Will G7 Vaccine Promises help Zambia?
[On the day that Zambia's first President, Dr Kenneth Kaunda, father of the nation, died at 97 years, we ask if Zambia is in good hands? And what hope is there as the country faces elections in August? Below is a photo of KK circa 1946 when he was Headmaster of Mine Basic School in Mufulira.]
With seagulls under instruction from Vladimir Putin to poop-bomb delegates at the G7 in Carbis Bay with drone-like splat accuracy, please spare a thought for Zambia.
Not a day goes by without a ping in my inbox from locals in the Copperbelt. Today’s is from a Zambian doctor who quotes from the ‘Our World in Data’ section of the Oxford Martin School, a University of Oxford affiliated research and policy unit which records cases of Covid worldwide.
‘As of today, Zambia has the highest bi-weekly case growth in the world’.
And it’s not just pandemic cases spiralling out of control. Zambian debt is on what you might call the third wave too – causing devaluation of the Zambian Kwacha to K32 to the Sterling Pound today compared to K8 a decade ago.
As seagull shielding vaccine donor country leaders in Cornwall outbid each other like party-goers at a London Christmas charity auction, it would be nice to think their bounty will lead to some relief. However, as my inbox for the last 12 years shows, recipient countries such as Zambia need a bit more than vaccinations when it comes to forging a better life.
Some Lord Copper readers may know that, taking Zambia as I found it in 2009, I saw a country that was making headway after the brutal IMF/World Bank-led privatisations of 2000. Back then, it must be admitted it was lucky for Zambia it had something to sell. The cash cow of the mining industry was still auction-able despite the fact it was undisputedly dead. Meekly, the Zambians therefore accepted the tax holidays ‘investors’ demanded in return for revival of their industry and another quick-fix loan. But in national terms the last 20 years proved to be nothing other than a financial Treaty of Versailles – too much punishment and too little room for Zambia to benefit from the copper upturn that followed.
What is not in dispute is that investment from a range of foreign mining companies over the last 20 years created a copper renaissance, lifting output from below 100,000 metric tons per year to 800,000 mtpy. Anyone who visited the Copperbelt town of Mufulira in the last few years will have witnessed this in graphic detail – the training schools, the cleaner air, the dry port, the better roads, the revival and reinvention of sporting clubs such as the Mufulira Rugby Club, and the engineering feat of the Henderson Shaft with its ability to lift 30 million tons of ore per year from below 1800 metres direct to the surface.
This was intelligent copper mining at its best, but as copper prices recovered, reaching $10,000 per mt in 2011, instead of improved revenue for Zambian public works, not enough tax was forthcoming, so politicians defaulted to filling the gap by borrowing against the country’s better international credit rating. With debt now over $20 bln it is not even remotely serviceable.
To this awful cocktail of debt, poverty and pandemic we must now add political authoritarianism of a kind not seen before in this hitherto generally peaceful country. The incumbent, Mr Lungu of the Patriotic Front (PF), it must be remembered, seized the opportunity of President Sata’s death in office in 2014 to take control of his party and then use public money (such as there was) to campaign for his election in 2015.
He now comes up for re-election on August 12th after a period in office in which the country has slid towards a police state with a compliant judiciary and both The Times of Zambia and Lusaka Times serving as propagandist outlets for a government seeking nothing more than to remain in power and attack political rivals. Meanwhile the tendency to accept China’s bounty has spawned shady deals so far off-balance sheet that it is impossible to calculate real Zambian national debt with any accuracy. New Chinese-built roads to replace deeply cratered ones have been designed to make people feel the government is doing something, unaware that their future is being mortgaged to the Chinese regime’s rapacious need for resources. And, at the moment, due to Covid, political rallies have been curtailed, it is suspected, as a tool designed to damage the chances of the opposing United Party for National Development (UPND) of Hakainde Hichilema.
Upon this election, therefore, much hangs.
Lord Copper readers will have noted that Glencore was pressured earlier in the year to sell their Mopani mine and smelter complex to Zambian Consolidated Copper Mines Investment Holdings (ZCCM-IH), at a cost of a further $1.5 bln debt to the Government of Zambia in the process, while leaving bureaucrats to run a complex mining and smelting operation. Their chance of success is limited, but until the debt is paid in full Glencore will be paid in copper cathodes limiting the capacity of the Zambian Government to benefit from the acquisition. In other words, ZCCM-IH has acquired the responsibility of a mine and smelter without the means to run it, and with almost no advantage.
Depending which way the August 12th elections go, on August 13th Mopani will either have Chinese lettering over the door or Glencore will be welcomed back with open arms.
Although I hope it is the latter, if Glencore does not want to repeat its recent fate sometime in the future, it needs to take a much greater interest in paying more tax locally so that the state of the country in which it mines is able to support itself.
Paying equitable tax is not nearly as hard as running a mine and smelter complex - but you need the will to do it.
Let us just hope that all the seagull-poop plummeting to earth in Cornwall brings Zambia better luck in the form of much needed vaccines and better politics.
[I can recommend following Mr Hichilema on Twitter as an example of how to remain steadfastly polite and peaceful under fire from a savage government machine.]
By Anthony Lipmann 17.07.21 and simultaneously published on www.lord-copper.com
Our problem in Europe/U.K./G7 is that we prefer to burnish our reputation with charity. We are not as keen to influence our multi National mining companies to work tirelessly to pay current maximum rightful tax in the countries in which we mine. Hence mining companies operate with little financial accountability via low tax countries such as British Virgin Islands💰After a while this erodes the structure of the countries in which the miners operate. This is partly what happened to Zambia. No amount of vaccines will cure this.
This is a thoughtful piece of work, reflective, challenging, exposing or rather revealing, independent and liberal.
There is indeed much more than vaccines that this country needs to stand and sustain herself than the aforementioned. Of course this comes with many appreciations that such an initiative and consensus has been reached by the G7 to help curb/avert the grave effect of the pandemic in many of our African countriessie and Zambia in particular.
Change of mindset is one key issue that needs to be addressed amongst her people, leaders inclusive, because if not, even when the G7 gave her truckloads of billions of dollars, it may not suffice and would perhaps end up in a few peoples pockets.
The peace…