Zambia Analysis 2011-12 Dec-Jan Web

Zambia Analysis The thinking persons place
December 2011 & January 2012 | ZMK 10,000.00
Image:
flickr.com: Merlin
Zambias pipe dream
Why succeeding in copper fabrication isnt so easy

Budget analysis How to make farmer inputs more effective Mine conditions are the Chinese really the worst? Foreign policy missteps
Editorial
Zambias 90-day workout

The PFs famous 90 days are just about up. Predictably enough, the early rhetorical promises of development in 90 days have been replaced by sober reflections on how little can be achieved overnight, but what can we make of the PFs first three months in power? The government smartly went for some quick wins to convince people it was serious about its promisesreducing fuel prices, scrapping healthcare user fees, and restructuring income taxes a little in favour of low earners. The mining companies are going to foot a bigger tax bill to compensateas they shouldbut nevertheless the evolving mining tax regime feels somewhat flimsy. The windfall tax issue refuses to go away. Royalties may be up but Mines Minister Wilbur Simuusa has said they could come down again if prices crash. This kind of wavering, as Zambias top economic blogger has pointed out, suggests an ill-conceived regime, fails to appreciate the importance of stability, and could even encourage non-compliance. Zambia needs a regime that will be stable and effective in the longer term, and the mines will be willing to cooperate if this can be achieved. This sums up the main problem with the governments start: a certain kind of ad hoc-ness of how things are done. As refreshing as his administration has been after the dog days of MMD rule, President Satas populist roots are clearly present in the way some policy is being patched together. Weve seen out-of-the blue policy announcements and deals for more foreign financing, while some ill-considered appointments or near-appointments have tarnished a promising anti-corruption drive. The jury is out on whether this government will be able to create effective policies. Many things go into creating good policy: research and evidence, ideological vision, consultation and building coalitions between interest groups to mention a few. But reflex decision-making on the hoof is not one of them. If its sound policy Zambia needs, then we have some challenging and thought-provoking analyses this month. First, on p. 8 an article stemming from World Bank and DFID research takes the seductive idea that Zambia should be adding value to its copper by making and exporting more copper semi-manufactures (wires, tubes, etc) and ducks it under a cold shower. Where is your market? the article essentially asks, pointing out the challenges Zambia faces in being internationally competitive in this field. Zambia needs a well-worked out industrial policy to encourage its entrepreneurs to start making some of goods that it currently imports, slowly creating a local market for copper semi-manufactures. Second, on p. 18, the Indaba Agricultural Policy Research Institute questions whether fertiliser subsidies are really the best way to support Zambias farmers. Research has shown that Zambias acidic soils can render the fertiliser ineffective and many farmers are unaware of how to counter this. A more integrated approach to supporting farmers is needed, include more research and extension services. (continued overleaf)

Editor Aaron Griffiths editor.zambia.analysis@gmail.com Contributing writers Shankar Acharya, Yan Hairong, Chola Mukanga, Isaac Ngoma, Ceire Sadlier, Barry Sautman, Sishuwa Sishuwa, Indaba Agricultural Policy Research Institute, World Bank/DFID Art Direction & Design Christoph Nick Administration Kondwani S. Chipeta Published by Zambian Analysis Limited Board of Directors Simon Zukas (Chairman), Masulani Mazyopa (CEO), Robert Liebenthal, Friday Ndhlovu, Isaac Ngoma Zambian Analysis Ltd. Plot 1283, Flat 3 Lungwebungu Road Rhodes Park, Lusaka Subscription 6 issues: ZMK 90,000.00 12 issues: ZMK 180,000.00 (including postage/delivery) Call +260-955-55 05 50 www.facebook.com/ZambiaAnalysis Zambian Analysis Ltd.
Zambia Analysis, December 2011 & January 2012 | 3
Contents
This issue
December 2011 & January 2012 5 Notes Cover Story 8 Pipe dream?
Scrutinising Zambias prospects of developing its copper fabrication industry
Features 14 The PF plan for our pockets

Isaac Ngoma reviews the 2012 budget
18 Getting more out of farmer input support

Why subsidised fertiliser is not enough
22 New relations, old issues 25 Simply the worst?
Sishuwa Sishuwa on the pitfalls of Satas foreign policy
Barry Sautman and Yan Hairong challenge findings on labour practices in Chinese-owned mines
Arts | Books | Culture 28 Book Review: Beijing rules

Chola Mukanga on Stefan Halpers Beijing Consensus
30 Book Review: Emerging Africa

Shankar Acharya on Steven Radelets new book
And third, on p. 25 we publish an article responding to the recent Human Rights Watch report that condemned conditions in Chinese-owned mines and plants in Zambia. The Hong Kong-based scholars Barry Sautman and Yan Hairong see this report as another sign of Western anti-Chinese bias. While acknowledging that conditions must be improved, they use mining casualty figures to show that the CNMC mines are no worse than others regarding safety, and they point to practical differences between mines to explain differences in labour conditions. Whatever the truth about exactly who is worse than whom, the perception of Chinese indifference to workers travails is widely held in this country, and probably not without reasonthere is, after all, no smoke without fire. But the response must be to put out the flames of exploitation wherever they are found, not just where we think we will find them. As Sautman and Hairong suggest, fixating on the issue as a Chinese problem could be counterproductive in terms of solving it. To be fair, the HRW reports author Matt Wells is equally ready to acknowledge that the focus should not all be on China: The issue...is not so much with Chinese companies, who will stretch the laws as far as they will go, but with countries that let their laws be stretched. So, at least we should all agree on this: that Zambian workers suffering is ultimately a Zambian problem, which the elected Zambian government must ensure is addressed properly, without bowing to either fear or prejudice.
32 Rat tails and fairy tales
Write for Zambia Analysis If you have something to say, why not say it in these pages? We invite ideas and contributions of all kinds. Please contact the Editor: editor.zambia.analysis@gmail.com
Ceire Sadlier at the Lusaka Playhouse
4 | Zambia Analysis, December 2011 & January 2012
Notes
Stray statistics Diary: December 2011

02.1216.12 Anti Retroviral Man feature at the National Museum, Lusaka 10.12 Human Rights Day 10.1219.12 2011 African Youth Chess Championships, Baobab College, Lusaka 15.1217.12 Eighth Session of the WTO Ministerial Conference, Geneva, Switzerland The most common password used on the internet is password. The second most common is 123456. (SplashData, reported in the Daily Finance) The cost of transporting a t-shirt made in China to Europe by container ship is 2.5 cents. (The Economist) Congo DRs 2011 election required 4,000 tonnes of ballot papers. The Kinshasa ballot was a 56-page booklet of more than 1,500 candidates. (BBC) Over 100 million Chinese people became poor last month. Fortunately this is simply because the government increased the income level defining rural poverty from 1,196 to 2,330 yuan a year. (The Economist) One African woman made the Financial Times list of the Top 50 Women in World Business 2011: she was Olunfunke Iyabo Osibodu, head of the Union Bank of Nigeria. (FT)
January 2012
08.01 South Africas ANC celebrates 100th anniversary 21.0112.02 African Cup of Nations in Gabon and Equatorial Guinea 25.0129.01 World Economic Forum Annual Meeting 2012, DavosKlosters, Switzerland
Corruption Perceptions Index 2011

2011 CPI score Transparency Internationals recently published 2011 Corruption Perceptions Index shows a slight improvement in Zambias scores this year. Zambia ranks 91st out of 182 countries around the world, compared to 101st out of 178 last year. Does this mean things have got better? Not really. The difference in score is explained by a methodological difference: the use of an additional indicator (from Political Risk Services Internationals Country Risk Guide) that boosts Zambias score, when in many of the other indicators Zambias score actually went down. Of course, none of this takes any account of the recent change of governmentnext years score may be far more interesting in this regard.
Congo DR Angola Zimbabwe Tanzania Malawi Zambia South Africa Namibia Botswana 0 2 4 6 8
Notes
Zambia remains eligible for MCC funding

1
Business start-up = 0.963 (79%)
The Millennium Challenge Corporation (MCC) is a US Government corporation which gives large grants to selected developing countries to finance development projects. To be eligible for MCC Compact funding, countries must score above the median or absolute threshold in more than half of the MCC indicators covering three areas; ruling justly, investing in people and economic freedom. In addition, eligible countries must pass the control of corruption and democratic rights indicators. The indicators used are not assessed by MCC, but are drawn from third-party sources, such as the World Bank, IMF, Heritage Foundation, Freedom House, WHO, UNESCO and UNICEF. Eligibility is assessed annually in December. Zambias results for the US fiscal year 2012 are shown here. As in 2011, Zambia scores well, passing in 17 out of 20 indicators The only failures are freedom of information, child health and primary education expenditures. For MCC purposes, Zambia is being compared with other low-income countries, (defined by MCC as countries with per capita income of less than US$ 1,915, a higher cut-off point than is used by the World Bank). Zambia will therefore undoubtedly remain eligible for MCC funding. There are, however, some areas of concern. First, some scores have been deteriorating over the last two years, even though they remain in the upper half of the scores for low-income countries, notably the control of corruption, political rights, civil liberties, government effectiveness and fiscal policy. Since the indicators were measured in most cases more than one year ago, these are the results of the previous MMD governments policies, not the present PF government. Nevertheless, they broadly indicate areas where
the PF government needs to take action. More seriously, Zambia fails on the freedom of information and child health indicators. These indicators are new this year, so no comparison can be made with previous years. It also fails on primary education expenditures, but this seems to reflect non-availability of data. For more information on MCC and its eligibility criteria, visit www.mcc.gov. For methodological details, see the Report on the Criteria and Methodology for Determining the Eligibility of Candidate Countries for Millennium Challenge Account Assistance in Fiscal Year 2012.
Note: Alongside the name of each indicator is the countrys score and percentile ranking in its income peer group (0% is worst; 50% is the median; 100% is best). The peer group median is represented by the blue dashed line in each graph.
0.5 0 2006 2007 2008 2009 2010 2011

Business start-up: IFC
Trade policy = 82.3 (95%) 100 50 0 2006 2007 2008 2009 2010 2011
Trade policy: Heritage Foundation
Inflation = 8.5 (33%) 20 15 10 5 0 2006 2007 2008 2009 2010 2011
Economic freedom
Regulatory quality = 0.24 (69%) 2 1 0 -12006 2007 2008 -2
Regulatory quality: World Bank, Brookings WGI
Inflation: IMF, WEO
Fiscal policy = -2.4 (54%) 10 5 0
2009 2010
2011
-5 2006 2007 2008 2009 2010 2011 -10

Fiscal policy: IMF, WEO
Land rights and access = 0.641 (52%) 1 0.5 0 2006 2007 2008 2009 2010 2011
Land rights and access: IFAD/IFC
Access to credit = 52 (96%) 60 40 20 0 2006 2007 2008 2009 2010 2011
Access to credit: IFC
Notes
Political rights = 25 (73%)

30 20 10 0 2006 2007 2008 2009 2010 2011 40 30 20 10 0
Civil liberties = 33 (61%)
Control of corruption = 0.21 (73%)

1 0.5 0
2006 2007 2008
2009 2010 2011
-0.5
2006 2007 2008 2009 2010 2011
Political rights: Freedom House
Civil liberties: Freedom House
Control of corruption: World Bank/Brookings WGI
Government effectiveness = 0.06 (56%)

1 0.5 0 -0.5 2006 2007 2008 2009 2010 2011
1 0.5 0 -0.5
Rule of law = 0.43 (80%)
Voice and accountability = 0.54 (68%)

1 0.5 0
2006 2007 2008 2009 2010 2011
-0.5
2006 2007 2008 2009 2010 2011
Governm. effectiveness: World Bank/Brookings WGI
Rule of law: World Bank/Brookings WGI
Voice and accountabil.: World Bank/Brookings WGI
Ruling justly
Freedom of information= 61 (46%)

2006 2007 2008 2009 2010 2011 0 20 40 60 80 100
Investing in people
Immunisation rates = 86.5 (59%) 4 90 70 50 2006 2007 2008 2009 2010 2011
Immunisation rates: WHO
Freedom of Inform.: Freedom House/ONI/FRINGE
Health expenditure = 3.66 (73%) 3 2 1 0 2006 2007 2008 2009 2010 2011
Primary education expenditure = 0.21 (3%) 4.00 2.00 0.00 2006 2007 2008 2009 2010 2011
Primary educ. expend.: UNESCO/National sources
Health expenditure: WHO
Girls' primary educ. completion = 85.2 (73%) 100 50 0 2006 2007 2008 2009 2010 2011
Girls primary education completion: UNESCO
Natural resources managment = 63.34 (63%) 100 50 0 2006 2007 2008 2009 2010 2011
Natural resource management: CIESIN/YCELP
Child health = 5.1 (33%) 100 50 0 2006 2007 2008 2009 2010 2011
Child health: CIESIN/YCELP
Economic Analysis
Pipe dream?
A recent study scrutinises Zambias prospects of developing its copper fabrication industry
For years Zambias leaders have articulated a desire to add more value to the countrys copper. Unfortunately, precious little headway has been made in copper fabrication or in manufacturing products that contain copper. Only a few companies are engaged in processing copper in Zambia today and together they employ less than 1,000 workers. Why has Zambia done so little to capture the additional economic returns that can be earned from fabricating copper, and what are its prospects for doing so in the future? 8 | Zambia Analysis, December 2011 & January 2012 This article, based on a study conducted by the World Bank and DFID, uncovers the real difficulties Zambia would face in establishing a thriving copper fabrication industry. The most important constraints relate to the size of the local market for fabricated copper, and the disadvantages faced in competing in bigger markets further afield. Understanding these constraints is vitalotherwise, there is a real risk that policy-makers start pushing products that they think can work, instead of enabling markets and reducing costs so that markets can work.
Image: ZANIS
Economic Analysis
Constraints on Zambian copper fabrication

(1) Limited local or regional demand. The major source of demand for fabricated copper products is manufacturing, but Zambias manufacturing base is smallas is sub-Saharan Africas more generallywhich translates into limited local and regional demand for copper semi-manufactures. Sub-Saharan Africa accounts for less than 1 percent of global consumption of the principal semi-manufactures. The total open market for all copper and copper alloy semis in sub-Saharan Africa (excluding South Africa, whose market is largely self-sufficient) is around 10,000 tonnes a year. In Zambia itself, the market is even smaller: Zambias usage of refined copper is less than 0.2 percent of the global total. The market for semi-manufactures in Zambia largely consists of the various items needed by ZESCO, telephone cable for Zamtel, signalling cable for the railways, various wire and cable items for the construction industry, copper strip and connectors for transformer manufacture and repair, and various castings and Figure 1: Typical freight costs
180 160 140 120 110 165
engineering materials for the mining industry. In sum, local and regional demand is not sufficient to support a substantial Zambian copper fabrication industry any time soon. (2) Zambia cannot compete in markets further afield. Zambias location, a long way from potential significant market outlets, is a disadvantage. This is exacerbated by freight costs, logistical difficulties (particularly border delays and long lead times) and inadequate transport infrastructure. The Asian market is well served locally, and taking into account freight costs, Zambian exporters have no room for any profit margin to establish a foothold against local suppliers. The only way to get around this is to be capable of meeting a particular need better than local suppliers. With improved logistics, perhaps the Zambian industry could engage in the South African market, but South Africa already has a well-established industry producing the full range of semi-manufactures and it is very competitive in terms of efficiency, service and delivery. This, along with geographical realities, also puts it in a better position to service customers in export markets outside Africa (Figure 1 shows the cost advantage enjoyed by South Africas Palabora).
Sources: project research reports, interviews with companies
107
US$/tonne
100 80 60 40 20 0 Copperbelt to Johnannesburg Copperbelt to Durban Copperbelt to Dar Palabora to Durban Durbant to Asia 15 15
In the copper industry value chain, copper fabrication lies between copper production (e.g. the mining of ore and its refining into copper cathodes) and the downstream industrial users who use copper and copper alloys in manufactured products such as cables, electrical fittings and much else besides. In between, copper is fabricated into semi-manufactures such as tubes, sheets, strips, rods, castings and, above all, wire.
Economic Analysis (3) The ability to source copper locally is not a major competitive advantage for the copper fabrication industry. This may seem counter-intuitive, but the price of copper is set by international commodity exchanges and varies little throughout the world. Zambian fabricators buying metal at the refinery gate and selling their products regionally may be in a competitive position against non-regional suppliers, but as soon as Zambian semi-manufactures are exported to, say, Asia, that saving is offset by the transport costs that will have effectively been transferred from the cathode to the semi. The world over, copper is usually fabricated closer to the markets for copper products than to where copper is actually mined from the ground. The worlds large copper fabrication industries are concentrated in the industrialised areas of the world where there is local or regional demand for their output. So an ability to produce copper does not go hand in hand with an ability to fabricate it (see Figure 2). Figure 2: Locations of copper production and use, 2008
10,000
its use of refined copper is less than 1 percent of the world total. Like Zambia, both its population (16.8 million) and its manufacturing industry are small, and its economy is centred on natural resources. But Chile has successfully leveraged its resource base by establishing a competitive mining industry, ensuring the benefits of copper are channelled to the population, and encouraging diversification in industries with growth potential (horticulture, fisheries and tourism). Chiles fabrication meets the needs of local industry and infrastructure, and little more. This example suggests that pinning hope for economic diversification on the copper fabrication industry, or even manufacturing as a whole, is not necessarily the most appropriate course of action for a major copper producer. (4) Copper fabrication requires types of raw material not available in Zambia. Firstly, as a general rule, the fabrication industry prefers to use scrap, provided that there is a supply of
Source: International Copper Study Group
8,000 Refined copper use 6,000 Refined production Mined production
'000 tonnes
4,000
2,000
0 Chile Peru Zambia Australia Canada Russia India Japan USA Brazil South Africa China South Korea Germany
Zambia is clearly not alone in lacking a major copper fabrication industry despite the local availability of copper. The worlds largest copper producer, Chile, has also not developed into a major fabricator on a global scale. It accounts for 34 percent of world mined copper and 17 percent of world refined copper, yet 10 | Zambia Analysis, December 2011 & January 2012
acceptable quality, and 37 percent of the copper used in fabrication is derived from scrap metal. Scrap metal is derived from two sources: new process scrap from downstream processors of metal productsoff-cuts, turnings, quality rejects and so on and end-of-life scrap from obsolete copper-containing products.
Economic Analysis Zambia, unfortunately, lacks sufficient quantities of scrap to sustain a major copper fabrication industry. Zambian scrap, which is probably about 1,000 tonnes a year, is mostly exported to South Africa. Secondly, many copper products are made from copper alloys and Zambia produces only a few of the other metals required. For brass, bronze and copper nickel products, alloying materials such as tin, lead and zinc would have to be imported, which puts a land-locked country such as Zambia at a comparative disadvantage. (5) Access to capital and skilled labour. Word class fabrication of copper and copper alloy semi-manufactures is capital intensive, not labour-intensive. Sophisticated machines need only a small number of workers. A continuous-cast wire rod mill with a throughput of up to 300,000 tonnes a year may require a team of less than 100 to undertake operations, maintenance, sales and administration. The know-how needed to set up and operate equipment requires highly skilled labour. These characteristics pose problems for Zambia. Interest rates are high and without access to capital small indigenous firms would struggle to buy equipment, achieve critical mass, and manufacture to an acceptable standard. Labour productivity in Zambia is a concern, at least compared to higher-performing countries such as Kenya and South Africa. (6) Wider business troubles. Deficiencies in the broader environment for manufacturing not only make it more difficult for copper fabrication businesses to start up and expand but also make it difficult for other types of manufacturerthe users of fabricated copper productsto thrive. There are three main issues. First, infrastructure: the problems need not be rehearsed here, but there are shortcomings in Zambias transportation, energy and telecoms infrastructure. Improving these could increase competitiveness. It should also be remembered that not only do infrastructure improvement projects enhance the economic life of the country, but many are also copper-intensive. Second, entrepreneurship. Zambia is overly reliant on imports, especially from South Africa. Until more Zambian entrepreneurs start asking Cant we make this product here? a decent manufacturing base cannot emerge. The entrepreneurship which does exist in Zambia is directed more at trading opportunities than at manufacturing. Changing this will take time, education and leadership, but the development of entrepreneurial approaches has happened elsewhere in a relatively short period of time, especially in South Asia, and there is no inherent reason why they cannot develop here in the same way. Third, industrial policy. A major feature of recent industrial policy is the Multi-Facility Economic Zones (MFEZs) introduced by the last government to promote the manufacturing industry. Unfortunately there has been a lot of confusion surrounding their exact purpose and execution. Ideas for an improved industrial policy are summarised at the end of this article.
Fabricated benefits?
Given these constraints, the potential for copper fabrication in Zambia appears modest. What is more, even if Zambias copper fabrication were to develop it may not be able to provide the benefits of jobs and prosperity that the country is looking for. First, because internationally-competitive fabricating operations are not labour-intensive, they would not make significant inroads in Zambias employment targets. Second, Zambia is already dependent on copper for the bulk of its export earnings, and more copper fabricationwhich is linked to the same demand-cycle as refined copperwill only increase Zambias exposure to copper price volatility and defeat the purpose of diversification. Moreover, producers of refined copper have a market of last resort (a London Metal Exchange warehouse in Singapore or Dubai), so they can always receive some value for their product, while fabricators have no such luxury: in a downturn they must quickly adjust their production to match declining demand. Finally copper fabrication merely increases the focus of the economy on copper, rather than diversifying it into other areas which offer development opportunities. Third, margins in copper fabrication are lower than in copper mining and refining, and even world-leading fabricators do not earn high margins. The scale of profit margins in copper fabrication is altogether different from mining, as are the risks. Compared with mining, copper fabrication requires modest capital investment, but the margins are slim (see Table 1).
Table 1: Relative costs and profit margins per tonne Large capacity wire rod mill Costs Profit $106 $13 Oxygen-free high conductivity rod $137 $68
Cathode from ore $3593 $3070
Mainstream fabricated metal products require a high level of capacity utilisation and throughput to generate sufficient income. More sophisticated products, which require more working, quality control and consistency, offer a bit more scope for enhancing margins. Zambia Analysis, December 2011 & January 2012 | 11
Economic Analysis
Ways forward
It is unlikely that significant new demand for fabricated copper products will emerge domestically or regionally in the short- or medium-term. Domestic demand will remain limited because of Zambias lack of competitiveness in manufacturing generally. Regional markets are growing, but from a small base, and South Africa is a formidable competitor. In short, the current market prospects do not justify a significant expansion of Zambias copper fabrication capacity. There may be scope for marginal expansions to existing capacity. The limited number of users of copper semi-manufactures in Zambia may wish to source products locally in order to reduce their dependence on imports (which are subject to slow border clearance). Local entrepreneurs might also cater to small, local needs on an artisanal scale, but these are largely scrap-based rather than cathode-based. Greater use of copper products in Zambia and the region in the construction industryfor example using copper pipes for plumbing rather than the more common galvanised iron or plasticcould also help build domestic demand for copper products. But together these will not amount to a substantial market. Even these opportunities could be limited if the need is for products which require inputs of scrap and other metals rather than pure copper. In addition, highly competitive industries in South Africa in particular, and perhaps in India, China and elsewhere, will be prepared to seize any market opportunities that arise. New market opportunities in non-electrical applications are likely to lead to increased imports before any import substitution by local manufacturers. So what is the most effective way to encourage copper fabrication over the longer term? Aiming high straightawayfor international large scale fabricating industrywould pose major challenges in how to access a customer base and achieve a competitive edge and profitability. Instead, the industry must be helped to crawl before it can run. The immediate strategy should be to encourage investment in manufacturing components and spares, especially in Copperbelt clusters, which could create a market for fabricators. The next step would be to encourage some further low-level activity that caters for local needs, gradually expanding into small-scale competitive niche production based on identified market opportunities. These steps should be helped along by measures to improve access to finance, create awareness of market opportunities, and improve infrastructure in light industry areas. The government should also focus on attracting manufacturing investment both from inside and outside the country. For this, five main changes are required: 1. A cultural shift away from import dependence 2. More availability of affordable, long-term capital
Image:
flickr.com: marc falardeau
Economic Analysis
Image:
flickr.com: ahisgett
3. Investment in industrial and transport infrastructure 4. Currency stability 5. Clear and realistic industrial and economic policies delivered by an efficient administration. Above all, Zambian policy-makers should understand the importance of the market in industrial development in a liberal economy. Changing the place of industrial manufacturing means addressing the market end of the value chain. In addition, there should also be greater cooperation between industry and government, more support for startup businesses, and an industrial policy comprising ten key elements: 1. Recognise the inherent limitations: a land-locked country with a small populationbut at the heart of a sizeable region 2. Identify realistic targets 3. Identify which manufacturing sectors to prioritise 4. Create an attractive inward investment climate but encourage local participation and look for partnership opportunities 5. Assure reliable power 6. Reduce road and rail transport costs and times 7. Improve telecommunications 8. Address technical skills gaps by vocational education and
technical trainingretain skills rather than export them 9. Incentivise improved labour productivity 10. Understand what is happeningmore and better data is needed, and the International Copper Study Group could help in this regard. None of these changes will be achieved in the short-term and none will immediately change the nature of Zambias industry and economy, but they will lay the groundwork for a new approach that could one day unlock potential that Zambia has to offer.
This article was adapted especially for Zambia Analysis from DFID and the World Banks June 2011 report, What is the potential for more copper fabrication in Zambia? The project was led by Marie Sheppard and original research was conducted by Sunil Sinha and Simon Payton. For a full version of the report, contact the Sipiwe Chihame at the World Bank, Zambia (schihame@worldbank.org). For a summary version, see http://tinyurl.com/copper-fabrication (pdf, 1Mb).
Budget Analysis
The PF plan for our pockets

Isaac Ngoma reviews the 2012 budget
The electoral victory of the Patriotic Front (PF) was accompanied by high expectations of economic change, so the PFs first budget tells us about how it plans to meet the many promises it made in opposition. Putting more money in our pockets sounds like a good idea, but in reality there are always balancing acts and trade-offs to make in economic policy. As Finance Minister Alexander Chikwanda said in his speech, the government has to focus on both social justice and equity and sustaining macroeconomic stability. They also need to carefully balance the demands of our citizens for lower taxes against the demands for higher spending, especially on poverty reducing programmes. The challenges of poverty (especially in rural areas) and unemployment are undeniably huge, so the PF needs to show it can maintain stability and bring some feel-good factor in the short term, while bringing development and poverty reduction in the longer-term. The proffered means for achieving all this are familiar enough: diversifying the economy, enhancing productivity, promoting employment opportunities and pursuing sound financial management while investing in supportive infrastructure. Effecting these changes is a slow and difficult task which the budget can only begin to help encourage. Many of the targets for the financial year ahead bear close relation to the MMD projections from 2011. On the macroeconomic front, these are to: 1. Achieve real Gross Domestic Product (GDP) growth of above 7 percent (up from 6 percent in 2011) 2. Attain end-year inflation of no more than 7 percent 3. Limit overall fiscal deficit to 4.3 percent of GDP and domestic borrowing to 1.3 percent of GDP 4. Maintain gross international reserves of at least four months of import cover. 14 | Zambia Analysis, December 2011 & January 2012
The fiscal policy objectives are also more of the same: 1. Increase domestic revenues to 19 percent of GDP (up from 18 percent in 2011) 2. Limit domestic borrowing to 1.3 percent of GDP (down from 1.4) and net external borrowing to 3 percent of GDP (up from 2 percent) 3. Commit at least 50 percent of the budget to social sectors and infrastructure development Some of the most telling changes are to be found in the tax regime. Chikwanda set out his desire to rebalance the burden of taxation, providing tax relief for those who have borne a disproportionate burden in the past while at the same time generating more resources from those areas of the economy that have benefited most from our strong macroeconomic performance. So who are the winners and losers in this rebalancing act? For formal sector workers on low wages there is welcome relief. The Pay-As-You-Earn tax-free income threshold increases from ZMK 1m to ZMK 2m, while the income brackets taxed at 25 percent and 30 percent a month each increase. This is a bold move that should increase these peoples disposable income and so stimulate consumption or saving. In the business world, bankers got a tax reduction from 40 to 35 percent; the aim is to encourage them to lower the high lending tax rates which contribute to the high cost of doing business. Farmers corporate tax has also reduced from 15 to 10 percent in the hope that it will encourage higher productivity and accelerated investment in the sector. We only hope this will mean not more maize growing but rather crop diversification. The sector that loses most is mining, with mineral royalty tax from increasing from 3 and 5 percent to 6 percent across the
Budget Analysis
Image: ZANIS
board for base metals, energy minerals, and gemstones. This revenue-based tax can means more tax is paid, whether profits are made or not, but the mining companies will at least be pleased to have avoided the windfall tax. On the spending side, education and health both get more money but a similar share of the budget as before. A notable advance is the removal of user fees for primary healthcare services, which should widen access. Big investments are being made in the energy and road sectors, which will have great economic spinoffs if properly managed. While comparisons will be made between the PFs first budget and the MMDs last, any meaningful judgement on what this all means lies far ahead. Implementation is always the bottom line. From what we know now, the PF has made a competent start. The fundamental budgetary objectives are acceptable and reassuring as long as there is prudent economic management and commitment to fiscal discipline. The hand of
the MMD government is still very much visible, but this is no bad thing for continuitys sake. We may learn a lot more about the PFs direction from the 2013 budgetand in how 2012s is implemented. For now, let us wait in anticipation. Our pockets are open in readiness.
Isaac Ngoma is President of the Economics Association of Zambia.
(continued overleaf) Zambia Analysis, December 2011 & January 2012 | 15
Budget Analysis
Table 1. Expenditure, 2011 and 2012 budgets
Allocation % of budget (ZMK billions) 2012 8,304.8 856.1 257.1 120.1 594.7 7,400.5 1,650.1 1,416.8 200.0 362.5 1,648.5 1,017.4 8,120.0 266.1 40.0 1,698.0 500.0 300.0 25.0 1,369.7 864.0 437.1 4,658.8 4,481.0 39.0 52.6 31.8 352.9 150.3 2,579.9 389.3 136.9 4,850.5 796.4 655.6 474.2 55.0 27,698.3 100% 2.4% 0.5% 17.5% 9.3% 0.1% 1.3% 6.0% 3.7% 29.3% 30.0%
Allocation % of budget (ZMK billions) 2011 5,855.5 708.9 146.2 108.0 423.3 4,478.5 1,170.7 494.6 244.6 362.5 1,485.8 919.0 5,252.0 248.9 76.0 1,231.6 485.0 150.0 15.0 355.8 314.3 3,312.0 3,098.0 15.9 63.3 121.3 646.6 555.0 1,772.9 152.4 108.0 3,828.8 444.2 547.5 358.6 42.7 20,537.4 100% 2.7% 0.5% 18.6% 8.6% 0.1% 3.2% 7.2% 4.5% 25.6% 28.5%
Allocation % of budget (ZMK billions) Change 2449.3 147.2 110.9 12.1 171.4 2922.0 479.4 922.2 200.0 -244.6 0.0 162.7 98.4 2868.0 17.2 -36.0 466.4 15.0 150.0 10.0 1013.9 864.0 122.8 1346.8 1383.0 23.1 -10.7 -89.5 -293.7 -404.7 807.0 236.9 28.9 1021.7 352.2 108.1 115.6 12.3 7,160.9 0.6% -0.3% 0.0% -1.1% 0.7% 0.0% -1.9% -1.2% -0.8% 3.7% 1.5%
General Public Services Executive Executive o/w Grants to local authorities Constituency Development Fund Legislation General government services o/w Domestic debt interest External debt Compensation and awards Elections Centralised administrative services Defence Public order and safety Economic affairs General economic, commercial and labour o/w Empowerment Fund Agriculture forestry and fishing o/w Farmer Input Support Programme Strategic Food Reserve Food Security Pack Fuel and energy o/w Kafue Gorge Lower power project Rural electrification programme Transport o/w roads Communications Tourism Environment protection Housing and community amenities o/w water supply and sanitation Health o/w infrastructure development Recreation, culture and religion Education o/w infrastructure development Social protection o/w public service pension fund Social cash transfer GRAND TOTAL
Budget Analysis
Table 2. Resource envelope, 2011 and 2012 budgets (ZMK billions)
2012 Total tax revenues Income tax Company income tax PAYE Withholding & other Mineral royalty Value added tax Domestic VAT Import VAT Customs and excise Customs duty Excise duty o/w Fuel Levy Non-tax revenues Fees & Fines Exceptional Medical levy Dividends & on-lending Domestic borrowing Total domestic revenue and financing Total foreign grants and financing Grants General budget support Sector budget support Project grants Foreign financing Programme loans Project loans TOTAL REVENUE AND FINANCING 19,267.7 10,271.5 3,264.4 4,216.2 909.5 1,881.4 4,723.6 392.0 4,331.6 4,272.6 2,108.6 2,164.0 460.6 708.3 465.0 216.2 19.2 7.9 1,324.3 21,300.3 6,398.0 1,894.4 541.4 219.2 1,133.7 4,503.6 2,652.0 1,851.6 27,698.3
2011 15,230.1 7,800.8 1,337.1 3,710.6 894.7 1,858.4 3,998.8 828.5 3,170.3 3,430.5 1,674.5 1,756.0 313.8 539.0
Change 4,037.6 2,470.7 1,927.3 505.6 14.8 23.0 724.8 -436.5 1,161.3 842.1 434.1 408.0 146.8 169.3
1,219.8 16,988.9 3,548.5 1,587.7 586.6 1,001.1 1,960.8 1,762.0 198.8 20,537.4
104.5 4,311.4 2,849.5 306.7 -45.2 -781.9 1,133.7 2,542.8 890.0 1,652.8 7,160.9
Policy Analysis
Getting more out of farmer input support

Analysis by the Indaba Agricultural Policy Research Institute shows there is more to supporting farmers than subsidising fertiliser
Zambia has enjoyed two consecutive record-setting years of maize production that coincided with massive increases in distribution of subsidised fertiliser through the Farmer Input Support Programme (FISP). Research has demonstrated, however, that the primary cause of the growth in production has been unusually favourable weather, not increased fertiliser use. Using the 2006, 2007 and 2008 harvests as the baseline, 15 percent of the additional maize production in 2011 is the result of increased fertiliser use, while 42 percent is attributed to differences in weather.1 Much of the remainder is attributable to the activities of the Food Reserve Agency (FRA) through incentives for the expansion of maize farmland. However, the governments expenditures on FRA have primarily gone to 30 percent of the farmers in Zambia who sell maize (see
Mountains of Maize, Persistent Poverty in last months issue of this magazine). Moreover, consecutive surplus harvests have masked the fact that Zambian land productivity falls far short of the standard for other surplus producing countries such as South Africa, Argentina and the US (see figure). Despite the dramatic increase in the use of FISP fertiliser in recent years, the maize yield in Zambia has been stagnant for decades. The fact remains that most small farmers still do not produce enough to feed their own families, and very few sell any substantial surplus. As the newly elected government forms agricultural policies that will guide investments over the next 5 years, it might be useful to ask why input subsidies have not increased productivity more effectively.
Image: Tom Harris
Policy Analysis
Ineffective inputs on acidic soils

Criticisms of Zambias input programme often revolve around issues related to corruption and untimely input deliveries. Much less attention is given to fact that inputs other than fertiliser could also be considered as a means to increasing productivity. Perhaps surprisingly, if subsidies were to focus on a single input alone, fertiliser may not be the most appropriate technology for many Zambian maize fields. At the most sophisticated level of commercial farming, minute variations in soil characteristics and other agronomic conditions dictate that the appropriate input technology can vary from one corner of a field to the other. As this article is being written, there are commercial farmers (most likely even some in Zambia) using on-the-ground photo sensing and infrared technologies to adjust input mixes and optimise input use on their maize fields with great precision. It is obviously unrealistic to expect the government to do this for all the farmers receiving input subsidies, but this is the level of efficiency with which small surplus producing farmers will increasingly need to compete, and policy-makers could address at least one glaring disadvantage they face. Specifically, a forthcoming study by the Indaba Agricultural Policy Research Institute demonstrates that soil acidity is a substantial limiting factor in Zambian maize production. This is not a new revelation, but the fact that nothing is being done about
it continues to impede most Zambian farmers yields and livelihoods. Zambian soil is, for the most part, acidic by nature due to the parent material from which it was derived several thousand years ago and the pattern of rainfall prevalent in this part of the world. Over the past few decades, however, concentrated crop portfolios and extensive fertiliser use have worsened the problem. Acidity on maize fields affects yield both directly, through the impact it has on the plants themselves, and indirectly, through the impact it has on fertilisers effectiveness. Basal fertiliser in particular, which contains primarily phosphorus, is vulnerable to nutrient lockup in the acidic soils that prevail throughout Zambia, rendering it of little use to plants. When phosphorus is exposed to certain other elements it chemically bonds with them, forming what is known as a phosphate. Not all phosphates are alike, however, and in terms of phosphoric fertiliser application, the type that is formed is highly correlated with soil acidity. On acidic soils, phosphorus in basal fertiliser converts to aluminium and iron phosphates, which are unavailable for plant consumption. On neutral and semi-neutral soils, phosphorus will convert to mono- and di-calcium phosphates that are readily consumed by the plant. This is important because phosphorus is a necessary element in the processes of storing the suns energy and plant growth.
Figure 1: Maize yields in Zambia versus global exporting countries (19612009)
Source: FAOSTAT, accessed July 2011
12000 Argentina 10000 RSA USA Zambia
Average yield (kg/ha)
8000
6000
4000
2000
0 200 200 200 196 196 196 197 197 197 197 199 199 198 198 198 199 200
Policy Analysis
Table 1: Average yield response to basal fertiliser in Zambia over soil acidity ranges 3.14.3 2.175 51% 4.45.4 3.813 47% 5.57.1 7.876 2%
Soil pH Kgs maize per kg basal applied % of maize fields nationwide in this category
Source:
FSRP/CSO Supplemental Survey data, 2004 & 2008 and authors calculations.
Table 1 shows the estimated average marginal yield response to basal fertiliser application in Zambia over a range of potential Hydrogen (pH) levels (pH is the standard unit of acidity measurement where lower values indicate more acidity) and the distribution of fields in the nationally representative sample of the more than 7,000 fields used to measure them. In the pH range below 4.4 (i.e. in very acidic soils) yield response to basal application is just 2.18 incremental kilograms of maize per kilogram of fertiliser. Response is slightly higher over the pH range from 4.4 to 5.5, where the average effect is 3.81 kg/kg. Above the 5.5 pH level (i.e. in semi-neutral soils) yield response increases considerably, more than doubling to 7.88 kg/kg, on average. There is a vast body of agronomic literature on the limited effectiveness of phosphoric fertilisers on maize in acidic soils that corroborates these findings. The unfortunate fact for Zambia is that the overwhelming majority of all maize fields (98 percent of those used in the study generating these estimates) are in areas where most soils are acidic and where basal fertiliser is relatively ineffective. In his first speech to the new Parliament on 14 October, President Sata stated that his government would continue input subsidies with a view of enabling farmers to be weaned-off the programme while continuing to use fertilisers they will then purchase commercially. At these response rates, however, this vision is unattainable because using fertiliser without mitigating soil acidity is only profitable when the fertiliser can be purchased at subsidised prices.
The Zambian Agricultural Research Institute (ZARI) is the most logical place for this research to take place. The results of the study mentioned above were shared with several researchers and officials at ZARI. All agronomists and officials interviewed were fully aware of the fact that acidity affects the productivity of both maize plants and the fertiliser applied near them, and the fact that most Zambian soil is acidic. Indeed, Zambian agronomists even have working theories on how to solve the problem. In the opinion of senior ZARI researchers, one approach is to develop acid-resistant seed varieties that are specifically designed to prosper on Zambian soils. There are, however, very limited resources dedicated to such endeavours. According to one official, the budget allocated to improved plant development for all of Zambia is less than ZMK 0.5 billion annually and the laboratories tend to receive less than half of that. The remainder is frequently re-allocated to either FISP or FRA. That said, additional research might not be necessary to improve yields in the short term because ZARI has generated Zambia-specific knowledge that has never been fully exploited. It is known to agronomists (and commercial farmers), for example, that lime application is the most direct management practice to solve the problem of soil acidity. Certain types of lime even have the added benefit of adding calcium and magnesium (useful elements) to the soil, while neutralising manganese and aluminium (harmful elements).
Changing the strategy

This calls for a shift in the design of agricultural productivity policies, away from fertiliser subsidies and towards developing a more integrated programme. This may include fertiliser subsidies along with other inputs and agronomic practices, but must allow for sustainable and profitable crop intensification, even after the subsidies are withdrawn. That a policy shift is necessary is clear, but how new investments should be prioritised is less so. Among other things, designing and implementing new programmes will require significant research and extension. 20 | Zambia Analysis, December 2011 & January 2012
If Zambian officials are aware of both the acidity problem and at least one potential solution to it, why do smallholders not attempt to manage their soils pH? (Less than 2 percent of the studys sample applied lime, and those who did applied at just 5-10 percent of the recommended rate, on average). According to officials, there are two primary constraints. First, the cost of getting the appropriate amount of lime on to the field is high. The unit price of lime itself is relatively low (the retail price is approximately 10 percent of that of basal fertiliser), but ZARI application recommendations are 12 tonnes per hectare (510 times greater than the recommended basal fertilisation rate). The cost of moving that quantity of lime has
Image: William Burke
Policy Analysis been prohibitive. For example, while a 50 kg bag of lime may cost ZMK 17,000 at the retailer, officials estimate the cost at the farm gate can be as high as ZMK 80,000 in more remote areas. If this is true, distributing sufficient lime would indeed be twice as costly as distributing the current amount of basal fertiliser. That said, ZARI has experimental results demonstrating that lime alone can more than double yields on acidic soils, while phosphoric fertilisation alone has almost no impact. In short, the added benefit of distributing lime would almost certainly outweigh the added cost. Unfortunately, these results have never been widely published. The second constraint is the lack of farmer awareness regarding the negative impacts of soil acidity and the mitigating effects of lime application. There was a brief period during which the Programme Against Malnutrition (PAM) included lime in the package of goods distributed to its beneficiaries. Not realising the potential benefits, or in some cases believing lime would damage their soil, many recipients either disposed of their lime or mixed it with water to use as paint for their houses. Low awareness is a surmountable hurdle but, at current budget allocations, extension officials claim they are not adequately equipped to convince farmers to shift input strategies. For example, ZARI has produced production guides for several crops, including one for maize which discusses the importance of liming. Funding, however, has limited production of these guides to about 2,000 copies per crop. In a nation of nearly 1,500,000 small farming households, this is staggeringly inadequate. That said, extension officials claim that guides alone are not sufficient to change behaviour. On-the-ground evidence will be necessary, they say, through example plots that demonstrate the benefits of soil pH management over several years. Resources for maintaining such plots have not been allocated. Officials estimate that one plot per District Camp would sufficiently sensitise farmers about the benefits of managing pH. There are roughly 1,700 such Camps in Zambia, each with an extension officer already in place. Roughly half of them are in areas where highly acidic soil is prevalent. By official reckoning, the additional cost of installing and managing each demonstration plot would be ZMK 2.55 million a year. A pilot programme of 100 Camps over three years would thus cost less than one percent of the governments allocation to FISP in 2011 alone. Managing one demonstration plot in every one of the 800 Camps where soil acidity is the worst would cost, at most, ZMK 4 billion a year. This is less than the ZMK 5.2 billion allocated to the annual agricultural show in 2011, a three-day event held in the capital which, incidentally, is partly a farmer outreach programme. Liming, of course, is not the only solution to the productivity limitations of acidic soil. For example, it has been shown that applying small bands of fertiliser very near, around or under the seed at the time of planting makes phosphoric fertilisation more effective in acidic soil. This is known as banding application, as opposed to spreading fertiliser evenly over the entire field (broadcasting) as is commonly practiced. Private firms in developed countries produce phosphorus-enhancing fertiliser supplements that alter the soil chemistry near the fertiliser to protect it from becoming unavailable to plants. These fertiliser supplements have been tested extensively on US soils where they have been found to increase yields by 1520 percent. The benefits may be even greater on Zambias more acidic soils. Increasing the land productivity of small holders is an obtainable goal for Zambian policy-makers. Results from the study discussed here show that it will be important for new policies to acknowledge that there are potentially much more effective input alternatives to fertiliser alone. Acidity-mitigating measures could be taken to improve yields meaningfully for the first time in decades. This may be through tailored application methods, the use of supplementary inputs such as lime and phosphorus enhancers, or some combination of pH mitigation and management practices. The optimal prescriptions are unknown and finding them will require investments in agronomic research specific to Zambias agricultural systems. On the other hand, it is clear that uninformed subsidy policies will not succeed in producing long-term economic growth. On 3 August 2011, shortly before becoming Vice-President of Zambia, Guy Scott wrote openly in his column in The Post newspaper about the need to improve and diversify the input subsidy programme. We wholeheartedly agree. In fact, there is a need to revise the set of productivity enhancing policies as a whole. Addressing the issues related to soil acidity and allocating more resources to agricultural research and development would be a good start.
The Indaba Agricultural Policy Research Institute is a local institute dedicated to enhancing the publics understanding of agricultural policy issues in Zambia. Indaba Institute members William Burke, Thomas Jayne and Chance Kabaghe contributed to the preparation of this report. This article draws on results presented in: W. J. Burke. 2011. Determinants of maize yield response to fertiliser application in Zambia: Implications for strategies to promote smallholder productivity. PhD dissertation. Department of Agricultural, Food, and Resource Economics, Michigan State University. East Lansing, Michigan.
Figures according to N. M. Mason, W. J. Burke, A. Shipekesa, and T. S. Jayne, The 2011 Surplus in Smallholder Maize Production in Zambia: Drivers, Beneficiaries, & Implications for Agricultural & Poverty Reduction Policies, Lusaka: Food Security Research Project Working Paper No. 58, 2011. Downloadable at: http://aec.msu.edu/fs2/zambia/wp58.pdf
Foreign Policy Analysis
New relations, old issues

Sishuwa Sishuwa on the pitfalls of the Sata governments approach to foreign policy
It is nearly 100 days since Michael Sata assumed Zambias highest office. While the first months of his rule have been eventful on the domestic front, foreign policy is another matter altogether. For example, the governments response to NATOs activities in Libya, the death of Muammar Gaddafi, and the matter of recognition of the National Transitional Council was a deafening silence. At home, Satas first public appointment with a foreign representative was with the Chinese Ambassador to Zambia. One could have interpreted this decision as a signal that a New Look policy towards Beijing was in the offing. But Sata has since moved to quell such thoughts by meeting and assuring top American and British officials that they too have an important position in his government. It is difficult to know what really drives the new government or what it stands for when it comes to foreign policy. The appointment of outspoken and labour-oriented Chishimba Kambwili as Minister of Foreign Affairs has not helped the situation. The choice surprised many analysts; the position is ordinarily reserved for an experienced and mature figure with a deep understanding of foreign policy issues. In spite of his oratory gifts and other strengths, no one can accuse Kambwili of possessing such qualities. The appointment suggests that Sata does not rate foreign policy matters very highly among his priorities, at least for now. Of course, the President may advance the excuse that his choice was constrained by the scarcity of suitable candidates within the PF pool. But he could have easily found qualified and experienced Zambians for the position if he was serious enough about it to rise above partisan politics. But the PFs campaign message prior to the elections focused largely on domestic issues, so it is hardly surprising that foreign policy issues seem to be secondary in terms of the new governments priorities. Without attempting to comprehensively unravel the enigma 22 | Zambia Analysis, December 2011 & January 2012
of the Satas foreign policy, this article looks at two episodes in order to make some sense of his approach as well as to highlight some of its pitfalls. The first was his refusal to travel to Malawi on account of having been deported from that country in March 2007. The second was the decision to apologise to Angola over the MMDs dealings with Jonas Savimbis rebel National Union for the Total Independence of Angola (UNITA).
Taking it personally
On 15 March 2007, while still in opposition, Sata landed at Malawis Chileka International Airport and was immediately arrested. The PF leader was detained at Blantyre Police Station for over eight hours before he was unceremoniously and embarrassingly driven to Mwami border post by immigration officers. His passport was confiscated and only given back to him upon arriving at the border near Chipata. This was in spite of the fact that Sata had travelled to Malawi by air and had a return air ticket. To crown it all, the future Zambian President was deported, declared a prohibited immigrant forthwith and warned that he would be arrested if he entered Malawi while the deportation order was still in effect. Eager to know why he had been arrested and deported, Sata engaged a local lawyer and took the Malawian government of President Mbingu wa Mutharika to court. The matter is still in court today and the Malawian government has yet to furnish the now Zambian President with reasons for what happened. Following his election as President of Zambia in September, Sata demanded a public apology from the Malawian government over his unexplained deportation. He refused to attend the Common Market for Eastern and Southern Africa (COMESA) Heads of State summit that was held in Malawi from 14 October, arguing that he could not travel because, legally, the
Image: ZANIS
President Kaunda greets Angolan President Eduardo dos Santos on an early visit to Zambia.
deportation order was still in effect. To show that his government is not against Malawi per se, however, President Sata sent Vice-President Guy Scott in his stead. In the aftermath of the meeting, the Malawian government revoked the deportation order and stated that Sata was free to enter the country and would be accorded the status due to any head of state. But Sata has stood firm, insisting that Mutharika, renowned for his arrogance and lack of humility, should apologise or at least furnish him with the reasons for his infamous deportation. What do we make out of this episode in relation to Satas foreign policy? Ever since the deportation, people had feared for Zambias relationship with Malawi in the event of Sata becoming president, and their fears have now been vindicated. Sata was right to demand for an explanation of why he was deported andin the absence of convincing justificationsfor
an appropriate apology. What the Malawian government did was simply wrong. Any democratic government that respects individual rights and freedoms would not have reacted to Satas visit to Malawi the way Mutharikas regime did. It was wrong to expel an opposition leader who posed no danger to public safety, had committed no crime nor violated any laws. Opposition party leaders, like those in government, are also democratic representatives of the people. Whenever they travel, they represent their constituencies, political parties and indeed countries and should therefore be accorded the respect that they deserve. Although the reasons for Satas deportation remain undisclosed, it is not unreasonable to suggest that Satas deportation had much to do with the fact that he was likely to meet Mutharikas sworn adversary, former Malawian president Bakili Muluzi. This was a serious violation of both Satas and Muluzis human rights. Zambia Analysis, December 2011 & January 2012 | 23
However, to suggest that Sata has a legitimate case against Malawi is not to say that even his approach was spot-on. Sata was wrong to drag the whole nation into what is otherwise a personal issue. Although he was representing the PF, he was not representing the whole country because at the time he was deported he was not yet an elected public official. Neither was he on a mission that concerned the whole nation or the aspirations of all Zambians. So we can ask of this apology that Sata is demanding on behalf of Zambia: what is in it for the nation? In discussing his own personal relationship with Mutharika, Sata should have brought out broader issues that are beneficial to Zambia and Zambians and even to the region as a whole. For instance, he should have used that opportunity to condemn Mutharikas record on human rights in Malawi and urge him to address human rights violations in his country. There is growing consensus in Malawi that Mutharika is becoming ever more autocratic and intolerant of criticism. Intimidation of civil society officials, lack of democratic space for opposition parties, media restrictions and alleged corruption have become widespread. Drawing attention to these crucial broader issues would have made more sense than simply downgrading the episode to a personal quarrel. But the Zambian governments decision to invite Malawis vice-president Joyce Banda, who has fallen out with Mutharika, to Zambias independence celebrations, as well as the reported decision to award a broadcasting licence to a Malawian opposition-allied radio station to transmit from Eastern province, not only issues from the SataMutharika stand-off but is also likely to unnecessarily worsen the relations between the two countries. One hopes that lessons have been learnt from this issue and that the nation will see a more diplomatically mature response to the matter than it has seen so far.
An unexplained apology
Another issue that threw up much dust was the apology that Kenneth Kaunda was dispatched to convey to Angola over the MMDs dealings with UNITA. The pitfall of that move lies in the fact that neither the purpose of that apology nor the response from the Angolan government has been disclosed to the Zambian public. As opposed to keeping the reasoning a mystery, a nuanced explanation of what inspired the governments apology to Angola over the MMD governments dealings with Jonas Savimbis UNITA would do for both historical and contemporary reasons. First, Sata was a senior official in the MMD government. 24 | Zambia Analysis, December 2011 & January 2012
Where did he stand on the issue at the time? Why did he not resign if he was opposed to the collective decision that was taken then? Second, is the apology an official admission of guilt? Furthermore, given the fact that both the Kenneth Kaunda and Frederick Chiluba governments recognised UNITA instead of the Peoples Movement for the Liberation of Angola (MPLA), the nation deserves to know why the apology was not extended to the Kaunda era and whether or not Kaunda was the best person to deliver the apology given that he was part of the problem. In his book Into Exile and Back, Simon Zukas recalled how President Kaunda once sought arms assistance from the US in the 1970s to sponsor Savimbi and his UNITA political machine and also how Vernon Mwaanga and Rupiah Banda frequently boasted that they had managed to convince Kaunda and his government to isolate the MPLA in favour of UNITA. These are serious revelations over which Kaunda, Mwaanga and Banda should be interrogated. University of Zambia students once publicly protested against the recognition of UNITA by the Kaunda regime while Chilubas government, in which Sata was a senior figure, vehemently denied any association with UNITA. What has changed? Has Angola complained or threatened not to trade with Zambia if we did not apologise? While the apology may have been made in good faith, there is need for the government to learn to communicate to the nation some of its actions to avoid misinterpretation between the governed and their government. Given the fact that the new government has only been in power for a few months, most of the pitfalls of the Sata presidency so farespecially in relation to foreign policy matters are not untypical for a new government with limited administrative experience. It is also understandable that in the first 100 days priority was given to pressing domestic issues such as the setting up of government, the establishment of commission of enquiries to look into various issues including the Mongu killings, the sales of Finance Bank and ZAMTEL, the operations of the Zambia Revenue Authority and the launch of investigations into suspected plunder of national resources by the previous administrations. But now that they have settled in, the nation will want to see how the government moves from here on foreign matters, and whether they have drawn any lessons from the previous three months.
Sishuwa Sishuwa is reading for a doctorate in Modern History at Oxford University as a Rhodes Scholar.
Special Feature
Simply the worst?

Findings from Human Rights Watch about labour practices in Chineseowned copper mines are flawed, say Barry Sautman and Yan Hairong
A recent report on labour abuses by Chinese-owned mining firms in Zambia has been a predictable media sensation. Countless news outlets and blogs have reported the conclusions of Human Rights Watch (HRW) report that the four firms parented by the China Non-ferrous Metal Mining Company (CNMC) are generally the worst on issues involving health and safety, hours of work, and the right to organise. In this article we challenge both the methodology and empirical conclusions of the report, arguing that there is little evidence to believe Chinese-owned operations are worse than any others. Moreover, we suggest that the report accords with the larger, highly-skewed Western discourse of China in Africa.
Worst for safety?

The HRW report is based largely on interviews with miners. Their concrete observations about the working conditions and deficiencies they have experienced or witnessed cannot be dismissed. But the interviewees cannot, however, reliably infer from their own experiences that CNMC operations are less safe than others elsewhere. Any such inferences are highly suspect given the climate of intense anti-Chinese prejudice present where they work and live. The surest way to know whether a mining companys safety practices are greatly deficient compared to other firms is to determine, ceteris paribus, whether it accounts for a large disproportion of mining fatalities. Firms in Zambia cannot avoid reporting fatalities. Injuries may be under-reported, but serious ones should strongly correlate with fatalities, as most fatalities and serious injuries result from rock falls. Statistics provided by the Mineworkers Union of Zambia (MUZ) on fatalities in all foreign-owned copper mines and for CNMC-owned operations indicate that CNMC is unexceptional. CNMC-firm fatalities in Zambia25 of the countrys total of 217 from 2001 to mid-2011, or 11.5 percentare not disproportionate. Moreover, mining fatalities in Zambia are not especially high by world standards; Zambia is not among the 60 most dangerous
countries for miners according to the International Federation of Chemical, Energy, Mine and General Workers Unions. Unsafe conditions of service remain an industry-wide problem. There have also been firm-specific studies of Chibuluma mine under South Africas Metorex firm (2005), Konkola Copper Mine (KCM) (2007) and Mopani Copper Mine (MCM) (2010) that have shown substantial safety problems. If the claim is that CNMC is worse than other mining firms in Zambia with regard to certain practices, the reasons for this claim must be convincingly set out. The HRW report asserts that it stems largely from the attitude of Chinese owned and run companies in Zambia, which have tended to treat safety and health measures as trivial. Explaining CNMCs safety outcomes only in terms of attitudes is simplistic. The relative number of fatalities is not determined solely by the relative safety consciousness of mining firms, but also by the operational configurations of their mines. Underground mines typically have more casualties than open cast (open pit) mines. The deeper underground mining goes, the greater the likelihood of rock falls and casualties. At over a thousand meters, the CNMC mine Non-Ferrous Company-Africa (NFCA) Chambishi is deep underground. The CNMC China Luanshya Mine (CLM), which is at least 580 metres deep, is also an underground operation. Open cast mining, especially to extract surface deposits, is not only safer, but also cheaper than deep mining, so mine configurations affect wages as well as safety (more on this below). Other, larger Zambian copper mining firms do not have only underground mines; some have open cast mines and some are mixed underground/open cast operations. KCM is owned by Vedanta, the UKIndian major. KCM Nchanga open pit mine plus KCM Nchanga underground mine had 32 fatalities from 200111, while KCM Konkola, an underground mine, had 31 fatalities. MCM is owned by the Swiss-based mining and metals trading giant Glencore. MCM Nkana has underground and open cast mines and had 55 fatalities from 200111, while MCM Mufilira, an underground mine, had 27 fatalities. Zambia Analysis, December 2011 & January 2012 | 25
Special Feature
For 22 months, from October 2006 to August 2008, NFCA had no fatalities, a rarity in the industry When asked about its record, CEO Wang Chunlai stated that accidents increase when operations and employment levels expand and explained to us: Before, we only had one ore body to work on; now we have two [but] as you go deeper there is more stress on structures. Now we go down to more than 1,000 meters. The ceiling there gets unstable and that can create injury. We do try to look for weaknesses in our safety work. As the scale of work enlarges, weve recruited more new workers, so our training may be lagging and we have to invest more in training. In a 2011 interview, the Mine Safety Department (MSD) Chief Inspector of Mines spoke negatively of NFCA, but only of its first five years in operation (200308), when he said it was the worst mine in terms of safety. Now, however, he views it as OK in terms of safety, no longer standing out from the others. As for CLM, the MSD Director told us that it had the industrys best dust abatement system. From June 2009 to December 2010, CLM had only one fatality. No one, including the company itself, denies health and safety problems in CNMCs Zambia facilitiesor that such problems require urgent attention. Taking into account fatality figures and differences in the configuration of mines, however, 26 | Zambia Analysis, December 2011 & January 2012
there is no basis to claim that Chinese-owned copper operations are the worst in terms of safety.
Why are wages lower?

CNMC mines still have to catch up with other mines on in terms of pay, but the gap has been narrowing. There are a number of reasons why some mines pay more than others. One is the size and productivity of the operation. The total workforce (including permanent and contract workers) for each of KCM and MCM, is more than three times the CNMC mines total workforce (20,000 each versus 6,000); in 2010 they produced five to thirteen times the amount of copper concentrate (138,000 tons for KCM and 98,000 tons for MCM versus 22,000 tons for NFCA and 10,000 tons for CLM). In a 2011 interview, John Lungu compared miners basic salaries at the two CNMC Zambia mines with the countrys largest foreign mining firms: MCM and KCM are the best payers among the mine owners. But the Chinese have responded to criticisms. The lowest wage in Chambishi went up from 400,000 Kwacha to K1.5 million and thereve been later increments. There are a number of mining-specific reasons why there is still a wage gap between CNMC-owned mines and those of the larger firms. These reasons in part have to do with the costs of
Image: Yan Hairong
Special Feature rehabilitating Chambishi (which had been closed for 13 years and was flooded before CNMC acquired it) and of refurbishing of the antiquated Luanshya mine, which had been neglected by previous owners and closed after its abandonment by the Swiss/ Israeli partnership J&W in 2008. Furthermore, there are differences in the copper content of mining concessions that affect wage levels. A section engineer at Chambishi Mine remarked to us in 2008: With 1.8 percent copper content, the former [owner] didnt think it was worth their while to mine it. 1.8 percent in Zambia is considered a tail [leftovers] mine. They dont think it was worth their effort if its lower than 3 percent. Deep underground operations and lower copper content make CNMC production more labour-intensive, with lower productivity. NFCA and CLM Luanshya together accounted for 4.5 percent of copper concentrate production in Zambia in 2010 while having about 10.5 percent of its workforce. NFCA and CLM Luanshyas productivity (7.1 tons per person) is significantly lower than the industry average in both Zambia (12.3 tons/person) and China (13 tons/person). When we asked NFCA CEO Wang Chunlai about his companys reputation as a low-wage operation, he pointed out that NFCA is young and labour-intensive. He also noted that salary increases are a cumulative annual percentage: part of the reason why CLM pays higher wages than NFCA is that it is an older enterprise and CLM acquired longer-serving workers, even though the starting pay is about the same as for NFCA. While CNMC companies are still behind the industry standard in pay, they do better in terms of job security. During the financial crisis, when other companies were retrenching their workforces and closing operations, CNMC companies made a promise of three nots: not to reduce investment, not to cut down on production, and not to lay off workers. Starting in 2012, all NFCA and CLM workers will be permanent employees (contract workers are still heavily used in KCM and MCM). The nickel mine Albidon Ltd., of which the Chinese state-owned enterprise Jinchuan has a 51 percent share, indefinitely suspended operations in November 2011 due to a 23 percent decline in the price of nickel over the preceding four months, but it continues to pay the full salaries of its 2,000 or so employees. MUZ is not recognised by the two CNMC processing enterprises, Sino-Metals and Chambishi Copper Smelter, and the reason for this needs further investigation. But the facts so far do not support the claim that CNMC companies are hostile to MUZ for political reasons. In fact, we were told by the MUZ branch chairman at CLM that When Chinese came [to take over Luanshya], it was at a time of anti-Chinese sentiment. The union supported it [CNMC]. What has been most devastating to union activism in Zambias mining sector was the drastic decline in the membership due to retrenchment during the financial crisis. MUZs membership, for example, dropped from 26,000 before the crisis to 12,000 in August 2011.
A skewed focus
CNMCs practices are worse than others in some respects and better in othersand they are slowly improving. There should be improvements across the board for mineworkers in Zambia who still receive a subsistence wage and live in under-serviced communities, a possibility made less rather than more likely when attention is focused exclusively on the Chinese. But why does HRW focus on labour abuses at CNMC firms in Zambia? Labour abuse in Zambias copper industry, while deplorable, is not an outstanding issue in the context of the African continent, which like many other parts of the world, experiences massive human rights violations, including grave labour rights violations. Despite focusing on just one industry in one country, HRW dubiously asserts its report begin[s] to paint a picture of Chinas broader role in Africa. HRWs focus plays into the racial hierarchy already present in Zambia and risks reinforcing racist stereotypesthat the Chinese are cruel and have a disregard for human lifewhich have endured for more than a century in the West and which have now spread to Africa. Is it a coincidence that HRW studies of abuses in the mining industry in Africa have been confined to one about a Chinese state-owned enterprise and two others that implicate the Zimbabwean government, a target of Western sanctions? The HRW study tells us more about the political agenda of HRWand the mainstream discourse of China-in-Africa that it reinforcesthan about Chinese-owned operations in Zambia.
Barry Sautman and Yan Hairong are affiliated with the Hong Kong University of Science & Technology and the Hong Kong Polytechnic University respectively. A fully-footnoted version of this article is available from the authors (sobarrys@ust.hk or hairongy@gmail.com), who are also producing a much longer academic study on the subject.
Union membership
Both the MUZ and National Union of Miners and Allied Workers (NUMAW) are active in NFCA and CLM. NUMAW is better represented in NFCA and MUZ better represented in CLM. The
Books
Image: Marc and Nick Francis (whenchinametafrica.com)
Beijing rules
Chola Mukanga weighs up what we have to fear from Chinas growing influence The Beijing Consensus: How Chinas authoritarian model will dominate the 21st century
By Stefan Halper (Basic Books, 2011)
A week never passes without hearing something about Chinas growing dominance of international economic and political relations. Such international exposure comes with increased global scrutiny of Chinese society and policies. Everyone has an opinion about Chinas place in the world. Is China colonising Africa? Will it initiate global disorder? Or will it eventually implode? These questions reflect the fact that the rest of the world does not really understand China. The public narrative about China has largely been scripted by an ignorant and impatient media. This has produced a rather unhelpful black and white juxtaposition. You are either for Chinas global emergence or against it. Stefan Halpers The Beijing Consensus marks a refreshing departure by seeking
to provide a more nuanced assessment of Beijings challenge to the global order. Written largely from an American perspective, the central thesis of the book is that although Chinas emergence on the international stage does pose a serious danger to global order, this is not primarily military. Rather it is a threat of ideas about how prosperity is attained and the society we want to live in. China is championing a market authoritarianism which it is now exporting across the globe. The Chinese model promises rapid growth but excludes things that many in the West believe underpin a good society: free speech, freedom of worship, open government and political opposition. Such a model, Halper argues, is proving attractive to dictators and partial democracies as they flock to Beijing to learn how they can combine staying in power with economic growth. All this poses a strategic challenge to the West, particularly the USA and its global leadership. In Halpers words China is shrinking the West and its values. The global financial crisis has accelerated
matters: China emerged from the first phase of the crisis in both substance and tone as the new leader of the global order and that role will become more pronounced in decades to come. The question for genuine democracies is whether Beijing can be considered a responsible stakeholder while its policies continue to enable systematic repression among its impoverished partners. If the West is able to confront this challenge, it must first appreciate the nature of the threat and recognise that Chinas democratisation is not inevitable. To understand China we need to focus on the interests and incentives that are driving its leaders. A key observation is that China is not deliberately setting out to diminish the power of the West, but is assuming global economic and political dominance in response to its leaders need to pacify the masses. Domestic pressure has forced Chinas leadership to focus squarely on growth and sacrifice all else on its altar. The globalisation of information has also made Beijing vulnerable to international pressure, and this combination
Books of domestic and international pressures has led to the emergence of two Chinas co-existing in the international system: a good neighbour and the rogue state. This duality in Chinas global presence limits the extent to which the democratic West can steer Beijing to a more positive course. China will continue to simultaneously support and subvert global governance structures for its own benefit. And Beijing will continue to export its market authoritarian model as long this keeps the leaders in power. Taken together, Halpers central arguments are difficult to challenge. The evidence in sub-Saharan Africa says that Beijings influence is growing. It appears that the fear of antagonising China looms large among African leaders, past and present. Earlier this year Zambia found itself at a centre of a storm when workers were fired upon by Chinese employers: a day later then Vice-President George Kunda was in Beijing praising the Chinese government and saying absolutely nothing about the incident, while then President Rupiah Banda moved to tell Zambians to keep quiet about such things. But the central issue remains whether Beijing really has begun to export its authoritarian model or whether that is simply a fear that is yet to be realised. It is not clear from the evidence in the book whether Beijings influence is replacing genuine democracy with illiberal democracy in developing nations or whether it is merely holding back the emergence of more democratic states. This distinction is vital and goes to the heart of what the West is purported to have already achieved globally and what Beijing is threatening to supplant. The lack of clear evidence on this matter is a major weakness of Halpers narrative. The question of whether China has made things worse for the Africa is undoubtedly a complex question, but one which is very important. It requires a deeper country-by-country assessment of how China has affected outcomes and a proper grasp of the counterfactualthat is, a world without Beijing. Taking Zambia as an example, it is not obvious that we would necessarily be better off in terms of democratic outcomes without Chinese influence. Beyond the perverse economic plunder of mineral resources (which is primarily Western led), it is difficult to argue that in terms of governance, the 19912001 period under IMF/World Bank leadership was necessarily better than the 200210 period when China expanded its Zambian interests. So what, then, is the value of Western values? Are we really just referring to American dominance, for better or for worse? In that case, for many poor nations theres little difference between a Beijing dominated world and an American one. Similarly, if we look at the last MMD governments policy, it is unclear what it was learning from Beijing. The Beijing model is direct state-led involvement in key strategic sectors and stricter requirements on foreign investments (e.g. in the car industry). That was hardly Zambias approach under the MMD government. Indeed when one extrapolates across other developing nations (e.g. Malawi, DR Congo and Angola) a similar picture emerges. Many of these countries are more liberal than Beijing, and where they are intolerant of democracy, it is because they have always been intolerant, not because Beijing has introduced such a stance. Globally, one would imagine that the counterfactual would see increasing dominance of America ideas. That raises the question of whether such a model is necessarily better than a duopolistic arrangement at the top, or indeed outright Beijing dominance. American geopolitical activities have helped keep millions of people poorjust look at the chaos during Zaires genesiswhile the economic policies of the IMF and World Bank set much of Africa on a destructive path of decline. There are many African countries that welcome competition among the great powers to allow the best ideas and international governance frameworks to emerge. Equally surprisingly is Halpers somewhat narrow assessment of Beijings military threat. There may be no risk of a direct military confrontation, but Beijing does appear to be challenging Western military influence in Africa. When the USA sought to establish Africom a number of nations roundly rejected those advances after pressure from Beijing. A recent academic study noted that Chinas military-to-military activities in Africa, including defence attach presence, naval ship visits, arms sales and other missions to support military cooperation are expanding to keep pace with Chinas growing national interests throughout the region. The economic and military spheres are not unconnected: why would nations that invest billions in other nations not back this up with some guarantee of security? Chinas growing global integration is bound to be accompanied by greater military intervention as it seeks to secure global supply. This is the most worrying aspect of Chinas reach in developing nations and one slightly underplayed by Halper. But it is a lesson that Zambia and other African nations must not lose sight of. Despite these weaknesses, The Beijing Consensus presents a fine assessment of the Chinese question. It provides a clear analytical approach that focuses on the structural incentives driving Beijing and in doing so allows readers to begin to see more clearly what a Beijing-dominated world may look like.
Chola Mukanga is an economic adviser to the UK Government on issues of economics, international justice, rights and law. He is the founder of the Zambian Economist website, www.zambian-economist.com.
Books
Emerging Africa
Zambia is one of 17 African countries responsible for lifting the gloom over Africas development prospects, writes Shankar Acharya Emerging Africa: How 17 Countries Are Leading the Way
By Steven Radelet (Brookings Institution Press) The table shows the details of the country groupings and average per capita growth rates 19962008.
Emerging countries Botswana Burkina Faso Cape Verde Ethiopia Ghana Lesotho Mali Mauritius Mozambique Namibia Rwanda Sao Tome and Principe Seychelles South Africa Tanzania Uganda Zambia
(344 million) 4.1 2.8 4.0 4.1 2.6 2.3 2.5 3.7 5.4 2.4 3.7 5.0 2.6 2.0 3.0 3.8 1.8
Other countries Burundi CAR Comoros DRC. Cote dIvoire Djibouti Eritrea Gambia Guinea Guinea-Bissau Niger Madagascar Somalia Swaziland Togo Zimbabwe
(180 million) -0.8 -0.5 -0.3 -1.1 -0.9 -0.4 -1.7 1.5 1.7 -2.3 0.6 0.9 n.a. 1.9 0.2 -2.9
As an employee of the World Bank in the mid-1970s I spent a few years working on sub-Saharan African (SSA) countries and concluded that their prospects for robust economic development were problematic. All these years later, is there any reason to change that judgment now? Many people would say no. After all, median real income in SSA has changed little since the mid-1970s. The image of sub-Saharan Africa that many of us outside the continent recognise is one of corrupt rulers, undiversified economies, and civil strife. Earlier this year I had an opportunity to revisit the issue at a conference in Bellagio, Italy convened by the Ghana-based African Centre for Economic Transformation. While many different points of view were represented there, I came away with the impression that things were really changing for the better in many SSA countries. The single most persuasive presentation was made by USAID chief economist, Steve Radelet, based on his book, Emerging Africa, which he wrote during his years with the Centre for Global Development. Let me convey the gist of his analysis. Radelet divides the 48 SSA nations into four groups: 17 emerging countries which have averaged over 2 percent per capita GDP growth since 1995; another 6 on the threshold of sustained growth; 9 oil exporters (dominated by Nigeria and Sudan) whose fortunes fluctuate with oil prices; and the remaining 16 others where
Oil exporters Threshold countries Benin Kenya 2003-08 Liberia 2005-08 Malawi Senegal Sierra Leone 2003-08 (89 million) 1.3 2.4 3.1 1.2 1.4 3.7 Angola Cameroon Chad Congo, Rep. Eq. Guinea Gabon Mauritania Nigeria
Note: Figures in parentheses refer to population in 2010.
(261 million) 7.6 1.7 3.4 1.3 23.6 -0.7 1.1 2.3 4.7
Sudan
Books
average income has actually declined since 1995. What is particularly encouraging is that the emerging countries (ECs) account for 344 million of SSAs total 2010 population of 875 million. Adding the threshold countries 89 million would mean that about half of SSAs population resides in countries doing reasonably well without the benefit of oil riches. In a series of inter-temporal comparisons between emerging countries and those in the other sub-Saharan African (OSSA) country category, Radelet proceeds to flesh out the markedly superior performance of the former group. By 2007, the level of gross investment in ECs had nearly tripled since the mid-1990s, as compared to rising only about 70 percent in the OSSAs. There had been a similar tripling of the ECs total trade during this period, compared to hardly 50 percent more trade in the OSSAs. Estimates indicate that total factor productivity growth in the ECs averaged close to 2 percent a year, as compared to minus 1 percent for OSSAs. Agricultural production in the ECs was 50 percent higher over the period compared to a 30 percent increase among the OSSAs. Between 1999 and 2007, net primary school enrolment increased from 65 to 80 percent in the ECs, while in the OSSAs the rise was more gradual, from 57 to 67 percent. So what explains the substantially superior performance of the 17 emerging countries of sub-Saharan Africa? Radelet attributes this to five fundamental factors: the rise of democracy and improved governance; better economic policies; the end of the African debt crisis and improved donor relations; the rise of new technologies (especially mobile telephony); and the emergence of a new generation
of leaders and voters. The first two merit elaboration here. In the late 1980s there were only three democracies in sub-Saharan Africa: Botswana, Gambia and Mauritius. By 1994 the number had risen to 20 and by 2005 to 26. Interestingly, by the end of the millennium nearly all the 17 emerging countries could be characterised as democracies. Using Freedom House indices, political
and civil liberties improved markedly in the EC group from 1990 onwards, while they remained at a low level in the OSSA group. Similarly, the incidence of domestic conflict fell sharply (comparing 1996 2008 to the previous 15 years) in the EC group, while remaining high in the OSSA group. On each of the World Bank governance indicators (rule of law, corruption control, political stability, regulatory quality, government effectiveness and voice/accountability) the ECs recorded improvement between 1996 and 2008, while in OSSA all indicators worsened. Turning to economic policy, Radelet draws on a seminal study (Benno Ndulu et.al. The Political Economy of Economic Growth in Africa, 1960-2000, Cambridge University Press, 2007) that identified four identified anti-growth syndromes, three of which are economic ones:
heavy-handed control regimes; redistribution systems that rewarded political allies and ethnic groups at the expense of efficiency and growth; and heavy borrowing and asset stripping. Radelet shows that these syndromes declined sharply in the EC group from the mid-1980s. In contrast, the syndromes retained their stifling hold in the OSSA right through to 2004 (the end point of the underlying data series). The emerging countries of Africa clearly refute the gloom about African economic development that pervaded until quite recently. Yet Africas development is by no means on autopilot. For one thing, the 16 OSSA countries (with 180 million people) are still going the wrong way. They include nearly 70 million citizens in strife-torn Democratic Republic of Congo and substantial numbers in Ivory Coast, Madagascar, Niger, Zimbabwe, Guinea and Somalia. For another, the fate of 261 million people living in the oil exporters (nearly 160 million of them in Nigeria), depends not just on the price of oil but also on necessary improvements in economic policy and governance of the kind seen in emerging Africa. Finally, even in the 17 emerging countries (and the 6 threshold ones) a great deal remains to be done to ensure sustained, broad-based and diversified growth and development. At the very least, however, the last 15 years or so has seen a strong, positive and hopeful development story coming out of Africa.
Shankar Acharya is Honorary Professor at ICRIER and former Chief Economic Adviser to the Government of India. The views expressed are personal. A version of this review was originally published in Indias Business Standard.
Image: Brookings Institution Press
Arts
Rat tails and fairy tales

Beware the Ice Queens Wand, 810 December 2011, Lusaka Playhouse.
Reviewed by Ceire Sadlier
To take a corner of Lusaka in this hot and humid time of year and turn it into a strange, frozen ice-world where children huddle together with chattering teeth requires more than a little magic. Such a chilling feat might only be achieved by the sorcery of an evil ice queen or the creative brilliance and resourcefulness of the Barefeet Theatre company, and fortunately both were to be found in this Decembers Christmas play at the Lusaka Playhouse. Touching on classics including The Pied Piper of Hamelin and A Christmas Carol, it was the overarching borrowings from The Snow Queen that added a real seasonal feel to the story. The energetic fairy tale premise guaranteed family fun, while a spattering of cunning political jibes aimed squarely at the bureaucracies of donor funding kept the adults accommodated. Though the finer references to childrens rights may have been lost on the youngsters in the audience, the exciting and frantic production was a clever mix of Zambian flavoured fairy tales and real life human rights issues that are core to Barefeets every day work. With the same frenetic energy as 90 minutes of Spongebob Squarepants, the young audience was catered to and participation was a must. Publicity posters had told us to lose the shoes and join the fun, and sure enough one of
the highlights of the show was half a dozen audience members of all shapes, sizes and ages being pulled up onto the stage to groove to the sounds of Vanilla Ices cringe worthy but irresistible Ice, Ice Baby. Their enthusiastic if involuntary contributions had the audience in stitches. In the role of the Ice Queen, Ndala Bukolo ensured that the evil character injected humour rather than fright to the play. His droll personification of a tempestuous, greedy oppressor was matched perfectly by Michael Chandas skillful physical comedy as the Ice King. Chandas back bending, cartoonesque movements depicted a goofy King drawing
constant laughs for his performance. The group of enslaved children convinced the audience of the chill they were feeling in icy lair of the Queens palace, moving in a chattering huddle and introducing the show stopping dancing and acrobatics that Barefeet are famous for. Just as the audience began to wilt and wonder if there was going to be an interval, the booming voice of the Rat King, enthrallingly played by Adam McGuigan, roared from the back of the auditorium. McGuigans fleeting appearance as a tongue thrusting rodent mob boss lifted the play with perfect timing.
The sparsity of the uncharacteristically simple, white scenery was spared by the wild movements on stage and the colourful and humorous costumes. The limitations of the Playhouses technical resources were circumvented by restricting the lighting to a convincingly cold mix of white and blue. Though each actor bellowed their lines and songs with unflinching effort, their voices could not contend at all times with the annoying interruption of the venues clacking ceiling fans, at least for those at the back of the auditorium. Beware the Ice Queens Wand was packed with dance and song, laughs and roars. It lacked some of the spine tingling, romantic elements and finessed, formal drama of previous Barefeet Christmas performances, especially 2008s Edward Scissorhands. But it delivered genuinely uplifting festive pantomime fun. The production was buoyantly animated from start to finish, gripping children throughout. A young girl in front of me leapt to her feet several times with excitement. As the final scene was being played out, a mother trying to beat the exit rush tried to pull her daughter by the hand up the stairs. The five-year-olds eyes were glued to the stage and she kept turning, tripping on the steps to catch the last glimpses of the spectacle.
Ceire Sadlier lives in Lusaka and writes a weekly blog at www.theirishexzaminer.com. Barefeet are proud to use the power of entertainment (and initiatives like the Christmas show) to assist in funding their programmes with the children. For more information or to donate please visit www.barefeettheatre.org.
Image: 2011 Barefeet
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Zambia Analysis The thinking persons place

December 2011 & January 2012 | ZMK 10,000.00

Zambias pipe dream

Why succeeding in copper fabrication isnt so easy

Zambias 90-day workout

Zambia Analysis The thinking persons place

Zambia Analysis, December 2011 & January 2012 | 3

Features 14 The PF plan for our pockets

18 Getting more out of farmer input support

22 New relations, old issues 25 Simply the worst?

Sishuwa Sishuwa on the pitfalls of Satas foreign policy

Arts | Books | Culture 28 Book Review: Beijing rules

30 Book Review: Emerging Africa

32 Rat tails and fairy tales

Ceire Sadlier at the Lusaka Playhouse

4 | Zambia Analysis, December 2011 & January 2012

Stray statistics Diary: December 2011

Corruption Perceptions Index 2011

Zambia Analysis, December 2011 & January 2012 | 5

Zambia remains eligible for MCC funding

Business start-up = 0.963 (79%)

0.5 0 2006 2007 2008 2009 2010 2011

Inflation = 8.5 (33%) 20 15 10 5 0 2006 2007 2008 2009 2010 2011

Inflation: IMF, WEO

Fiscal policy = -2.4 (54%) 10 5 0

-5 2006 2007 2008 2009 2010 2011 -10

Access to credit = 52 (96%) 60 40 20 0 2006 2007 2008 2009 2010 2011

Access to credit: IFC

6 | Zambia Analysis, December 2011 & January 2012

Political rights = 25 (73%)

Civil liberties = 33 (61%)

Control of corruption = 0.21 (73%)

2006 2007 2008

2009 2010 2011

2006 2007 2008 2009 2010 2011

Political rights: Freedom House

Civil liberties: Freedom House

Control of corruption: World Bank/Brookings WGI

Government effectiveness = 0.06 (56%)

Rule of law = 0.43 (80%)

Voice and accountability = 0.54 (68%)

2006 2007 2008 2009 2010 2011

2006 2007 2008 2009 2010 2011

Governm. effectiveness: World Bank/Brookings WGI

Rule of law: World Bank/Brookings WGI

Voice and accountabil.: World Bank/Brookings WGI

Freedom of information= 61 (46%)

Freedom of Inform.: Freedom House/ONI/FRINGE

Health expenditure: WHO

Zambia Analysis, December 2011 & January 2012 | 7

Constraints on Zambian copper fabrication

Zambia Analysis, December 2011 & January 2012 | 9

8,000 Refined copper use 6,000 Refined production Mined production

Cathode from ore $3593 $3070

12 | Zambia Analysis, December 2011 & January 2012

flickr.com: marc falardeau

Zambia Analysis, December 2011 & January 2012 | 13

The PF plan for our pockets

(continued overleaf) Zambia Analysis, December 2011 & January 2012 | 15

16 | Zambia Analysis, December 2011 & January 2012

Zambia Analysis, December 2011 & January 2012 | 17

Getting more out of farmer input support

18 | Zambia Analysis, December 2011 & January 2012