Zambia: thinking the unthinkable.Zambia has been saying what many African countries would like to say but don't because they worry about the consequences--that privatisation Noun 1. privatisation - changing something from state to private ownership or control
denationalisation, denationalization, privatization
social control - control exerted (actively or passively) by group action is creating unemployment, suffering and delivering few, if any, benefits. The country, as Neil Ford reports, is now reviewing its privatisation policies.
Zambian President Levy Mwanawasa Levy Patrick Mwanawasa (born September 3, 1948) has served as the President of Zambia since 2002. Early life
Mwanawasa was born in Mufulira, the second of 10 children. He holds a law degree from the University of Zambia. has informed the IMF IMF
See: International Monetary Fund
See International Monetary Fund (IMF). that his government is reassessing its commitment to the country's privatisation programme. Although the country had only to continue complying with its plans for economic reform until the end of last year in order to qualify for massive debt relief, the government has reconsidered its position as a result of the impact of the programme upon living standards living standards npl → nivel msg de vida
living standards living npl → niveau m de vie
living standards living npl and employment. A compromise solution may yet be hammered ham·mered
1. Shaped or worked with a metalworker's hammer and often showing the marks of these tools: a bowl of hammered brass.
2. Slang Drunk or intoxicated.
Adj. out but Zambia's dilemma illustrates the problems facing the many African countries taking IMF medicine.
It could be thought that the government is considering abandoning its privatisation programme because it has made little progress in selling stakes in parastatals over the past few years, but this would be wrong. A total of 257 out of 280 state owned companies have been sold off since 1992. However, many of these were loss-making commercial ventures and several key utilities, such as telecommunications firm Zamtel and power company Zambia Electricity supply Corporation (Zesco), remain in government hands. The government is also committed to privatising the Zambia National Commercial Bank
President Mwanawasa's reformist credentials have so far been strong. Upon assuming power, he promised to reduce the level of fraud and increase economic transparency. He ordered an audit of Zanaco--the first ever carried out at a state owned company--after it recorded a loss of 65bn kwacha during the 2000-01 financial year on the back of bad debts, including those owed by Zambia National Oil Company (ZNOC) and copper and cobalt mining firm Roan Antelope (Zool.) a very large South African antelope (Hippotragus equinus). It has long sharp horns and a stiff bright brown mane. Called also mahnya ltname>, equine antelope ltname>, and bastard gemsbok ltname>.
See also: Roan Mining Corporation. The bank has now been placed under the supervision of Central Bank of Zambia governor Caleb Fundanga.
Rising inflation and the gradual depreciation of the Zambian kwacha during the past two years have hit the economy hard. Dollar use has grown as a result of currency fluctuations, so the government has introduced fines for shopkeepers caught doing business in foreign currency in order to increase demand for the kwacha. Falling copper prices and Anglo-American's decision to halt production at the Konkola mine have also affected the economy. Konkola was the country's biggest employer and accounted for 67% of the country's metal exports, while copper and cobalt exports together accounted for 70% of Zambia's exports. Diversification is therefore vital but it is easier said than done.
The Mwanawasa administration's relations with the multilaterals were initially good, despite the growing risk of famine famine
Extreme and protracted shortage of food, resulting in widespread hunger and a substantial increase in the death rate. General famines affect all classes or groups in the region of food shortage; class famines affect some classes or groups much more severely than in 2001-02. After the IMF approved $317m to target poverty reduction, finance minister Emmanuel Kasonde responded: "The gesture by the IMF is tremendous testimony to its shift in addressing poverty in least developed countries." He added: "The government will diligently dil·i·gent
Marked by persevering, painstaking effort. See Synonyms at busy.
[Middle English, from Old French, from Latin d observe the 2002 budget targets and maintain an appropriate tight monetary policy to achieve the inflation target."
However, the government's attitude towards the IMF appeared to change during the course of last year, when the threat of job losses and trade union action prompted President Mwanawasa to announce that he was suspending the privatisation of Zanaco. The government was committed to selling a 51% stake in the bank, after an earlier attempt to sell a 35% minority stake met with little interest. This was unsurprising given the bank's poor past performance and the fact that the minority stake would have given investors little control over how the bank was run.
The IMF country director for Zambia, Mark Ellyne, warned that the failure to proceed with the sell off would prevent implementation of $1bn worth of debt relief. Zanaco is the country's biggest retail bank but employs just 1,440 people at its 43 branches, although it must be remembered than only just over 10% of the population is in formal employment.
The President stepped up his attack upon the reform plans when he complained that increased debt repayments during 2003 would place an intolerable burden upon the economy. He concluded: "The debt is what is going to undermine our development efforts."
When Robert Sharer, the IMF assistant director for Africa, arrived in the country last February for talks with Mwanawasa, he commented: "This administration has made excellent changes although there are many problems which lie ahead and the IMF is ready to help address these problems." However, during the talks Mwanawasa told Sharer that although he agreed with privatisation in principle, economic mismanagement mis·man·age
tr.v. mis·man·aged, mis·man·ag·ing, mis·man·ag·es
To manage badly or carelessly.
mis·manage·ment n. under the previous administration of Frederick Chiluba “Chiluba” redirects here. For the language, see Tshiluba language.
Frederick Jacob Titus Chiluba (born April 30, 1943) served as the President of Zambia from 1991 to 2002, when Zambians elected former Vice President Levy Mwanawasa as his successor. had compounded the social impact of privatisation.
Mwanawasa added: "There has been no significant benefit to the country. Privatisation has contributed to high levels of poverty, loss of employment and asset stripping asset stripping
The sale of selected assets of an acquired company generally for the purpose of raising money to pay off some of the debt incurred in financing the acquisition. . This administration felt that it is necessary and essential to revisit re·vis·it
tr.v. re·vis·it·ed, re·vis·it·ing, re·vis·its
To visit again.
A second or repeated visit.
re the method by which government exits itself from public property."
In March, even Mwanawasa's support for privatisation in principle was put in some doubt when he commented: "Our past experience has been that privatisation has brought about misery and job losses. If we privatise Verb 1. privatise - change from governmental to private control or ownership; "The oil industry was privatized"
manufacture, industry - the organized action of making of goods and services for sale; "American industry is making increased use of Zesco, people in rural areas may never get electricity because such a move would not be profitable to a private company."
Unsurprisingly, Mwanawasa's stance was supported by the trade union movement. Joyce Nonde, the president of the Federation for Free Trade Unions of Zambia, said in May that Zambians had lost confidence in the IMF and World Bank, and she also complained that workers' organisations had not been consulted. Despite such opposition, there seems little doubt that the economic restructuring programme will continue, albeit in a slightly altered form.
The government says that total debt repayments have increased from $200m last year to $300m for 2003 and there is little doubt that the debt has placed it in a Catch 22 situation. While the social impact of Zambia's economic restructuring plans would have been considerable under any circumstances, the fact that belts are having to be tightened still further during the aftermath of one of the worst famines This is an incomplete list of major famines, ordered by date.
A complete list will almost certainly never become available. 5th century BC
Yet if Zambia continues with its privatisation plans, it is in line for enhanced highly indebted in·debt·ed
Morally, socially, or legally obligated to another; beholden.
[Middle English endetted, from Old French endette, past participle of endetter, to oblige poor country (HIPC HiPC High Performance Computing
HIPC Highly Indebted Poor Countries
HIPC Heavily Indebted Poor Country (World Bank initiative)
HIPC Health Insurance Purchasing Cooperative
HIPC Hosted IP Centrex ) status, which would result in the cancellation of just under half its $6.5bn external debt, reducing repayments in the long term. In order to qualify for this relief, the government must continue implementing the programme, including the sale of the Zanaco stake, until the end of this year. If the government halts its economic reforms, banks and other lenders are unlikely to consider any form of debt cancellation. In effect, the government is being asked to reduce social spending and therefore living standards in the short term in order to improve the situation in the longer term.
In June, the government, the World Bank and IMF finally reached agreement on how to deal with Zesco, indicating that compromise solutions are still possible. Commerce and Trade Minister Dipak Patel Dipak Narshibhai Patel (born 25 October, 1958 in Nairobi, Kenya) played 37 Tests and 75 One-Day Internationals for the New Zealand cricket team.
A stylish middle order batsman, he started playing for Worcestershire in 1976, having moved to England in 1968, he continued to announced that the power company will now be commercialised rather than privatised. It is to become a profit orientated o·ri·en·tate
v. o·ri·en·tat·ed, o·ri·en·tat·ing, o·ri·en·tates
To orient: "He . . . company, under state ownership but hopefully devoid de·void
Completely lacking; destitute or empty: a novel devoid of wit and inventiveness.
[Middle English, past participle of devoiden, of political interference.
Ellyne said: "What this essentially means is that the government will not sell any of the shares of state owned Zesco to a foreign investor. They will cede complete control of the company to an independent, competent chief executive, appointed by an independent board of directors. Such people cannot be expected to do the government favours, as was the case in the past." Zesco's reserves had been used by the Chiluba government to fund the wages of civil servants.
Despite his stance in the current dispute, Mwanawasa is generally perceived as being probusiness and his government is attempting to increase foreign investment in the country. Taxes and duties have been lowered for foreign companies operating in the country, particularly for those who develop Zambia's raw materials. Although the country possesses a wealth of raw materials, poor infrastructure and the country's landlocked landlocked adj. referring to a parcel of real property which has no access or egress (entry or exit) to a public street and cannot be reached except by crossing another's property. status have prevented the growth of many industries, with the notable exception of copper mining. The current government's approach also appears to be an improvement on the record of the Chiluba administration. In the face of high inflation, the government has attempted to restrain wage rises and the cabinet agreed to forego a 30% annual rise in June.
The problems facing Zambia are likely to be repeated across Africa over the next few years. Governments are signing up to reform packages that could run smoothly if all goes well but which could result in terrible cuts in government spending Government spending or government expenditure consists of government purchases, which can be financed by seigniorage, taxes, or government borrowing. It is considered to be one of the major components of gross domestic product. if the economy does not perform as well as expected. The benefits of HIPC debt relief certainly seem worth struggling for but it is to be hoped that the IMF will not be more dogmatic dog·mat·ic
1. Relating to, characteristic of, or resulting from dogma.
2. Characterized by an authoritative, arrogant assertion of unproved or unprovable principles. See Synonyms at dictatorial. than it needs to be in its efforts to secure economic restructuring in return for debt relief.