By Eugene Makai
There abound many myths (some enduring) and misinformation about the history, participants and management of privatization in Zambia which transitioned from the Command Economy along socialist lines (mixed economy) in which the state was a primary operator in the economy, to the sale of State Owned Enterprises (SOEs), in what is now commonly referred to as Zambia’s Privatisation period (1991-2001).
The objective of this series of articles is to separate commonly held myths from the facts of privatization – and afford the reader an opportunity to obtain real, accurate and undiluted facts – unrelated to the political bent and innuendo which has been a staple for many Zambians in the last 14 years.
•MYTH – Chiluba’s MMD conceived the privatisation of SOEs
•FACT – The United National Independence Party (UNIP) government of Dr. Kenneth David Kaunda set up a Task Force on Privatisation based at Zambia Industrial and Mining Corporation Ltd. (ZIMCO) Head Office in September 1990 to examine and recommend modalities for implementing a privatisation policy.
This was prompted by Dr. Kaunda’s address to the 5th Extraordinary National Council on 28th May, 1990 in which he admitted that the Command Economy had run its course and that his government had decided to “…devolve more economic power to the Zambian people through a scheme by which the state will sell PART of its capital in state enterprises to the general public.”
The Budget Address of November 1990 underscored the UNIP government’s commitment to privatization. In January 1991 the Task Force on Privatisation submitted its report to the Minister of Finance after which government set up a Steering Committee on Privatisation. It is this Committee that put together the initial framework for launching the privatisation process.
At this point, all this was administrative as no legislative anchor had been created to enforce this economic policy. The first tranche of companies identified by June 1991 to be sold were:
•AFE
•Consolidated Tyre Services Limited
•Crushed Stones Sales
•Eagle Travel
•Mwinilunga Canneries
•Zambia Clay Industries
•Zambezi Sawmills
•Lublend *
•Nkwazi Manufacturing Company*
•Poultry Processing Company*
*In the last three, Minority shareholders had pre-emptive rights.
《pre-emptive rights or first option to buy is a contractual right to acquire certain property newly coming into existence before it can be offered to any other person or entity.》
FAST FORWARD 2002 – KCM
In August 2002, then Finance and National Planning Minister Emmanuel Kasonde announced on the floor of the house that after protracted negotiations by the government of the Republic of Zambia (MMD) with Anglo-American out of GRZ’s demand of exit payments of US$250 million, the mining firm only agreed to a package of US$65 million which included exit payments amounting to US$30 million and US$26.5 as soft loans to Konkola Copper Mines (KCM), while on its part GRZ was to provide US$8.5 million to KCM.
These negotiations commenced in January 2002 after Anglo-American gave its notice to quit its mining operations.
PART TWO FOLLOWS….