THE issue of searching, finding, and selecting suitable and credible investors, to invest in various sectors of Zambia’s economy, particularly, the mining sector including Konkola Copper Mines (KCM) has increasingly been topical in the recent years.
Of course, this is not the first time that the country has been in dire need of foreign direct investors to run some of the nation’s economic sectors.
At the outset of the market economic system in Zambia in the early 1990’s, the country went through a similar phase.
Following on, a decade later, foreign investors: Anglo American Corporation (AMC), Guys and Girls chain retailers, Supreme and Barnett Furnishers, Blue Financial Services, Edgars and Jets who had earlier invested in the country, after the expiry of their ten year tax incentives, or a sinister reason divested and left the country.
The list of such investors may go on and on.
As an inscription by a famous Austrian Poet puts it, “The man who doesn’t remember history is bound to live it through again”.
Indeed, doing the same thing and expecting different results is said to be a sure sign of insanity.
In a nut-shell, Zambia has been selecting foreign direct investors time again and again and from the information that is publicly available, the nation has usually fallen short of getting a win-win situation in most, if not all the cases.
Every patriotic Zambian will agree with me that it’s actually painful to see an enormously natural resource endowed nation failing to make benefits of foreign direct investments work in its favour.
Where has the nation previously got it wrong?
What lessons has Zambia learnt from the past that she would use this time around, to make foreign direct investments workable in her national economy?
What factors should be made to work for a nation’s foreign direct investment to work in its favor?
The sole purpose of this discourse in this article series is to take a holistic view as to what could be done to make foreign direct investment work for Zambia.
From the onset, I wish to reiterate the saying, if politics is not your business, you keep politics out of your business.
Certainly, politics isn’t my business, and therefore, I’m not discussing politics.
It’s an open secret in Zambia that for over three decades, there have been literally few credible investors, if any that have operated in the country and conducted business, in a way that has created win-win situations for the investor and the nation.
A few weeks ago, Vedanta Resources Limited, is reported to have promised to invest $1 billion , set-aside $220 million to pay suppliers and effect a whopping 20 per cent salary hike across the board if the Zambian Government allows the investor to regain its ownership stake of KCM.
The investor is reported to have expressed its commitment to directing the USD 1 billion towards capital mine development and other infrastructure to increase KCM’s integrated production from the current 50 kilo tonnes (kt) to 100kt per annum, and a further potential increase to 200 kilo tonnes per annum (ktpa) in the medium-term.
On the other hand, on May17 this year, Chingola District Chamber of Commerce and Industry President Freddie Musonda is reported to have said, the government must ensure that the next investor to run KCM prioritizes the interests of local people.
Mr Musonda said the local community must be involved in the signing of license agreement with the investor in KCM especially on corporate social responsibility.
Once again, this platform will tackle this discourse, in this and next week’s article by taking a holistic view, not just the KCM quagmire.
What factors should be at play for a nation like Zambia to make foreign direct investments workable than has been the trend outlined in this scenario?
The starting point inevitably begins from a deep self-introspection in the nation’s leaders and the foreign direct investors asking themselves very tough questions:
What have been our motives of investing in countries like Zambia in the past?
What is the real root-source of the merry-go-round?
Once again, it’s very interesting to look at Mr Musonda’s sentiments that the Zambian Government should pick an investor that would prioritise Worker’s interests.
Foreign Direct investors are capitalists, aren’t they?
In today’s era, what are capitalist’s priorities?
Secondly, what selection criteria do countries like Zambia use to pick suitable investors?
Do modern production methods gravitate towards indigenous workers?
Ironically, the current taxation guidelines provides that mining companies can claim capital allowances at a rate of 20 per cent on the cost of any expenditure incurred in mining townships to provide services to mining communities.
This means that what the Chingola Chamber of Commerce and Industry is asking for is already catered for in existing tax and labour laws.
If that is the case, what should be the suitable and fair criteria of selecting a foreign direct investor that would ensure the country benefits from such an investor?
Don’t miss another exciting edition of this article which will delve into factors that should prevail to increasingly create workable strategies that would make foreign direct investments work for Zambia.
For comments e-mail: ntumbograndy@yahoo.com Mobile +260977403113 +260955403113
The author is the Managing Consultant at G. N Grant Business Consultant, a Chartered Certified Accountant (ACCA), a Master of Business Administration (MBA) holder, with a Specialism in Strategic Planning, and a candidate for the Herriot Watt University (Scotland) Doctor of Business Administration (DBA)