Brenthurst Media Articles: News Release [128021]
Zambia’s Economic Speed-bumps
Greg Mills

Speed-bumps are a Zambian obsession. Every town seems to have them, some small and jagged, others long and flat, often in the form of rumble-strips.

Their location and frequency leaves the traveller as puzzled as to their purpose as Zambian politicians are apparently about the speed-bumps in the economy.

Vice President Guy Scott believes that the high costs of borrowing and an overvalued exchange rate lie at the root of addressing Zambia’s overall challenge in creating jobs for its burgeoning youth population.

It’s a big challenge. At independence in October 1964, the central African nation had 300,000 full-time jobs for its then three million people. Today, there are 400,000 jobs for over 13 million.

He has a point. Local bank lending rates are over 25 percent.

Others thus argue that the costs of borrowing and slow rate of job creation are symptoms of wider malaise. The high expense of doing business and the uncertainty of the political environment, says opposition leader Haikunde Hichalema, known widely as ‘HH’, are closely related and far more constraining.

He too has a point. Take the Chirundu border to the south with Zimbabwe through which much of the country’s traffic flows. This border-post has been refurbished using donor money into what is advertised as a model regional one-stop-border-shop.

The nearly two kilometre absolutely chaotic queue of trucks on the Zimbabwe side suggests that things are not quite that perfect yet, an instinct backed up by experience which involved a lot of ‘shopping’. First, the passports had to be stamped by the friendly, in this case, Zimbabwe official. Then it was around the corner to the ‘Interpol Desk’, two Zimbabwean officials reeking of the morning after the night before, in civvies, slouched behind a desk covered in newspapers and two textbooks for writing crucial bits of information. Upon asking what I needed to do or get, one pointed to the sign taped to the wall which stipulated the need for original registration papers, passport, and police clearance among other bits of paper.

Told to ‘wait at the car’, which we did for 30 minutes, the two emerged into the sunlight in the company of their more helpful Zambian counterpart to check the engine and chassis number, telling me all the time that we would not get through and would have to ‘go back to South Africa’. Then it was back inside – where I was repeatedly asked by the pair ‘what are you going to do for us’. Playing dumb and making small-talk, they grudgingly filled out my name in one of the text books (using my pen, which was not returned) and with much effort stamped two sundry pieces of paper. It was then over to the Zambian side of the room for a similar stamp, before heading out the building and over the road to acquire the $25 Zambian road insurance. Then crossing back to the main building, the $35 carbon tax was followed by the temporary customs import permit before heading to another building to pay the $10 ‘Siavonga District Council’ charge and a $20 toll fee.

Then back into the car to clear customs at the gate, out of once there to obtain another stamp or two and make friendly banter with some policemen, before hitting the road to Lusaka an hour-and-a-half later. A several-stop-rather-expensive-shop as it turned out.

These are the unlegislated costs. The 67 percent rise in the minimum salary this year further raises the premium of doing business. These realities are not helped by a 51 percent local ownership stipulation in the mooted Companies Act. Instead of encouraging new business and capital inflows, the government is falling into the trap of targeting those already there.

On the road out south of Lusaka is a symphony of speed-bumps before, during and after the cement factory. Having to accelerate to overtake a drunken, semi-dressed pedestrian weaving her way down the middle of the road, I was pulled over by a white-gloved policeman ‘for speeding’. Told to get out of the car and sit down on a chair next to the patrol-car in which four officers sat, I was informed of my fate.

‘Now you must pay’ said the police-woman. ‘It is 270,000 kwacha [R350] for your crime.’ I protested that they said I was only three km/h over the limit and that I did so only to swerve into the other lane to avoid hitting the drunken woman. ‘Yes, we saw her. OK, then its only 180,000.’ I still protested. ‘OK, then how much do you think is reasonable.’ I got back in the car 100,000 Kwacha lighter and, despite my asking, with no receipt to show for this donation, I am sure, to the Zambian exchequer.

No, it’s not the costs of borrowing that are principally at fault. These reflect the costs of doing business and the vagaries of the rule of law and policy environment that make job creation so difficult in Africa.

Dr Mills has been in Zambia.

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