A short drive from woodlands shopping mall towards Chalala stands a 40-foot container, burgundy in colour – located just before the ring road intersecting Chilenje and Chalala.
It is owed by Rasta – a middle aged artisan of slight built with a distinct husky voice. His free hanging dreadlocks aptly compliment this moniker. More than his persona, it’s the quality of his products and impeccable welding skills that has made him the go to guy for steel fabrication and related products in this vicinity – a factor that is ably demonstrated by the snaking queue of clients standing outside. Despite there being only few people, the commotion is palpable.
The reason: His clients are jostling for a quick turn for service granted that the load shedding schedule allocated to that area by power utility, Zesco is nearing kick-in. Once switched off, his clients would have to wait another 6 hours before power is restored. By then, the business would have lost a considerable amount of revenue if not all his takings for the day. Why not buy a generator to counter intermittent disruptions? “Nanga mu uziba mutengo wa genset. Elo nayeve genset isebenza na mafuta”, loosely translated as, do you know the price of a genset and associated running costs,” he retorts almost in agitation.
Rasta has 3 welders in his employee with an admin clerk raising the tally to 4. It’s certain that a poor profit yield for the month will impact the pay-cheque of these employees. In the face of this latest bout of outages, he barely has options to keep his head above waters. Like other mere mortals, he has probably resigned himself to fate opting to wait for the storm to pass.
Load shedding is a menace more so to households saddled with a double whammy of rising food prices and transport costs. Adding to this, the perceived inertia by ZESCO towards mitigating this scourge has only fueled angst to an already febrile situation. Ever wondered then what the impact is to small businesses such as Rasta’s and by extension to GDP growth? How many jobs will the economy have shed before a stable and consistent supply is restored?
As is often the case with most developing countries, Zambia’s small business sector is the life blood of its economy. A 2017 research conducted by Bank of Zambia (BoZ) and the International Labour Organisation (ILO) further illustrates this argument. It showed that Small Medium Enterprises (SMEs) accounted for 70% of Zambia’s Gross Domestic Product (GDP) contributing about 88% of the country’s employment tally. By implication, this segment of the economy should be the key driver to achieving the state’s medium to long-term job creation targets. Granted energy is a key input cost to production in the SME environment, it’s likely that load shedding is strangling growth.
In fairness, it would be disingenuous to entirely blame the state for ZESCO’s woes for most of these challenges pre-date the government of the day. To be more circumspect, Zambia’s energy is largely derived from its hydro-power stations so the only fact that should matter in this context is that we had poor rains.
Yet critics argue that this is not the first time the country is facing a challenge of this magnitude and therefore, the power utility needed to have planned for a possible recurrence – given the unpredictable and inconsistent rainfall patterns we have come to experience off late. In 2016, Zambia had 2 338 Megawatts (MW) of installed hydropower capacity with a forecast report predicting demand to peak at a rate of 3% per annum.
Mega mining projects aside, the country has in the last 3 years – experienced a massive infrastructure boom manifested in shopping malls and housing developments mushrooming across the country. At best, the stats are indicative of a growth that is fast outstripping demand. As part of its scenario planning, doesn’t ZESCO have early warning capabilities to detect a potential crisis in the event of say a drought or any unplanned catastrophe? Most important, does it have the capacity to mitigate outages?
On scrutiny, the prognosis looks dire. Gleaning through the company’s 2017 financial results available online is a painful experience – akin to a dentist attempting to remove your set of pre-molars using a swiss army knife. ZESCO’s liabilities far outweigh its bottom line. Just how much it owes institutional lenders is hard to decipher from this well-crafted document – perhaps a product of clever accounting.
Even more troubling, this is an entity that’s consistently used state backed guarantees to borrow heavily yet lacks the capex to fund new power generation plants. During this period when it should be embarking on a drive to bring on board critical skills that can help to stem blackouts, it has instead placed a moratorium on recruitment. Any assertion therefore that it is battling a severe liquidity crisis couldn’t be further from the truth. While likely that management will pull all stops to disprove the vibrating chorus of gloom, the fragility of the company’s fiscus is evident in both the unabating outages and the lackadaisical approach to addressing this challenge.
So, where did all the money borrowed from multilateral institutional lenders under the guise of, capacity building, infrastructure revamp and related activities go to? Make of this what you can. It’s even more baffling that the relevant Parliamentary oversight committee responsible for monitoring ZESCO’s sustainability, hasn’t yet red-flagged its precarious balance sheet. In the absence of plan B, shouldn’t the company be considering changing both its business and operating model?
Its unsustainable for ZESCO to continue to play and officiate its own game. Its infrastructure – especially its grid, is desolate from years of neglect implying it can barely carry excess capacity from new energy producers set to come on board. The firm should either choose to focus on energy generation as its core business or carve out the rest of its distribution infrastructure to nimbler players that have capacity to manage and upgrade these assets.
If the latter proves unworkable, the state should consider giving up partial custody of this dinosaur through a public listing on the Lusaka Stock Exchange. Food for thought? Given our experience, privatisation remains an anathema to our parlance but what could be worse than government keeping a cash guzzling asset that is holding the country hostage? Just sell that damn thing.
By Chimwemwe Mwanza