By Henry Kyambalesa
Introduction
I have found it necessary to continue to share my views concerning the saga which has been engendered by the Zambian government’s proposal to revive the Industrial Development Corporation (INDECO or IDC) because the issue at hand is too important to be left to the whims of a few government officials, who could be pretending to support the idea merely because they are fearful of being disciplined by the appointing authorities.
This is, of course, understandable!
But be that as it may, future generations will judge us harshly for our fascination with a disastrous socialist experiment that once plunged our beloved country into socio-economic decay and backwardness—an experiment that ultimately subjected the majority of our people to want, misery, and destitution!
There is really nothing that is benign, equitable, or humane about such an experiment!
In fact, the devastating loss by UNIP in the 1991 Presidential and General Elections was, by and large, a reflection of the Zambian people’s extreme suffering occasioned by decades of the Party’s experiment with socialist ideals.
Rational Use of Public Resources
From 1972 to date, our government has not been able to adequately meet the basic needs and aspirations of the people partly due to bloated administrative structures. The creation of the Central Committee (a somewhat parallel structure to the National Assembly) and the position of Prime Minister that followed the introduction of a one-party State in 1972, for example, escalated the cost of performing government functions.
In March 2007, the late former President Levy Mwanawasa, during his official visit to Namibia, revealed that 65% of the national budget was devoted to the sustenance of a bloated state apparatus, and that only a paltry 35% was left for education, agriculture, healthcare, roads and bridges, and so forth.
In June 2009, former President Rupiah Banda decried the fact 50% of the government’s domestic revenues were spent on 1% of the population, including Ministers, and wondered how the provision for roads, hospitals, schools, energy, and defence and security could be met.
And in October 2012, an article by Kabanda Chulu, which appeared in The Post Newspaper, revealed that 50% of the 2013 national budget would be spent on the wages, salaries, allowances, and fringe benefits of civil servants and government officials.
Given this state of affairs, what His Excellency, President Michael Sata, can do is to be courageous enough to trim the national government by doing away with sinecures and superfluous government functions.
We need to create a smaller and more efficient government. We need to do so in order to save resources for use in addressing the needs of education and training, agriculture and food security, public health and sanitation, public housing, transportation infrastructure, and so forth.
Finding new ways of spending the country’s meager resources—such as the revival of INDECO, which will require enormous amounts of foreign exchange, debt-financing, and tax-payer funding to implement—will clearly be counterproductive.
Privatization of State Companies
Some people have accused me of trying to sanitize the “privatization” of state-owned companies without addressing any of the issues relating to the rampant asset-stripping, the mass lay-offs of workers in privatized companies, and the misappropriation of proceeds from privatized state-assets which followed the privatization of such companies.
These and other unfavorable effects which followed the privatization of state-owned companies, I believe, were very likely due to the lack of adequate and stringent rules and regulations designed to provide safeguards against potential pitfalls in the implementation of the privatization program.
Countries which are committed to the privatization of state-owned companies need to address a number of issues, such as the pace of privatization, the choice of companies or industries to be affected, stringent antitrust legislation, prevention of asset-stripping, consumer protection, protection of employees, and the conduciveness of existing policies and conditions to the evolvement of a robust market economy.
With respect to the pace of privatization, there has been a tendency for governments committed to economic liberalization to be obsessed with speedy privatization of state-owned companies without considering the very likely possibility that they are merely shifting the monopolistic positions enjoyed by such companies from government to private hands if new, private investments are not quickly made in the lines of business involved to provide the necessary competition to the buyers of the companies and prompt them to strive for greater efficiency.
A gradual transition to a private-sector-driven economy can enable a government to put in place a sound competition policy, a strong market for securities, and the necessary legislation to enforce contracts, among a host of other things.
Objectives of the INDECO Proposal
I understand that the INDECO idea is currently a mere suggestion about potential initiatives in the government’s attempts to revitalize the Zambian economy. But if it is ultimately pursued, it expected to stimulate industrial development, create 1 million jobs in 5 years, become a development financial institution, be a sovereign wealth fund, be a holding company for all state-owned enterprises, and, among other things, make investments in high-risk areas that the private sector would not find profitable enough to engage in.
But, as Jeremiah Mwansa Mweemba has argued in an article published recently in Zambia Weekly, industrial development can be spurred without an IDC. A predictable fiscal policy and further promotion of existing industrial clusters such as the Multi-Facility Economic Zones can achieve the same result.
In his view, the country already has a development financial institution (DFI) under the auspices of the Development Bank of Zambia, which in some ways operates like the Development Bank of Southern Africa and South Africa’s IDC, and the Citizens Economic Empowerment Commission also mirrors many of these activities.
He has further argued that the country already has a de facto sovereign wealth fund in the name of ZCCM-IH, and the IDC would struggle to enhance corporate governance of SOEs due to the political element in decision-making that would emanate from having the President as Chair of the IDC.
In addition to Mweemba’s suggestions, the government can boost economic activities by incentivizing the private sector to create jobs and bolster economic growth if it can adequately provide for various kinds of guarantees, inducements, and essential public services and facilities.
The following is Mweemba’s conclusion regarding the proposal to revive INDECO:
“It would be better for the government to improve the viability and governance of existing … [state-owned enterprises], while encouraging further private-sector growth through credit availability and more private equity investments by NAPSA and ZCCM-IH.”
What Is Zambia’s National Ideology?
Finally, let us consider the evolvement of our beloved country’s socio-economic system from its independence in 1964 to date.
When we gained political independence in 1964, our country adopted an economy that was more or less managed by the British colonial government through free-market principles.
From 1968 to 1991, the country’s economy was managed by means of socialist state policies, which barred both local and foreign private investors from certain commercial and industrial sectors of the economy. Dr. Kenneth D. Kaunda made the policy pronouncements which ushered in an era of state-owned enterprises in his April 1968, August 1969, and November 1970 addresses to the National Council of the United National Independence Party.
The next government of the late President Frederick J. T. Chiluba of the Movement for Multi-party Democracy embarked on economic reforms designed to create a market-based economy—a private-sector-driven economy—upon his inauguration in November 1991.
The reforms were designed to ensure that investment laws were clear, transparent, and accessible, and included the following:
- abolition of price controls;
- abolition of exchange rate controls;
- privatization of state-owned companies;
- liberalization of interest rates;
- provision for 100% repatriation of profits;
- removal of quantitative restrictions on imports;
- removal of restrictions on investment in all sectors of the country’s economy.
So, what is the way forward for our country in terms of its ideological inclination?
I would urge the ruling political party, the Patriotic Front, to honor and embrace what is enshrined in the current Republican constitution, the 1996 Republican constitution, Article 112(b) of which asserts that “the State shall endeavor to create an economic environment which shall encourage individual initiative and self-reliance among the people and promote private investment.”
And, preferably, a Clause proclaiming that “the State shall not nationalize or expropriate private property” should have been enshrined in the new Republican constitution that is currently being crafted to ensure that investors know without a shadow of a doubt the country’s stance on local and foreign investment.
There is a need for political parties and their leaders in Zambia to guard against the temptation of changing the country’s socio-economic ideals when they secure the people’s mandate to assume the reins of power.
Obviously, every country needs to generate a set of socio-economic ideals (or an ideology, to use the term that is in vogue worldwide) to serve as a guide to all national pursuits and endeavors. But such an ideology, or set of ideals, must satisfy three basic requirements if it is to stand the test of time.
Firstly, it should be generated through national consensus, either by parliament or through a referendum, and not by an individual leader, a group of leaders, a political party, or a group of political parties.
Secondly, it should be consistent with the cherished values and virtues of a country’s people. And, thirdly, it should be based on realistic assumptions about what is humanly achievable rather than on an idealized or utopian concept of the best conditions of human life.
In this regard, consideration of the failures and successes of the socialist, communist, and free-enterprise ideologies and their various versions and blends is critical to the formulation of a viable national ideology.
You are trying to hard Henry Kyambalesa and you seem to have read one too many literature novels.
Poorly written article.
Thanks
True…boring to the core.. Natenga pensulo…na pepa…nalembela sweetie wanga mushota…now jive ka gelo
You are right Mushota – Kyambalesa doesn’t even seem to listen to himself. The question he should be answering is, what is wrong with having a mixed economy – an economy where private sector compete side by side in a fair environment with public companies?
Let us not get stuck in misinterpreting history. The Zambia of the Kaunda era is totally different from the Zambia we live in today.
It is good youngman for your class credits.
Nice one Honre. Dullards can’t read.
What is worrying with the way the PF are managing the economy is that they don’t have a clear economic policy to which we can all refer, and as such they seem to be experimenting on anything and everything.
To start with the INDECO idea is not in the budget, so its an after thought. Secondly, the idea was announced on 1st january 2014, and by 31st january 2014 the president wrote on facebook that IDC had been incorporated. So from that it is clear there is no adequate consultation, or planning.
From 1991 up until the PF won the elections we were promoting liberal economic policies which so far was working well with inflation reducing to single digits and economic growth of over 5% average. Yes they have the mandate but mandate comes with responsibility.
First of all:
What are the POLICIES of PF???
They seem not to have any policy because it appears they just trying things borrowed from here and there.
They did a lot of campaign; and during that time people thought they were explaining their policies through their promises.
They have turned round and said all that they said should not be relied upon nor is it trustworthy because none of it was true. It was MERE CAMPAIN SLOGANS.
Then where are PF policies??
No one can answer this question, however hard you try because even the owners don’t know. PF has no idea what their policies are.
In other words PF has no policies. But something like a policy is what they are using to govern – and that is, if PF has a single policy it is that of TRY-AND-Error.
That is the only…
Find this from the PF Constitution.
ARTICLE 3
PUBLIC INSTITUTIONS
The Party shall ensure that all the public institutions, State-owned enterprises and popular mass and similar organizations are led by persons who are members of the Party and who are uncompromisingly committed to achievements of the Party.
ARTICLE 4
STRUGGLE AGAINST EXPLOITATION
The Party shall wage a relentless struggle against all domestic and international forces of reaction.
It shall fight for the eradication of Capitalism, with its offshoots; poverty, with its offshoots of Hunger, Ignorance, Disease, Crime, Corruption and the exploitation of man by man.
Also this.
ARTICLE 5
PARTY SUPREME ORGAN
The Party is the supreme organization and the guiding political force in the land. Its aims and objectives as expressed in this Constitution shall provide guidelines for all persons and associated
to it.
Contd…
..
In other words PF has no policies. But something like a policy is what they are using to govern – and that is, if PF has a single policy it is that of TRY-AND-Error.
That is the only policy that they have consistently used to govern the country.
If a couple divorced, it does not mean partners, if reconciled, cannot make a successful marriage. Most Zambians look down upon themselves….and think they cannot do what is good. If INDECO was a failure was good idea but failed in the past, do it better this time.
Mr Academician in USA come back and develop your country or stay blessed silently
I wouldnt say that Zambia has been a PURELY free market economy.Instead,its a mix.E.g there are private vs public (govt) schools,colleges and universities,hospitals,clinics,banks (natsave,znbs vs barclays,stambic,etc),telecoms(zamtel vs airtel,mtn),etc.
It wouldnt be bad (for the national economy or otherwise) for govt to e.g open new mines (if they have the capacity),set up industries particularly those that individual Zambians cant.E.g for public transport and retail,individuals can take up the challenge (we now have Euro-Africa,Shalom,Mazandu,taxi and truckers).But big big industries govt can.Look at the pineapple industry in NW,Mansa Batteries,Textiles,etc.Private players dont want to move in,so why shouldnt govt take action?
Wide consultation,legislative and otherwise,would be…
Mr. Kyambalesa better ask himself how the US, where he is residing became so wealthy. Does he know that like Zambia, the US was once a British colony too? Does he know what policies where enacted in the US after independence? I advise him to read about the Federal Alien Property Act of 1887 that prohibited the ownership of land by foreigners and about the Federal mining laws that restricted concessions to foreigners.
Not only the US but almost all nations that made a jump from poverty to wealth had a state-directed economic model once. The Korean economic miracle, for example resulted from a clever mix of free market incentives and a state-owned enterprises.
All those ideas can work, the bottom line here is the confidence in PF and Sata as president. we have had many u-turns by Sata.
This goes out to all those saying the article is boring.?you want to hide anything from an African man?put it in writting’.
To the author.To hit the nail on the head.I would respect Sata if he came out in the open to say ‘Zambians we are reverting to a one party (participatory ‘democracy’)and this is the path the PF goverment has chosen for you so we implement the ‘important’policies for the benefit of every Zambian’.
If SATA has no courage to tell us this?then we are are deep trouble.I say this because all these resources we want to pump into IDC and the latest face book communique on ZCCM recapitalisation are programmes which will not be carried on by any Government which will take over in the invent that PF looses elections at any given time.
The waste uhmmm.
What I really don’t admire about recent approaches by some supposedly smart people of the Zambian Enterprise is their lack of confidence in themselves and fellow country men at large.
There seems to be this perception that as Zambians we are not going to amount to anything at all especially if it is initiated by ourselves. We somehow would need investors and/or others to help us build our own nation.
As a result, we seem to want to shot anything home-grown down making references to some failed policies of say UNIP my party (by the way, I am a proud UNIPist). Now did we make mistakes in the way we managed parastatals two decades ago? Yes!!!
Have we learnt from our mistakes and are eager to do things differently this time around? YES!!!
You must be a delusional stupid i.d.iot to even dream that this government of Satan and his vampires have the capacity to learnt from their mistakes and are now all of a sudden eager to do things differently this time around? The plain stupidity that characterizes some Zambian minds stinks, like the old adage goes, you cannot teach an old dog new tricks at all. Mumba wenye, walakwa ngako ndithu!
whenever once fails to argue on merit they revert to name calling. I share ideas and have no time to stoop low and excogitate on a sub-human level. Facts are stubborn things and life is a serious enterprise.
Take for instance a group of individuals wanting to argue that IDC would not work and all they want to base that on is nothing but their hatred for the President. That to me is way below my margins and it has no place or class.
Say for instance, someone wants to argue that Zambezi Resources would be a bad idea only because they don’t want to see a fellow Zambian became a billionaire and they want to argue that he’s a conman.
They have no proof other than hearsay, no FBI report on money laundering charges, etc … I don’t even dignify them with any responses, I am way past…
Let’s see if you can argue your points in plain good English without reverting to insults, then we will talk but if you have no capacity to even write one proper sentence in the Queen’s language coherently, then don’t wait my time.
No Scientific analysis in this article except History lessons.Very boring-Henry
Good arguments mr kyambalesa. For those failing to digest the arguments, the author quotes 3 past presidents emphasing that between 50% to 65% of govt revenue is spent on salaries and allownces of politicians & civil servants who consist of only 1% of the population. Where does this leave the other 99% of the populatipn? By deduction, he implies that subsidising loss making INDECO firms will increase this ratio even further say beyond 90% leaving only 10% for investments in roads and bridges, agric, education, health etc. How do you expect the country to progress with such pathetically low levels of investment? Of course he makes other arguments which unfortunately most zambian bloggers find less interesting than insults and backstabbing tribal/petty politics.
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