Sunday, April 28, 2002

The Post, Lusaka

The success of privatisation is not determined by the speed companies are privatised, University of Zambia Institute of Economic and Social Research director Professor Oliver Saasa has said. Addressing the first national reference group meeting of the Investment for Development Project in Lusaka last week, Prof. Saasa said speed or the number of companies sold did not signify success. “The success of the privatisation policy should be measured by the rationale for privatisation and this is enhanced by productivity and profitability,” he said. Prof. Saasa also observed that central planning and control of the economy should be replaced by the use of market forces so that productive resources are used in an efficient manner. He said providing more freedom and stronger incentives would stimulate entrepreneurial activity, business efficiency, productive investment and economic growth. Prof. Saasa hailed liberalisation as having improved quality and efficiency as it enhanced competition. He said with the high competition from liberalisation, consumer preferences were reflected in market responses. Prof. Saasa said foreigninvestment required a conducive environment because trading had become more attractive than before. He said the increased flow of finished goods into the country should not be blamed on investors but on the poor status of the Zambian investment ground. “The playing field challenge should be levelled, especially with South Africa and Zimbabwe,” said Prof. Saasa. And Zambia Competition Commission executive director George Lipimile said African countries are not attracting foreign direct investment (FDI) due to lack of stability and transparency, among other factors. “Investors perceive a high risk for FDI in Africa despite possible high rates of return,” he said. Lipimile observed that Zambia had begun to pay attention to the investment facilitation and competition policy as these were essential requirements in the creation of an environment with sustained economic growth. “We are also finding it increasingly necessary that these issues are brought onto the agenda of regional integration within the framework of the SADC and COMESA,” he said.Lipimile observed that developing countries could not compete with developed countries by providing incentives and subsidies to attract FDI, which had led to costly distortions in developing countries. He said research had also shown that a good level of
education and a skilled labour force is one of the major factors that attract FDI