the development of this country. The trouble is they are not positively acknowledged in preference to foreign investors. Well, most foreign investors we have had over the last few years only targeted takeovers of privatised state companies.Very few came over to set up new enterprises. In fact some were awarded favourable investment incentives. But incentives should have room to allow regulation as foreign investment is not an end in itself.One researcher simply puts it that the incentives awarded have been too open ended and open to abuse because they have no closure rules. He is of the opinion that fiscal incentives should have penalties for closure so that exit conditions are sufficiently stringent to discourage what he calls footloose investors who surface only during the tax holiday but take off once that ends. Right now for reasons that are very clear foreign investments in the mines is questionable. Without hesitation, Konkola Copper Mines (KCM) is in deep trouble especially that no one is being honest with what is going on. We all know that what KCM is going through is about the same thing that happened to the Roan Antelope Mining Corporation of Zambia except maybe all sorts of assurances even from the highest office that the mine will be kept afloat. What we have today is a sad story of a non operational mine which is being stripped bare.

Workers are dejected, families are striving and Luanshya town is practically doomed. Social vulnerability is high, what with our weak labour laws and the workers rights far from being guaranteed. Much as foreign investors are welcome to Zambia, some are outrageous in their dealings.

They subject workers to all sorts of things ­ body searches, long working hours, foul language and worst of all near-slave wages. As far as I know both the public and private media have adequately highlighted these issues regarding some foreign investors. It has clearly been reported that some investors in such areas as tourism, manufacturing, trading and agriculture have no regard for the Zambian workers and indeed the labour laws of the country. But I am hopeful that government through other government agencies will keep an eagle’s eye on such investors and perhaps through the Zambia Investment Centre seriously scrutinise new foreign investors before they are given licences or certificates.

In spite of such setbacks, various stakeholders would like to see how best to promote foreign direct investment (FDI) and improve the overall investment climate which some say is unsatisfactory. One such organisation is the Consumer Unity and Trust Society ­ Africa Resource Centre (CUTS-ARC). This is a Non Governmental Organisation undertaking the Zambian component of a two year collaborative research project on “Investment For Development” (IFD). The project involves fact finding and advocacy work on investment regimes in seven developing countries and these are Bangladesh, India, South Africa, Hungary, Tanzania, Brazil and Zambia.

The main objective is to make assist ploicy making bodies of the concerned countries in designing and implementing effective investment policies that will contribute to equitable growth and development. A major component of the project is to constitute the National Reference Group (NRG) and to conduct periodic consultative meetings. The NRG is expected to comprise of leading personalities from the civil society, the private sector, the media and the government agencies. It is also expected to steer the project through discussions, assessments and consultations. Some of the objectives of the NRG consultations are: to identify core policy and non policy issues concerning domestic investment and FDI, to review and appraise the current investment regime in Zambia and to create a network for advocacy on the effective FDI regime in Zambia so as to raise awareness and to stimulate National debate on investment issues.

At the first NRG meeting on IFD held at Lusaka’s Chrisma Hotel on 25th April 2002, Oliver Saasa professor of International Economic Relations at the Institute of Economic and Social Research of the University of Zambia, presented a paper on Economic Liberalisation and the Role of FDI: Lessons for Zambia. Professor Saasa indicated that the success of the privatisation policy should not be measured in terms of its speed or how many companies have been privatised. He also made reference to the British privatisation which suggests that rather than who owns the company, it is the competitive environment within which a firm operates that weighs more as the most crucial factor in its performance. A draft research paper entitled Zambia Investment Policy Report has in fact been prepared by Gideon Choolwe Mudenda. The paper describes the investment regime in Zambia under four general headings ­ Macro-economic context, Policy trends, Investment Policy audit a attended with participants coming from such organisations as the Export Board of Zambia, OXFAM, KEPA Zambia, Ministry of Commerce and Industry, Zambia Wildlife Authority and the Investment Centre to mention a few. It was generally observed that much as foreign investors are welcome to Zambia, it should not be at the expense of the local ones.

Currently foreign investors are offered certain incentives and it was suggested that local investors should also enjoy the same. There are two more NRG meetings which should critically address and recommend ways of improving the overall investment climate taking into account infrastructure provision, strengthening labour laws and guaranteeing workers’ rights as well as seeing to it that government steps its investment in human capital. The investment climate will also be something to talk about if measures are put in place to encourage investment in the manufacturing of such basic items as needles, spoons and knives which are today being imported. The NRG should also help find answers and recommend ways on how Zambia can really attract FDI in the wake of such countries as Mozambique and Angola; emerging from civil wars, Congo DR; practically still at war and South Africa; just settling down after apartheid are said to be doing much better in this regard.