Do We Deserve to Be Mocked By Agarwal?

Anil Agarwal’s story about how he has dribbled the Zambian people and their government to make a fortune is annoying.
But the anger should not be wholly directed at him. A greater part of it should be directed at ourselves, our leaders and our government. Agarwal knew what he was doing and we should also have known what we were doing. In fact, the Zambian government and the Zambian people were warned about how poor this deal was. On November 9, 2004, we carried an editorial comment titled ‘Zambia’s careless privatisation’. And in that comment, we stated the following:
“Zambians cannot in any way claim to have benefitted from the privatisation programme started by Frederick Chiluba’s administration in the 1990s.
The Zambian people have, in fact, suffered the adverse effects of what is clearly a failed privatisation programme which was heralded – and stupidly so – as the fastest privatisation programme in the world. There were even some careless statements to the effect that there would be no sacred cows in the privatisation programme.
Sadly, we seem to have continued on the same path. The government seems to have learnt no lessons even with over a decade of implementing the disastrous programme.
The most notable results of the fastest privatisation programme in the world had certainly been the huge job losses and the countless collapse of companies, some of whom were stripped of equipment and relocated. This has been the ‘benefit’ to the Zambians.
We are certainly concerned that there appears to be no worrying about the continuing trend to just give away our treasured national resources, especially in the mining sector, for almost nothing. And a classical case is the just signed deal with Sterlite’s Vedanta. Through this deal, government has given away a 51 per cent stake in Konkola Copper Mines for US$25 million, a mining venture that just recorded US$60 million in its half year results this year.
Government has certainly continued to play its father Christmas role and managed yet again to offer a gift to foreign investors.
The deal is certainly equivalent to selling KCM’s 51 per cent for the mine’s own 2004 half year profit.
The sale is almost giving away KCM to Vedanta unless there are other hidden benefits which are yet to be disclosed. Zambians should start to question the government on the continuing practice of giving away national assets even if there is pressure from the International Monetary Fund and the World Bank.
It is indeed difficult to understand why mines minister Kaunda Lembalemba had welcomed and vehemently defended the Vedanta deal as a good one. For the government to consider US$25 million as a worthwhile amount for Sterlite to have a majority stake in our largest assets, may be an indicator that things are very bad in the country. We really cannot accept the argument that there were no alternatives to the Vedanta deal.
We did raise similar sentiments over the sale of Baluba mine to J &W Investments. We still maintain that the two deals have merely been gifts and definitely not sales. And it is time the Zambian people started to question the justification of the father Christmas attitude by the government leaders.
It is not long ago that government sealed a US$7.5 million deal with J&W for Baluba mine. To make it worse, J&W Investment group only paid the Zambian government US$750,000 as a 10 per cent down payment.
We regret that our government has again hastily signed another poor deal which would sadly not benefit the Zambian people and indeed the country as a whole.
When one takes a critical look at the manner the privatisation process is being handled and the clear hurry to bring on board foreign investors to take over our national assets, one could simply conclude that there seems to be a misconception about privatisation. A common argument advanced for privatisation is that this is a means to mobilise private sector investment, including foreign investment, for developmental goals. This argument is not necessarily wrong. Where it is wrong is when it assumes that this is the only possible way to mobilise capital resources.
The privatisation route must always be weighed against the advantages and disadvantages of other possibilities of raising investments. Governments are able to access major relatively low interest loans on foreign capital markets, of course ignoring the International Monetary Fund and World Bank restrictions. While this will increase the public debt, it may well prove to be financially more prudent in the medium and long term. International examples abound of privatisation projects designed to relieve governments of financial burdens that have back-fired.
A common argument for privatisation is that government should best occupy its time and resources with setting strategic objectives, leaving management and ownership to the private sector. This might, in many cases, be the most feasible option, not least in a national and global economy that is dominated by capitalism.
Attempting to regulate the private sector might prove to be more complicated than actually owning and managing an entity – numerous international examples of concessions, and other restructuring projects raise questions about the complexity of regulating private entities, and of ensuring that they do indeed deliver efficiently and that they do effectively carry risk, the ostensible reason for being ‘rewarded’ with profits. All too often, private entities nominally carry risk, until there are losses, then they expect to be bailed out with public subsidies.
It is true that we often lack capacity and resources in the public sector and parastatals, but it might, in the medium term, prove to be more reliable building such capacity and resources. The task of regulating major transnationals might be more daunting than improving your own public service capacity.”
This is what we stated in 2004 when the Levy Mwanawasa government was giving away KCM to Agarwal for a song. And throughout that period, the government defended whatever KCM did. When there were industrial disputes, the government always took the side of Agarwal. Even when KCM polluted the Kafue River, they literally got away with it.
Today, Agarwal is mocking the Zambian people and their government. And these are the same people and government that still want to extend more concessions, favours and subsidies to KCM. As it was in 2004, there are still people today speaking for Agarwal and his company. They have hired literally every known expert in mining, business and economics, law and politics in this country to speak for them, to defend their interests. And the people don’t seem to have such experts to speak for them, to defend their interests. The few who attempt to defend the people and their interests are dismissed as charlatans who know very little, if not nothing.
We hope there will be a national awakening in the light of these experiences and that we will start to do things in the right way and act in the best interest of the people.