Business and Economy in Zambia

2010 National Budget Not Inspiring

2009-10-11T04:57:00Z

We received the following from Henry Kyambalesa.

The 2010 national budget unveiled in a speech delivered to the Zambian National Assembly on October 9, 2009 by the Honorable Minister of Finance and National Planning is not inspiring at all, given the depth of socio-economic woes the country has been facing since the 1970s. It is not possible for our beloved country to make any headway in socio-economic development with such a mild budget, not even by the year 2030 when the MMD government is dreaming of turning Zambia into a middle-income country.

For reasons of brevity, let me comment on a few highlights of the budget.

*Inflation and Taxes*:

The attainment of single-digit annual inflation (of 8%) is a target that would be appropriate for countries that have already achieved a high level of job creation and socio-economic development. Zambia is clearly not one of such countries.

There is a need to reduce PAYE, VAT and interest rates in order to stimulate both the supply of goods and services and the demand for goods and services and, in the process, bolster job creation and eco nomic growth. We need to reverse the recurrent emphasis on sta bili zing inflation at the expense of job creation and econom ic growth.

Value-added tax, for example, could have been reduced to 12.5% from 16%. The increase in the PAYE exempt threshold from K700,000 to K800,000 is not adequate; this should have been increased to at least K1,000,000. And the income bands should have been expanded to make them fairer to tax payers as

follows:

*2010 Income Bands and Tax Rates*:

K0 – K800,000 per month 0%

K800,001 -- K1,335,000 per month 25% K1,335,001 -- K4,100,000 per month 30% K4,100,001 and above per month 35% *Proposed **Income Bands and Tax Rates*: K0 – K1,000,000 per month 0% K1,000,001 -- K1,435,000 per month 10% K1,435,001 -- K1,970,000 per month 15% K1,970,001 -- K2,370,000 per month 20% K2,770,001 -- K3,170,000 per month 25% K3,570,001 -- K3,970,000 per month 30% K3,970,001 and above per month 35% Lower taxes and interest rates could have functioned as an effective economic stimulus that could have spurred economic activity and job creation, as well as create a new class of tax payers. There is really no other obvious way in which a country can jump-start an economically beleaguered economy like ours. *Dependency on Foreign Investors*: There is too much emphasis in the budget on creating opportunities for foreign investment with little or no emphasis on promoting small and medium-sized enterprises (SMEs) by Zambians. As the United Nations Economic Commission for Europe has maintained, a growing body of empirical evidence supports the widely held view that SMEs are instrumental to socio-economic development. They can, as such, play an important role in improving the socio-economic welfare of a lot of people in a country. There are many ways in which SMEs can positively contribute to the improvement of the socio-economic well-being of a country’s people, such as the following:

(a) They can create employment opportunities for talented citizens and family members who cannot find jobs in large business establishments;

(b) They can function as a vehicle through which a country’s government can economically empower its people by enabling them to participate actively and directly in their country’s commercial and industrial activities;

(c) They can facilitate the generation of wealth for all sectors of the national economy and thereby reduce existing income disparities;

(d) They can contribute to the improvement of the social and economic welfare of people in their host communities through the provision of various kinds of needed goods and services; and

(e) They can function as the backbone of a country’s economy if they are mainly operated by citizens, as they would be both indigenous and permanent, as Andrew Sardanis has maintained.

*Negative Thoughts*:

If Zambians “spend lots of their time on negative thoughts,” as the Minister has claimed in his budget speech, it is because over 65% of them cannot find jobs and are eking out a mere living. I cannot imagine people who are wallowing in abject poverty singing empty praises glorifying a government that is incapable of addressing their basic needs.

Reduce PAYE, VAT and Interest Rates

2009-10-08T08:05:00Z

We received the following from Henry Kyambalesa.

I wish to join the Zambia Union of Journalists (ZUJ), National Energy and Allied Workers Union (NESAWU) and the Zambia National Union of Teachers (ZNUT) in calling for a reduction in Pay-As-You-Earn (PAYE) when the Minister of Finance and National Planning, Situmbeko Musokotwane, presents the national Budget on Friday.

In this regard, I also wish to implore the government to expand the tight PAYE income tax bands in order to make them fairer to tax payers by adding K635,000 (calculated by subtracting K700,000 from K1,335,000 in the current band) to each subsequent band, and by narrowing the gap between 0% and 25% as follows:

-----------------------------------------------------------

Income Bands: Tax Rate:

-----------------------------------------------------------

K0 -- K700,000 per month 0%

K700,001 -- K1,335,000 per month 10%

K1,335,001 -- K1,970,000 per month 15%

K1,970,001 -- K2,605,000 per month 20%

K2,605,001 -- K3,340,000 per month 25%

K3,340,001 -- K3,975,000 per month 30%

K3,975,001 and above per month 35%

-----------------------------------------------------------

Eventually, the government should consider the prospect of adjusting the non-taxable income from K700,000 to K1,000,000. And value-added tax (VAT) needs to be reduced from 16% to 12.5%, while the maximum corporate tax should be pegged at 30%.

Zambians have never had any meaningful tax reduction since the country’s independence in 1964. It is high time the government made it possible for them to keep more of their hard-earned incomes for saving, investment and consumption.

There is also a need for the Bank of Zambia to reduce interest rates. The lower taxes and interest rates can function as an effective economic stimulus that can spur economic activity and job creation, as well as create a new class of tax payers.

There is really no other obvious way to stimulate the national economy. We need to reverse the current emphasis on stabilizing inflation at the expense of job creation and economic growth. By the way, the attainment of single-digit inflation is a target that is appropriate for countries that have already achieved a high level of job creation and socio-economic development. Zambia is clearly not one of such countries!

Reasons to invest in Zambia

2008-06-28T01:51:00Z

Zambia is a multi-party democracy and provides a market oriented liberalized economic environment. The Zambian Government welcomes all investors and has designed a package of incentives aimed specifically at creating a sound investment climate for increased domestic economic growth.

The country's central location in the region as well as combination of following key strengths makes Zambia an ideal investment destination.

Abundance of natural resources and labour, which are highly under-utilized
Continuous political stability since attaining independence in 1964
Abolition of Controls -Price, Interest Rate, Foreign Exchange and free repatriation of earnings and repayments
Guarantees and Security to investors with statutory rights to full and fair compensation
Duty Free Access to Regional, wider African and the USA markets under SADC, COMESA/FTA, AGOA (African Growth and Opportunity Act), and Cotonou Agreements respectively
Banking, Financial, Legal and Insurance services of international standard as well as a Stock Exchange
Double Taxation Agreements with number of European, North American, African and Asian countries
Attractive place to work and live - sub-tropical climate and vegetation with plenty of water and electricity.
Friendly people, mostly English speaking with high literacy rate.
Educational establishments to University level.
Strong religious values.
Open-air lifestyle with nature reserves, game parks, rivers, lakes and waterfalls.
Thriving Private Sector - Government has successfully privatized most of the previously state owned enterprises thus encouraging an entrepreneurial spirit.

Investment Incentives

The Investment Act of 1993 (amended 1st April 1996) offers a wide range of incentives in the form of tax allowances, exemptions & concessions for companies, which include:

    *
      Buildings for Manufacturing, Mining and Hotels enjoy initial allowance of 10% and an annual 5% wear & tear Allowance of the cost.
    *
      Machinery for Farming, Tourism and Manufacturing qualify for wear & tear allowance of 50% per annum for the first two years.
    *
      Dividends from farming exempt from tax for first 5 years
    *
      Capital Expenditure on farm Improvements -20% per year write off for the first 5 years
    *
      Farm Works Allowance - 100% write off on stumping, clearing, prevention of soil erosion, boreholes, wells, water conservation and aerial or geographical surveys.
    *
      Customs Duty Exemption on machinery and equipment for mining and agriculture
    *
      Duty Free Imports of organic and inorganic chemicals, rubber, steel and plastics; most other inputs at 5%.
    *
      Customs Duty on Intermediate Goods 15% and on Finished Goods 25%.
    *
      Specific sector-related fiscal incentives and duty/tax concessions packaged for the Mining, Manufacturing, Agriculture, Tourism and Energy sectors.

Some incentives relating to investments on the Lusaka Stock Exchange (LuSE):

Corporate Tax reduced to 33% compared to normal 35%
Foreign Ownership - No restrictions on ownership levels
Shareholder Levels - No restrictions on shareholder levels
No Capital Gains T

Source: http://zamcom.smetoolkit.org/zambia/en/content/en/2643/Investment-Climate

Zambian Kwacha Currency Conversion Tool

2007-09-27T01:22:00Z

There are various currency conversion tools available to convert your currency into Zambian Kwacha but perhaps the most widely and accepted tool is provided at the Universal Currency Converter.

According to the Bank of Zambia site on 26th September 2007 the exchange rates were:

Currency	Buying	Selling
US Dollar	3,875.92	3,895.92
GB Pound	7,820.07	7,861.20
Rand	556.09	563.00
Euro	5,473.20	5,502.61

Zambian Fortune 10

2005-02-27T02:39:00Z

The Zambian Fortune 10 are a list of companies that have been respected and voted for by consumers as being on the fore front of innovation and improvement in Zambia.

ZESCO
ZCCM
Telecel
Zambian Airways
Coppernet
Zamtel
Zambia Sugar Company
National Breweries
Zambia National Oil Company
Gamma Pharmaceuticals

How To Invest on the Lusaka Stock Exchange

2005-02-26T19:16:00Z

Background

The Lusaka Stock Exchange (LuSE) has received numerous queries from investors abroad on the operation of its stock market. In response, the Lusaka Stock Exchange (LuSE) has now made arrangements for Zambians abroad and foreign investors to easily buy and sell shares on its market. Please follow the notes and guidelines below.

Key Market Attributes of Zambia

No foreign exchange controls
No capital gains tax
No limits on foreign ownership
Nil Property transfer tax on local shares
Listed companies taxed at 30%
T+3 Settlement
Immobilisation of Scrip-no physical certificates

Easy Steps for Zambians Abroad and Foreign Investors to Invest on the Lusaka Stock Exchange (LuSE)

Open a Share Account with a Lusaka Stock Exchange (LuSE) Stock Broker

Select a broker of your choice from the list at the back and fill in an e-mail application form to open your share account. Upon receipt of your e-mail application form, the Lusaka Stock Exchange (LuSE) Broker should send you a note to confirm that your share account has been opened at the Central Share Depository [CSD] of the Lusaka Stock Exchange (LuSE).

The Broker should also advise you of your share account number.

A copy of your application form will be sent to the Lusaka Stock Exchange (LuSE) by your broker for verification and recording.

Send Money from your Bank to you Broker in Zambia to Buy Shares on the Lusaka Stock Exchange (LuSE)

Zambians abroad and foreign investors can easily send money to their appointed broker with instructions to purchase shares on the Lusaka Stock Exchange (LuSE). Call your broker for their bank account details.

Custodian Banks (Alternative Option for Investors Abroad)

Custodian banks provide safe custody of funds and securities in Zambia for both domestic and investors abroad. The Lusaka Stock Exchange (LuSE) has two custodian banks, namely Barclays Bank Zambia Ltd and Stanbic Zambia Ltd.

The custodian bank receives instructions from the client [investor abroad] and executes these in the domestic market. For a buying transaction, the custodian bank will receive the funds from the investor abroad.

The custodian will then monitor the entire transaction, and release funds when the buy order has successfully been traded, cleared and settled on the Lusaka Stock Exchange (LuSE). After settlement, the custodian may [if the client requests] proceed to hold the shares in a custodian sub-account in the CSD of the Lusaka Stock Exchange (LuSE), on behalf of the investor abroad. The contact details for the Lusaka Stock Exchange (LuSE) custodians are shown at the back.

Obtain a Contract Note from your Broker

Once your order to buy or sell has been traded (matched) at the stock exchange, the Lusaka Stock Exchange (LuSE) produces a trade confirmation report to your broker. Your broker is then required, under the Securities Act, to issue you a Contract Note within 24 hours. The contract note is the legal confirmation of the transaction. You should therefore receive an e-mail contract note from your broker to confirm that your buy or sell order has been matched on the Lusaka Stock Exchange (LuSE) and that the transaction will be irrevocably settled with finality 3 days after the trade (T+3).

Contract notes should be filed and kept under the safe custody, as they are legal proof of the transaction.

Settlement

3 days after the trade, termed T+3, (excluding weekends and holidays), the matched trades are settled by the Lusaka Stock Exchange (LuSE) Central Share Depository (CSD). This settlement involves two simultaneous steps – the movement of money (payment) from the buyer to the seller and the movement of shares [delivery] from the seller to the buyer. This is termed Delivery versus Payment.

Settlement is run everyday on the Lusaka Stock Exchange (LuSE) at 09:00 hours and completed by 11:00 hours, the brokers (seller’s side) receive money for all shares sold whilst the buyers receive the shares purchased as book entry credits to their share accounts in the CSD. Brokers are therefore in a position to pass on the money from the sale proceeds, to their clients the same day on T+3 when settlement is run.

Selling Shares

The procedure for selling shares is similar to that for buying shares as described above. To sell shares you should send an instruction to your broker or custodian bank preferably by fax or by e-mail.

Interview with Dr. Kenneth K. Mwenda

2005-02-26T12:02:00Z

In a surprise phone call last week I had an opportunity to converse with a Zambian author regarding an interview request. In just a few minutes, it was clear that the person I was speaking to was a gentleman - he was not only polite but enquired to make sure that everything was okay and was greatly looking forward to the interview. In those few moments I realized that humility is a great virtue and reflects in everything you do or say. This Zambian author is Dr. Kenneth Mwenda, a Rhodes Scholar, a Law Professor, a World-Class Businessman and a person dedicated to ensuring love for all humankind. In this interview Dr. Mwenda gives us a glimpse of his life and shares advise on the business sector in Zambia.

Biographies on Dr. Kenneth Kaoma Mwenda often focus on qualifications as a lawyer and a renowned expert in the field of Business. How would you personally describe yourself?

It is a bit difficult to describe oneself. But, I will try. One way is to say that those that have had the opportunity of working with me, and those that have been influenced positively by my work and writing, and also those that have been close to me in many good ways, will no doubt offer you a good biographical note on me. But there is also the little side of critics, who, unfortunately, will always be there for various reasons. I shall, however, not labour on that.

Here, all I can say is that, personally I am inspired mainly by values such as trust and faith in the good Lord, integrity, honesty, excellence, self-esteem, confidence, love, and the community of brotherhood to help out those that are less fortunate. On the other hand, what I try to avoid in many cases is submitting my will, my dreams and my hopes to the rule of men. Often, temptation tries us out against externally driven subversive elements in the form of unfounded egos, hatred, jealousies and malice against each other. We must work against such vices. Indeed, I am more on the truth, honesty and progressive side of things, than on the destructive side of things. Some good friends have often told me, smilingly, that it is usually difficult to know what you are actually thinking. And that I am one fond of good surprises. Well, I like it that way. As one adage says: Go not where the path may lead, but where there is no path so that you can leave a trail there. My general advice is that never let out fully on all your thoughts, lest you run out of ammunition. I think any good general of an army knows that strategy very well. There should always be one pocket of hope ahead of time and odds. This pocket is our foundation, trust and faith in the Lord.

It would be hard not to describe you as a person committed to excellence.

Thank you. I am humbled by your kind words. I try to do the best for myself, my family and my country. We all have to keep pushing.

Have there been any goals that you have failed to achieve especially in terms of education?

I am ever thankful to the good Lord for granting me this opportunity and gift of good scholarship. I have won several academic and professional awards, internationally. The secret is to be humble, yet remaining a hard-worker and fully confident as you plough through. They say: ‘Respect is earned and not demanded.’ And once you earn it, no one will ever take it away from you. Only God has the final word. There are many trials and challenges that we face in life, as we progress on the social and professional echelons. Some of these challenges can be controlled and are not man-made. Others are beyond our control, yet they are man-made. We can only sift through, taking full cognizance of the political climate at stake. Man-made issues can be found when we are confronted with what the Bembas call “umu-fimbila no ubu-nkalwe bwa bantu!” (that is, man-driven spite)

Now, coming back to the main subject, I started off for my undergraduate law degree at the University of Zambia in the 1980’s. I graduated from the University of Zambia with excellent grades, as one of the best graduating law students. I also won the Law Association of Zambia Best Graduating Student in Jurisprudence Award. Shortly, thereafter, I followed that up with distinction grades for my Bar admission at the then Law Practice Institute in Zambia, ending up at the lead of my graduating class. Yes indeed, I am a qualified member of the Zambian Bar.

I then went on to take two postgraduate diplomas from the UK (by distance-learning), while teaching at the University of Zambia (UNZA), and further while pursuing a Masters degree programme at UNZA. I had just been retained by UNZA under their competitive Staff Development Fellowship Programme. Later on, I won the esteemed Rhodes Scholarship and decided to leave for Oxford to pursue my joint Masters degree programme, the two years Oxford BCL (now split into a one year BCL and an MPhil, sequentially). The Oxford BCL remains one of the most intellectually rigorous and most highly respected postgraduate law degree programmes in the Commonwealth today.

After earning the Oxford BCL, I went on to take my MBA at Hull, and then took a lectureship at the University of Warwick, UK, shortly thereafter. I was only 26 years old when I started teaching at Warwick University. I’d guess it was somewhat inconceivable to many a Zambian friend for such a young African boy to move on and start teaching at a top whiteman’s university; teaching the white children their own English law! But, I have always believed in myself and in what I do. And I knew I could do it. And that I did perfectly well! Indeed, when I started teaching at Warwick University I became the first Zambian lawyer to hold a full-time lecturing post at one of the top five UK universities. As you may know, Warwick University is very well placed on the UK universities league tables and has been ranked consistently among the top ten universities out of more than one hundred UK universities. Also, the Law School at Warwick University ranks highly in the top notch of the league table for UK Law Schools, and was at the close of the century ranked among the top three UK Law Schools, after Oxford and then Cambridge. Warwick University Law School still ranks among the top five UK law schools.

Interestingly, while teaching at Warwick - in my free time, that is - I embarked on several projects to develop my career further and this saw me complete my first doctorate degree, a Doctor of Business Administration (DBA). I later embarked on and completed my second doctorate degree, a PhD in Law from the University of Warwick. At the same time, I completed a professional graduate qualification for teaching proficiency at university-level education. This programme was offered at Warwick University to members of the academic community. While teaching at Warwick, I taught both on the undergraduate and postgraduate law degree programmes. I also supervised and examined several dozens Master of Laws degree dissertations. And, in 1997, I served as Visiting Professor of Law at Miskolc University in Hungary. I have also served as Visiting Professor of Law at the University of Zambia, and have given several lead lectures at top universities abroad, such as Michigan State University in Lansing, Michigan, US.

In 1998, I left active academia to pursue a career at the World Bank. It is while at the World Bank that I earned my third doctorate degree (PhD by submission of Published Work). As I have recorded in the preface of one of my books, “Banking Supervision and Systemic Bank Restructuring: An International and Comparative Perspective (2000)”, parts of this effort has come through from an angle such as this:

“The original idea for this book was conceived out of somewhat unusual circumstances. The concept of the book came through while I was still in active academia. At that time, I served as a full-time Law Lecturer at a leading UK law school, the University of Warwick Law School. Initially, the book was intended as a possible dissertation for further graduate studies at Yale University Law School. I had, for some time, been considering to move over to the US to continue my academic career there before returning to Africa. The thought of having a balanced experience of Anglo-American traditions struck me as a brilliant way forward in building my academic career. Hence, it was only appropriate at that time, and as a market entry strategy, to undertake some further advanced graduate studies in American jurisprudence on corporate and banking laws. Law, unlike the natural sciences and other social sciences, is often a jurisdiction-sensitive discipline. Thus, one has to undergo some conversion to adapt to the new context and jurisdiction. So, this is how the story started.

I had just won a highly competitive graduate fellowship to pursue further advanced studies at Yale Law School, USA. I, however, found myself at cross-roads. I had a second offer to consider. The World Bank had just offered me an attractive position. I knew that the World Bank offer would also enhance my career profile. But I did not know which way to go. In my mind’s eye, I could see that I had to take account of all factors so as to reach a seasoned and thoughtful decision. While I enjoyed academic work very much, I also knew that I had a soft heart for work relating to the fight against poverty and injustice in the world. Either way, getting to Yale or joining the World Bank, I knew that the dream had to live on. Yale Law School, probably the leading law school in the USA, had its doors open. For a moment, I remained undecided. I, however, after thoughtful consideration, decided to go to Washington DC, USA, to take up the World Bank position. It was a difficult choice, but it had to be made. The choice was made lighter by the fact that I had already refueled sufficiently in Oxford. Yes indeed, it was time to put into practice the theory that had been accumulated over the years. It was also time to reflect and re-focus some of the theory that had been imbedded in me against what goes on in the real world. The World Bank was therefore a good opportunity.

Throughout my graduate student days in Oxford, I had developed a strong interest in the areas of corporate law and banking law. This book, therefore, reflects some of those dreams while I was a Rhodes Scholar in Oxford pursuing the two years BCL degree. The book is, indeed, a sequel to my last three books: ‘Legal Aspects of Corporate Capital and Finance’; ‘Contemporary Issues in Corporate Finance and Investment Law’; and ‘Corporate Finance Law in Emerging Markets: Zambia’s Stock Exchange and Privatisation Programme.’

I have benefited tremendously in writing and working with a number of senior academic colleagues. However, although I have been inspired and influenced by many, at various levels of consciousness, the sound and heartbeat of my work remains my own. Their in-put, however, has always helped me to sharpen my focus on a number of intellectual issues. Individuals whose names I have managed to acknowledge here by no means represent the full list of friends and colleagues to whom I owe my many thanks. First, and most important of all, and making it possible for me to accommodate the intrusion of active scholarship in my private life and also amidst a busy working life, the Heavenly Father must be thanked earnestly.”

Who would you say guided you throughout your childhood years?

My parents were, and are, a great inspiration to me. My old folks cultivated good values in me at a very tender age. I come from a Christian family. I was raised up on these values. Education mattered a lot in my family. Both my parents are educationists by profession. My Dad studied at the Universities of Toronto and Saskatoon, respectively, in the early 1970’s.

Do you attribute your zeal for educational excellence to a particular school or teacher?

Please see the response to the question immediately above. Also, personally, I have, indeed, grown to love and find much joy in the virtues of academe and scholarship. There is nothing intellectually and spiritually enriching as our faith, and our knowledge of understanding. This is what actually drives me to write books and academic journal articles. Indeed, life is not just about making money. It’s about making a difference where we can, when we truly know that we are blessed with a certain gift and talent from above.

Have you heard about the Matrix Scandal?

Yes indeed. I read the Zambian newspapers Online every day.

What do you think about the political scandals that have been sweeping across the nation?

It’s rather sad. One can only hope for the best. At this stage, I cannot say much. We have to wait until all evidence from all interested parties is fully examined to the fullest possible extent.

In your book, “The Dynamics of Market Integration” you argue that the establishment of a stock exchange in a region would stimulate increased liquidity.

Yes indeed, that’s the thesis I advance there.

How well do you think the Lusaka Stock Exchange has performed?

There has been some good progress from the time of inception. But much of this progress has resulted from the privatization of parastatal companies, and we are yet to see if there will be sustained growth and deepening of the market. I have discussed in much depth and detail developments relating to the Lusaka Stock Exchange and the Privatisation Programme in one of my recently published books, titled:

K.K. Mwenda, Zambia’s Stock Exchange And Privatisation Programme: Corporate Finance Law in Emerging Markets, (Lewiston, NY: The Edwin Mellen Press, 2001), pages – 565 pp.

What advise would you share to ensure that we are on the right track.

Love for fellow mankind, and for your own country and people is the number one issue. We must push for this. Secondly, Africa must move away from the colonial mentality of often looking up to the West for everyday financial assistance and for provision of good technical know-how. We have a serious problem in these two departments and that is where most of the problems stem from. It is sad, for example, that after all these years of political independence some of the African countries are still experiencing civil war. Greed and selfishness in political leaders are all products of the two factors outlined above. What we see as corruption and embezzlement of public funds are merely symptoms of greater endemic and systemic problems in society. We have to look deep within ourselves to find out where we are going really. Indeed, as John F. Kennedy once said: Ask not what your country can do for you or has done for you, but what you can do for your country. I recently returned from Zambia where I had gone at the invitation of the University of Zambia as a Visiting Professor of Law. My conscience just told me that we, as Africans, have to give back to our countries the little that we can afford to give. My services to UNZA, as Visiting Professor of Law, were entirely free and at no fee at all. It saddens me to see that while the people on the ground are trying their best to foster such good efforts, politicians are busy stealing public funds. When will this ever come to an end?

On July 11th, France promised to write off the 115 million Euros debt that Zambia owed as long as the country reaches the Highly Indebted Poor Countries Initiative. Do you think that classifying Zambia as a member of the HIPC is actually attracting foreign investors to the country. In other words, why would an organization want to develop infrastructure if a country is labeled as poor?

There are many answers to this puzzle. The bottom line, however, is that Africa is not really poor. Although Africa is justified in seeking reparations from the West for the economic effects of colonialism and neo-colonialism, I strongly believe, too, that Africa, on the other hand, has many riches. It’s a question of good leadership. The problem today is that many Africans are the worst enemies of their own people. [Many] African leaders steal money from public funds and deposit these funds into ‘secret’ bank accounts in the West! The whole thing is a big mess. I am not even sure if at all Western countries, themselves, are that morally and ethically clean if they can permit their banks to receive ill-gotten wealth from Africa! Where is the principle of ‘know-your-customer well’ here?

Do you plan on continuing to write?

I am now working on my next two books. As at now, I have written five books and have authored more than fifty articles in refereed academic and professional journals worldwide. I also contribute regularly to media debates on contemporary socio-economic and political issues in Africa.

[Synopsis]

Book Titles

The Dynamics of Market Integration: African Stock Exchanges in the New Millennium

Zambia's Stock Exchange and Privatisation Programme: Corporate Finance Law in Emerging Markets

Banking Supervision and Systematic Bank Restructuring: An International and Comparative Perspective

How do you prioritize your time? Do you have time for leisure, friends and family or other social activities?

Planning is an important hallmark of good working ethics. I write mainly over-weekends and late at night during the week, depending on the nature of the project. And, yes indeed, I enjoy relaxing too, and making good use of my leisure time. I also enjoy traveling a lot. My present job takes me to many countries worldwide. And I have many valuable friends from across all works of life and professions. On related activities, I play soccer – and not golf, please! – in my free and spare time. I was told that many Africans who think that they have really made it in life try to be ‘wannabes’ by playing golf! But, hey, that’s not my view. I was just told so.

If you could begin to work on a project in Zambia what would you do?

My primary concern is the common man on the ground. And, education and the health sectors are a priority here.

Do you feel that Zambians living abroad should give back to Zambia in some way or the other?

There are no two ways about that. If one has a decent conscience he or she should be troubled by the levels of poverty back home.

How has your life changed after September 11th.

It was a sad event. All we can do is offer deep prayers, just as much as we should do so in the case of all those African souls that left us during slave trade, colonialism, the Rwanda Holocaust and many other forms of injustices in Africa.

In order for Zambia to succeed in the African Union world, should we begin to rethink our very foundations of ways to achieve development and progress?

Certainly. Though many people have difficulties appreciating the quality of good leadership in men such as Thabo Mbeki and Muammar Gaddafi, I think these two men have the good interests of Africa at heart. We should not be blinded by Western media propaganda.

According to you, who is a Zambian?

I would rather say: Who is an African? It is more important to be an African first, in mind and heart, and to be a Zambian thereafter. It’s pointless, regardless of what the Zambian Constitution says, to claim to be a Zambian first, and not wish to be an African. I trust you see what I mean.

.COMs in Zambia

2004-07-24T19:26:00Z

The Taipei Times is reporting on Zambia's new interest in 'dotcomms' - the term commonly associated with the free cars that people can apply for.

According to Peter Mwale, who bought his car for only $250, the major cost is the freight cost of shipping the car from Japan to South Africa.

For more information or to sign up for a free .com visit Transport Aid

Be Zambian, Buy Zambian

2004-07-21T19:24:00Z

How many times have you walked into Shoprite and bought a carton of fruit knowing that it was imported from South Africa? I'm sure that each of us are fully aware of this yet still fail to demand more local produce. The United States is going through a similar dilemma with the outsourcing wave - how can you increase local demand when foreign supply is cheaper and better.

In a recent Times of Zambia editorial, Chris Sealy, is quoted as saying, “No one else but Zambians themselves can help promote their own products and in turn market them abroad.”

Are you creating a demand for Zambia?

Lusaka Stock Exchange

2004-07-07T19:39:00Z

Did you know that Zambia has a stock exchange? Did you know that several incentives have been put in place to promote rapid development of the capital market in Zambia. These include the following:

No exchange controls
No restrictions on shareholding levels
No restrictions on foreign ownership
No capital gains tax
Corporate income tax reduced by 2% for one year for initial listing and a further 5% over and above the 2% reduction for listings offering at least 33% shares to Zambian public.
No property transfer tax on listed sec

Check out our cheat sheet on how to invest on the Lusaka Stock Exchange (LuSE) ?

Recognising the Need for Strategic Management

2004-03-10T03:02:00Z

Thompson Strickland, one of the respected writers on strategic management, once wrote that for a company to qualify as excellently managed, it must exhibit excellent execution of an excellent strategy. It is against this canvas that I wish to paint an abstract on the realisation of the need for strategic thinking and planning in relation to SoEs (State owned Enterprises) vis-à-vis privatisation.

The establishment of most SoEs was not as a result of deliberate desire to conduct business. The driving force behind their establishment was a movement towards self-reliance. This was increasingly important during Ian Smith's Unilateral Declaration of Independence (UDI). One very obvious development from this era is the Tanzania-Zambia Pipeline (TAZAMA) and Tanzania-Zambia Railways (TAZARA).

Self-reliance therefore required that there be a broad based array of companies to make the country almost self contained. There was Mansa Batteries in Northern Province, Luangwa Industries in Eastern Province, Mwinilunga Canneries in North-Western, Kapiri Glass in Central Province, Nitrogen Chemicals and Kafue Textiles in Lusaka Province and Livingstone Motor Assemblers in Southern Province. The structure of some of these firms was such that they were integrated. NCZ uses coal gasification of coal to yield ammonia gas a key base for its products. This coal came from Maamba Collieries. Fertiliser so manufactured was used in agriculture for crops such as maize for the milling companies and cotton for the textile industry. Products such as ammonium nitrate for explosives was used in the mines as well as sulphuric acid, all produced at NCZ.

The creation of employment was also a motivating factor for the setup of industry. At the time it was not important to consider the optimal levels of employment. In the event of a company making a loss, Government would subsidise through ZIMCO Limited, the holding company. The economy then was monopolistic hence there was no threat from new players in the market. Strategic management was not a key issue therefore. Down the corporate road, management became relaxed and the quality of the product/service reduced. The customer had no alternative and so did not complain. The black market developed and thrived providing smuggled goods creating a parallel unofficial alternative to the customer.

The loss making parastatals did not contribute to the Treasury, they instead helped deplete it through subsidies. For those companies which made a profit, proceeds were used to finance the loss making ones. However, this could not go on forever. Lack of funds meant that recapitalisation was a problem. Companies could not get the necessary upgrades of equipment, send staff for training, usually abroad as plants were country specific. Production which ultimately drives the economy was affected. However, the over employment was maintained and companies remained inefficient.

The change of government in 1991 brought in a liberalised economy. Anyone who wanted to conduct business could do so provided they adhered to the set conditions. Institutions such as the Zambia Privatisation Agency were created to divest Government interest in SoEs. Government made a decision that they should remove themselves from the business of business.

Most people have understood privatisation to mean outright sale when in reality there are about sixteen methods of privatisation, to mention a few; lease or management contract, dilution of shares held by government by offer of additional shares, concession and public offering of shares. It is common to hear people talk of how company x was sold for a song, etc. A starting point to understanding the process is an appreciation of the situation as discussed already, that is the origins and state of these parastatals or SoEs.

Most investors have vast experience in the sectors they have acquired SoEs. They operate businesses strategically. Management in the current world economy can not afford to lag behind and involves a continuous process of change. Privatised SoEs therefore require strategic management, which is the management of change. The process of strategic management consists of five core managerial tasks which are not isolated from each other:-

Decisions on what business a company will be in and hence the vision where the company wants to be results in the creation of purpose which gives the long-term path of the company.
The strategic mission/vision has to be assessed to determine the most critical issues the business must address to achieve the vision/mission.
A strategy then has to be crafted to achieve the desired result. How exactly will the resources be allocated in the right places.
The strategy has to be effectively and efficiently implemented by involving from the beginning of the process, parties that will help carry out the strategy.
The results are therefore evaluated making adjustments on a continuous basis.

It follows, therefore, that when an investor conducts his due-diligence of a company to be privatised he first looks at how the company will fit into his plans as the first step of strategic management. Orientation of the business may be altered in his plan. He may choose to do away with certain sections of the business, improve on some or add new areas of business. Most investors shy away from taking over social assets. The rationale is that they are masters of a particular field and cannot concern themselves with management of what they do not know. Key to strategic management is to identify a competitive strength, that which you do well, and use it to attain competitive advantage over your competitors. The social asset can, however, also be leased out to an experienced operator. For example a guest lodge can be given to an experienced firm in the hospitality business to run on behalf of the investor. This allows the investor to concentrate on the core business.

Most investors have praised Zambian staff in parastatals earmarked for privatisation. They have expressed surprise at how the staff are able to operate in usually very difficult circumstances. One major noticeable handicap has been the failure by management to make decisions that will chart the course for these companies. This has been attributed to the already discussed backdrop of a socialist and monopolistic economy where there was no motivation to excel in business.

The investor with his different and usually seasoned background will definitely have different expectations from the existing SoEs. A private investor could be seen as a redeemer who is going to pay a premium for the company and transform it for the better. Whilst agreeing to transform the business, the investor is tasked with grooming a viable business. This involves curving the company into a very efficient unit that will be strategically sound, that is with the right staffing levels, acceptable remuneration and quality of work life, quality product/service, good corporate citizen status and a leader in the industry of operation. To achieve this, usually, the company has to be recapitalised, reequipped and systems replaced or improved upon. This costs money and most investors would rather invest into businesses than advance a huge payment for the company. Employment is likely to be created in support or spill-over businesses.

The value of the transaction therefore ought to be a balancing act of what is advanced in form of payment (the purchase consideration) and what is to be invested by way of equipment, staff training, quality of the product, liabilities assumed and recapitalisation. The business has to survive in a competitive environment, competing for funding, creating value for the owners and giving back to the community in which it operates to gain the elusive goodwill. Later, payoffs will manifest in form of a company which will pay taxes, remunerate the scaled down workers well, etc. The business is just that, a business and not a charity.

As Michael E. Porter sums it all up, The essence of formulating competitive strategy is relating a company to its environment ...the best strategy for a given firm is ultimately a unique construction reflecting its particular circumstances.

Article by Brian K. Tembo.

Foreign Direct Investment in Zambia

2004-03-10T03:00:00Z

So much has been said about foreign investment in Zambia and elsewhere, particularly in the last decade. No doubt FDI -- by which we mean investment of multinational or transnational companies -- has played a significant role in the economic development of countries.

However, I would like to state that much of the talk about FDI, particularly in as far as factors attracting it to Zambia, has been more or less ''perfunctory.'' I put forward here the thesis that there are factors other than economic policies that need to be given greater attention if Zambia is to be an attractive FDI destination.

Era of FDI

The period beginning in the 1980s and up to the present time could be referred to as the era of Foreign Direct Investment. One commentator once said that economic policy pursuits could be paralleled to fads. They come and go. Today you may be talking about FDI and the need to open up your economies. Tomorrow could see a shift to some other approach. But the tragedy of all this is that Africa, though most afflicted by economic problems, has yet to come up with something of its own.

In Zambia the advent of enhanced FDI focus in economic development is strongly linked to the dawn of democratic transition which was characterised by a shift from the era of one party state to multiparty state. The democratisation agenda also came generally with the neo-liberal economic dispensation

I put forward here the thesis that there are factors other than economic policies that need to be given greater attention if Zambia is to be an attractive FDI destination.

that has become the path for economic policy. This path for economic policy has not only been adopted by Zambia but also a majority of developing and advanced countries. The neo-liberal economic paradigm has been reinforced by the World Bank and the International Monetary Fund (IMF). It encourages opening up of national markets -- removal of trade barriers to allow for free movement of capital, goods, services, creation of appropriate environment, so-called enabling environment, etc.

Why FDI?

A lot of factors have encouraged FDI focus as an agenda item in economic policy. For example, according to the IMF in the period 1980 to 1996, global FDI outflows increased at an average rate of about 13 per cent a year compared with average rates of 7 per cent both for world exports of goods and services and for world Gross Domestic Product (GDP). In addition, there has been the notion that where FDI occurs, you would expect a country to have positive externalities or spillover effects arising out of the investments from multinational companies.

For example, these positive externalities would include the benefits of Research and Development, R&D. FDI is also considered as a way of dealing with adverse terms of trade. A country with higher levels of FDI will most likely be exporting finished products -- there would be value added to export goods. It is also considered to be a source of long-term external financing compared to loans from international banks.

Factors that attract FDI

There have been many studies carried out to establish what factors would make a particular country an attractive FDI destination. Here I am only going to highlight some. Most of the works done so far have indicated that to attract FDI there are certain policies that a country must pay attention to before experiencing an inflow of FDI. These include trade liberalisation -- free movement of goods and services, tax policy, privatisation, social amenities, stability in all spheres -- social, political and economic.

There are also such factors as market size, resources available -- both human and natural resource endowments, etc. In the case of human resources, we are talking about skilled human resource predicated on sound education that is accessible to the people.

Global Situation

The state of the distribution of FDI is such that it is primarily taking place in developed countries or high-income countries. For example, the World Bank reports that in 1999, the value of FDI quoted in US Million Dollars in high-income countries was about 727,130 compared to low-income countries with only 9,750.

It should be mentioned also that distribution of FDI is disproportionate among low-income countries, with Africa having the least share of FDI. It is also the case that even within Africa, the distribution of FDI is uneven, for example, it ranges in value from (US$ Millions, 1999 figures) 1,376 in South Africa to 40 in Cameroon. This situation raises the question ''Why should there be so much emphasis on FDI as a way of fostering development, particularly on the part of those countries that have the least share of FDI?'

There is also a further question relating to this situation. Is it that low income countries have not put in place policies such as mentioned above that attract FDI inflows? Or could there be other reasons that might help us find an explanation to this situation? To answer fully the above question requires in-depth studies. However, let me try to provide some insights by looking at Zambia's experience.

Experience of Zambia

Since 1991 the government of Zambia has been pursuing liberal economic policies. Important to this policy framework has been embarking on a very rigid, rapid and far-reaching structural adjustment programme. This strategy (supported by IMF and World Bank) was a dramatic shift from the previous government controlled approach to economic management.

At the heart of the new order of economic management has been, inter alia, trade liberalisation, removal of foreign exchange controls, public service reform, introduction of cost sharing (arrangement where both government and citizens share the responsibilities of meeting the costs) with respect to the social sectors -- education and health, the heralded privatisation programme -- government withdrawal in running business. Privatisation has tended to stand out as the major driving force for economic development.

The private sector-driven economic approach went with the emphasis on calling foreign investors

Why should there be so much emphasis on FDI as a way of fostering development, particularly on the part of those countries that have the least share of FDI?

to come and invest in Zambia. But I must mention here that not so much emphasis and enthusiasm has been given to Zambians to invest or indeed take over some of the para-statal companies that were being privatised. If there has been some Zambian investment such as Management Buy Out (MBO), this took place only in those companies that were lukewarm in performance and vibrancy. In a situation where there are low levels or no savings, it would be unlikely that there can be capital formation for people to invest in or buy companies that were highly vibrant.

SPECIFIC INCENTIVES

One undeniable fact is that Zambia has not only structurally adjusted its economy as shown above over the past decade but has also tried to make itself an attractive destination for FDI by improving the standards of treatment given to foreign firms. Key to this has been the Zambian Investment Centre which has been trying to make itself a ''one stop shop.''

Other efforts linked to the Investment Centre have involved for example, investment guarantees under which the Investment Act assures investors that property rights shall be respected and that no investment of any description can be expropriated unless Parliament has passed an Act relating to the compulsory acquisition of that property. Moreover in case of expropriation, full compensation shall be made on the market value and must be convertible at the current exchange rate.

Investors are guaranteed that investments will not be adversely affected by any changes in the investment Act for a period of seven years. The country has gone further by being a signatory to the Multi-lateral Investment Guarantee Agency (MIGA) and other international agreements which guarantees foreign investment protection in cases of civil strife, disasters, as well as other disturbances.

At the bilateral level, Zambia has signed reciprocal promotional and protection of investment protocols with a number of countries.

In addition to the above incentives, Zambia could be considered an attractive destination to FDI because of its social and political stability. Since independence, the country has never experienced any civil strive.

ZAMBIA'S RECORD

Have these incentives made a difference in attracting FDI to Zambia? To be honest, it has been difficult to discover exactly what the levels of FDI inflows have been to Zambia, especially with the view to looking at trends over a certain period of time. At the time of gathering information for my research, only investment pledges were available. Of course we do not know whether these promises to invest may translate into actual investments or not. This is an area that needs further detailed research.

However, the World Bank reports that in 1999, the value of FDI in Zambia was 163 Million US Dollars, compared to Mozambique's 384 Million US Dollars and Tanzania's 183 Million US Dollars. This of course does not give us a comprehensive picture of the situation over the past years. But we can say that Mozambique and Tanzania are relatively ahead in attracting FDI as compared to Zambia.

Why has Zambia despite all the efforts -- at structural adjustment and additional foreign investor incentives -- not been much of an FDI destination?

However, even in the absence of statistical evidence of the amount of FDI inflows to Zambia, we can still -- going by the current situation -- conclude that much has not happened in the country with respect to FDI.

May be the question to address is why Zambia -- despite all the efforts in terms of structural adjustment and additional foreign investor incentives -- has not in fact been much of an FDI destination?

Of course this is not to say we have not attracted any foreign investors. There certainly has been such as in the mining sector. But these outside investors are not in fact coming to establish new firms altogether. Most of them took over already existing firms and especially those that were vibrant.

WHY THIS SITUATION?

Let me now offer some reasons as to why Zambia has not been so much of an FDI destination. In the first place, it is important to acknowledge -- as has been established already -- that the most active destination for foreign investment still is the rich countries.

Zambia's being a landlocked country makes it inevitably a high cost area. The difference we have observed earlier between Zambia on one hand and Tanzania and Mozambique on the other could be due to this reason. Mozambique and Tanzania have direct access to sea transportation.

The other reason that one may be looking at, especially when comparing beyond Africa, is education and thus availability of skilled personnel. It is hopeless for one to expect an inflow of foreign investment, particularly that which is long-term in orientation, with what is obtaining currently in the education sector.

We have also been caught-up in the ''poverty trap.'' Reports of 80 per cent of the people living below the poverty line cannot in any way add value to investment attraction. This could be looked at as perhaps one of the major reasons for Zambia not being so much of an FDI destination. Just a matter of highlighting this point: I remember a representative of a foreign firm that was intending to come to invest in Zambia asking me about trends in the cost of the JCTR monthly Food Basket. This measures the cost of living in Lusaka and how that relates to household's incomes. It is a simple and shocking indication of poverty levels. We see here an inquiry pertaining to people's ability to buy goods and services.

Linked to poverty has been the dreaded HIV/AIDS pandemic that has continued to ravage countries in Sub-Sahara Africa. This pandemic continues to claim lives whose productive contribution is essential to any foreign firms investing in Zambia.

Another point to add to this discourse is that it is paradoxical that while on one hand we are trying to attract foreign investment, we have on the other hand allowed companies to collapse. The recent relocation of the Lever Brothers bath-soap plant (to a neighbouring country ) is one case in a line of companies finding difficulties to operate effectively and eventually winding-up operations.

A final invariable factor that discourages FDI in Zambia is the perception of high levels of corruption. The just released Transparency International 2001 Report places Zambia at 76 out of 90 countries on its scale of its scale of "Corruption Perception Index.'' Only 14 places from bottom.

WHAT SHOULD ZAMBIA DO?

Unless the issues highlighted above are dealt with, there is very little hope in significantly attracting foreign investment. In my view, there is great promise in investing in education beyond what is currently happening. It is through education that a lot of problems can be tackled -- poverty, HIV/AIDS, sustained availability of skilled human resource. We can and should do as much as we can at policy level and incentives to make Zambia an FDI destination. But without addressing fundamental issues like education, poverty, HIV/AIDS, corruption there will be little hope for FDI and the overall development of the country.

This is why I strongly feel that the Zambia Investment Centre should be working closely with institutions such as Ministry of Education, Anti Corruption Commission, Central Statistical Office. In that way, when marketing Zambia, whatever is happening on the ground in terms of improvement could be highlighted.

Article by Muweme Muweme

Cost of Living in Zambia

2004-03-10T02:59:00Z

A) Cost of Basic Food Items

Commodity	Kwacha
Mealie meal	32,400
Beans	4,300
Kapenta	35,000
Dry Fish	12,000
Meat (Mixed Cut)	7,600
Eggs 1 unit	3,200
Vegetable (Greens)	1,400
Tomato	2,200
Onion	2,300
Milk	2,300
Cooking Oil	11,400
Bread	1,500
Sugar	2,550
Salt	1,250
Tea (Leaves)	5,000

B) Cost of Essential Non-Food Items

Commodity	Kwacha
Charcoal	14,000
Soap (Lifebuoy)	800
Wash Soap (Paste)	2,000
Jelly	3,200
Electricity	75,000
Water (Medium Density)	25,000
Housing (Medium Density)	350,000

C) Some Other Additional Costs (Include personal care, clothing, recreation)

Item	Kwacha
Education (per year-PTA)
Primary	K20,000 - K30,000
Secondary	K75,000 - K185,000

Health (monthly scheme per person)	K1,500

Transport Bus Fare round trip:
Chilenje - Town	K 2,000
Chelston - Town	K 2,800
Matero - Town	K 1,600

D) Some Comparative Figures of Wages - "Take Home Pay"

Profession	Salary
Teacher (Primary)	K280,000 - K309,000
Teacher (Secondary)	K297,000 - K497,000
Secretary in civil Service	K270,000 - K370,000
Nurse	K250,000 - K320,000
Police Officer	K120,000-K300,000
Security Guard	K40,000-K180,000

This survey was conducted on 29 May 2002 by the Economic and Social Development Research Project of the Jesuit Centre for Theological Reflection. Average prices were calculated on the basis of prices gathered from large retail shops at Northmead, Town Centre and Soweto Market, Chainda, Kabwata, Matero and schools, clinics/ hospitals around Lusaka.

The Zambia Agriculture and Commercial Show

2004-03-10T02:57:00Z

"Growth Through Agriculture and Commerce"

The Zambia Agricultural and Commercial Show which is organized by the Agricultural and Commercial Society of Zambia (ACSZ) is the Country's premier annual show held in the capital city, Lusaka, for five days ending on Farmers Day, a public holiday observed on the first Monday of August.

The show is the climax of district and provincial agricultural shows, which are held in the proceeding eight weeks, and so only the best of the agriculture products grown by small-scale farmers are finally exhibited at the show.

Exhibitors at the show have over the years included companies from Botswana Burundi, Zimbabwe, Tanzania, Malawi, Kenya, South Africa, Namibia, Sweden, Holland, Norway, Egypt, England, Pakistan, India, China, France and Germany. The Zambia Agricultural and Commercial Show has truly become a leading Southern African regional meeting place for investors and business people looking for opportunities and development.

Ticket Prices

Duration	Adult	Children
Daily Tickets	K6,000	K6,000
5 Day Tickets	K27,000	K12,000

For more information contact:

The General Manager,
Agriculture and Commercial Show,
P.O Box 30333,Lusaka
Zambia.
Telephone : 260-1 253426 / 260-1 253415
Fax : 260-1 254898
Email : acsz@zamnet.zm
Website: http://www.acsz.co.zm/

Trade Contacts in Zambia

2004-03-10T02:54:00Z

Export Board Of Zambia
P.O. Box 30064, Lusaka
Tel: (2601) 22 8106/7 Fax: (2601) 22 2509
Lusaka Chamber Of Commerce
P.O. Box 37887, Lusaka
Tel: (2601) 22 4114 / 22 4134
Fax: (2601) 22 4134

Ministry Of Commerce, Trade And Industry
P.O. Box 31968, Lusaka
Tel: (2601) 22 8301-9
Fax: (2601) 22 6673 / 22 1475
E-Mail: comtrade@zamnet.zm

Zambia Association Of Chambers Of Commerce And Industry (ZACCI)
P.O Box 30844, Lusaka
Tel: (2601) 25 2369
Fax: (2601) 25 2483

Zambia Export And Import Bank Limited
P.O. Box 33046, Lusaka
Tel: (2601) 22 9504 / 22 2304
Fax: (2601) 22 2313

Zambia Investment Centre
P.O. Box 34580, Lusaka
Tel: (2601) 25 5241/2/3
Fax: (2601) 25 2150
E-Mail: invest@zamnet.zm

Zambia Privatisation Agency
P.O. Box 30189, Lusaka
Tel: (2601) 22 385
Fax: (2601) 22 5270