Executive Issues - June 2009

Volume 12 - June 2009

Volume 12

May 2009

RB Takes Early Lead In Mmd Sweepstakes Six provinces declare for Rupiah Banda as 2011 shapes up as a re-run of 2008 The next Presidential Election in Zambia is not until 2011. But already six out of nine provincial committees of the ruling Movement for Multi-party Democracy (MMD) have firmly indicated that their nominee for party candidate in the 2011 Presidential election will be President Rupiah Banda. There seems to be a growing consensus around that at least in the mainstream MMD. The Southern province was first to declare for Mr. Banda. Speaking in the provincial capital, Livingstone when the president arrived for an official engagement, the MMD provincial chairman, the lawyer Solomon Muzyamba said the party in the province wanted Mr. Banda to be the “sole” MMD presidential candidate in 2011 and that anyone else in the ruling party who aspired to that position should wait until 2016.

“The message is clear. Come 2011, you are the sole candidate for MMD president. We do not want upstarts to disturb, to take us back to the drawing board. We want to continue on the success of the past, from where you picked up, up to the logical conclusion,” he said. The fat now seemed to be in the fire! In rapid succession, four other provincial committees declared for President Banda. The MMD in Lusaka said there was consensus that President Banda should be the party’s candidate in 2011 and that the Lusaka committee would spearhead the campaign for his re-election. “We want Mr. Banda to continue working at improving the economy and we will therefore spearhead the campaign for his re-election,” declared Cleophas Chimembe the provincial chairman. The Central province committee was next. “President Banda has demonstrated unmatched leadership skills and we are therefore, confident that if he continues in office after 2011, he will be able to turn around the economy of the country,” said Roy Mulenga the provincial chairman.

32 Banned ss Investigation into K10 Billion Fraud Intensifies High Court thr ows out applications for judicial review At least 32 members of staff at the Ministry of Health headquarters have been put on forced leave to facilitate investigations into a fraud initially believed to have involved the sum of K10 billion at the Ministry. Many of them were subsequently interviewed by the police who have confirmed recording “warn and caution statements” from some of them. The suspended workers were barred from entering the office premises-Ndeke House in Longacres- as a security operation got underway. The affected workers are mainly from the Procurement, Internal Audit, Accounts, Planning and policy and Human Resources departments. The security crackdown followed closely the receipt of an interim report on the suspected fraud by President Rupiah Banda on May 26, 2009. Investigations into the suspected

fraud intensified as May drew to a close after having been first disclosed May 13, by the Anti-Corruption Commission (ACC). The ACC disclosed that it had seized and restricted property worth over K3billion from a onetime Human Resources manager at the Ministry of Health who at the time was working in the same capacity at the Ministry of Local Government and Housing.

Two other provincial committeesEastern and North-western- also announced they would back Mr. Banda. Subsequently, the Western province declared for Mr. Banda with the caveat that they will lobby for the Vice-president to be appointed from the province.

The properties seized were suspected to have been obtained using the K10 billion siphoned off the public budget. They included an executive lodge in Roma township of Lusaka, a house in Olympia Park, another lodge under construction in that same area, a Hummer H3 vehicle, a BMW X5 vehicle, two Mercedes Benz cars, two Lexus cars, a 30-tonne Nissan Tipper truck, a Mitsubishi Challenger vehicle, a Ford Ranger vehicle and a Mazda pickup van. The ACC did not name the official nor had they formally arrested him by that time. A week

The Lusaka MMD committee reiterated its support for President Banda at a subsequent press briefing on June 2, 2009. The committee said he has done well as head of state despite the many challenges including an opposition driven by “selfish motives and the To pg 2

Contents Divided They Stand: The Creeping Public Service Strike - Page 3

Global Fund Director To Visit Zambia - Page 7

Passport Jitters in the Diaspora

- Page 4

AID: Between A Rock and a Hard Place - Page 8

Local Authorities: “The Lagos Scenario?”

- Page 5

Debt Contraction Clause Referred to National Referendum - Page 6

Siavonga Ponders Uranium

- Page 9

Orbituary - Francis Xavier Nkhoma

- Page 11

Professional Soccer League Mooted

- Page 12

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Volume 12 - June 2009

RB Takes Early Lead In Mmd Sweepstakes From Page 1 politics of insults and character assassination.” “In the midst of such insults and insinuations leveled against him, he has not reacted in a negative way but instead continued his agenda of developing the nation… [He] has shamed the prophets of doom by finding investors for Luanshya Copper Mines,” said Mr. Chimembe. More than half the provinces are for Mr. Banda and he has won endorsements from individuals as well including the Vice-President George Kunda, Labour and Social Security Minister Austin Liato and MMD Chief Parliamentary Whip Vernon Mwaanga. For his part, President Banda has said he will run. In response to the Southern province chairman, he indicated that he will seek the ruling party’s nomination at the party convention due next year. Going by these developments and the mood in the ruling party, it seems even at this early stage that he will be the nominee though not necessarily without a challenger(s). These developments in the ruling party seemed to slam the door in the face of many “closet” or perhaps fringe candidates within the ruling party. The message was that despite their ambitions, the nomination may not be within reach. That in fact may have been the primary aim of the early endorsements-to deliver an early message to “nonstarter” candidates and there is quite a sprinkling of them in the MMD. In the last nomination in 2008 for instance, there were quite a number who got one vote, theirs! But more poignantly, there are persistent reports of other candidates who by stealth are reported to be trying to inch or buy their way to the nomination. They probably have been emasculated by now. For Zambia what this trajectory of events does is set it up for a virtual re-run in 2011 of the October 30, 2008 presidential by-election at least by candidates and perhaps in every other aspect as well! For, even as the Southern Province MMD chairman opened the floodgates, the man who narrowly lost to President Banda in the 2008 election,

Patriotic Front (PF) President Michael Sata had already indicated at a rally at Senema near Mansa that he would be the candidate for president in 2011. The PF has so far held no convention since formation and Mr.Sata has previously stood without going through a convention or any kind of public or transparent party rank and file nomination. It does seem therefore that by whatever mechanism the party uses, he will be the party’s standard-bearer despite a whispering campaign in some party circles against his candidature. He still seems secure enough to pull off the nomination. He has, following the growing consolidation in the MMD, tried to stir up trouble there without much outward success by saying that those in the MMD who thought Mr. Banda would give way in 2011 were duped. But so far only the FDD President Edith Nawakwi is reported to have confessed to something of that nature. Sata has also made the now ritual overtures for cooperation among opposition parties through an electoral/political pact with the UPND. The UPND’s Hakainde Hichilema who was the other candidate in 2008 has been increasingly combative of late. He has since formed an alliance with the PF for 2011. But it is nearly always like that with the opposition however such moves rarely bear any fruit. Something of a re-run of the 2008 election would therefore appear to be in store. Momentum towards the 2011 election is bound to increase when registration of voters begins later this year. Chairperson of the Electoral Commission of Zambia (ECZ) Judge Florence Mumba has recently indicated that her organization is due to start the registration later in the year and the Ministry of Home Affairs has indicated that mobile issuance of National Registration Cards will commence shortly. Perhaps that will be the only fundamental difference with 2008, there is bound to be a lot more voters in 2011.

32 Banned ss Investigation into K10 Billion Fraud Intensifies From Page 1 later, one Henry Kapoko, a Human Resources Manager at the Ministry of Local Government and Housing filed an application in the Lusaka High Court for judicial review of the actions of the ACC. His application was for the court to declare “null and void” the seizure of those properties by the ACC. The application sought that the action of the ACC to seize all the property belonging to the applicant and to innocent third parties be declared “irrational and/or unreasonable.” Its thrust was that not all properties seized belonged to one person. The High Court turned down the application. The court seemed dissatisfied with the applicant’s locus standi in the matter and said the application could have been better heard if the owners of the seized property had initiated the action since they had a clearer interest in the matter. By then there were several other developments around the issue. President Banda had already directed the Secretary to the Cabinet as head of the civil service and law enforcement agencies to carry out forensic investigations to get to the truth and emphasized that he took no comfort in allegations of fraud in public institutions. “I want a full report on these allegations. We cannot condone acts of abuse of public funds,” he said. In a related development, Secretary to the Treasury Likolo Ndalamei disclosed that government would this year introduce a single account from which all payments would be made in order to stem recurrent misappropriation of public fund and that an orientation workshop for controlling officers would be held in July. “Payments will be centralized and every ministry will have to provide information on who should be paid and these payments will be done centrally,” he told the Public Accounts Committee The President received the interim report on the scam on the same day that he held closed door meetings with donors, obviously on the same issue. Investigations intensified. On May 29, the Lusaka High Court turned down an application “to stay criminal investigations” against a principal Planner at the Ministry of Health and her mother. They had a run-in with

the Anti-Corruption Commission investigators who froze their personal accounts with at K200 million, restricted the health planner from disposing of her residential flat, her government bonds valued at K368.3 million and restricted disposal of her shares in a number companies. They also seized a total of K55.5 million in various currencies from that her house. She was granted leave to apply for judicial review but criminal investigations were not stayed. The applicants believed they were targeted because one of them has a child with the main suspect Kapoko. An interim audit by the Auditor-General’s office put the total embezzlement at the Ministry at K27 billion. The former Permanent Secretary in the Ministry Dr. Simon Miti who is now at the Ministry of Science, Technology and Vocational Training was interviewed by the police and sent on leave. On June 2, the Lusaka High Court again dismissed three applications for judicial review in connection with the investigation. Shareholders of the Best Lodge, a Lusaka businessman and resident had applied for judicial review of the seizure of their properties. The same day, President Banda said that he would not shield anybody from the investigation saying that he wanted the truth to come out and would not shield anybody. He said the investigations were too serious to be trivialized or politicized because of the amounts involved. Subsequently, the main suspect Henry Kapoko, the Ministry of Health Human Resources Manager was formally arrested and charged with one count of obtaining money by false pretences in the sum of K1.9 billion. He denied the charge and the matter was adjourned to June 17. His application for bail was contested by the prosecution on the grounds that he had been illusive: “It took 10 days for the police to locate Kapoko and it is a pity that the defence are not aware of this. The investigating team went to his home in Woodlands but nobody knew his whereabouts. Even his uncle expressed ignorance,” the prosecutor told the court and added that the arresting officer only traced him when he made a telephone call to his best friend. Ruling was reserved to the next day.

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Volume 12 - June 2009

Divided They Stand: The Creeping Public Service Strike

Few will want to negotiate with unions if their members do not seem to recognize the process. May saw a rush of strikes in what seemed like a widening spiral of labour turmoil in the civil service. Teachers, hospital staff and other unionized civil service workers staged work stoppages to press for a speedy conclusion of pay increase negotiations between government and public service unions. Unionized government employees want a 25% salary increase across the board and not the 11% which for some reason they fear will be the final settlement. In addition, teachers want the payment of rural hardship allowances and liquidation of housing allowance arrears, some of which they say have been outstanding for up to six years! Health workers sound adamant about a K800, 000 increase in housing allowance. Demanding a “sensible and realistic outcome” and apparently exasperated by delays in concluding negotiations on these demands, unionized government employees led by teachers walked off the workplace in what they said was an “ indefinite strike.” Some said that the delay in concluding negotiations showed that “the government was not ready to listen to the workers.” Assurances of good faith on the part of government by Labour and Social Security Minister Austin Liato did nothing to stem the spiral of “industrial action.” “We mean well,” Liato had said,”the process is still on and I urge the labour leaders in the collective bargaining process to go to the table and conclude the negotiations. The process has not stalled and they can only call for industrial action when the process has stalled.” His entreaties came shortly after the General-Secretary of the Zambia Congress of Trade Unions (ZCTU) Roy Mwaba had said the ZCTU would support industrial action if negotiations were not concluded by May 31, 2009 and warned of a nation-wide strike. But before even then civil servants in Livingstone and Monze; teachers in Luwingu, Lufwanyama and the Copperbelt walked out together with nurses and paramedics from the Ndola and Kitwe Central hospitals. The strike spread quickly and so also did the effects. The Ndola Central Hospital for instance, had to discharge some patients. Student nurses and senior staff were the only staff on duty. There was a widespread disruption of classes as teachers were not available to teach in various and increasing parts of the country. The exception came May 27, when the Zambia Union of Financial Institutions and Allied Workers (ZUFIAW) formally declared a dispute with Finance Bank Zambia over their deadlocked salary negotiations. General Secretary Joyce Nonde-Simukoko urged members to remain calm as the parties moved to the next stage conciliation as required by law. That was a far cry from the situation elsewhere. In Livingstone, union leaders condemned the Southern Province Permanent Secretary Darius Hakayobe and Monze District Commissioner Joyce Nondo for saying that the work stoppage was illegal and those participating risked disciplinary action. They said this was intimidation but that it would not work. Unless there was closure on the negotiations, work stoppage seemed set to spread after May 31.But there were indications that agreement was imminent. Whether the “final settlement” will be acceptable is another matter. Among teachers, it seems that some of them at least were paid hardship allowances when they were not entitled to. The Ministry would appear to be recovering from salaries and that has caused quite some anger. These deductions have been described as “illegal and inhuman.”So, there will continuing anger there. The workers would appear to be in a militant mood and will not stand for interminable negotiations. Industrial action when legitimate is one way to putting pressure.

Legitimate that is, when it is resorted to in line with the provisions of the Industrial Relations Act. But increasingly and in this case those provisions seem to count for nothing. In fact, the pattern of strikes has tended to call into question the whole system of “free bargaining” between unions and employers. Their basic premise is that the negotiating teams have the confidence, support and mandate of their principals. But the nature of the strikes tends to suggest that this may not be so. Strikes have occurred and continue to occur while negotiations are underway and

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on a number of times over demands that are not on the table-new ones! It is also the case that strikes have occurred over matters that have already been agreed to. The strike by teachers over non-payment of rural “hardship” allowances and arrears on housing allowances is a case in point. The strike had festered for some time. By the end of the first school term in April, there was a rush of strike action by teachers in various parts of the country. The second term opened to a widening strike over basically the same issues. But not long after the 2009 budget was approved, the treasury in rapid succession disbursed funds in at least two tranches to address the issue. Subsequent discussions between the government and unions produced an undertaking by government to clear the outstanding K42 billion in housing allowance arrears by August 2009. The Zambia National Union of Teachers (ZNUT) said subsequently that it was working with the Ministry of Education to ensure that all outstanding arrears some of which it said were from six years ago, were paid as soon as possible and that it had been agreed that K15 billion would be disbursed monthly until August when the arrears would be cleared. Even so, sporadic strikes and go-slow resolutions by teachers in various parts of the country continued. In Choma, a meeting of teachers held the same day as the union attempted to clear the air over the issue resolved on a go-slow and called for a 25% salary increment and not 11%. What these walkouts do ultimately is raise questions about trade unions. There seems to be a widening gulf between the membership and leadership. Hence while the leadership is still negotiating members may walk out on strike over the subject of the negotiations and it is not always clear what exactly is being negotiated because there are supplementary demands! This tends to reduce the credibility of union negotiators. For, the only reason to sit down with them is in the spirit that their position will have come from their membership and decisions will permeate to the membership. But in this case, union leaders were being cast as “sell-outs” for having met with President Rupiah Banda at Hippo Lodge in the Kafue National Park. If trade unions do not seem to enjoy the support and confidence of the membership, then the bottom will have fallen off the whole framework of industrial relations. Both employers and trade unions will need to go over this. Members must act in support of the trade union leadership and not pull it down by taking unilateral action. At the same time employers must realize that solutions must be found in good time. Organized free bargaining must be preserved and enhanced for the sake of industrial harmony.

ACHTUNG-SA Treatment not Cheap Patients need to know what it will cost before travelling there The Zambian Mission in South Africa has recently warned self-sponsored patients for treatment in that country that medical treatment there is expensive. They should therefore make sure that they ascertain the cost of it before travelling or risk being discharged before medication is complete. The warning came in the wake of a reported increasing number of Zambians who travel for medical treatment but end up not completing treatment because of a shortage of money to cover the complete course. “Medical treatment in South Africa is very expensive,” said the statement. It advised would be patients to ascertain the cost before embarking on the trip. It was pointless to spend so much on travel and medical bills only to run out of money and thereby be unable to complete treatment.

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Volume 12 - June 2009

Chiluba Appeals High Court Ruling in One Case…

And indicates the intention to apply for permission to file final submissions in another The Lusaka High Court has granted former President Frederick Chiluba leave to appeal its decision to reject his application to set aside the registration in Zambia of the May 4, 2007 London High Court judgment. The London High found Chiluba and 19 others liable for defrauding the state in a civil case brought by the Attorney-General of Zambia. The court ruled that Chiluba had to pay back within 14 days of the judgment, 85% of the US$ 25,754,316 that he was adjudged to have misappropriated plus US$600,000 in damages and do so within 14 days of the judgment. His co-respondents were ordered to do likewise. That court found that as President Chiluba earned a maximum US$105,000 over ten years yet a shop in Switzerland was paid US$51,200 for his clothing and that government funds paid for items of his personal expenditure among them school fees for his children, five star hotel bills, clothing and jewellery. The London judgment has to be registered in Zambia before it can be executed. Chiluba, who refused to even tender a defence before that court, has challenged its registration and it is in pursuit of that challenge that he applied for and obtained leave to appeal. He had applied for the registration to be set aside on the preliminary issue he had raised of whether the Foreign Judgment Reciprocal Act under which the London judgment is supposed to be registered extended to the United Kingdom as a foreign country.

The High Court earlier dismissed that application and requested the parties to file final written submissions on the case as a whole so it could proceed to judgment. Leave to appeal in that matter was granted shortly before Dr. Chiluba indicated that he would file an application to ask the magistrates’ court to allow him file final submissions in another case where he and two others are charged with theft by public servant involving US$500,000. He did not meet that court’s deadline for written submissions. In his application for leave to appeal in the registration case, he contended that the preliminary question he had raised needed to be determined because all the other arguments depended on whether the act in question extended to the UK. Leave was granted and all proceedings were stayed pending hearing and appeal of the matter. Judgment in the case had been set for May 29, 2009. In the second case Dr. Chiluba is seeking the indulgence of the court to file final written submissions after the court’s deadline. He was supposed to have done so by April 24, 2009 and the state to have filed theirs by May 22, 2009. But when it was the state’s time to do so, the prosecution said they were unable to respond because the defence had not filed any written submissions with regard to Chiluba. This is in a case where Chiluba, the former Directors of Access Financial Services Aaron Chungu and Faustin Kabwe are jointly charged with theft by servant involving US$500,000, the property of the Government of Zambia. Judgment in that plus US$600,000 in damages is set for July 20, 2009.

Passport Jitters in the Diaspora Zambians abroad have a hard time accessing the new passports Going by the exasperated inquiries from Zambians in the Diaspora, the issuance of the new passports would appear to have turned out to be something of a fiasco for them. The validity of the now old passports has of course been extended to August 31, 2009 for them. But they seem good only for flights into Lusaka. Locally, the old passport has ceased and issuance of the new ones is proceeding apace. Home Affairs Minister Dr Kalombo Mwansa recently revealed that at least 62,000 new passports had been issued since the exercise commenced although not all had been collected. For Zambians abroad the figure is around 4000 new passports issued. Processing of passports for Zambians abroad would appear to be painfully slow and would in fact appear to have stalled completely in the recent past, if what they have to say is anything to go by. It appears that there had been no movement at all on that front for some time. Many who applied for the new passports at Zambia’s missions abroad turned in their old ones. If they are to be believed some did so nearly a year ago! But up to now no new ones have been issued and they are still not in sight. People are genuinely troubled. As foreigners, passports are the conclusive identity documents for them. There appears to be a paucity of information on the situation as well and applicants seem

to be largely in the dark. The Ministry of Home Affairs has recently issued public notices confirming that the old passports will not be valid for travel from Zambia with effect from May 31, 2009 but that they will remain valid for travel into Zambia, for Zambians living abroad. But seeing the way things are going over the new passports, many are beginning to wonder whether that was in fact a veiled invitation for them to travel back home to obtain the new passports. The passports question is causing many outside the country real anxious moments. But there are anxieties locally as well. In the past few years, Zambia has rapidly changed from one passport type to another until to the machine read one which has just been phased out. The considerations in favour of these changes suggest that this may not be the end in the quest of better security features. The more sophisticated, the more they will cost and the cost of the new ones is already prohibitive by Zambian standards. The cost is quite a formidable barrier to the enjoyment of the freedom of movement guaranteed by the constitution. The constant changeovers and recalls also ensure that the Passport Office remains “inefficient” because just as they internalize and begin to run the system more efficiently, there is a change to a new passport! This was the case with the machine readable passports. Issuance had become very predictable and efficient-within two weeks it would be ready. But the introduction of the new one has disrupted this and the system is clearly not catering for Zambians outside the country sufficiently or efficiently.

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Volume 12 - June 2009

Local Authorities: “The Lagos Scenario?” Installation ceremonies will not address pressing issues on the ground -the system must work The round of mayoral installations has come to an end. By now, most of the new mayors have been officially installed. All through May, new mayors for the various city and town councils were inducted in formal ceremonies presided over by ministers and other big-wigs. The mayors were fully robed, with the chains of office on their shoulders and all. Sadly, that is all they seem to have these days. Institutions of local government have taken a dip and are in a pitiful state. Virtually no local authority today is able to meet the growing demands on its services. The financial autonomy of the big three- Lusaka, Ndola and Kitwe- that was envisaged as early as the first budget of the MMD in 1992 is still a pipedream. Even the concept of “tripartite elections” has not been kind to local government. Issues failing in that area have been overshadowed. Parliamentary and presidential candidates get all the air time to the exclusion of candidates for councilor. It is not clear even whether they really campaign or are elected largely by default! Yet the real issues tend increasingly to be local and in the urban areas, they are assuming an urgency that cannot continue to be brushed aside. Solid waste management, water and sewerage issues, housing and general upkeep cry out for solutions. The living environment in the urban areas has deteriorated. Witness: the annual cholera visitations. What were once tarred township roads are today mainly gravel or a series of ditches right in the residential areas. In the rainy season the townships are muddy with pools of many times rotten water. In the dry season, they are mainly billows of dust! Town planning is being repeatedly defeated by illegal plot allocations mainly by party officials. There is little to indicate that what is received in rates and other local levies is ploughed back into the communities.

There are no street name plates anymore. Whereas Lusaka for instance was easily navigable because of street names, it is not so anymore. The biggest letdown has been in the provision of basic essential services such as water. Virtually all the new developments in Lusaka for instance are not connected to the main grid. They have to depend on boreholes so where there are 100 houses there will be likely that number of boreholes! How that affects the aquaficer is not known especially in the long –term. It could well turn out that some of these places will have no water in years to come. There are some urgent matters in local government and already the urban population is largely in rebellion partly because of the failure to halt dilapidation in the living environment. They have more or less given up on the ruling party and without a forthright attempt to address the many outstanding issues as continues to be the case; it may well pay dearly for the neglect. In the short-term roads and drainage have to be addressed and there is a context. The fuel levy is collected mainly from the urban areas. A proportion-based system that would allow a certain percentage of total takings to be spent in the area where it was collected would get something going. Feeder roads and other roads in rural areas are of course important. However, there appears to be little justification to spend all the proceeds there when the areas from which it is mainly collected are in dangers of running out of roads! Issues of local government are mainly the basis on which government performance is judged and going by the situation on the ground, there is cause for concern. This can’t be the time for merely ceremoniously enthroning mayors. It is time to re-activate a functioning local government system that performs and takes the real issues in perceptive. Without that the “Lagos scenario” will overtake ZambiaLagos where traffic jams can last days! It hardly a pretty prospect to contemplate yet it can’t be merely wished away. Something has to give and soon.

Heart of Africa: Hype or Reality? The estate promises to transform the face of Lusaka in a fundamental way The Legacy Group has officially launched its office/housing/hotel and shopping complex on the south side of Lusaka around the Eureka Corner. It is perhaps the most ambitious building project to date. When it is actualized, both its scale and quality promise to transform the face of Lusaka in a fundamental way. The US$150 million development started off as the Southgate Housing Estate and has now been re-christened the “Heart of Africa” and there is something of that in its parameters. It is dubbed the “Golf and Lifestyle estate.” It is planned to be Zambia’s largest residential estate with an eventual total of 850 homes positioned around a 70ha international standard golf course. The residential estate will include a Country Club with clubhouse and have world class services and technology. Adjoining the residential estate will be the commercial and retail facilities. There will be constructed a lake on whose shores there will be 10,000sqm of office parks and 20 satellite offices of 2,000sqm. The centre’s shopping mall is planned to be the largest in Zambia and to be “a true” regional centre and destination for all Zambians. Overlooking the lake will be a square and the five star Legacy Hotel with the golf estate in the distance. The hotel will be at the level of the Michelangelo of Nelson Mandela Square in South Africa. “The Legacy hotel on the square will be unparalleled in Zambia and fully earn and deserve its own world class status,” said the Legacy Group Chairman Bart Dorrestein. The square is planned and will exist as a “meeting place “in Africa. “We are firmly committed to this project. The value of this project is not about fiscal rewards but rather the ultimate growth, development and emergence of Zambia as a dominant

force in the African market. Legacy believes that it is time that Zambia is given the status and prestige it deserves. Heart of Africa is not named by mistake, we are entrenched in our endevour to help Zambia and Lusaka to grow as the very essence and “Heart of Africa,” Dorrestein has said. So far, 60 units on the estate are reported to have been “reserved.” The developers-Legacy Holdings- have a track record in high profile developments among those they have been involved in are The Lost City, Michelangelo Hotel and Michelangelo Towers in Sandton as well as the Nelson Mandela Square, all in South Africa. The properties will be for either lease or outright purchase. Construction contracts are now on sale and they are priced from US$50,000. Buyers have the option of using Legacy’s architectural designs to develop their dream home. That architectural design is described as “African Contemporary.” Buyers will be able to choose from a range of different floor plans and home designs. An addition to the Heart of Africa project is the Copperfields Village which has a total of 72 units on offer. “These units will have the characteristic Legacy finishes and quality and are sure to be well received by the public. They offer significant value for money and present attractive investment opportunities and a quality of life not available anywhere else in Zambia,” the promoters say. The project was launched May 20, 2009. It has a website:www.legacyzambia.com. It is sure to transform and add value to at least one part of the Zambian capital. Lusaka has quite a name in the region but in recent years, it has mainly been rundown. State of the art developments are few and far between. Perhaps this is the sort of project that the city needs if for nothing else to be in touching distance of developments elsewhere.

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Volume 12 - June 2009

Debt Contraction Clause Referred to National Referendum

Dogged resistance by government threatens parliamentary oversight clause. The question of whether the National Assembly should have in the contraction of national debt has been referred to a national referendum by the plenary of the National Constitutional Conference (NCC) now in session. NCC chairman Chifumu Banda announced May 21 that since there had been no consensus on the issue plus the failure by either side to win a two-thirds majority in voting, the issue would be referred to a referendum. “No agreement was reached over that issue and so it will be determined by the referendum,” he said. Article 312 sub-section 3(a) of the draft constitution enjoins the Minister of Finance to refer to the National Assembly terms and conditions of loans which should not come into operation unless approved by a resolution of the National Assembly.” The clause has been hotly contested and three times, the NCC has been deadlocked. Basically the most of the delegates consider the clause to be all-right and that it should be included in the new constitution. But the government led by VicePresident George Kunda has insisted that debt contraction is a function of the executive branch of government and should be left that way. Presumably, to subject it to parliamentary scrutiny would be to whittle down the territory of the executive and the issue has been largely reduced to that-territory! But it is much larger and more serious than that and in some respects quite simple as well. The issue has its genesis in the huge foreign debt-US$7.1 billion – that Zambia carried until 2005. Repayments were debilitating and very nearly broke Zambia’s back. The debt was unsustainable and most of the dilapidation and chronic under-funding of vital public services that have blighted the Zambian landscape are a consequence of that debt now virtually written off through the tough Highly Indebted Poor Countries (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI) of the G-8 industrialized countries. Studies of how Zambia came to saddle herself with such a massive debt have raised a number of questions about the contraction process and even though Zambia undertook not to slide back into debt after the “debt forgiveness,” no solid instruments have been promulgated to ensure that history does not repeat itself. Mere good intentions will not suffice. There is nothing to suggest that they were absent in the contraction of the unsustainable debt. Parliamentary oversight is the proposal on the table and it is by no means clear that in the form that it is proposed, it will be effective. It is essentially a first step but it has caused so much contention. Three times, there has been deadlock in the NCC. The deadlock is astonishing and there is reason to wonder why. The basic idea is that scrutiny by more “eyes” could help improve the quality of decisions on debt contraction. Zambia badly needs a mechanism to address that matter. The costs of” business as usual” on this matter are ghastly as the recent past clearly shows. The contention is thus rather surprising and so is the decision to refer such a matter to a referendum. It seems straight-forward-an attempt to learn from the pitfalls of the past. The basic thrust is to ensure that there is a mechanism in the future to try and ensure that unsustainable debt does not rear its head again. It is of course also the case that with greater prudence the executive branch can ensure that by itself. But so far no clear control mechanisms in the light of what has happened before have emerged and history is not on the side of the executive at all. They had all the power to contract debt and do it prudently. But the result- an unsustainable debt- was appalling and extremely debilitating. Shouldn’t it be once bitten, twice shy? The proposed clause isn’t just about “taking away from the executive,”

it is rather an attempt to have a mechanism that will manage the matter transparently, in the interests of all. Civil Society which had an input in the debt-write off campaign that preceded the write-offs has long called for a Debt Management Act in order to establish a proper control framework. All manner of things can be said in support of the status quo but the need for better debt management isn’t a hypothetical case. It is real. The benefits of debt cancellation need to be sustained and current debt management needs to be strengthened to ensure that legal, institutional and policy weaknesses which led to the occurrence of the unsustainable debt are eliminated. Zambia has just emerged from a very difficult economic situation and most of the pressure came directly from the unsustainable debt. A large part of the resources that the country generated went to repayment and very little remained for development. Without the write offs, the country would still be in the “debt yoke.” But now that she has survived by quite a painful passage and still bears all the scars, it isn’t time to learn? A common sense solution in the light of the country’s experiences and not one based on considerations of turf seems the most appropriate.

IFC Recommends Downsizing of Power Station Government ponders reduction of output from 750 to 600MW as a power outage unsettles the country The International Finance Corporation (IFC) the lead advisors on the US$1billion Kafue Gorge Lower (KGL) Hydropower station have recommended downsizing the proposed power station’s output from 750Megawatts to 600 for environmental reasons. At the same time, the existing power station at Kafue Gorge has of late been stricken and has been under-generating resulting in an unsettling nearcountrywide power outage on June 1. The recommendation to reduce output by 150MW at the proposed power station is under study and government will make its position on the matter known as soon as it has fully appraised itself of the recommendation. It does seem however that the Ministry of Energy is not too enthusiastic about the recommendation and had earlier indicated that it may have to seek a second opinion on the matter if need be.It seems anxious that the full potential of the project should be harnessed especially as an output of 750MW is feasible. The project will go to tender only after a decision has been made on the recommendations. But by January this year, 15 companies were reported interested in the project and their interest was reported firm despite the global economic recession. KGL is the biggest of the hydropower stations that Zambia wants to construct to end the creeping power deficit that saw to the unpopular “load shedding, the rationing of power in the early part of the year. Rationing had abated somewhat due partly to reduced economic activity which resulted at one time into a power surplus of about 200MW.That surplus was obviously not available on June 1. There was a lengthy and crippling power outage until late in the night. The problem was identified as under-generation at the Kafue Gorge Power Station due to “a massive reduction” in water volume in some of the turbines at To Page 7

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Volume 12 - June 2009

Global Fund Director To Visit Zambia… As Zambia wins Vaccine award for the second time The high-level visit to Zambia of the Executive Director of the Global Fund Professor Michel Kazatchkine was announced in Lusaka, May 28, 2009. The Global Fund is the United Nations-anchored fund that supports health programmes around the world particularly in the areas of HIV-AIDS, malaria and tuberculosis. Prof. Kazatchkine is expected to visit Zambia between October 12 and 15, this year.

News

Marginal Increase in Inflation

It goes up by 0.4%

The visit, his third to the region since taking office in mid 2007, will coincide with the Fund’s Regional Meeting for Southern Africa which is aimed at sharing knowledge on the Fund’s programmes within the Southern African region. The same meeting will also seek to promote effective programme implementation by building knowledge based systems with the goal of scaling-up programmes and increase service delivery.

High food prices mainly maintained the pressure on the annual inflation rate in May. Inflation increased by four percentage points from 14.3% in April to 14.7% last month.

Prof. Kazatchkine’s visit was finalized during a bilateral meeting between the Global Fund and a delegation from the Zambian Health Ministry led by minister Kapembwa Simbao held in Geneva on May 20, 2009.

Food inflation was driven by rises in the price of mealie-meal, cereals and cereal products, meat, fish, fresh vegetables and milk, coffee, sugar, table salt and other processed food products.

According to the flyer for the visit Prof. Kazatchkine would use the visit as “an opportunity to view first hand, the exemplary way in which Zambia implements its HIV and AIDS, Malaria, and Tuberculosis programmes.”

The price of a 25Kg bag of white breakfast meal rose by 2.2 percentage points from K65,543 to K66, 979.

Mr. Simbao had during the meeting given the Global Fund a run-down of some of the country’s successes –the reduction of the incidence of Malaria and prevalence of the HIV and AIDS pandemic from 16% to 14.3% among the 16-49 years age group-that Zambia had recorded through the support of the Fund. The Executive Director is reported to have “commended Zambia’s achievement in Malaria control and its effective use of money from the Global Fund and other Cooperating Partners.” He is reported to have said that “the successes attained in Zambia should be a show case in other countries in the African region.” The meeting came as it was disclosed that Zambia had for the second time won an award of the Global Alliance for Vaccines and Immunization (GAVI). She was bestowed the award because of her “outstanding commitment to the co-financing of vaccines for the immunization of children as part of the Vaccine Independence Initiative (VII). Zambia first won the award in 2007. That initiative is meant to ensure that poor countries gradually assume financial responsibility for meeting their own vaccine needs. GAVI Chief Executive officer Dr. Julian Lob-Levyt is reported to have said that he was “proud to recognize Zambia and other countries that had received similar awards for their extraordinary commitment to immunization.” He said the countries had demonstrated an impressive level of ownership and that GAVI’s unique co-financing scheme was proving to be a successful model for development aid. For his part, Mr. Simbao is reported to have thanked GVI for continued funding and technical support that had helped increase immunization coverage and the eradication of measles in Zambia. He called on GAVI to intensify efforts to find a malaria vaccine as it was still one the major causes of illness in Zambia. Financing vaccines and Immunization programmes has pre-occupied health professionals in recent years and it is considered that co-financing of vaccines for the immunization of children will greatly assist in the sustenance of the national immunization programmes in the light of competing health priorities and needs. That Zambia has qualified for an international award in that area is widely seen as an encouraging sign. GAVI has mobilized funds from its donors despite the Global Financial Crisis to ensure the continued financing of vaccines and child immunization programs and attainment of the Millennium Development Goal on reducing child mortality and is involved in the search for a malaria vaccine. The other countries to receive the GAVI award were Ghana, Liberia, Rwanda, Malawi and Tanzania.

Food products accounted for 7.9 percentage points.

The cost of beverages, clothing and footwear, rent, fuel, lighting, furniture and household goods went up as well. But the prices of such food as fresh fruit, shelled groundnuts, maize grain, roller meal, dried beans and sweet potatoes reduced. Sixty six per cent of total export earnings came from copper. Switzerland was the largest destination of Zambian exports accounting for 48.2 per cent. Other destinations were the Democratic Republic of the Congo (DRC), South Africa, Egypt and China.

IFC Recommends Downsizing of Power Station

From Page 6

the station. That resulted in a 500MW deficit during pick demand. The station that has an installed capacity of 990MW could produce only 400MW. Zambia began importing 250MW from South Africa and Namibia to cover the shortfall and seemed set to continue with imports until the problem at the power station is resolved. The imports cost US$260,000 a day and ZESCO needs to work fast to end that haerrhage of funds. It is believed that weeds have clogged the inlet into the turbines and ZESCO hired army divers to go under and find out exactly what is happening “down under.” The ZESCO board of directors recently terminated the employment contract of Managing Director Rodnie Sisala. That was followed with the termination of the contract of Energy Regulation Board Executive Director Sylvester Hibajeene. In both cases no reasons were given for the action. Energy and Water Development Minister Kenneth Konga who travelled to the power station demanded a full report on the outage and said that it had damaged household electrical appliances and negatively impacted industrial production. He vowed to improve supervision of ZESCO through the board of directors. Apart from KGL, a power station at Itezhi-tezhi is under construction in a joint venture of ZESCO and Tata Africa Group of India. In conjunction with Sino-hydro of China, ZESCO is increasing output at Kariba North Bank.

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Volume 12 - June 2009

AID: Between A Rock and a Hard Place

Even with Zambia initiating the probe, aid was suspended. Had there been no probe, the same was sure to happen! One of the immediate fall-outs from the fraud investigation at the Ministry of Health was that Zambia rapidly found herself quite literary between the proverbial rock and a hard place. She found herself in a classical Catch-22 situation!

The Netherlands and Sweden suspended financial assistance to the Ministry of Health pending the outcome of the investigation. The suspension of that aid means that the health programme has come to be short of US$30 million and Minister of Health Kapembwa Simbao has said the most affected by the unexpected shortfall are the country’s district hospitals. From all accounts this was an investigation instituted by the Anti-Corruption Commission (ACC), Zambia’s main anti-graft body. But even with that, aid was suspended. Had there been no investigation, the same was sure to happen! This situation is what being “between a rock and hard place” would describe. However, it now seems clear that these suspensions of aid are temporal in nature. Sweden May 27, 2009 stressed that it had not withdrawn but merely ”suspended” support to the health sector pending investigations into the alleged corruption and this year its assistance to health programmes is of the level of US$15 million. The Swedish Deputy head of mission Charlotta Norrby said her government was fully aware that withdrawing aid to the health sector would impact the ordinary people more and badly and also pointed out that President Rupiah Banda had held a ”fruitful” meeting with various donors and the donors had pledged their continued support to the government of Zambia. So, there appears to be a level at which the matter is being handled rationally. For in fact, the suspension of aid is itself a rational decision. In the interests of everybody money must be spent on agreed programmes otherwise there can be no end to the misery. Government has responded to the aid freeze by attempting to cut down expenditure at the Ministry. Non-core activities will be curtailed in order mainly to assure funding to district hospitals whose monthly funding requirement is K16 billion. The financial management and controls regime is to be reviewed and criminal investigations will proceed apace. President Banda has made it clear that nobody will be shielded from the investigation if evidence points their way. He said he wanted the truth to come out and would not shield anybody from investigation or prosecution if evidence was established. He also said the matter was too serious to be trivialized or politicized because of the amounts involved. Zambians reacted to the news with shock and disbelief. Initial reports carried no name(s) of those accused of involvement. There was an absolute mad rush to find out who they were and astonished public discussions of the matter tended to proceed from the premise that a civil servant cannot have such money! Civil servants would appear to have a track record of solid poverty and they need to watch it because they could be dispossessed of what is lawfully theirs with everybody watching simply because they are civil servants and shouldn’t afford it! There have been prejudicial utterances mainly casting the accused as already convicted felons. There is also a continuing refusal to accept that those named were the only ones involved. Instead the most unlikely of names are being dragged into the scandal in public discourses. There are several versions and a number of names are whispered to be the real “dons” behind the racket and the list is long, very long! What is totally absent is any approval of what is alleged to have happened. What one learns is that there is support in the court of public opinion for any kind of fiddling. Invariably, the most boring and self-serving reaction was that of politicians. They gave the issue the political treatment which in Zambia means completely unsubstantiated allegations of corruption at the higher levels of government. Some said the suspension of aid showed that donors had no confidence in the government. Others that it proved what they have always said that the government is corrupt! Opposition politics appear to be driven by desperation nowadays and anything that has the remotest possibility

of discrediting the government is seized upon to increase the chances of wrestling the power has so far eluded them! Power is the obsession and in this case, the end is seen to justify the means. Thus the more inventive in the opposition have spun quite some yarns around the matter. It has even been said that the suspended members of staff were prevented from entering the office premises so that investigators would destroy all evidence linking senior people in government! The opposition has recently been shaken to the core and has had sleepless nights over the government’s acquisition of 100 hearses for public use. They fear that it will be a powerful campaign tool in 2011. They were even more alarmed when there were reports of government acquiring mobile hospitals from China! They feared that they would finish them off! All sorts of incoherent scandals were alleged. What they really feared is of course that if the two were in place, the argument that government is not doing much will be hard to sell in areas where it is normally easy to go by that! In fact both the hearses and the mobile hospitals are opposed mainly on political grounds-which they may leave the opposition with nothing to say in the 2011 campaign! Consequently, the bogey of a corrupt and bumbling government is being ridden to death and there are truly desperate attempts to make it stick! Whether there is anything to their furry of allegations only time will tell. But it would be better for Zambia if the matter was taken in its real context. Theft and misuse of public resources has to end and of late, corruption has become the main label for everybody and anybody. The country needs clear proof of it and pointers as how it works out in practice, if it is to be fought. The investigations at the Ministry of Health provide such an opportunity if it is not squandered by this increasing tendency to politicize and seek political mileage from what is after all an ordinary criminal offence under the penal code.

What Goes Round Comes Round South African recession to impact Zambia The recent confirmation that the South African economy-Africa’s largest - is in recession will put pressure on her major trading partners like Zambia. South Africa accounts for 43% of all Zambia’s foreign trade. The Bank of Zambia has recently said that the South African recession could worsen Zambia’s balance of payments position due to a decline in exports to that country. The South African economy was recently confirmed to have contracted by a higher than expected 6.4%-the first contraction since the end of apartheid. The mining and manufacturing sectors have been particularly hit. Zambia’s trade with South Africa for the first quarter of 2009 was already in decline by an estimated 40%. It was worthUS$578.3 million in 2008 but reduced to US$346.8 in the first quarter of 2009. The slowdown in production in that country could force Zambia to look further afield for imports and could lead to reduced exports due to low demand. Investment flows from that country into Zambia are also expected to slow down. A depreciating Rand would make imports from that country cheaper in foreign exchange terms which could lead to a deterioration in the terms of trade. Confirmation of the South African recession came as High Commissioner to Zambia Moses Chikane called for increased partnership between businesses in the two countries. Speaking at the end of the Copperbelt Mining, Agricultural and Commercial Show (CMACS), he called on Zambian companies to participate in South African trade fairs and business exhibitions to forge partnerships. He said South African companies were already taking part in fairs and shows in Zambia-fifteen exhibited at the just ended CMACS. He revealed that South Africa envisaged to partner with Zambia in the production of organic foods because of Zambia’s policy of not allowing in Genetically Modified Organisms (GMOs) into the country.

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Volume 12 - June 2009

Siavonga Ponders Uranium

First Quarter Results Out Copper production was 17% higher and exports were the highest in three years but a chilling slump in cobalt production. Taken as a whole, first quarter results for the mining sector were positive. The Bank of Zambia has disclosed that copper exports at 155,078 tonnes were the highest in three years. At 167,185 tonnes copper cathode production was 17% higher than the 2008 first quarter figure of 139,000 tonnes. There was a chilling decline in both cobalt production and exports. Both figures were lower than for the first quarter of 2008. Cobalt exports were 586 tonnes down from 1173 tonnes in 2008. Production slumped by more than half to 600 tonnes from 1244 tonnes in 2008. The poor cobalt results were the consequence of the closure of Chambishi Metals Plc, the country’s largest producer. Chambishi was owed by the same company that owned the Luanshya Copper mine before it was “re-assigned.” Both mines were closed at the on-set of the global economic downturn. The first quarter figures for copper have led to renewed hope that the 2009 target of 600,000 tonnes will be achieved. It has been elusive. It was the target in 2008 as well and it seemed within reach until the slump in prices intervened rather dramatically towards the end of the year and the target was only “nearly” reached. The results reflect something of the mixed fortunes of copper on the international market. The price fell drastically from highs of US$8,800 per tonne to about US$3000 when the downturn kicked in. It perambulated around those levels before beginning a somewhat slow but steady rise that saw it selling at around US$45000 by April. Production and exports responded to the rally in the price and despite a reduction in overall output due to the closure of some mines, the reduction should be well offset by the resumption of full production at Mopani Copper Mines (MCM) with mines at Mufulira and Nkana. The production capacity has in fact increased with the coming on stream of the Lumwana mine. Output can and will be higher and could be higher still but for the price. The now more or less assured resumption of production at Luanshya and the development of the second mine there by the new owners, Non-Ferrous Metals Corporation of China (NFCA) should also increase capacity. There had been an outline plan to resume production at Chambishi Metals Plc, the country’s largest producer. The plans envisaged resumption by June but it was also based on securing copper from mines in the Democratic Republic of the Congo(DRC), other Zambian mines and in particular the newly-commissioned Lumwana mine. But the deal with Lumwana seems to have come unstuck and it is not immediately clear that the plan remains on course. The prospects seem good, at least in the event of a favourable business climate; Zambia would have copper to sell. It is now in fact widely acknowledged that Zambia will restore its production capacity and perhaps surpass past production levels if the price is good. But that can only revive the old issue of how much the country makes from the copper industry. The windfall tax on earnings has for instance been stopped though it is argued that it is of no consequence because the Variable Profits tax remains on the book.In addition to expunging the windfall tax, there were further concessions in the form of capital allowances to the industry in the 2009 budget. If the price improves and firms up, the mines will be in a good position to recoup any losses and depending on the price levels rapidly move to profitability. But the Government will be getting less in revenue due to the “2009 budget incentives” to the industry. This was precisely the underlying argument in the heated debate in the National Assembly over the removal of the windfall tax. The way some see it, Zambia has come to specialize in lavishing concessions on the mining companies at her own expense. Whether that is true or is a mere simplification of a complex relationship in which the government must see both sides of the coin and harmonize the conflicting interests is debatable. But for as long as the question remains unresolved even the positive first quarter results and promises of further improvements are seen to merely re-wind the old argument to rage one more time.

Community set to discuss uranium mining mitigation measures When minerals still attracted the sort of price that fires the imagination of entrepreneurs, it seemed like only a matter of time before Zambia would have a uranium mine. There was detailed exploration particularly in the Zambezi Valley for the mineral that has not before been mined in Zambia. The results in many places turned out positive. From the outside, it seemed as though it is one of the more common minerals found in Zambia. The economic downturn dampened moves towards actual mining that had gathered pace. Most activity seemed to flounder. But there is still some activity on the uranium front -in Siavonga- and preparations are approaching the mining stage. A consultation meeting between the now ubiquitous “stakeholders” meaning the community, other interested groups and a mining company was scheduled for June 4 at the Mutanga Exploration camp in Siavonga. The meeting was to seek the views of the community to go as an input towards developing mitigation measures for the upcoming open pit uranium mining at Mutanga and Dibwe in Siavonga district. The mining company Denison Mines Zambia Limited /OmegaCorp Minerals Ltd sought the views, hopes, fears and any concerns over the advent of the mines. The company plans to mine uranium ore by open pit methods at the two sites. They are located about 40 kilometres north-west of Siavonga Township. The open pits will be mined to extract uranium ore which will be leached and processed to produce uranium oxide concentrate. But before commencing operations, the mining company is obliged to submit an Environmental and Social Impact Statement to the Environmental Council of Zambia. The meeting is part of the environmental and social impact assessment process. Government Agencies, Local Authorities, Traditional leadership, NGOs, community based organizations, interested parties and affected communities and individuals with concerns were all invited and the company volunteered transport from Siavonga town to the venue. These developments are noteworthy mainly because they represent the logical end to the feverish investigations and finds of the mineral boom period. Most of those who set out to explore for uranium were rarely disappointed. There were mainly significant finds at a string of places with the Zambezi Valley dominant. There seems to be several mineable deposits of uranium, enough perhaps to compete with copper. The new Lumwana mine for instance has a sizeable high grade uranium deposit and last year completed the Lumwana Uranium feasibility study (UFS). It is on the design of a treatment facility for the uranium stockpile that will result from the selective mining of the high grade uranium zones within the Lumwana copper ore bodies. The proposed facility is estimated to cost about US$200 million and could recover approximately two million pounds of uranium oxide and 12, 800 tonnes of copper concentrate per year. The final decision whether or not to proceed with the project will depend on a number of factors including improvements in the international project financing climate as well as the market prices of uranium oxide. One thing is certain though and that is that there will be a level of uranium mining and all things being equal, a lot of it.

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Volume 12 - June 2009

Renewed Search for Oil and Natural Gas

A new cabinet-level committee to spearhead the search appointed Zambia is renewing the search for oil and natural gas. A new Petroleum Committee has been constituted to formulate policies for ” exploration, development and production” of petroleum. It isn’t the first such committee. An earlier one had been appointed by the late President Levy Mwanawasa but had to be “stood down” to allow for the promulgation of a more comprehensive regulatory framework for minerals that have not previously been mined in the country. Prospects for striking oil and natural gas exist. Results of preliminary investigations for both in the North-Western, Western and Eastern provinces were encouraging. Those investigations followed complaints by traditional authorities in the Kabompo district in 2004 about persistent “mysteriously ignited fires” in the area that raged for long periods. Subsequently investigations by the Geological Survey Department in Kabompo, Chavuma and Zambezi districts indicated that there could be natural gas and perhaps oil in the area. In August 2005, soil samples were collected for analysis in Germany using the microbial method whose accuracy level is said to be 90%. Out of the eleven samples analyzed, nine tested positive for oil and two for gas. A follow up study in July 2006 collected 31 samples for analysis-twelve tested positive for oil and six for gas. The resulted were taken to be a strong indication of the presence of oil and gas in Kabompo, Chavuma and Zambezi. Investigations were extended to the north Luangwa valley in the eastern province and laboratory tests of soil samples pointed to the presence of oil. Analysis of another 277 samples showed there were high chances of finding oil in Lukulu and Kalabo districts of the western province while there were traces of oil in Mongu. These preliminary findings prompted a rethink of the Petroleum (Exploration and production) Act of 1985. It was thought to be no longer appropriate and needed to be amended to provide for two different licences-one for exploration and the other for production and to establish a stronger framework for environmental protection. Further exploration was suspended in order to come up with a more appropriate framework.That has now been done and an amended act is in place. Thus on May 19, 2009, President Rupiah Banda announced the appointment with immediate effect of the new committee.It is chaired by Minister of Mines and Mineral Development Maxwell Mwale and seems to have had meeting at least once before it was officially unveiled. Mr. Mwale has said it is focusing attention on the bid process and documents to put to tender the detailed exploration and production of oil and gas and that this should happen any time now. The operative word is soon. Blocks for exploration have been demarcated in the most promising areas and both international and capable local companies will in the next few weeks be invited to bid for exploration in those blocks. What is not clear given the prevailing international economic climate is how much response the invitations will elicit. Mineral exploration in Zambia has all but shut down. Before the on-set of the global economic recession there was feverish activity. But now except for the Chinese who are still active in Mwinilunga, exploration has all but ceased including projects that had reached advanced stage like the copper mine at old Mkushi which was being re-developed by the company “African Eagle” and was coming up rapidly. Whether the response to exploring for oil will be different remains to be seen. THE NEW PETROLEUM COMMITTEE: Maxwell Mwale- Minister of Mines and Minerals Development (Chairperson) Kenneth Konga -Minister of Energy and Water Development (Deputy) Felix Mutati -Minister Commerce, Trade and Industry Caleb Fundanga (Dr) - Governor Bank of Zambia Andrew Kamanga Energy Consultant Guy Phiri Engen Petroleum Zambia Ltd

Maize Floor Price Uproar Farmers insist it is not cost-reflective and that FSP costs should not be the baseline The announcement of the anxiously awaited floor price of maize for the 2009 marketing season that starts June 1, 2009 met with a heated reaction. It was greeted with undisguised anger and disappointment in some circles and remains contentious. The main criticism of it is that it is not cost reflective and would therefore leave farmers who had to buy inputs at record prices during the last planting season without any real return. But it also met with quiet acceptance as a “fair” price, overall. After extended consultations, the Food Reserve Agency (FRA) May 16 announced an 18% increase in the floor price of maize to K65, 000 per 50 Kg bag and a 16% rise in that of rice which would sell at K60, 000 for a 40Kg bag. The FRA will not this year buy any Cassava because of the low demand for it. During consultations, President of the Zambia National Union of Farmers (ZNUF) Jervis Zimba had talked of a floor price of at least K85,000 for 50Kgs of maize on account of the record high price of inputs. Expectations were that it would be in that region. But when it was actually unveiled it dampened expectations. Medium scale farmers sounded incensed and were scathing in their remarks. They said this was another instance of government’s readiness to pay up to K100, 000 a bag for imported maize and of its unwillingness to even consider paying anything near that to its own farmers. Some farmers on the Copperbelt called for withdrawal of the price altogether because it would only bankrupt farmers. But there were more moderate voices as well. But even they were not saying that this was a great price. Only that it was “fair” in the circumstances. After what seemed a “thoughtful” silence, Agriculture and Co-operatives minister Dr Brian Chituwo defended the price saying it factored in among other costs that the FRA would still have to shoulder that of transporting the maize from remote rural depots to the more accessible parts of the country. Subsequently, he seemed amenable to further consultations on the matter. A point convergence among all who spoke was that this price was good for the 200,000 or so peasant farmers who accessed subsidized fertilizer at K50, 000 per bag through the government’s Fertilizer Support Programme (FSP) - that the floor price seemed to have been calculated on that basis in fact and therefore that those farmers of who benefited from it may have something to smile about. Not so the other farmers who bought fertilizer on the open market. Their position is that the FSP costs should not be the baseline for arriving at the floor price because the programme is accessed by no more than 10% of the farming community. Fertilizer was the most expensive it has ever been during the last planting season. It was imported at a time when the economic cycle that eventually led to the global economic crash created an unprecedented rise in the price of fertilizers internationally. Fertilizer according to many medium-scale and commercial farmers went for as much K275, 000 a bag and even at K300, 000 in some corners of the country! Those who bought it from the open market had to dig deeper into their pockets and they are alarmed by the floor price which they say is not reflective of such basic costs of production. Some among them said government should withdraw the price and think anew. The ZNUF warned of increased bankruptcies among farmers with such a price and talked of another frustrating season for them. The hubbub came as the results of the Crop Survey forecast a more than 200,000 tonne surplus in maize production in 2009. Agriculture Minister Dr. Brian Chituwo said the forecast showed that the maize harvest will be around 1.8 million tonnes compared to last season’s 1.2milion. The country’s total annual requirement is estimated at 1.3 To Page 11

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Volume 12 - June 2009

Obituary Francis Xavier Nkhoma 1937-2009

In 2000, Francis Nkhoma emerged the winner of the contest for UNIP President. He was the rank outsider and the unlikely popular choice for leader of Zambia’s oldest political party which at the time looked like it still could be re-organized and had some fight left.

His victory was a surprise. Yet Nkhoma seems to have had perhaps a lifelong attraction to politics and this was not the first time that he had “dubbed” into politics. As General Manager of Barclays Bank Zambia, he stood and was elected Member of Parliament for Lusaka’s Matero constituency. He represented that constituency in the National Assembly from 1978 until 1982. So perhaps his winning the UNIP presidency was only surprising because he was never outspokenly political but nursed political ambitions. It also could well have been that at a time of crisis UNIP saw some qualities in him that could redeem the party. For, qualities he did not lack. He was rather mild mannered and quiet spoken. For most of his working life he was a technocrat and quite distinguished-the first Zambian to be General Manager of Barclays Bank. He was also among the famous 100 graduates at the time of Independence. He was an economics graduate from what was then the University College of Rhodesia and Nyasaland, at Salisbury now Harare. It is said he wanted to study law but it wasn’t easy at the time. He had obtained university entrance qualifications through private study while he worked for the

Maize Floor Price Uproar From Page 10 million tonnes. When the stocks that are already in the country are factored in, it is expected that there will be a surplus of just over 200,000 tonnes. The improvement was in yields while the hectrage under cultivation increased only marginally by an estimated one per cent. The output for rice and Soya Beans especially were equally impressive and there is still the unresolved question of what to do with the 65,000 tonnes of wheat from the last crop season which remain unsold. Increased food availability in the months ahead should help stem the steep rise in the price of food of recent months. High food prices accounted for much of the jump in the inflation rate in April. The staple food mealie -meal was particularly expensive, selling at an average K60, 000 for the standard 25Kg bag. Food inflation was again a factor in the increased rate of inflation in May. The Zambia Competition Commission (ZCC) even suggested the importation of mealie-meal to break the stranglehold on the price and market by local millers. Millers reacted positively to the floor price. How that will play out in practice remains to be seen. It seems the case however that they will want to buy their stocks at as close to the floor price as possible and that is why farmers insist that the price must at all times be cost reflective. When it is not, it impairs their capacity to negotiate an economic price. If such a floor price was assured farmers would have some bargaining leeway. The FRA will in 2009 buy only 110,000 tonnes of maize which is only about 10% of the crop. Other market players will have to pick up the 90%. At what price is what isn’t clear and is further clouded by the announcement of an “uneconomic” floor price. However, when he spoke the second time on the issue Minister Chituwo sounded amenable to further consideration of the matter. He talked of consultations with cabinet colleagues. It seems as though the saga of the 2009 maize floor price may not be at an end.

Northern Rhodesia Department of Information and was appointed an Information Officer while still at university. On his graduation and return, he rose through the ranks in the Ministry of Trade and Industry to be Under-Secretary at the Ministry of Mines before becoming the first Permanent Secretary for the North-Western Province when that position was created in 1968. He served successively as Permanent Secretary for the Ministries of Trade and Industry and Lands and Natural Resources. He left the civil service in 1972 and joined Barclays Bank. He was branch manager, General Manager’s assistant and rose to be the bank’s first Zambian General Manager in 1975. He retired from Barclays Bank in 1985 and later served as Managing Director of the Import Export Bank. He was appointed Governor of the Bank of Zambia in 1987 and remained in that position until 1989. For all his dubbing into UNIP politics and his last dalliance with the party as President was not the happiest, he remained largely a private sector man and there is a sense in which he was the ideal president for a party in these days. But UNIP does not seem to lend itself to any real reform and just the fact of his popular election was the cause of much largely pointless wrangling. He left in unhappy circumstances long before the expiry of his mandate. He had been born in Lundazi district in 1937. He had his early education at Lumezi Mission in the same district and subsequently attended Chassa Upper School and on to what was then Canisius College at Chikuni. Francis Nkhoma died on May 15, 2009 at the Lusaka Trust Hospital and was buried on May 18 after a requiem mass at St. Ignatius Catholic Church in Lusaka. He is survived by his wife Benedicta and four children. Nkhoma was a life-long catholic and a trail-blazer whose record remains a challenge.

20,000 at Copperbelt Show Organizers pleased with the way it went An estimated 20,000 people visited the 52nd Copperbelt Mining, Agricultural and Commercial Show (CMACS) held in Kitwe, May 27-31, 2009. Attendance was lower by an estimated 7,000 compared to last year. Seventy-four companies in all-15 from South Africa- exhibited compared to 120 last year. The show society estimates to have earned K800 million against an expenditure of K500 million. The society has pronounced itself “very pleased with the way it went.” The CMACS is the first of three annual trade and agricultural fairs. The Zambia International Trade Fair (ZITF) in Ndola is next in July followed by the Zambia Agricultural and Commercial Show in Lusaka in August. The ZITF management had scheduled a meeting with exhibitors for June 5, 2009 to discuss this year’s event. SOME CMACS AWARD WINNERS: Agricultural producers and Suppliers category: ZAMBEEF Plc Suppliers of Goods category: Associated Fire Services Ltd Finance Houses: Zambia State Insurance Corporation Heavy Duty and Industrial Equipment: Sandvik Motor Vehicle and Transport Category: Toyota Zambia

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Volume 12 - June 2009

Professional Soccer League Mooted

Chisamba meeting draws up blueprint for professional league by 2012 A meeting of 16 Zambian soccer clubs May 22, 2009 adopted a declaration to introduce a professional soccer league by 2012 in line with FIFA guidelines for affiliates. Held at Chisamba’s Protea Hotel, the meeting was attended by the FIFA Development Officer for Southern Africa, Ashford Mamelodi of South Africa. The meeting appointed an Ad-hoc committee to spearhead the transformation and resolved that the Football Association of Zambia (FAZ) should facilitate the process including ensuring that the goals of the “Chisamba Declaration” are met. The meeting decided that the professional league would be independent of the FAZ and would have its own secretariat. The present premier league clubs would be maintained and licenced to the new league over the next three years as it becomes operational. Clubs will be expected to comply with the requirements of the licencing system to allow for the smooth running of the concept which has already been implemented in other countries. Under the new league clubs would be allowed 25 players each and three foreign players if needed. Foreign players would be subject to scrutiny by a technical committee of the FAZ. Players would be professionally contracted to the clubs in line with regulations to be agreed. Mamelodi declared the meeting a success and commended the participants for their enthusiasm. He pledged continued FIFA support in implementing the idea. Deputy Sports, Youth and Child Development Minister Christopher Kalila said a professional league was overdue and it was time that professionalism was introduced to the game of soccer in Zambia. Professional League Ad-hoc committee chairman Kephas Katongo of Roan United appealed for government support to improve playing grounds since most clubs still used state-owned grounds and said teams would need their own grounds with the advent of a professional soccer league. “The gathering has been a success, this is a historic ground-breaking development for Zambian football and the clubs have shown that they are determined to make it

a reality,” said Mamelodi. Two things. The idea of professional soccer isn’t exactly new. Effectively, this is a re-launch. The state-owned Zambia Consolidated Copper Mines (ZCCM) had introduced it earlier among soccer clubs of its affiliates. It worked for a while before it fizzled out. It was in fact a factor in the vast improvement in soccer standards that saw Zambia become one of the consistent soccer powerhouses on the continent. Soccer has since suffered a slump not least because of the Gabon crash tragedy which killed two generations of players. Recovery has been slow and a well organized professional league could breathe new life into the flattering soccer scene and there is at least some basic local expertise. Some of the people who worked on the ZCCM experiment could be roped-in. Their input could be invaluable especially as the reasons for abandonment could still be present today. Second, there is a dire need for increased investment in soccer and that is more likely to come about through a “paradigm shift.” Soccer should cease to be seen as merely social. It should instead be seen as a potential business which what it is in those parts of the world where it is at its most advanced. Investors put their money in soccer teams hoping for a return. That has helped football grow. The same is possible in Zambia. There is no shortage of enthusiasm and a good team will have devoted fans ready and willing to pay money to see their favourite team play. There is great potential particularly with astute management and a good venue. The real reason why soccer teams do not make money is largely because they are considered social and are not organized even to break even in financial terms. They survive by sponsorship which still has a place in the general scheme of things. But teams must begin to seek financial viability from gate-takings, merchandising and other “fund-raising” activities associated with soccer. Unless the teams begin to address the issue of financing through their own methods, it is unlikely that even the renewed push for a professional soccer league may yield little.

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