Executive Issue April 2009 Edition

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

Post Newspaper Wants Amicable Settlement

As DBZ instructs lawyers to pursue the newspaper and JCN in court The Post Newspaper, one of the shareholders of the embattled and debt-ridden Zambian Airways, has asked the stateowned Development Bank of Zambia (DBZ) for an “amicable resolution” of the matter of the K14 billion which it allegedly ‘guaranteed’ on behalf of the airline. Post Newspapers Limited, through its lawyers MNB, said they were still open to an amicable solution to the DBZ claim following a second demand notice sent to them by Malambo and Company – lawyers for the DBZ. Malambo and Company have demanded that The Post Newspaper settles the claim or court action. MNB is also representing JCN, a company owned by

Taskforce on Corruption prosecutor Mutembo Nchito and his brother Nchima Nchito. The law firm, is a partnership of the two Nchito brothers and Law Association of Zambia President Elijah Banda. According to sources at MNB, the law firm had been retained to defend the Post Newspaper and JCN following a Demand Letter from DBZ to the two companies demanding the money which they alleged ‘guaranteed under the ‘Buy-Back Equity’ transaction. “Our clients are still open to an amicable resolution of this matter,” the letter from MNB read in part. The Post and JCN argue that they cannot pay the stated amount because the transaction to swap the DBZ loans into equity in Zambian Airways was never finalized although they had duly signed legally binding guarantees, which DBZ is relying on.

Though arguably the most hit by the global recession as it was only just coming on stream, development at Lumwana mine is forging stoically ahead and the target of 172,000 tonnes of copper by the end of the year seems in sight. There have been reports that the company may be taking on around 1200workers by June. Development of the new town around the mine is proceeding apace though there are some purely local disputes. At Luanshya, the preferred bidder NFCA is reported to be currently undertaking a comprehensive due diligence study of the closed To pg 2

Contents Shut Airline Directors Summoned

- Page 2

Magande’s Letter: See No Evil, Hear No Evil - Page 3

Malnutrition Stalks Under-Fives Kuomboka 2009



- Page 7 - Page 9

Zambia Ponders Us$200 Million IMF Loan - Page 4

Orbituaries

- Page 10

Skepticism over 5% GDP Growth in 2009 - Page 6

End Game in a Doubtful Spat

- Page 12

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.

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.

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

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.

Post Newspaper Wants Amicable Settlement

Shut Airline Directors Summoned

“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.

They are alleged to have stolen US$1,793,782 the property of National Airports Corporation

From Page 1

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.

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.

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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 girlsobtained 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, NorthWestern 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.

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?

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Volume 9 - April 2009

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

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 DarEs-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.

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

the momentum towards transparency, good governance and anti corruption. She needs to continue investing in education, health, pursue liberalized marketoriented 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 anticorruption 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.

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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 (UPNDMonze) 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

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.

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Volume 9 - April 2009

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

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.

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Volume 9 - April 2009

Agriculture: Sub-Economic Prices Hit Farmers Hard

News

economic situation. Last year Soya beans sold at K3.4 million/Mt but this year the ruling prices are around K1.98million/Mt.

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

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

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Volume 9 - April 2009

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

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.

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.

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.

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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 page 8 One wonders 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.

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

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Obituaries

Volume 9 - April 2009

Gwendoline Konie [1938-2009]

Lt-General Christon Tembo (1944-2009)

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.

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.

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.

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 VicePresident 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.

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.

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.

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.

What General Tembo was above all was a soldier who may have stumbled into politics only through the sheer force of circumstances.

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.

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

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 worldclass 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!

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Volume 9 - April 2009

SPORT SPORT SPORT SPORT

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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.

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!

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.

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 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.

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

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.

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.

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.”

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.

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.

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.

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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. 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

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. 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.

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