/ 30 May 1997

Zambia `bites the bullet’

MARX and Mao were not on the agenda at last week’s WEF meeting, but Deng Xiao Ping did put in an appearance, albeit obliquely. Discussing his country’s policy on privatisation, President Frederick Chiluba of Zambia quoted Deng: “I do not care whether cats are black or white, so long as they catch mice. That is the beauty of privatisation: we do not care who owns our mines as long as they abide by our laws and make money.”

Zambia’s privatisation programme has seen 200 companies returned to the private sector in the past five years, with another 30, including the giant copper mines, under consideration.

“We looked at privatisation as a means to bring in fresh investment and to improve efficiency in the economy, and if we achieve this, the benefits will accrue to all our people,” said Chiluba.

The Zambian government, he added, was no longer suspicious of privatisation. “There is a huge difference between businesses run by the government and those run by business. The government’s task is to provide an enabling environ-ment for business to operate. The private sector must be trusted to do so successfully.”

And referring to his own background, he said: “One thing you can be sure of: when you have a trade unionist presiding over privatisation, it will be complete.”

The audience lapped it up enthusiastically; Chiluba was speaking their language. He even had a reassuring word for the trade unionists among them: privatisation and job losses need not be synonymous. But past employment practices in Zambia were often based on political necessity – building a power base, in other words – and inefficiency had no place in the modern world. So, yes, bloated nationalised industries would have to bite the bullet in the short term for longer-term gains.

And Zambia is making sure that in privatisating a state monopoly it does not create a private monopoly. Chiluba highlighted the case of Zamtel, the telecoms provider. “We have appointed consultants to advise on the privatisation of Zamtel, but the regulatory authority must be in place first to encourage competition. Talks with possible foreign competitors are still at an early stage.”

The government is keen to encourage wider share ownership, but acknowledges the problems. A fund has been set up with shares earmarked for the man, and woman, in the street – but no handouts. “Misconceptions abound. There is still a belief that even buying one share will make someone a fortune. So we need to educate people. The stock exchange is still in its infancy but at least the younger generation understands how it works.”

In Chiluba’s case, one trip down Wall Street was enough to convince him of the benefits: “I saw the bulls and bears on the New York Stock Exchange and am a changed man.”