Volume 9 - April 2009

Volume 9 April 2009

Mining: Turn of the Tide?

Cautious optimism is returning and the assent is no longer on mine closures,
suspension of operations and retrenchments but more on weathering the
storm
The tide would seem to be slowly turning in the mining industry as cautious
optimism begins to return. The centre-piece of plans no longer seems to be mine
closures, suspension of operations “until further notice” and wholesale labour
retrenchments that seemed a real prospect only a short while ago.
Instead a quiet reassessment seems underway. The “stun effect” may have worn
out and the assent now seems to be on how best to weather the storm without
closing down and the price levels suggest, it is possible. The worst could well
be averted and a level of mining seems assured for the duration of the global
recession. Mines Minister Maxwell Mwale indicated March 19, 2009 that no
further mine closures were in the offing and disclosed that even Mopani Copper
Mines (MCM) who had revealed plans to close the underground mine at Mufulira
and scale down operations at Nkana had now indicated an interest to continue
as before. Konkola Copper Mines (KCM), the country’s largest mining company
is into the fray. It recently made it publicly known that it won’t be closing down its
Nampundwe pyrite mine as earlier indicated. Instead, it will run it as a commercial
unit producing pyrites for other mining houses with no consequent job losses.
Further, alternative investors in the closed Luanshya mine should “move on site”
soon as the bidding process for acquisition of the mine has arrived at an advanced
stage. Bidding should close by mid-April but already the Chinese company, Non-
Ferrous Mining Company Africa (NFCA) has been designated the “preferred
bidder” with a bid understood to be around US$65 million for the mine’s assets.
Jinchuan Limited, another Chinese company is in negotiations with Albidon
Zambia Limited, for a financing deal that could see the country’s only nickel mine
resume operations after a period of being on a care and maintenance basis due to
the depressed price of nickel. Though divesting of the Luanshya Mine, the mining
company that owned it, Luanshya Copper Mines (LCM) is not leaving.
Instead it is in negotiations with a mining company from the Democratic
Republic of the Congo(DRC), the new Lumwana mine as well as other mines on
the Copperbelt for a business arrangement that would enable it access copper
concentrates for its operation at Chambishi, the country’s largest cobalt producer
that was closed down at the same time as Luanshya mine. Those negotiations
have advanced and Chambishi is now expected to resume operations within two
months. At least 600 of the 900

Post Newspaper Wants

workers who were retrenched at
closure last December will have
their jobs back.

Amicable Settlement Though arguably the most hit

by the global recession as it
was only just coming on stream,
As DBZ instructs lawyers to pursue the newspaper and Taskforce on Corruption prosecutor Mutembo Nchito and development at Lumwana mine
JCN in court his brother Nchima Nchito. The law firm, is a partnership is forging stoically ahead and the
of the two Nchito brothers and Law Association of Zambia target of 172,000 tonnes of copper
The Post Newspaper, one of the shareholders of the embattled President Elijah Banda. by the end of the year seems in
and debt-ridden Zambian Airways, has asked the state- sight. There have been reports
owned Development Bank of Zambia (DBZ) for an “amicable According to sources at MNB, the law firm had been retained that the company may be taking
resolution” of the matter of the K14 billion which it allegedly to defend the Post Newspaper and JCN following a Demand on around 1200workers by June.
‘guaranteed’ on behalf of the airline. Letter from DBZ to the two companies demanding the Development of the new town
money which they alleged ‘guaranteed under the ‘Buy-Back around the mine is proceeding
Post Newspapers Limited, through its lawyers MNB, said Equity’ transaction. “Our clients are still open to an amicable apace though there are some
they were still open to an amicable solution to the DBZ claim resolution of this matter,” the letter from MNB read in part. purely local disputes.
following a second demand notice sent to them by Malambo
and Company – lawyers for the DBZ. Malambo and Company The Post and JCN argue that they cannot pay the stated At Luanshya, the preferred bidder
have demanded that The Post Newspaper settles the claim amount because the transaction to swap the DBZ loans into NFCA is reported to be currently
or court action. equity in Zambian Airways was never finalized although they undertaking a comprehensive
had duly signed legally binding guarantees, which DBZ is due diligence study of the closed
MNB is also representing JCN, a company owned by relying on. To pg 2

Contents
Shut Airline Directors Summoned - Page 2 Malnutrition Stalks Under-Fives - Page 7

Magande’s Letter: See No Evil, Hear

No Evil - Page 3 Kuomboka 2009 - Page 9

Zambia Ponders Us$200 Million IMF Orbituaries - Page 10

Loan - Page 4

Skepticism over 5% GDP Growth in End Game in a Doubtful Spat - Page 12

2009 - Page 6
Executive Issues
News
From Page 1
Mining: Turn of the Tide?
mine. There are two other bidders, Britain’s Lion Finance, working in conjunction
with a local company, Madini Copper Resources and the Shanduka Group of
South Africa. By some accounts, there is a total of six bidders and there could be
more before bidding closes.
Mining sources have indicated that no profit-driven investor can run LCM because
at current prices its operations have to be subsidized. The Chinese are therefore
considered the best bet. They have the money and considerable backing from
their government. But the mine itself isn’t quite out on a limb. It is potentially very
profitable. A section of it- Mulyashi – which was under development by LCM at a
cost of US$350 million before closure, is a very sound prospect. It is estimated
that if fully developed, it can produce up to 600, 00 tonnes of copper per year by
2010 and has a maximum lifespan of up to 20 years. The Chinese are thought to
have the financial gravitas to exploit its full potential.
Their financial muscle and it must said interest has again seen them favourites
in the “sweepstakes” to revive operations at the country’s only nickel mine in the
Munali Hills near Lusaka. The Chinese company involved, Jinchuan is the largest
shareholder in the mine and is the holder of the life-of-mine off-take agreement
- which entitles it to most of the mine’s output. Its offer consists of US$1.8 million
upfront backed by concentrate production for the months of January and February
2009. In the second tranche, Jinchuan is ready to provide US$7 million through
issuance of about 135 million ordinary shares at US$0.052 each.
It has also proposed a convertible note facility to fund essential activities. Albidon
which already has had to pacify major Australian creditors over its loan repayment
difficulties is mulling over the offer. The Chinese remain keen. The general trend
world-wide has come to be that only China and India have the money to invest
in mining at this time and this is now widely acknowledged. Zambia has not
succeeded to side-step the trend. It is also from China that the increased demand
for copper that is likely to revive the price is expected to come from.
On March 19, 2009, Finance and National Planning Minister Dr. Situmbeko
Musokotwane for instance expressed optimism for Zambia’s mining industry
following indications by China’s State Reserve Bureau that it would this year
increase its copper purchases from 600,000 to one million tonnes. He said if this
Post Newspaper Wants
Amicable Settlement
From Page 1
“In any event, even assuming the document you refer to was binding and our
client’s position is that it is not, the undertaking referred to at paragraph two
of your letter was contingent upon the consideration of conversion of the debt
facility to Zambian Airways Limited into shares. Since this has not occurred, that
undertaking is wholly unenforceable for lack of consideration,” the MNB letter
reads.
The lawyers for Post further argue that the issue of converting the DBZ debt
into equity never went beyond negotiations between the parties. “The document
you assert constitutes an enforceable share buy-back undertaking was executed
subject to negotiations, which negotiations as noted above, have never concluded.”
DBZ is claiming a total of K28 billion ;K 14 billion each from JCN and The Post
Newspaper as a result of their having signed an “undertaking to buy-back equity
from DBZ” in October 2008.
“We, Post Newspaper Limited, further undertake to hold this undertaking valid and
legally binding on ourselves until the execution of the irrevocable joint and several
share buy-back guarantee by all the shareholders of the Zambian Airways,” reads
part of the undertaking.
Some sources close to the transaction insist that the transaction was
concluded as DBZ, based on the same deal, relinquished its securities
and debentures on Zambian Airways to Finance Bank after it was clear
that it had converted the loans into equity.
Executive Issues
Executive Issues
Volume 9 - April 2009
actually happened, it would result in a deficit in world copper supplies resulting in
a higher price for the metal. China’s increased purchases would turn the projected
copper supply surplus of between 350, 000 and 400,000 tonnes into a deficit. He
attributed part of the rise in the price of copper to around US$3,862 per tonne to a
55% jump in China’s copper imports in February. This was at its highest price since
November 2008. As the Chinese begin to look increasingly the more likely to at
least help stabilize Zambia’s mining industry, there are also “background noises”
of resistance and even intolerance of Chinese investment. As developments in
the Luanshya mine sale were announced, opposition Patriotic Front(PF) Roan
MP Chishimba Kambwili warned of serious unspecified trouble if government
did not take into consideration the concerns of residents over the sale.
A so-called “Indaba” of residents on March 22, 2009 resolved that whoever took
over the mine needed to be able to take care of the environment, corporate social
responsibility and the health sector. This “indaba” was however boycotted by
officials of the Mineworkers Union of Zambia (MUZ) who said the MP was merely
against Chinese investment but that this was not their take. Subsequently,
Luanshya District Commissioner George Kapu turned down a petition from
pastors on the same issue. “Why are we rushing directly into giving NFCA? We
know the Chinese have all the dollars in the world as at now. But that does not
mean we have to rush into getting any company from China without carefully
selecting the right investor,” read the petition which was supposed to be relayed
to the President. The DC rejected it saying government had already answered
most of the concerns and that the pastors were being used by politicians to stir
up trouble in the town.
But even as these events were unfolding, Mines Minister Maxwell Mwale had
March 15, 2009 announced that government was in the process of constituting is
a broad-based technical team comprising experts in various disciplines to look at
the affairs of the mining industry and make recommendations on the way forward.
Perhaps the question of Zambian attitudes towards Chinese investment is one
issue for study. The worst would be to leave the matter to fester. Already some of
the industrial unrest at Chinese enterprises has been informed more by attitudes
rather than issues on the ground. With the glimmer of hope now emerging that
the copper mining industry can be salvaged after all, everyone will need to have
their feet firmly on the ground.
Shut Airline Directors
Summoned
They are alleged to have stolen US$1,793,782 the property of National
Airports Corporation
Two directors of the ill-starred Zambian Airways, the local airline that abruptly
suspended operations in January 2009-Mutembo Nchito and Frederick
Mmembe-were March 28, 2009 summoned by the joint investigating team that
is probing the affairs of the airline made of the Police, Drug Enforcement and
Anti-Corruption Commissions.
The investigating team recorded Warn and Caution statements from the two in
connection with the money that the airline that has been firmly on the ground
since January owes the airports operator, the National Airports Corporation Ltd
(NACL).
The investigators are pursuing the criminal charge of theft by agent against the
pair, in contravention of Section 272 and 280 of the Penal Code, Chapter 87 of
the Laws of Zambia. .
The allegation against the two so far is that being agents of the National Airports
Corporation Ltd in the collection of passenger service charges, the two did steal
US$1, 793,782, the property of NACL.
It is now up to the investigating team to decide whether or not to recommend
prosecution.
Volume 9 - April 2009
Magande’s Letter: See No Evil, Hear No Evil
Releasing the letter may have been calculated hogwash to keep on side
those who afford the opposition “the oxygen of publicity.”
Following the so-called 48-hour ultimatum to President Rupiah Banda to reveal the
contents of a letter written by the former Minister of Finance and National Planning
Ng’andu Magande to Communications and Transport Minister Dora Siliya asking
her to consider deferring certain charges due to the state from the ill-starred
Zambian Airways, Opposition Patriotic Front (PF) President Michael Sata went
ahead to release the letter on March 16, 2009. It is now in the public domain and
the content is known. It is basically that the National Airports Corporation Limited
(NACL) should consider deferring charges due from the airline for a period of two
to three years in view of the adverse operating conditions occasioned by hikes
in the price of jet fuel. That, the Ministry of Finance would consider measures to
cushion NACL from the effects of the resultant loss of revenue. When he did, Mr.
Sata was emphatic about his reasons for releasing it:“People should be allowed
to know the truth. Magande is not only an MMD member. He is a national leader.
So as leaders, there is no need to tell lies, falsehood about each other. We want
the truth to be known in this matter,” he is quoted as having said.
Sanguine words, those.
But what is the truth? Isn’t it that Magande’s suggestions as means of securing the
airline were wrong as they would not work? For in the final analysis, Magande’s
idea of “deferment” of charges was practically effected even if only by default.
Many of the payments due to the NACL were not paid and are among the debt the
airline owes. Even so, the airline still had to suspend operations! In view of this,
2008 Grade 12 Results Out
A marginal increase in the pass rate at school leaving level
Twenty-one (21) secondary schools achieved a 100% pass rate in the 2008
school leaving examinations. They are mainly Catholic Church-run and private
schools. No government school achieved that and curiously, at one private school
nobody passed. In a ministerial statement, Education Minister Professor Godfrey
Lungwangwa told the National Assembly March 19, 2009 that out of 57,129
candidates who took the examination, 34, 894 – 20,668 boys and 14,227 girls-
obtained full certificates, representing 61.85 pass rate compared to 60.98% in
2007.
Eleven thousand, three hundred and eighty two (11,382) boys and 9,895 girls
obtained the General Certificate of Education (GCE). A total of 58,769 candidates
had entered the examination, 1,640 or 2.79%were absent compared to 2.26%
in 2007. Of those, 957 or 1.68% compared to 1.74% in 2007 failed the exam
outright. Brother Luke High School in Western Province achieved a record of
sorts, nobody passed! But perhaps the real failures were the teachers? There
was an increase in 2008 in the number of candidates involved in examination
malpractices to 285 compared to 116 in 2007 and the predominant malpractice
was smuggling materials into the examination. Luapula, Copperbelt, North-
Western and Western provinces recorded an overall increase in performance
while Central, Lusaka, Eastern, Southern and Northern provinces declined in
performance.
SCHOOLS THAT ACHIEVED 100% PASS RATE:
Lubushi Seminary and St. Francis Secondary School, Malole in the Northern
Province, Charles Lwanga Junior Seminary in Luapula Province, Mukasa Minor
Seminary and Nakambala Private School in the Southern Province, St.
Mary’s Junior Seminary , Chongololo School and Sonja Girls High School in
Eastern Province, St. Paul’s Secondary School in Central Province. Ibenga Girls
Secondary School, Fatima Girls Secondary School, Mpelembe Secondary
School, Da-Gama Secondary School, Sathya-Sai Secondary School, St.Johns
Convent School, Sacred Heart Convent School, Nsansa International School
and Kalulushi Trust School on the Copperbelt. Roma Girls Secondary School,
Matero Boys Secondary School and Kasisi Girls Secondary School in Lusaka.
ZERO PASS RATE
Brother Luke High School in thee Western Province.
Executive Issues
Executive Issues
News
Magande’s suggestion would seem at best to have been misleading and at worst
thoroughly useless, certainly as a means of securing the airline’s future. They
did come into play whichever way but still they did not rescue the airline from
oblivion! Were those suggestions then worth even the paper they were written
on? In any case, can the truth be arrived at by merely releasing the letter and
sanitizing it by insisting that it was about deferment and not forgiveness as those
who will “see no evil, hear no evil,” would have us believe? Or is theirs merely a
calculated attempt to plant a simplistic view of the whole issue so as to effectively
blur the significance of the letter in order protect those in their camp who may be
implicated in the event of any “digging deeper?”
The letter was highly presumptuous and “up side down” in fact. It makes the
unsubstantiated and highly questionable assertion that: “It is evident that Zambian
Airways has become a major player in the Zambian aviation industry and its
contribution to the economy has been tremendous as evidenced by its growth in
a short time.” This view is just not shared by many who used the service. Many of
those who used it resolved never to do so again unless they had to. Many frequent
fliers opted for other carriers. How an airline of such record, could possibly have
“become a major player in the Zambian aviation industry” is difficult to fathom.
With a debt running into millions of dollars in mainly unpaid statutory dues, it is
equally hard to see how it could possibly have made a “tremendous contribution
to the economy.” The letter was clearly “up side down” because the recipient
would have been the most appropriate and rightful originator and the writer the
right recipient. It dwells on ostensibly the travails of the Zambian aviation industry
in the light of escalating fuel costs but in reality it is about those of Zambian
Airways. Who in any case would have known better about these than the Minister
of Communications and Transport? Unless the system doesn’t work and the letter
was an admission of it, the latter would have known better. It is the Ministry of
Transport which was in a position to originate the proposals for the course of
action suggested in the letter because these were matters well within its purview.
The letter was actually unnecessary! Still, it was written! The unanswered
question is: Why was it written? Those who have rallied to his cause have so
far provided no answers and it is the answer to this question, particularly the
right one that would be illuminating! Why did he have to entertain a meeting on
an issue outside his portfolio, an issue on which as his letter shows he was not
even in a position to make a decision? Is this how Ministers should be expected
to use their office hours? Mr. Magande was a competent and quite astute Minister
of Finance and as Minister, he always took an appropriately broad view of the
economy. However, in this particular letter he uncharacteristically but effectively
equates Zambian Airways to the “Zambian civil aviation industry!” What explains
this apparent slippage? He certainly would not have been unaware that there
were other perhaps smaller players but players never the less who would have
been entitled to the same concessions as they were facing the same conditions
and the cost in deferments? Why did he seem to forget them and to be fixated
only on Zambian Airways?
Could it because they had taken the initiative or perhaps that he was aware of “a
special relationship” as many insist that existed between some of the promoters
of the airline and the highest levels of government at the time? Some of them
clearly would appear to have enjoyed some not inconsiderable political influence
and leverage! Was he perhaps under instruction from on high or perhaps more
accurately from that shadowy group that had ambitions of taking over the reigns of
power at the expiry of the late President Mwanawasa’s second term and saw in the
mix of Zambian Airways shareholders possible allies for the 2011 campaign and
an opportunity to curry favour and cement the connection? Magande was after all
the anointed successor, wasn’t he now? The letter would seem to point us to a
new matrix that would seem to have operated in the later years of the Mwanawasa
presidency and the members and beneficiaries would appear anxious to keep the
lid on the goings on of the time. No sooner had the late president for instance
been taken ill than some circles began to identify themselves as possible targets
after his passing. Why?
People must know the truth as Mr. Sata has rightly pointed out. But this cannot be
achieved by the simple expedient of making the letter public. The truth
can only be known when the motives and motivation for the letter are
known. Why did Mr. Magande have to write it? That is the unanswered
question. He didn’t have to, did he?
News
Zambia Ponders Us$200 Million IMF Loan
Negotiations remain on track
Negotiations between Zambia and the International Monetary Fund (IMF), under
which Zambia is seeking a loan of around US$200 million to tidy her over, are
continuing. Recent confirmation of that has come from both the World Bank and
the IMF. Staff – level agreement on additional IMF funding for Zambia was in
fact reached in February. What remains to be settled are the exact details and
ratification by the IMF board.
Both the IMF and the World Bank reaffirmed their support for the negotiations
when they denied press reports that the World Bank was somehow not quite in on
the idea. The World Bank Country Manager for Zambia Dr. Kapil Kapoor said his
organization “strongly “ supported the ongoing discussions between Zambia and
IMF and that the Bank was hopeful that they would result in the IMF providing
additional financial resources to Zambia.
The IMF resident Representative Birgir Arnson spoke in the same vein. He said
the facility under discussion was aimed at providing foreign exchange to the Bank
of Zambia (BOZ) to give confidence to market participants. He said the IMF was
ready to give the Bank of Zambia the resources it needed to maintain orderly
conditions in the foreign exchange market. That tallied with what Bank of Zambia
Governor Dr. Caleb Fundanga was initially quoted as having said at the recent
IMF Africa conference in Dar-Es-Salaam. He is reported to have said that Zambia
was seeking a loan from the IMF to boost its foreign currency reserves.“Our
balance of payments position has deteriorated quite considerably. The IMF was
in the country and we are discussing with them the possibility of enhancing our
current loan facility (the Poverty Reduction and Growth Facility (PRGF).
They are willing to do that because they have seen what has happened to our
external sector in the last quarter of the year.” Zambia has already secured US$79
Towards (Up To) Us$700 Million In American Grant Aid
Up to US$69 million will be available for health and education in the next
18 months.
Two high ranking executives of the US Millennium Challenge Corporation (MCC),
an aid channel of the US Department of State - Vice-President for Compact
Development Darius Teter and Senior Country Director for Compact Development
Kyeh Kim- were in Zambia during March.Their visit was a follow-up to Zambia’s
qualification last year for up to US$700 million in grant aid over five years from the
MCC. Zambia became eligible for that assistance after having satisfied stringent
developmental, governance and corruption benchmarks. Together with the MCC,
Zambia has now to work out a broad-based economic development programme
to be funded by the MCC. The two-man delegation held preliminary discussions
with government and Civil Society on the development of that progamme to
enable Zambia access the funds. In the next 18 months, up to US$69 million in
large-scale investments will become available to the country for poverty reduction
and strengthening of access to health and education.There is a process.
Government will have to appoint a coordinator for the programme and set up
a team from the public and private sectors and civil society to determine the
development priorities that need funding. Eligible countries are expected to
propose programmes for funding with characteristics that promote sustainable
economic growth and poverty reduction. The Zambian programme will need to
identify specific activities, beneficiaries, expected results and implementation
mechanisms. “We look forward to working with all of you to develop a compact
that will stimulate economic growth, create jobs and result in real income in
people’s pockets. That is MCC philosophy. We focus on growth. Another part of
our philosophy is strong belief in country ownership. We expect our development
partners to take the lead in their development,” said Teter.
Those are broad parameters of the sort of programme that Zambia
must now work on. Eligible countries have to maintain strong policy
performance such as in the fight against corruption and they risk
discontinuance of support if they falter. Zambia will thus need to maintain
Executive
Executive Issues
Issues
Volume 9 - April 2009
million from the IMF over three years under the PRGF. The loan under discussion
will be in addition to that. “The new funding will be used to increase foreign
currency reserves, which currently cover about two-and-a –half months of import
cover excluding the mining industry,” Dr Fundanga was quoted as having said.
A decision on the loan is not expected until May and the exact amount still has to
be zeroed in on.
What is clear is that while still committed to a liberalized foreign exchange
market, Zambia is having to look hard at the prevailing economic situation and
is seeking to increase foreign exchange availability to bolster the Kwacha or at
least end the extreme volatility it has been displaying lately. It has depreciated
against the US Dollar more or less continuously since the beginning of the year
and has hit historical lows in the opening months of this year.
The situation has been a source of anxiety and there is no quick fix in the
circumstances.
Some measures have been implemented. The BOZ has banned non-residents
from borrowing the Kwacha for less than one year to help stem the currency’s
losses. The restriction is aimed at halting “speculation” in the currency by foreign
banks. “We faced extreme pressure on the foreign exchange market and it was
necessary to do something.” Dr. Fundanga was reported as having said in Dar-
Es-Salaam. Now, with negotiations with the IMF apparently still well on track, it
seems that at least more will be done to address the situation.
There have been assurances that the new loan will not change Zambia’s debt
sustainability indicators. “We should bear in mind that Zambia’s debt sustainability
indicators are much better than they were in the past and borrowing an additional
uS$200 million or so from the Fund would not represent a major change in them,”
said Arnason. What remained unclear was whether the loan would actually yield
the desired effects without creating new problems and anxieties for the country.
the momentum towards transparency, good governance and anti corruption.
She needs to continue investing in education, health, pursue liberalized market-
oriented economic policies and protect human rights to remain on side.
What is key for now is to kick-start the process for accessing the funds and it
has to be a credible one: “But …it is a process and it is a process that includes
consultations with some civil society as we define together the key projects for
investment. It is a process that will result in some high level engagement between
our two parties to ensure that we are working towards the same end and come
up with proposals that are suitable for funding,” explained Teter.
When the American delegation called on him, President Rupiah Banda used the
occasion to re-state his government’s commitment to the fight against corruption.
He said corruption had to be eradicated. He praised the achievements of the earlier
MCC project in Zambia saying it had Speeded up registration of companies and
businesses, strengthened the capacity of the Anti-Corruption Commission (ACC)
to prevent administrative corruption and assisted implement the national anti-
corruption policy. It had reduced the time it took to register for Value-Added Tax
(VAT) at the Zambia Revenue Authority and had improved border management.
He said he looked forward to continued engagement.
The MCC is an innovative aid programme of the State Department(Foreign
Ministry) of the Government of the United States of America(USA) and is
designed to invest in selected countries based on a series of indicators. Zambia
is among 19 countries of Africa to qualify for the grant. It followed her successful
implementation of a US$ 22 million MCC project that President Banda referred
to in his remarks when he met the MCC delegation. The significance of this new
phase of the MCC project in Zambia was not from the outset lost on the Zambian
authorities. Not too long after news of Zambia’s eligibility came through,
Secretary to the Treasury Likolo Ndalamei said logistics were being put in place
to access the funds.
With the last visit both parties should be better prepared for the launch of a project
that if well managed could bring Zambia some benefits.
Volume 9 - April 2009
National Assembly: Skirmishes over
Income Tax (Amendment) Bill
Opposition force division in the House and walk out over bill to end windfall
tax.
In a reflection of exasperation with the mining companies over projected mine
closures, the Income Tax (Amendment) Bill of 2009 had the stormiest passage
through the National Assembly of the Budget Session that adjourned sine die on
March 28, 2009.Among other provisions, the bill abolishes the windfall tax on
copper earnings - a 2009 Budget concession to the mining industry.
But opposition Members of Parliament (MPs) were hostile and would not
countenance it. They forced a division in the House at second reading stage and
only narrowly lost 54 to 63. When it finally went through, many walked out of the
chamber in protest. Throughout, opposition MPs and some from the ruling party
sounded baffled that the tax was being discontinued at a time when it had by its
nature already fallen off and there was therefore no basis for it to apply.
Further, they saw no need for legislation since the windfall tax was self-adjusting
and was triggered off only when the price of copper rose to certain levels. They
called for the withdrawal of the bill for “further consultations.” Some were of the
view that the provision for windfall tax should not be outlawed but should instead
be only suspended at the most, but still remain on the statute book. But they again
didn’t seem to understand the source of concern since it would automatically not
apply if prices were depressed. Government maintained that withdrawing the bill
would derail the 2009 budget and that the windfall tax was essentially a bad tax
because it did not take costs into consideration. It had now become a disincentive
to would-be investors.
Leader of government business in the House, Vice-President George Kunda
was at pains to explain that the mining companies had declared a dispute over
the windfall tax and the matter was now up for arbitration and that in any case,
only a handful of mining companies had paid it. He restated the need to keep
investment prospects in Zambia attractive. There had been earlier indications that
the MPs were in no mood to rubber-stamp the measure which some said was a
betrayal of Zambian interests. There were questions on the discontinuance of
the windfall tax when Finance and National Planning Minister Dr. Situmbeko
Musokotwane appeared before the Parliamentary Committee on Estimates on
February 16, 2009.
Members Charles Milupi (Independent-Luena) and Jack Mwiimbu (UPND-
Monze) wanted to know whether the government had removed the windfall tax
“because of pressure from the mining companies.” Dr. Musokotwane said
government would not lose anything by abolishing it because the mines would
still not have paid anything given the level of metal prices But the skepticism
in the National Assembly persisted. Secretary to the Treasury Likolo Ndalamei
ran into considerable flack when he appeared before a combative Parliamentary
Committee on Estimates over the same and other 2009 budget-related amendment
bills. Committee members were openly skeptical about the substance of the
amendments and the Secretary to the Treasury had some fire-fighting to do.
Batuke Imenda (ULP, Lukulu East) demanded that Ndalamei and his team
tell the country how much government was losing in revenue by awarding “tax
holidays” to investors in mining. Emmanuel Hachipuka (UPND, Mbabala) said
government needed to produce figures to justify why mining companies which
externalized their profits were given tax rebates. He observed that government
was more protective of mining investors than its citizens because the tax
structure was such that citizens were heavily taxed while mining companies made
profits which they went away with. The same MP had earlier wondered whether
it was actually true that mining companies could not make profit at a price of
US$3,200 per tonne. Imenda further demanded justification for the government’s
decision to discontinue the windfall tax.
In response, Ndalamei said that government had not been successful in
collecting the tax and only three companies had paid hence the discontinuance
in preference to the variable profits tax which would still capture any windfall. He
Executive
Executive Issues
Issues
News
revealed that Norway was funding an audit of some mining companies in Zambia.
The audit would be ready by the end of March 2009 and would help ascertain the
true cost of mining and thereby validate or otherwise what the mining companies
have been saying.
Only after the audit, would government be in a position to ascertain whether what
the mining companies were saying about costs was genuine or not. What was
generally true was that underground mining was more expensive than open pit
mining and government considered those factors when awarding incentives. The
resistance is connected to the attitude that the government is too generous and is
losing a lot of tax revenue in the process mainly to investors especially in mining
who do not show as much loyalty to the country. They will close down at the first
hint of trouble leaving everyone high and dry.
In the light of the proposed mine closures, there has also come to be a great
deal of skepticism about the figures for mining costs. Mining companies have
said it requires a minimum price of US$3,500 per tonne for underground mining
to be economical and their intentions to close down or suspend operations were
informed by that calculation. Without being specific, the Chamber of Mines has still
managed to be pointed in its reaction saying that some of the things that had been
said by “opinion leaders” about the mines in recent months were “unhelpful.”
Such utterances only discouraged investment. But the supporters of “more
equitable” taxing of the mines remain equally adamant: “We are losing out. We
are not helping Zambia. Zambia will continue to suffer…,”said an MP.
The truth could well be in between the two positions and therefore all parties have
every reason to remain engaged.
March Inflation: Down Nine
Percentage Points
Inflation slows down to 13.1%
The Central Statistical Office (CSO) through its monthly survey of consumer prices
March 27, 2009 announced a reduction in annual inflation by 0.9 percentage
points. Inflation for the month of March was put at 13.1 per cent from 14.0 per
cent in February.
The decline is largely attributed to reductions in the prices of food products such
as fish, Kapenta, fresh vegetables, dried beans, tubers and alcoholic beverages.
Of the total 13.1percent annual inflation in March 2009, food products accounted
for 6.8percentage points, while non-food products in the Consumer Price Index
(CPI) accounted for a total of 6.3 percentage points. Zambia also recorded a trade
deficit of K163.3 billion in February 2009.
Total value of exports was K1, 128.5 billion compared to K1, 117.9 billion in January
2009. The most prominent exports were manufactured goods accounting for
63.2% of which refined copper was the most significant export item. Others were
crude materials such as copper ores and concentrates; beverages and tobacco;
chemicals, machinery and transport equipment and food and live animals which
collectively accounted for 35.7%.
The five major destinations of Zambia’s exports during February 2009 were
Switzerland, South Africa, China, Democratic Republic of the Congo and
India. These five countries accounted for 80.0 percent of Zambia’s total export
earnings. Switzerland was the largest destination for Zambia’s export
products accounting for 52.6%. Major export products were Cathodes
and sections of cathodes of refined copper and copper ores and
concentrates.
News
Skepticism over 5% GDP Growth in 2009
Growth projections are being slashed downwards by some
The disruption and reduced profitability of copper mining as a result of the global
recession has led to uncertainties about whether Zambia’s overall GDP growth
objective of 5% in 2009 is attainable.
Increasingly, the view is that it is in the circumstances on the optimistic side.
Economic analyses have been increasingly fickle in the recent past. But some
Zambia watchers who had projected a growth rate of around 3% have slashed
it further down and have now put it at around 1%. There are projections of even
negative growth altogether.
Even among Zambians, there appears to be some skepticism.
The question of whether 5% GDP growth is attainable given the background was
posed by some members of the Parliamentary Committee on Estimates when
Finance and National Planning Minister Dr. Situmbeko Musokotwane appeared
before it on February 16, 2009.
The Committee chairman ULP Lukulu East Member of Parliament(MP) Batuke
Imenda wanted to know whether 5% growth was feasible and the PF Matero
MP Faustina Sinyangwe wanted to know specifically whether it was still feasible
“when companies were scaling down operations.”
Dr. Situmbeko maintained that it was still attainable because several interventions
to protect investment had been put in place. He was optimistic because of
measures to boost investment in agriculture, tourism and manufacturing put in
place through the 2009 Budget. There was also the Lumwana mine arguably
Africa’s largest copper/uranium mine that is due to come on stream in 2009.
The view that 5% growth is a long shot however persists.
This is against the background of a global economy that is forecast to slump
to -0.4% in 2009 before recovering slightly to 1.5% in 2010. Copper prices are
expected to be depressed most of 2009 before recovering slightly in 2010.
In these circumstances, they project growth in 2009 at 1.6% and 2.7% in 2010:
“Mining investment and production is expected to be especially badly hit by
weaker prices.”
The projection is that inflation will only come down slowly and will be 12.1% at
year end and not the projected 10%. They further project that it will stand at 11.1%
in 2010. The fiscal deficit in 2009 is put at 2.9% of GDP and 2.4% in 2010. The
Kwacha is expected to average K4, 312 to the US Dollar in 2009 and K4, 614 in
2010.
Analysts who have revised their projections from an initial growth rate of around
3.4% to a contraction of 0.1% have done so in view of a growth outlook of a 2.3%
contraction in the US and a growth of only 5.6% in China. These factors will weigh
on the value and volume of copper exports as well as investment in the mining
sector, while lower government receipts and job losses will restrict both public and
private spending.
Against this background they see Zambia’s economy shrinking by 0.1% as a
result of a collapse in exports and the subsequent impact on consumption.
Government back peddling on mine taxes is seen to threaten fiscal revenues.
If it were not for falling energy demand and slower capital investment resulting
in lower imports, the country they argue would have risked even more severe
negative growth.
But that is one view.
The other is that the economic stimulus packages put in place in
both the US and China should help keep copper prices reasonably
robust for most of the year. China has for instance already indicated
an increase of its copper purchases from 600,000 tonnes in 2008 to
Executive
Executive Issues
Issues
Volume 9 - April 2009
one million tonnes this year and this alone should create a supply deficit leading
to a surge in the price of copper. The US economy too is projected to begin a firm
recovery by the end of the year into 2010.
But economic analyses and projections have become notoriously unhelpful these
days. They are increasingly no more than informed speculation and what is going
to count is how things will actually play out in the end.
For now, there appears no way of telling for sure.
Mining On Course:
Africa’s Largest Copper Mine
Lumwana expects to produce 170,000 tonnes (375 million pounds) of copper
metal concentrates in 2009
To the owners - Equinox Minerals Ltd of Toronto, Canada - it is known simply as
the “Lumwana Copper Project, Zambia.” In practice, it is a large open cast copper/
uranium mine in the North-Western Province. Arguably Africa’s largest green-field
mining project that will give Zambia its newest town, development of Lumwana
mine is proceeding apace. The global economic recession has only introduced
the element of uncertainty but has not stopped development which has reached
production level since the mine was handed over to the owners by the contractors
in November 2008.
That is when the mine site and associated infra-structure were handed over to
the operators. Commissioning had started earlier, in April with the electrification of
the main Lumwana 33kV substation. Following closely, was the completion of the
feasibility study on the design of a treatment facility for the uranium ore stockpile
that will result from the selective mining of the high grade uranium zones within
the Lumwana Copper ore bodies. The cost of that facility is estimated at US$200
million and it could recover approximately two million pounds of uranium oxide
and 12, 800 tonnes of copper concentrate per year.
But the decision whether or not to proceed with it will depend on improvement in
the international project financing climate, as well as the market prices for uranium
oxide. In May last year, the mining company secured land title to approximately
35,000 hectares that include town development and mine operating areas.
This will enable the company deliver home ownership to employees and other
commercial developments within the project area. In June, the main mining mill
was fully energized and commissioning of the primary crusher also commenced.
A fire on July 7, 2008 caused damage to a main transformer and adjacent
substation. It led to a four and half months delay to project completion and
handover. Still, crushing of material at the primary crusher started in September
with the 4.5 kilometre conveyor belt transporting the crushed material. In October
Equinox secured an additional US$80 million loan to enable the company to meet
additional working capital requirements resulting from the transformer fire and
delayed start-up. The same month, the mine’s large-scale electric shovels were
successfully commissioned and put into production.
The first copper concentrate was produced during December 2008. By the end
of the year, the mine had processed 1,070,000 tonnes of ore producing 20,046
metric tonnes of concentrates and deliveries started with 12,156 tonnes delivered
to various customers. The same month, the first commercial quantities of
copper concentrates were delivered to customers. The mine expects that it will
prroducee170, 000 tonnes or 375 million pounds of copper metal in concentrates
in 2009.The mine owners have recently reached agreement with financiers to
restructure the debt repayment schedule.
The result is that in the 2009 calendar year principal repayments have reduced
to US$138.4 million, the majority due in September. .With such breathing space,
Lumwana is likely to make a major impact on Zambia’s mining output from this
year on.
Volume 9 - April 2009
Agriculture: Sub-Economic Prices
Hit Farmers Hard
Mkushi farmers now fear bankruptcy
Wheat farmers at the Mkushi Farm Block have expressed fears that they may end
up bankrupt if sub-economic prices for produce persist. They have complained
of facing “a dire situation with our financiers as we have not been able to sell our
produce at economic prices…”
Sub-economic prices would appear to have hit this group of industrious farmers
particularly hard. “We are supposed to start planting wheat in four weeks time
and yet we have not settled our loans from the previous wheat crop we planted
in 2008,” they told President Rupiah Banda when he visited, March 29, 2009.
The farmers now fear that their loan repayment difficulties will erode the previous
confidence banks had in wheat production.For farmers generally, there has been
no respite from mounting production costs especially the escalating cost of inputs
of recent months and they have perhaps been highest in the 2008/9 season, all
round.
Against this background, the price of around K1.9 million per metric tonne
offered for locally-grown wheat has been described by them as ”frankly an insult
to wheat farmers and are sub-economic.” They have warned of bankruptcy if the
situation is not reversed and soon. “We are asking government to come to the
rescue of the wheat industry which is young and requires some sort of aid until
it can fully stand on its own two feet…Farmers have invested millions of dollars
in dams, centre pivots, combines to promote wheat production but at these sub
economic prices we are doomed to failure. Something needs to be done very
soon to let local prices of wheat reach economic levels of return. ”
The specific intervention that they want of government as at now is to consider
topping up the current wheat prices offered by the millers by K550, 00/Mt “to
enable us to stay in production this year.” When he addressed them at the Country
Club in Mkushi, President Banda said his government was ready to assist the
farmers market their wheat. “I am aware that there is need to support our wheat
farmers, to ensure that their produce is sold on a timely basis to enable them
obtain financing for the next crop.”
He directed the Minister of Agriculture Dr. Brian Chituwo to look into the issue
of excessive wheat imports. Zambia has in the recent past made great strides
in wheat production and is at the point of self-sufficiency with harvests of up to
160,000Mt. The issue is that there are at present 60, 000 Mt of unsold locally
produced wheat due to the depressed price and demand. Most of the local wheat
was produced by the Mkushi Block but millers were still allowed to import wheat
which has complicated the farmers’ situation. There is a sort of glut and millers do
not need to buy locally.
The silos at Mkushi are full of unsold wheat and growing it in winter calls for
quite some expense in order to harness water in dams, to purchase irrigation
equipment and to procure expensive harvesting equipment. The investment costs
to bring one hectare of land to wheat production are conservatively estimated at
US$5000. The situation with the staple, maize is not very different. This season
saw the most dramatic increase in costs. At the time of planting compound fertilizer
prices shot up from K3.3 million /Mt to K8.8 million/ Mt. Diesel prices doubled.
“This has led to huge borrowing from the banks to purchase inputs for maize
production. Coupled with the low wheat prices prevailing at the moment, farmers
are on collision course with their banks unless we can realize a reasonable price
for this most precious of commodities.” They are about to start harvesting and
processing early maize for the market. By April/May, they will be at it.Mkushi alone
is expected to produce in excess of 30,000Mt of early maize. But it will be difficult
to market it for as long as millers have access to highly subsidized maize from the
Food Reserve Agency (FRA) which is what is mainly available now in an attempt
to put the lid of the price of mealie-meal.
The farmers want this matter of subsidized maize addressed so as to level
the playing field. The price of Soya beans Mkushi’s third cash crop is equally
depressed on account of a reduction in the consumption of poultry because of the
Executive
Executive Issues
Issues
News
economic situation. Last year Soya beans sold at K3.4 million/Mt but this year the
ruling prices are around K1.98million/Mt.
However, there was a noticeable swing towards Soya beans in 2008 because it
requires less fertilizer and the Mkushi Farm Block is set to produce considerable
quantities. “..It might be appropriate this year to allow significant exports of Soya
beans and Soy cake to allow the surplus beans to be sold to our neighbours in the
region,” the farmers have suggested. They are a forward-looking and altogether
industrious group-just the kind of farmers Zambia needs at this time.
They have constructed a processing/ storage facility within the farming block
under the name AGRIOPTIONS. The facility is owned and financed 100% by
the farmers and on completion of phase one, the complex will store 27,000Mt
of grains- maize, wheat and Soya beans- in bulk silos and when fully complete,
the facility will have the capacity for 60,000M/t. “Our mission is to be able to
guarantee quality of the product out of this facility and to this end we have ordered
top of the range products. Our wheat laboratory is state of the art and we are able
to grade all produce,” they said.
They will be installing a drying facility that will be capable of drying 50Mt of maize
per hour. The plant will process up to 1000Mt of maize a day from March 2010.
Total cost for the facility is estimated at US$8.8 million. Currently the members
of AGRIOPTIONS produce 35,000Mt of maize per year, 12,000Mt of Soya beans
and 22, 000Mt of wheat. Zambia needs these kinds of farmers and their problems
have to be addressed. They are basic and relate to the very framework of their
business. Nobody will be done a favour if they are forced off the land yet if the
problems they face are allowed to persist that may be the only option for at least
some of them!
Malnutrition Stalks
Under-Fives
“The pattern of admissions for severe malnutrition is similar in all
hospitals.”
A study by the National Food and Nutrition Commission and the University
of Zambia, Demography Division entitled: “Severe Malnutrition Hospital
Admissions and Mortality trends in Zambian hospitals, 2005-2008,” makes
sad reading and calls attention to an issue that deserves it. The study was
prompted by reports in the last quarter of 2008 that mortality rates among severely
malnourished children admitted to the UTH Malnutrition Ward AO7 had risen to
about 40-50%. That touched off concerns of poor nutrition and health among the
under-fives.
A nutrition assessment around Lusaka urban indicated higher admissions.
The subsequent study to assess the prevailing trends and patterns of malnutrition
admissions and mortality in first and second level hospitals in the country is the
one whose findings have recently become available.
It targeted general, mission and district hospitals across the country.
The key findings:
•` The pattern of hospital admissions for severe malnutrition in Zambian
hospitals was similar in all hospitals.
• There was an increasing trend in hospital admissions and associated
mortality.
• There was a significant increase in the risk of death in the older age
groups.
• In comparative terms, mortality levels during hospital admissions were
very high.
Arthur Davison Hospital in Ndola and Kitwe Central Hospital had the
To Page 8
News
Weather: Not Noah’s,
but Floods all the Same
By mid-March 21 districts were under water
Floods are mostly an annual story. This year, twenty-one districts were under
water by mid-March. With continuing sustained and somewhat un-seasonal
rainfall, the situation promised to get worse before it got better.
More districts were at risk and in the poorer sections of the urban areas
homelessness increased as several houses collapsed under the deluge and still
there was no respite. In some parts the rain was torrential and in others like
Lusaka, soft torrents for hours on end.
Shangombo in Western Province was cut-off from the rest of country after the
access road was breached at three points. Three schools had to close and in all,
forty-five households had to be evacuated to two temporal camps.
The story was more or less the same in Kalabo where sections of the prison were
partially submerged for a time. But even more serious and unexpected, a stretch
of the Lusaka-Chirundu road, one of the country’s lifelines given the worsening
decline of the railway system, was washed away. Trucks laden with vital industrial
spares and supplies were marooned. A few more days of this disruption and
Zambia would have been facing a crisis.
Most supplies now reach Zambia by road mainly from South Africa.The road’s
failure to withstand the elements rekindled anew the vexed question of construction
standards in the country. It is barely two years ago that what was portrayed to
be a comprehensive re-construction of that road was completed. That it buckled
under in this basic way tended to raise serious questions about workmanship.
After that, President Rupiah Banda ordered an assessment of all major roads
to determine their condition and he put the armed forces on standby in case
of a worsening in the situation. In the affected districts, floods have damaged
From Page 7
Malnutrition Stalks Under-Fives
highest number of deaths and mortality was highest in the 24-59 months age
group and lowest in the six months age group.
Overall mortality rate for the study period was 24.2 per cent and the numbers that
die from associated severe malnutrition has been on the increase since 2005.
The study concludes that severe malnutrition admissions in hospitals have
increased rapidly since 2005 in all hospitals and the proportion of admissions
is higher in the age group under six months and between six months and 11
months.
Overall mortality was just as high as the one reported at UTH.
There is cause for concern.
Zambia is already rated by the Food and Agriculture Organization (FAO) as having
the tenth highest malnutrition levels in the world. Further, improved nutrition is
an integral part of attaining Millennium Development Goal Number one-reducing
by half the proportion of people living in extreme poverty by 2015. It is also a
requirement for meeting those MDGs relating to health and education.
The study results show that Zambia is not exactly covered in glory in this
Endeavour. The slippage is large and widening and reflects on the availability and
cost of food. It also says something about the general level of health education.
This is a story about still advancing poverty and it calls for vigorous interventions
on a national scale and practical concern in the highest levels of
government.
The nation’s maternal mortality rate is still extremely high.
Executive
Executive Issues
Issues
Volume 9 - April 2009
crops, roads, bridges and several other installations. It is estimated that they have
damaged 80% of the rice crop and about 65% of maize grown on the edge of the
plain in the Western Province.
Kalabo has been cut off, about 40% of the population is affected and an outbreak
of dysentery has been reported. A fear of crocodile attacks in the flooded areas
has reduced school attendance. Rapid vulnerability assessment studies of the
affected areas by the Disaster Mitigation and Management Unit (DMMU) of the
Vice-President’s office were underway and interventions will be dependent on
the findings.
But in some of the affected districts notably Chavuma, Kalabo and Zambezi
relief food and supplies had been propositioned while Shangombo has been
supplied by air by the Zambia Airforce which has been engaged to fly out any
relief supplies. Repairs to the road and bridges to reconnect Shangombo were
underway. Indications were that the DMMU has the hang of things and would
cope reasonably well.
The big question mark was of course on the quality of road construction given the
staggering failure by a major road of the Lusaka-Chirundu type to withstand the
rains. There has been some debate on this issue but it would seem nothing on the
ground has really changed.
AFFECTED DISTRICTS:
Mwinilunga, Kasempa, Mambwe, Zambezi, Mufumbwe, Mporokoso, Mungwi,
Shang’ombo, Lukulu, Kaoma Kalabo, Sesheke, Chavuma, Kabompo,
Solwezi and Mufumbwe.
Kabwe and Serenje, Kapiri Mposhi in Central Province, Mazabuka in
Southern Province.
The situation calls for action if not from conviction, from fear at least of what might
happen. There is unlikely to be any real prospects for advancement of any sort
if the country comes to be populated by a generation of mentally retarded and
physically stunted people due to malnutrition.
Yet, for as long as the current policy of “benign neglect” persists, there may be
no escape.
FOOTNOTE:
Some, notably the Jesuit Centre for Theological Reflection (JCTR) have related
this trend directly to the rising food prices and widespread poverty of recent years.
JCTR notes for instance that Ndola which recorded the highest cost of food items
in the last half of 2008, also recorded the highest malnutrition admissions in 2008
according to the findings of the study.
While only 588 admissions of malnourished children were recorded in 2007 in
Ndola, there were 710 admissions in 2008, the highest in three years. Kitwe
recorded an increase from 428 admissions in 2007 to 475 in 2008.
The food price escalation has continued in 2009. According to the JCTR Basic
Needs Basket (BNB), the cost of food items alone in Lusaka was K774, 250, an
average nominal increase of K12, 700 from K761, 550 recorded in January 2009.
In Ndola the cost of food increased from K760,690 in January 2009 to K767,070 in
February and the cost of food items in Kabwe was K710,100, Kasama K697,910
and in Mongu K679,730.
Volume 9 - April 2009
Culture:
Kuomboka 2009
In all cases the emerging clash between tradition and commercial interests
has to be closely managed.
The date has been announced for one of Zambia’s longest-running traditional
ceremonies-the Kuomboka- of Western Province. The annual migration that has
been an item of the traditional calendar over the years will this year take place on
Easter Saturday, April 11, 2009.
The colourful ceremony celebrates the migration by traditional boat of the
province’s traditional ruler-the Litunga- from his flooded summer capital, Lealui
to the winter capital, Limulunga on higher ground. His boat traverses a traditional
route through the flooded Zambezi plain paddled by colourfully dressed and
enthusiastic paddlers called to traditional duty.
Both his departure from Lealui and arrival at Limulunga are full-scale ceremonies
celebrated and observed in a time-honoured way. This year, nature has not been
the impediment it can be. There was sufficient rain and the Zambezi plain is suitably
flooded to allow the ceremony to be staged in all its splendour. Preparations are
underway and are largely on course.
So, it is that Mongu, the provincial capital is readying itself for perhaps the most
hectic time of the year on its routine. Zambian tradition too seems set to “romp
through” the Zambezi plain one more time at least and that is a both satisfying and
troubling thought. The question is whether the country’s traditions can survive in
their material particulars or whether they will only survive the way of Christmas –
overtaken by commercial interests and the core significance lost!
Christmas nowadays tends to be about shopping and other forms of conspicuous
consumption far removed from the celebration of the birthday of Jesus Christ
that it is supposed to be. Obviously the traditionalists have been swamped and
overwhelmed by commercial interests. The prospect of that happening to local
ceremonies is not to be relished yet it is a possibility. Traditional ceremonies are
crowd pullers mainly because of active ownership by communities and where
there is a crowd there is likely to be a business opportunity.
Companies now actively sponsor most of the ceremonies –not a bad development
at all in these economically troubled times. In fact, their involvement could help
prolong the ceremonies but it could also change them fundamentally. For that not
to happen both sides will need to define their interaction, goals and objectives more
clearly.It is not for instance for the traditional organizers to sell the ceremonies to
the highest or willing bidder just in order to have a sponsor. Theirs should be to
preserve tradition and check any untoward intrusions.
It can’t also be right for sponsoring companies to make intrusive inroads and
encroachments simply because they are the sponsors. Proportion and care needs
to be observed. All must seek to preserve the ceremonies as close to original as
possible and marketing activities at such occasions need to be well-thought out
and staged. Out and out marketing can only debase the ceremonies to the level
of a bazaar and that won’t do.
The Kuomboka for instance is a well defined ceremony and comes with its own
colours, more or less. Virtually all the others too have their own details.But at
nearly all of them, there is an increasing intrusion of commercial brand colours
and not always done appropriately.
From
One page
wonders 8
why.
The suggestion is always that the organizers are beginning to lose control or else
that they have only loose agreements which don’t really define the expected roles.
Tourism is one of the priority sectors for the economic diversification programme
and these ceremonies would be a real boost.
However one of the attractions of the Zambian tourism circuit is the near pristine
condition of many of the attractions –hence the tourist motto: “Zambia, the real
Africa.” The country may be the poorer if that isn’t preserved in all cases.
Executive
Executive Issues
Issues
News
Tourism: Better Late
Than Never!
The Northern Tourism Circuit seems set to come to life…at last
What is now officially designated the “Northern Tourism Circuit” is all the rage in
tourism nowadays. The authorities are getting down to work there and they do
seem to mean some business. Finance Minister Dr. Situmbeko Musokotwane
was for instance none too pleased with the negative comments about the circuit
made by some Members of Parliament during the budget debate!
But crucially, the 2009 budget allocated considerable resources for the
development of the circuit which has several beautiful waterfalls and the huge
Lake Tanganyika among its offerings and is centred on the until now quite
neglected Lake Tanganyika resort of Kasaba Bay. Kasaba Bay itself is situated in
the Sumbu National Park which until the rampant poaching of the later years had
quite a sizable herd of elephant including a tame one who regularly emptied the
dustbins around the resort on cue.
But even with the poaching which was serious since the area is particularly
vulnerable as it can be approached by speedboat from Congo, Burundi or
Tanzania, small animals such as warthog and those in the antelope family
continued to thrive. Now, there is K24 billion in the budget for rehabilitation of
the road from Mbala to Kasaba Bay, a terminal building to cater for civilian traffic
is to be constructed at Mbala airport at a cost of K11 billion and the airstrip at
Kasaba Bay is to upgraded and the resort itself electrified.
The sum of K1 billion has been set aside for the preparation of an integrated
development plan for the circuit. The objective is to be able to attract at least 12
world class hotels to the area!
Well, about time too!
That these plans are materializing only illustrates just how long Zambia has sat
and is capable of sitting on its potential. Inertia and the habitual absence of timely
responses has clearly cost Zambia dearly in terms of opportunity and practically.
Bishop Furstenberg, the late Roman Catholic Bishop of Mbala, which incidentally
was the first Catholic diocese in Zambia and is the point at which Catholicism
entered Zambia over 100 year ago, was a passionate and quite tireless advocate
of the “Northern Tourist Circuit” in the 1980s without using that appellation, of
course.
But he had it very well worked out. In fact just as it is outlined today and this is
a coincidence? He was suggesting in those days not the construction of a new
terminal building at Mbala airport but that the existing airport should be shared by
military and civilian traffic something along the situation at the Lusaka International
airport and in fact put pen to paper to the authorities with that suggestion.
But things remained as before. The suggestion of sharing Mbala airport was
treated as something of a heresy. But he remained very clear in his own mind
that the area had all the potential for tourism which needed to be developed
to enhance the local economy. Mbala or Abercorn as it was known previously,
named after a chairman of the British South Africa Company (BSAC) is in fact
at the very centre of early Zambian history. It is widely believed to be the more
likely first western-style settlement or town in Zambia. For, contrary to the popular
imagination the first Europeans to enter modern day Zambia may not have done
so from the south.
They instead seem to have been missionaries of the Church of Scotland who
after finding Lake Nyasa now Lake Malawi realized that it lay in a volcanic fault
in which there was bound to another or more lakes. Partly in search of the next
one, they arrived at Mbala on the shores of Lake Tanganyika. The route they used
eventually became a road, the “Stevenson road,” whose outline remains and was
to be used by more Europeans, adventurers and missionaries.
These early missionaries built a church, at Niamikolo. They were
To Page 10
News
Obituaries
Gwendoline Konie
[1938-2009]
Gwendoline Konie who died in Lusaka on Saturday March 14, 2008 assiduously
fought the Zambian women’s corner when it was unfashionable to do so. She
was perhaps the country’s first gender lobbyist and always sought to advance the
cause of women and call attention to their situation in the country.
It was all at a time when Zambia had no gender policy and gender issues were
only dimly appreciated and understood with the result that several times she
was the subject of jeers and derision mainly from men who thought she was
nit-picking.
But she held her own and in a remarkable public service career, she rose to be
among the earliest women Permanent Secretaries. She was a senior civil servant
already by the time of independence in 1964 and was to rise higher in the years
after. She was among Zambia’s earliest female ambassadors with a posting to
Sweden. She was later to serve as Zambia’s Permanent Representative to the
United Nations.
She was Permanent Secretary in the Ministry of Tourism on her return before her
retirement from the civil service. Throughout, she was interested in raising the
profile of women in Zambia and dubbed in business as well. She for many years
ran a successful hair salon on Cairo Road in Lusaka. It was one of the earliest
and also published a magazine Women’s Exclusive. Later she was to run a travel
and tourist company.
She was to return to the diplomatic service as ambassador to the Federal
Republic of Germany. Again largely on account of her desire to raise the profile
of women in Zambia, was a presidential candidate for president of Zambia in the
2001 election. She was unsuccessful but satisfied that she had at least put the
women on the line up -something that remained dear to her.
She was born in on October 9, 1938 and educated at the famous Chipembi Girls’
Secondary School in Chisamba. She died on March 14 after having suffered a
stroke and was put to rest at her “New Kasama” farm east of Lusaka.
A day’s national mourning was declared to mark her passing and the burial was
preceded by a church service at the Cathedral of the Holy Cross and one of the
eulogies was given by Dr. Kenneth Kaunda, Zambia’s founding head of state.
In her passing, Zambia lost a tireless and courageous advocate for the
enhancement of the role of women in the society and a dedicated public servant.
M.H.S.R.I.P
From Page 9 Tourism: Better Late Than Never!
decimated by malaria but the outline of that church remains and acts as
“lighthouse” for boats on the huge lake and Tanganyika is immense. The
presence of these early protestant missionaries in Mbala seemed to attract the
attention of one who was to leave an indelible mark on the course and history
of Christianity in Zambia. He was the later Bishop Dupont, the very first Catholic
bishop in Zambia.
Apparently in a rush to counteract or match the influence of the Protestants, he
crossed the lake from Kalemie in the Democratic Republic of Congo(DRC) and
reached Mbala-bringing Catholicism into Zambia. He was by all accounts a
remarkable man. He was nicknamed “Moto-Moto” by the local people which says
something about his character-the fiery one. He was in other circles known as
“terrible eye” because he was a marksman. He went about establishing a series
of Catholic missions in the Mbala and Kasama districts, the first at Kayambi
which means first in the local language.
The notorious Swahili slave trader Msidi or Mshidi who used the lake to
ship slaves from Zambia to Zanzibar met his waterloo at Mbala. He was
Executive
Executive Issues
Issues
Volume 9 - April 2009
Lt-General Christon Tembo
(1944-2009)
Lt-General Christon Tembo who died in Lusaka on March 6, 2009 rose through
the officer ranks in the Zambia Army to be commander 4ZR at Gondar Barracks in
Chipata, Army Chief of Staff and Commander from May 1985 to January 1987.
He was the quintessential soldier. In matters military, he could be outspoken. He
for instance was critical of the IFA trucks that were procured from the old German
Democratic Republic (GDR) for the armed forces. He said they were “farm trucks”
and not for the military.
At his farewell parade as commander in Lusaka, his remarks showed that he was not
exactly comfortable leaving the armed forces. He sounded like a man hard done by.He
then served as ambassador to what was then West Germany. He was implicated in a
coup attempt and was detained but was subsequently set free. That, as later events
were to suggest perhaps determined his political outlook. Throughout the campaign for
multi-party politics, he came through as avowedly anti-UNIP. He entered active politics
in 1991, a founder member of the MMD. He came to be a vociferous and fearless
member of what was then the new party, the Movement for Multi-Party Democracy
(MMD). He caused temperatures to rise considerably by his public and deliberate
insistence at the time that the late Iraqi dictator Saddam Hussein was being sheltered
in Zambia by the UNIP government of Dr. Kenneth Kaunda. An angry Dr Kaunda held
an early morning press conference at State House to quash the rumour and was not
complimentary of the new opposition party.
The MMD leader at the time, the late Arthur Wina sought to play down Hussein
claims. General Tembo was the Minister of Tourism in the first MMD administration
after 1991 and was subsequently Minister of Foreign Affairs. He was named Vice-
President in 1997 and continued in that capacity until 2001 when he left the
MMD over former President Frederick Chiluba attempt to cling to power in the
time- honoured African tradition by securing a third term in office.
Even as Vice-President, he made no secret of his opposition to Dr. Chiluba’s
designs and more or less told him to his face that he stood ready to lead a splinter.
That is what he did. With others who had similarly decamped from the MMD,
he formed and led the Forum for Democracy and Development (FDD) and he
was the party’s presidential candidate in 2001. Despite much hype, it was a long
shot and he was unsuccessful. He was one of the petitioners against election of
President Levy Mwanawasa in 2001. He remained leader of the FDD until he
relinquished leadership to Edith Nawakwi who still leads the party today.
What General Tembo was above all was a soldier who may have stumbled into
politics only through the sheer force of circumstances.
arrested by the British colonial authorities, brought to trial in Abercorn and was
subsequently shot for “pillage and slave trading in British territory.” Asked to say
something in mitigation at the end of the trial, he is recorded as having quipped:
“of what use is it? These men want my death” and in that respect, he was right.
There are thus many historic sites around Mbala and to Bishop Furstenberg they
could all form part of a tour. There is the Kalambo Falls with its pre-historic site
and in those days at least, there was still the Outward Bound Lake School as well.
In addition, at night when the Kapenta rigs take to the lake, their fishing lights give
the impression of a vast city on the water! Bishop Furstenberg was of the idea that
tourists could even go with the fishermen to experience it all first hand instead of
just savouring the Kapenta on the table!
Mbala isn’t far away from Kasaba Bay especially using the lake and the other
waterfalls in the area Chishimba near Kasama, Lumangwe and other attractions
could form part of a package tour. Whether it will be possible to attract 12 world-
class hotels to the area is an open question. What is clear is that the authorities
are in arrears and will need to be mindful of it!
Volume 9 - April 2009
SPORT SPORT SPORT SPORT
End Game in a Doubtful Spat
FAZ President Kalusha Bwalya’s indefinite suspension from
sport has been lifted
The Chairman of the National Sports Council of Zambia (NSCZ)
Dr. Julius Sakala wielded a bombshell on March 19, 2009. He
announced the immediate suspension from office and from all sport,
of the President of the Football Association of Zambia (FAZ), the
soccer icon Kalusha Bwalya.
The suspension was indefinite!
It followed Bwalya’s failure or neglecting to appear before a
disciplinary committee of the NSCZ delving into the irregular transfer
of the teenage winger, Emmanuel Mayuka from Kabwe Warriors to
the Israeli club, Maccabi , Tel Aviv. Lengthy NSCZ investigations
into the transfer had uncovered several irregularities in which the
FAZ President and his association were implicated.
Mayuka’s International Transfer Certificate (ITC) was issued express,
even before his club could reach a decision on the matter!
Sufficient notice was not taken of the fact that Mayuka at 17 was
under Zambian law a juvenile and that his transfer would have
to conform to the provisions of the law. There have been flirting
suggestions in fact that money may have changed hands at Football
House hence the “indecent” speed with which things were done.
The sum total of the irregularities uncovered is that Mayuka’s
transfer is effectively null and void. The investigation revealed a
pattern of neglect and very feeble administration of the transfer
process by the FAZ.
The conclusion was that the transfer had to be regularized and FAZ
had to answer to the mess. Bwalya however consistently down
played the scandal and his attitude seemed to be that the FAZ
was being interfered with through the investigation and therefore
he tended to brush it aside and even to pretend that it was of no
import.
More specifically, he ignored NSCZ summons to appear in person
before the Disciplinary Committee chaired by Zambia National
Service (ZNS) Commandant, Major-General Raphael Chisheta. He
is reported to have instead merely written a note! The NSCZ would
have none of that and the suspension followed almost immediately.
Subsequently, Bwalya apologized publicly and “unreservedly” to
the NSCZ and its chairman and said he was now ready to appear
before the committee and at their call.He said he recognized that no
individual was “bigger than football.”
His suspension was lifted immediately and there seemed a sigh of
relief all round that a potentially explosive but unnecessary situation
had been diffused. Mayuka was issued with an International Transfer
Certificate (ITC) as it turned out irregularly by the FAZ which led to
a protest from his old club Kabwe Warriors who were still as is their
right mulling over the transfer request.
Executive
Executive Issues
Issues
News
Investigations by the NSCZ uncovered crass disregard of
procedures in the transfer and sought answers from FAZ. Bwalya
had earlier responded to the insistence by the NSCZ on a “clean
slate” by referring the matter to the FIFA Players’ Status Committee
for determination- a move that was done in the spirit of and was
widely understood to be a snub for the NSCZ. It also laid the course
for some kind of showdown between the Zambian authorities and
Kalusha Bwalya and FIFA on the other.
Subsequently and apparently on the basis that the matter was
before FIFA, Bwalya would not appear before the NSCZ disciplinary
committee! The shadow boxing over the issue was of course all
unnecessary and quite unsavoury.
There are varying versions of what prompted Bwalya’s climb-down.
One is that a frank discussion with Sports Minister Kenneth Chipungu
persuaded Bwalya that the only way out was to apologize.
“The Minister told Bwalya in no uncertain terms that he was not
above the law and that the NSCZ were within their mandate to
summon him,” sources have revealed.
Several other observes have said it was good Bwalya apologized
because he was headed nowhere with the line that he was pursuing.
He would only have repeatedly hit his head against a brick wall!
Kalusha well loved in his playing days is not always well regarded as
an administrator and there was increasing disillusionment with his
conduct on this matter. FAZ and NSCZ are not mutually exclusive.
They can work together and have in fact to do so if sport is to
develop given their mutually reinforcing roles.
The NSCZ is established by and operates under an Act of Parliament
and always had a clear locus standi on the matter. All footballers
are first and foremost citizens of their specific countries and their
governments have obligations towards them and especially their
welfare. 7
To expect that governments will have no say or interest in what
happens to their citizens simply because they are footballers is
hardly realistic. If anything, events after the Gabon air crash for
instance have shown that government is still the primary port of call
even for footballers.
In this case too, the matter hinged on disregard of Zambian law and
the possible placing of a Zambian in a disadvantageous position
far away from home. Bwalya’s suspension was lifted as FIFA was
coming into the picture saying it did not recognize it in the first
place.
Many nowadays hope and expect that Bwalya will now use his
connections in FIFA to promote Zambian football and especially
the sagging local league and not to conjure up cleavages
that put the Zambian authorities and FIFA on a collision
course.
News Volume 9 - April 2009

Ndola Stadium Project in Fillip…

As team of eight advance engineers arrive to kick start
construction
It is now only a matter of time before construction work on the Chinese
- funded 40,000-capacity ultra-modern sports stadium in Ndola starts
following the arrival in the country of the first group of Chinese engineers
to work on the project.
and government officials.
They are also expected to do a lot of the preliminary work before actual
construction starts. Leveling of the site is already underway and Hua
expressed satisfaction with the pace of work and co-operation among all
the stake holders. However, work has recently been adversely affected
by heavy rains.

The group of eight engineers arrived April 7 and the Vice-President of the
Chinese construction company hired for the job, Anhui Foreign Economic
Construction Company (AFECC), Hua Cheng Long said when he met
the engineers on arrival that his company was anxious to complete
construction of the stadium as soon as possible as it was a symbol of
cooperation between Zambia and the Peoples’ Republic of China. The
Construction period is estimated at 26 months.
But Hua said it could be done in a shorter period depending on how the
Chinese engineers were facilitated. More Chinese construction experts
to work on the US$70 million arena are expected and will be arriving in
batches. The next group is expected in the country this month-end.
The eight engineers are the spearhead group and are basically
familiarizing themselves with Zambia and will meet with local suppliers
Still, most of the clearing and leveling has been done and with the
rains now receding, more progress should be possible. Ndola has been
without a stadium since 1988 when the Dag Hammarskjold Stadium was
demolished to make room for a larger one meant for hosting the Cup of
African Nations (CAN) final that year.
Zambia ultimately opted out of hosting the final but only after the
stadium had been demolished.The demolition sparked off considerable
controversy as many wondered whether demolishing it was the correct
approach in the first place. Many said it would have been wiser to simply
build another one and leave the old one intact. But it was too late.
Subsequent successive fund-raising to rebuild the stadium came unstuck.
The late President Levy Mwanawasa negotiated and secured Chinese
assistance for the project during a visit to Beijing in 2007.

SUBSCRIBE NOW
Arthur Simuchoba
Executive Issues has developed discounted Corporate Rates for Small
Managing Editor
and Medium Scale Enterprises (SMEs), NGOs, Academic Institutions and
asimuchoba@yahoo.com
International Clients.
+260-977-820626
Annual PDF Licence
Robert M. Sichone
This package is designed for Big Corporate Institutions, which has more
Associate Editor
than 10 senior people who want to benefit from the in-depth analysis and
robertmsichone@yahoo.com
accurate forecasting on Zambia. The Licence allows the unlimited
+260-955-799995
distribution
of the PDF file strictly, with the members of staff of the organization.
Luyando Yoyo
Sales and Administration
Academic/NGO and SME
slyoyo@yahoo.com
This is a special offer, which allows the organization to discuss with our
+260-966-628865
Sales Team, which will in turn develop a tailor-made package that suits
your
organization. The charges depend on the size of your staff.
Published by Brentwood Public
Affairs Limited
Multi-User Internet Licence (Coming Soon!)
P O Box 32295
The Internet Licence will allow the subscriber to log onto our website with
LUSAKA – Zambia
a special username and password to read our Editions, including back-
issues.
Registered in Zambia Number. 70430
This licence also allows the subscriber to free access to the searchable
Tax PIN Number. 1000007043001
archives and downloadable documents. Watch out for our website, it is
going live soon! Its going to be www.executive-issues.com
For more information, contact Luyando Yoyo, Sales and Administration
Executive Issues for Executive People Manager on +260-966-628865 or luyandoyoyo@hotmail.com

Executive Issues
Executive Issues