“The government is promoting PPPs”

Rupiah Bwezani Banda

With Zambia’s next general election still at least a year away, President Banda is not yet in campaigning mode but more concerned to address Zambia’s economic challenges. In this interview with Global, he underlines his belief in the importance of private sector involvement in all areas of economic activity. He also discusses the controversial issue of taxes imposed on mining investors, the recent surge in investment by Chinese companies and the government’s commitment to fighting corruption

Global: Zambia has benefitted from the revival in demand for its copper resources over the past ten years, and this has led to a renewal of foreign investment and renewed expansion for the wider economy – and yet there are still concerns that the economic transformation is rather too constrained by the country’s energy, infrastructure and administrative bottlenecks. What is your vision for Zambia’s economic prospects?

President Rupiah Banda: The upsurge in global demand for copper has had positive effects on the Zambian economy. In the last eight years, growth of the mining sector has averaged about 9 percent per annum and has been one of the major drivers of GDP growth at about 6 percent recorded over the more recent years. The economic outlook remains robust both in 2010, and in the years ahead, on the back of the high in-vestments in the mining industry but also a rebound in tourism, continued expansion in the construction, transport and communication sectors as well as improved agriculture production.

It is correct that increased productivity and competitiveness are largely constrained by the country’s energy, infrastructure and administrative bottlenecks. In that regard, my government has embarked on an aggressive and ambitious programme to attract investment in energy, transport and road infrastructure, and reforms are being implemented in an effort to reduce the administrative bottlenecks. The government is implementing a number of reforms aimed at improving the investment climate and reducing the cost of doing business. Investment opportunities exist in mining – especially in exploration and mine mapping – as well as tourism, infrastructure, hotels and conference facilities. With the development of new multi-facility economic zones there is also a need for more investors in manufacturing for value-addition.

Your political opponents say your government is not extracting enough revenue from the mining industry for the benefit of ordinary Zambian citizens. How do you answer this criticism?

The question of mining taxation has generated a lot of debate because citizens rightly expect that a country should extract reasonable benefits from the exploitation of its natural resources, which should help in the development of other sectors and indeed in the provision of vital social services. In order to attract the large investment that we have seen in the industry, the tax regime had to be generous to draw in more investors in the sector. Over the years, copper production has again more than doubled, reaching the 1960 levels of 700,000 tonnes per annum. In 2008 and 2009, the government put in place the windfall tax as a measure to increase the benefits to the country. However, this new regime was considered highly punitive to the mining sector and thus discouraged new investments and re-investments. As a result, the windfall tax, among others, was removed. The removal of the windfall tax has generated considerable criticism but, in its place, the government introduced more cost-effective, transparent and efficient ways of taxing the mining sector with increased royalties and the introduction of a variable profit tax, among others. This new tax regime should result in increased revenues into the Treasury and at the same time allow for fair and appropriate returns on investment.

How do you envisage the evolution of Zambia’s relationship with China in coming years? Do you think China, as an emerging world economic power, will support Zambia’s long-term economic ambitions?

China has been an all-weather friend to Zambia. For example, soon after independence, when Southern Rhodesia’s UDI could have paralysed the newly-independent Zambia, we got the Tanzania-Zambia Railway (Tazara), and more recently during the global crisis, while other investors were pulling out and/or laying off some employees, the Chinese investors did not. It was the Chinese that came instead to buy Luanshya Copper mine, which had closed, and re-opened it, creating employment and securing the livelihood of our people. Our engagement with China has been mutually beneficial and anchored on a common development agenda. Zambia was a key supporter of China’s admission to the United Nations. The Chinese treasure this friendship and it has been one of the key factors when making decisions as to where to establish their investment and who to support. The fact that we’ve had this long-term friendship with China has translated into a continued flow of investments from China to Zambia. This gives us confidence that China will remain supportive of Zambia’s development ambitions.

Are you satisfied with the pace of modernization of Zambia’s agricultural sector? Are you in favour of more substantial private investment in the sector?

In terms of investment, we are now seeing more private sector-led investment in agricultural production, research programmes and agro-processing. In addition, more agro-based non governmental organizations are actively participating in extension service delivery systems to our farmers. There is a need for more efforts in information technology to ensure that modern agricultural methods are disseminated to our farmers. Agriculture is dynamic and so we need innovations that are suited to the current trends in agriculture. Therefore, yes, I would say that modernisation of the agricultural sector is underway, but slower than I would have loved it to be, and more certainly needs to be done.

If the agriculture sector is to be modernized and develop, private sector investment is important to that development and modernisation and to the sustainability of the economy. As you may be aware, past agricultural policies were restrictive and constraining, with strong government intervention and participation. In addition, the strategies pursued were not sustainable because of their heavy reliance on subsidies. Consequently, these policies and strategies failed to stimulate growth in the sector.

What are the government’s priorities for Zambia’s transport and telecommunications and for overcoming its shortage of energy?

Infrastructure bottlenecks have been identified as one of the constraints to growth in Zambia. Rail, roads, telecommunications, electricity and border infrastructure require massive investment to meet the requirements of a growing economy. Given limited public resources, the government is actively promoting public-private partnerships (PPP) in the development of infrastructure. Several of the major roads have already been advertised for PPP.

What is your response to donor concerns about the level of corruption, as indicated by the recent withholding of health aid by the Global Fund and other agencies?

My government remains committed to the fight against corruption and has demonstrated that commitment through the adoption of the National Anti-Corruption Policy 2009, which clearly stipulates the need to strengthen both the institutional and legal frameworks to enhance the fight against corruption. New legislation provides for the protection of whistle blowers from victimisation for exposing corrupt practices, for the confiscation and forfeiture of any proceeds of crime and the placing of all prosecutorial functions under the Director of Public Prosecutions. In the next session of Parliament, my government will present the revised and strengthened Anti-Corruption Bill. In addition, the Anti-Corruption Commission has also been strengthened with the establishment of the Serious Fraud Unit, among other things. All these measures were undertaken with the view to strengthening the fight against corruption. Thus the concerns of the donors are shared by my government. Individuals who are alleged to have been involved in corrupt acts or practices have been prosecuted after investigations.

The government did not appeal against a magistrates’ court decision to acquit ex-President Frederick Chiluba on corruption charges. Does this suggest that the government is satisfied with the magistrate’s verdict?

According to the provisions of the Constitution, the commencement and discontinuation of any prosecution is vested solely in the Director of Public Prosecutions (DPP). The DPP does not work under the direction of any person, including the President. Regardless of whether the President is satisfied or not, he cannot impose any directive on the DPP because doing so would be unconstitutional. If the President gave the DPP any directive, including that of appealing, he would be exposing himself to impeachment proceedings. As President, I have absolutely no role to play in the appeal.

Will you be encouraging rival candidates to come forward for the presidential nomination at the next Movement for Multiparty Democracy (MMD) convention ahead of next year’s general election?

The MMD – the ruling party that I head – is a democratic party that championed the cause for the reintroduction of plural politics in this country in 1991. The MMD has a democratic constitution that provides for the election of its top leadership. Therefore, there is no way that I, as MMD president, can go against my party’s own constitution to bar my rivals from challenging me for the position of party president at the convention ahead of the 2011 elections. In the MMD, any bona fide party member is free to contest any position. My rivals should not feel intimidated but should feel free to challenge me for the position of party president. Indeed, a number of them have already declared their intentions to challenge me.

How do you rate the MMD’s chances of victory in the 2011 elections?

The MMD’s chances of victory in next year’s elections are bright. My party is Zambia’s only national party with structures and representation in all parts of the country. My party is currently in the process of reorganising its structures on the ground in preparation for the 2011 elections.

About the author:

President of  Zambia


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