Reframing the privatisation talk and clarifying bid analysis and pricing

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By Alexander Nkosi

PF and UPND owe us a full Christmas holiday. They have somehow succeeded in ensuring we don’t enjoy this one peacefully with their privatisation debate. It has been so passionately and emotionally debated. They even saw potential witnesses in kids who shouted privatisation….’ ati nomwaice alandapo nankwe ni witness, naishiba ilyashi’.

The essence of privatisation was to transfer state run firms to private hands so that the state could focus on collecting taxes than worrying about running debt ridden, loss making companies (most of them were). Most of these companies needed recapitalisation. This being the case, let’s look at this interesting example. The state is selling a company under the privatisation program. Mr. Banda has a capital of $25 million. He bids $20m and pledges to pump in investments worth $5 million. Mr. Zulu has a capital of $60 million. He bids $6 million and pledges to invest $50 million. In whose hands is the company more secure. Remember that the motive was not to sell, raise money and forget about the assets but to transfer ownership and focus on tax collection, ensuring that the companies were doing well, creating jobs and income opportunities for smaller subcontracted companies and other dependent companies along the chain. Do you get the $20 million and make the company worse than it was with over 5 years of collecting very low taxes, no substantial job creation, possible resale/ closure as it struggles due to low investment injection? Do you get the $6 million and secure $50 million investment injection to ensure the company has better future prospects, pays more in taxes and has far reaching economic benefits?

The lesson from this is that there was more at play when choosing whom to sell to than just the bid amount. The buyer did not walk away with a receipt like we do from shops but a detailed agreement, studied by technocrats, approved by cabinet and signed by the minister of finance. It was up to government to monitor the investors and ensure they were in line with agreements.

The other important point is that a company whose total assets are worth $100 million but has liabilities worth $60 million is not worth $100 million. It pays to research and get more details than debate with emotions.

It would be of great benefit to the country if this energy and passion could be channelled towards ensuring we get the best out of the current investors, especially the mines. Otherwise a few years from now, we will be looking at billions of dollars mining companies made compared to the peanuts we got in form of taxes as we wallow in poverty. Let’s work together and find solutions to these important questions. Are mining companies giving us true figures of what is being mined? Are we getting a fair share of the investments in form of taxes? How are we monitoring the new crop of mining firms cropping up in different parts of the country? Are they abiding by investment agreements? Are they paying taxes as required. Where do locals fit in all this? What are we doing to ensure we build a local cadre of mining investors to run the mines in the near future. What is it that Chile, Tanzania and Botswana are doing right that we are not with the same investors? What can we learn from them?

The future should be that of Zambians owning and controlling most of the investments. Deliberate policies have to be put in place. Let’s keep debating and sharing ideas, it is healthy for development. Always remember that the country is bigger than political parties. In 2019, don’t be like my bemba friend Bwalya. Read the conversation below and enjoy.

POLITICIAN : I want this tree cut down now!

BWALYA : That is the wisest decision sir, this tree has robbed this place of the beauty with all the leaves that fall from it.

In fact keeping it here is risky to our lives as you know lethal lightening currency usually climbs down through the tallest objects in the vicinity – I will cut it down right away sir.

POLITICIAN: On second thought, I think just leave it, don’t cut it!

BWALYA : Sir, your love for the environment and it’s preservation is unrivalled.

Your decision not to cut down this tree is a clear demonstration of your commitment to reduce global warming by protecting vegetation that will suck in all the carbon dioxide that has been heating the environment – well done sir!

Merry Christmas and prosperous new year folks. No one has sent me a present, not even a mare card, what’s happening friends?


One Response to Reframing the privatisation talk and clarifying bid analysis and pricing

  1. Wishing you and of minions a happy new year

    December 31, 2018 at 1:53 pm

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Start: 2019-07-01 End: 2019-07-31