Zambia: KCM CLOSURE – HUMANITY VS ECONOMY

CATHOLIC COMMISSION FOR JUSTICE AND PEACE

PRESS RELEASE

KCM CLOSURE – HUMANITY VS ECONOMY

When the government of the Republic of Zambia privatised the mines, it was everybody’s expectation that the investment plans agreed with the mining investors would be successfully implemented and would improve the financial viability and technical efficiencies to the benefit of our country. On the advice of the World Bank that indicated “ healthy projections” the mines were sold. The new owners were given big concessions and took on less social and environmental responsibilities. The finalization of the sale of ZCCM was expected to positively impact on the various sectors of the economy and lead to sustainable economic growth so as to uplift the standards of living of the people of Zambia. Unfortunately today, the reality is different from the expectations.

The information coming through that the biggest mining investor, Anglo American Corporation (AAC) might pull out of the Konkola Copper Mines (KCM) if no financier or alternatives are found ought to be taken as shattering news by every Zambian. It is a potential human disaster. The impending closure of KCM will have adverse socio-economic effects, not only on the people on the Copperbelt, but on the economy as a whole. This will affect both the forward and backward linkages with other industries surrounding the mines.

This decision will have a ripple effect on the whole economy. It will not only adversely affect the growth rate of our economy, which Zambia has been trying hard to achieve, but it will also seriously affect our export revenues and would definitely put pressure on the exchange rate. This in return will stifle the confidence of both local and foreign investors in Zambia.

The expected slow down in the economy will impact negatively on future government earnings and expenditures and might lead to the reduction of funding to the essential social sectors such as health and education, which is already low. In our view, the estimated loss of 11,000 jobs is an underestimation because companies supplying the mines will have to shed off their labour force as well. Estimates show that on average, a worker supports close to eight people, which means that about 88,000 people will be affected. This is excluding the families of the workers in other support industries.

The political fallout from the possible closure of the mine may lead the government into agreeing to borrow in order to finance KCM so as to save jobs. But this would not be the solution, bearing in mind that Government already borrowed from the World Bank to finance the retrenchment of miners. It will just end up pushing the already high levels of indebtedness even higher. There is need therefore to look to other options to avert this impending human disaster. There should be wider consultation in finding a lasting solution to this problem, which should benefit all Zambians, but more especially, those whose jobs are threatened by the crisis at KCM.

A lesson to be learnt from all this is that we cannot rely on investors who are solely seeking profit to develop our country. If and when we enter into partnerships with such investors, then there must be clear terms agreed upon to safeguard the well being of our people. What is the morality of giving huge investment concessions to investors, who can pull out at very short notice? Why was the sale of mines handled differently from the rest of privatised companies? Why was there so much non-disclosure on the sale of the mines?

Events such as this should jolt the government into being more committed to ensuring livelihoods and economic ventures that are sustainable, renewable and benefit a wide majority without huge risks. In this regard therefore, there is an urgent need to start the long delayed diversification of our economy. There are options we have not seriously considered like Agriculture and Tourism.

Furthermore, there is need to check our over reliance on advice from World Bank and IMF experts, who claimed that privatisation of the mines was going to open new horizons for Zambia. We further question the underlying premises of the whole privatisation process in Zambia. Privatisation was hyped as the only way our economy could be resuscitated. So far it has not brought about the levels of investment talked about. It is not surprising that we have this impending catastrophe.

In this light, we would like to believe that the KCM crisis would have far reaching implications on the call by the IMF/ World Bank for Zambia to privatise the remaining strategic industries. Zambia will need to proceed cautiously in view of the negative development at KCM.

What is the morality of this situation?

Granted, KCM is not a charitable organisation but a profit seeking multinational. If the profit is not assured, their interest in a particular venture will disappear. The KCM crisis must be seen in this light. But we are dealing with human beings. We are talking about thousands of families losing their source of livelihood – jobs! Poverty will be exacerbated. Human dignity will be at risk.

Hence, the CCJP takes this opportunity to remind all actors in the KCM saga not to ignore the moral dimensions and human consequences that accompany all economic decisions. The economy is for the people and not people for the economy! It should be borne in mind that decisions on investments should protect human life and promote human rights, especially those most in need, wherever they might be in the world.

Mulima Akapelwa-Kufekisa (Mrs), Alick B Lungu, (Mr)
Coordinator, Economist,
Economic Justice Programme. Economic Justice Programme