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Chiluba's privatisation dilemma.

President Frederick Chiluba's government appears to be on a collision course with the World Bank and the International Monetary Fund (IMF) over the privatisation of public utilities.

During the World Bank consultative group meeting with donors, held in Lusaka last year, the Zambian government made firm commitments to privatise the Zambia Electricity Supply Corporation (ZESCO), Zambia Telecommunication (ZAMTEL), Zambia National Oil Company (ZNOC), Indeni Oil Refinery and Zambia National Commercial Bank. This was one of the conditions the Zambian government had to fulfil before international donors were prepared to activate several balance of payments support pledges. But now the Zambian government has made a u-turn on the matter, saying the public utilities will not be sold to the private sector, but will instead be commercialised to make them more efficient and profitable.

President Chiluba recently told a rally organised by the governing party - Movement for Multiparty Democracy (MMD) - that the parastatals will not be sold because "these industries are strategic. The government needs to play a part in these industries in the interest of our economy and our people."

President Chiluba said the people of Zambia would stand to benefit little from the sale of the utilities, as most of them would be gobbled up by foreign owned companies, with little, if any, interest in the country's economic welfare.

Until now, Finance Minister Dr Katele Kalumba and other government Ministers seemed to be supporting the privatisation idea although they wanted to wait and see the conclusions of a study on the optimum way to dispose of the public utilities.

But Chiluba now appears determined to oppose all moves to privatise public utilities. He said the country had learnt bitter lessons from the privatisation of other parastatals.

"We were blind when we sold some parastatals, and made mistakes." He said parastatals like Chilanga Cement should not have been sold to the Commonwealth Development Corporation (CDC). "How can you have a parastaral buying off another parastatal, and calling it privatisation? Government was asleep when it sold Chilanga Cement and Zambia Sugar to CDC which is a British parastatal. We are wondering why some countries are advocating the dismantling of parastatals here while on the other hand keeping their own parastatals back home."

Support for Chiluba

The Zambian government's stand has won the support of trade unionists, human rights organisation and opposition political parties.

Human Rights Commission chairperson Judge Lombe Chibesakunda said privatising the public utilities and other remaining parastatals would only deepen the poverty levels in Zambia, which, she argued, is a violation of human rights.

Judge Chibesakunda explained: "The government has a social and economic obligation to provide certain services to the people at affordable rates, something which many private companies would not feel obliged to do."

Federation of Free Trade Unions president Joyce Nonde said the Zambian government has "u-turned on the agreements that would disadvantage its people." Nonde insisted that the government must work at commercialising the public utilities. "The Zambian government has a right to 'u'-turn. The World Bank and IMP should know that some of the policies they have been insisting on have made Zambians economic destitutes."

United Party for National Development vice-president Sakwiba Sikota said the government has a socio-economic responsibility to participate in strategic areas of the economy. "The government is beginning to see reason in what we have always been telling it - that you cannot sell everything to the private sector."

When President Chiluba's government came to power in 1991, it embarked on a "no-sacred cows" privatisation programme. Some 90% of parastatals have been sold off. Massive retrenchment programmes have resulted in thousands of people losing their jobs.

Some local economists have been arguing that the Zambian government could meet the donors half-way by floating small percentages of shares on the Lusaka stock exchange.

World Bank resident representative Laurence Clarke has been insisting that the Zambian government "gave us their word on this. So it is up to them to honour their word."

The latest development puts Zambia's budget for this year in a precarious position. About 60% of funds to finance this year's budget are expected to come from international donors who are unlikely to take kindly to the government back pedalling.
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Title Annotation:President Frederick Chiluba of Zambia, utilities
Author:Kunda, Anthony
Publication:African Business
Article Type:Brief Article
Date:Apr 1, 2001
Words:699
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