Category "Business"

20/01/2021

By Charles Kakoma, UPND Spokesperson.

Many Zambians have been asking questions about what UPND President Hakainde Hichilema meant when he told the nation during a radio programme recently that the kwacha will immediately appreciate when he becomes President. Some doubting Thomases believe that it is next to impossible for the battered kwacha to immediately pick up when HH becomes President in August this year.
What HH said is not fiction. It is based on  sound economics. Here is why.
The first reason why the kwacha will appreciate is because of a market intangible commodity called “CONFIDENCE ” in the economy. Many players in the economy look forward to the type of leadership that will run the economy to make decisions in the foreign exchange market. Based on their EXPECTATIONS, the players in the market can decide to buy or sell foreign currency. If in their assessment of the type of leadership that will drive the economy, they conclude that the economy is going to get worse, they will quickly buy foreign currency in preparation to leave the country or indeed  store their hard earned income in a stable and convertible currency such as the United States Dollar. The cumulative high demand for the foreign currency will result in the kwacha depreciating or losing value as supply of foreign currency will be less than demand.
On the other hand, if players in the market  assess the new leadership and find that they have the capacity to improve the economy , they will develop CONFIDENCE in the economy. Based on their EXPECTATIONS, they will take it easy and prepare to remain in the country. There will be no need for them to panic and buy foreign currency to leave the country.  Some of the investors sit on the fence waiting to see how the elections go before committing themselves to huge investments in the country. The moment they know that the correct leadership has taken over the running of the country  , they will develop confidence in the economy and pump huge sums of money in the economy in terms of investment.  The cumulative total of their decisions will  result in increased supply of foreign currency in the market , resulting in  appreciation of the kwacha as the supply of foreign currency will be more than the demand.
It is therefore sound economics to expect the kwacha to immediately appreciate when HH takes over the leadership of this country in August this year because many players in the market are expecting change of leadership  and have expressed confidence in the leadership of Hakainde Hichilema.
The second reason why the kwacha will appreciate is tied to the first explanation above. Huge foreign direct investments in the Zambian economy will improve the supply of foreign currency in the market. President Hakainde Hichilema has already demonstrated his ability and commitment to attracting investors to Zambia. During his trip to the USA recently,  he managed to secure about $25 billion in investment pledges upon his ascendancy to power. This amount of $25 billion is actually almost equivalent to Zambia’s current total of all the goods and services produced in the economy ( which economists prefer to call the Gross Domestic Product or GDP). The impact of such huge investments in the economy will be to increase the supply of foreign currency in the market. There will be too much foreign currency in the market compared to demand, resulting in the appreciation of the kwacha. Apart from the kwacha appreciating,  a lot of employment will be created leading to better standards of living.
The third reason why the kwacha will appreciate is that the  leadership of Hakainde Hichilema will embark on  massive exports . The production of goods for export will bring in foreign exchange. It is only through the massive export of value added products that the country will ensure sustainable foreign exchange supply. Obviously , the current Patriotic Front regime has also been singing about value addition,  diversification and exports. The bottom line is that they have been in power for 10 years and have failed to do it. They have no capacity and no leadership to manage the economy.
The fourth reason and perhaps the most critical in the Zambian situation to strengthen the kwacha is to manage the choking foreign debt.
Currently,  most of the foreign exchange being generated by the country is going towards foreign debt repayment. Under such a situation,  there is scarcity of foreign currency in the market because demand is more than  supply of foreign currency. For as long as the foreign debt is not resolved,  the kwacha will continue to depreciate.
To resolve the current foreign debt crisis requires new leadership. The current leadership has lost credibility in the eyes of lenders. They cannot be trusted to restructure the debt or stick to any agreement on debt management.
Part of the solution to resolving the debt crisis and the depreciating kwacha is to change the leadership of the country in  this year’s  presidential and general election.
President Hakainde Hichilema has already put his cards on the table on how he is going to tackle the debt crisis.
First,  he will place a  moratorium on debt. This means that there will be no further reckless borrowing. Secondly,  he will seek a debt write off from as many lenders as possible. Thirdly,  he will restructure the remaining debt by replacing expensive loans with cheap ones. The lenders can only agree to help Zambia if they have confidence in the leadership of the country. The current leadership has failed and will never manage to carry out  any of the above actions. No donor will agree to enter into an agreement with the current Patriotic Front regime because they have lost confidence in them. They luck credibility.
In conclusion,  the  kwacha will stop running mad with the installation of a new leadership in Zambia  through the presidential and general elections in August this year . A combination of short term solutions such as the kwacha appreciating upon the change of leadership and long-term solutions such as attracting foreign investors and   debt management are the medicines for the kwacha’s madness.

12 TH DECEMBER 2020

Looking at what is happening on the KCM issue, it’s very clear that the PF regime did a very bad job.  The issue was rushed there by overlooking the implications of the agreement binding the two parties together. ZCCM IH may have a very genuine grievance against Vedanta of protecting the interest of the Zambian people. But the manner it executed its grievance procedure will most likely be very harmful and costly to the Zambian people. Two wrongs cannot make a right. We therefore wish to advise the PF regime through ZCCM IH to swallow its pride and take a deep reflection on the matter before the Country is plunged into deep financial crisis.

PF should stop misleading Zambians that it has a good case on KCM. If that was the case why did the Court of Appeal stay the winding up process of the mine and referred the matter to the arbitrator in South Africa? We are aware that locally PF does not respect any law, but this madness should not be taken outside its boundaries. PF’s arrogance has led this Country into very deep financial crisis. PF will leave too many problems behind as they leave office next year.

The financial implications that will come as a result of disrespecting the terms on which the mine was sold will not be borne by PF, but ordinary people. If the investor was found wanting on the agreed terms and conditions first, we should also have been the first ones to lodge a complaint before the arbitrator against the investor. When we sold the mine we did so on terms and conditions that we agreed with the buyer. People must stop being irresponsible and careless when carrying out such sensitive duties, don t use emotions.

PF has very serious problems in monitoring the activities on the mines. It’s like when things were going wrong in KCM the whole Government machinery was sleeping. Only to wake up when it was too late and now they want to use draconian methods to cover up their inefficiency. The case of KCM is just one example of how rotten the PF monitoring system is.  They say PUMBWE AFWILILE PALYAKWE.

Percy Chanda

UPND – Chairman for Mines and Freedom Fighter

(IN RECENT WEEKS, ACCUSATIONS HAVE BEEN MADE AGAINST UPND LEADER, HAKAINDE HICHILEMA THAT HE STOLE FROM PRIVATIZATION. LAST WEEK, HH HAD AN INTERVIEW TO CLEAR THE AIR. THE UPND MEDIA TEAM BRINGS YOU A VERBATIM REPORT OF THE INTERVIEW ON HOT FM, DIAMOND TV, AND OTHER STATIONS.)

INTERVIEWER: As Hakainde Hichilema, did you participate in the privatization process? Were you in charge of the process?

HH : It’s very important to clarify at some point who was responsible for the privatization program but to insinuate that I made money because of the privatization process only is far from the truth because I started business at a very early age of 26 and was able to buy a property at K 61 million in 1995 before I was involved in any privatization program. So, it’s not true that we made our money through privatization. We are business people. The answer is that I participated in the privatization program but I was not in charge of the process. Who was in charge? It was the government of the day and which one was the government of the day? It was the MMD who was responsible for the privatization program in terms of the policy, not myself because I was not part of the Government. Legally, they were responsible because they set up the Privatization Act of 1992 as a Government under the late Frederick Chiluba MHSRIP. And the overall structure ( today is our day to explain these things so that those who might not be aware might know, those who may be mischievous, their mischief can be laid bare) The MMD government came into office in 1991, and in 1992, they enacted the Privatisation Act which was a legal document, meaning that parliament at that time made a decision and gave the citizens a law, the privatization law. The way the structure was made was there was a cabinet on top chaired by the President of the Republic of Zambia. Under Cabinet, there was a Committee of Ministers from within Cabinet called the Committee of Ministers of Privatisation was not there. Then there was the Zambia Privatisation Agency, PA as an institution and manager to implement the privatization process. That is where the policy and legal power play. The Committee of Ministers comprised Finance, Commerce, Mines, and Tourism depending on the assets. The ZPA would then ask for expert advice from many, many people. Thousands of Zambian lawyers, corporate finance guys like ourselves, real estate agents, property valuators, engineering firms from 1992 along the way were somehow involved. 270 companies or units were sold and today HH was responsible sat below the privatization agency, asked to do his professional work. So, the answer is yes in terms of involvement at that level as I have explained and No in terms of responsibility, in terms of legal power, and in terms of policy power, I was not involved.

INTERVIEWER: Madam Edith Nawakwi has brought out three key issues which include the Kabulonga property, the sale of RAMCZ, and the sale of Mosio-Tunya Hotel in Livingstone us start with the Serval Road property in Kabulonga, when did you acquire that property?

HH: It’s fair to state that Madam Nawakwi on HOT FM alleged that I stole a house from Lima Bank and she mentioned the house, the one on Serval Road in Kabulonga. That I stole the house from Lima Bank. I abused my role in the privatization program, got that house from Lima Bank dubiously. She actually called me a crook. I’m not a crook. That house never belonged to Lima Bank as she alleges. I bought the house but not from the said bank.

INTERVIEWER: Is there proof to show that you didn’t acquire this house from Lima bank?

HH: There is yes.

INTERVIEWER: Would you care to show us?

HH: Madam Nawakwi made these allegations that I stole the house, I responded that I never stole the house, I don’t steal. Here are the facts Gary. This property is called farm 488a/40/a/3 Serval Road, that’s the name of the plot. I bought this house from a company called the National Tobacco Board of Zambia. This house was advertised through an open tender through the Newspaper in 1995. Madam Nawakwi says I stole the house from Lima Bank because, in her allegations, I was involved in the privatization of the bank in 1998, but I bought this house through a public tender in 1995. The timeline there does not match. Someone is lying, is it I or it is her. I say Edith Nawakwi you lied. Here is a summary of the house having been bought from National Tobacco Company and not Lima Bank. (displays the house documents). I responded to a Newspaper advert in April 1995 and then after I responded and I was awarded after emerging as the highest bidder. That’s the point I was making earlier on. Without being involved in Privatisation, I was already as a businessman able to tender for this property at K 61 Million. Now, who advertised the house? A firm in Ndola called T.P. Chibwe and company who were valuation surveyors and estate agents who had been engaged to sell the property. To be specific my offer went in on the 26th of April 1995, then the valuation was done, how they did it I don’t know, that was not my job. Then I was offered the house. Who owned the house from the very beginning? Here are the records from Lands Ministry showing who owned the house. (displays Ministry of Lands documents). Mr.Chileshe was the owner of the house who sold it to the Tobacco Company of Zambia in 1967 and then TBZ got a mortgage from Zambia National Building Society of K 15,000 in 1971 and then TBZ changed its name in 1989 to National Tobacco Company of Zambia and all these entries are there in the Ministry of Lands documents. Then the National Tobacco Company borrowed money from Finance bank in December 1989. The money was not paid according to these documents and the bank moved in to repossess the house according to the security that was provided and passed it over to TP Chibwe of Ndola to advertise the sale. I won the tender like I said K 61 million, no income from Privatisation but from other businesses as a partner, as a shareholder and a couple of other businesses at an early age. No privatization at that age. I then paid the Real Estate Agent through my lawyer, one Michael Musonda, the current Deputy Chief Justice of Zambia, and is still alive. Then they went and paid off the mortgage. The mortgage and interest were at ten million kwachas as of 27th September 1990 and the money I paid in was used to clear the mortgage and they were able to discharge the mortgage on 7th July 1995. Then the house was offered to me by the National Tobacco Company and became mine. Then I registered an assignment which is a document used to change ownership on 7th July 1995. That house was never ever a Lima Bank house. The bank came up for privatization in 1998, I bought the house in 1995. Clearly Madam Nawakwi you are a liar.

INTERVIEWER: Okay, that clears one of the particulars of the defamatory statements. So

HH: She will have a chance in court to prove whether she has a different record of this. She has a chance in court. That is why we have gone to court so that we can stop shouting at each other.

INTERVIEWER: We now move to the second issue which is on RAMCOZ What role did you play in that transaction whether remotely or closely because she raised this.

HH: First, there is this allegation that this young guy called HH was responsible for privatizing the mines and that he and he alone had the power. I think I have explained that I didn’t have the power because I was merely a service provider contracted and at the time appointed through a public tender either as an individual or firm with agreed fees. I got paid because that is my job and business. I think today I must clarify that. There is an allegation that I privatized a mine called RAMCOZ. I never privatized any mine in this country. I made this point clear. This mine was privatized around 1997. I was not there. The records are there at ZPA and Zambia Development Agency today and I can assure you that you will not find HH’s name there. RAMCOZ was sold by the MMD government through the structure I earlier gave you. I was not involved.

INTERVIEWER: Why do you think she mentions HH?

HH: Malice. She is confusing things. She is claiming that I was the Receiver as you can see in our demand letter. In her insinuations, she says this young guy called HH had the power to privatize mines and its assets but that is wrong. It is actually malicious, completely malicious and again she will have the time to prove herself in court. Neither did I privatize RAMCZ nor was I the receiver. I was none. On her program on Hot FM, she alleged that I stole 10 million dollars from RAMCOZ. How I stole it, I don’t know. She will prove that in court. I’m not a thief and I didn’t steal any money from RAMCOZ.
RAMCOZ was privatized in 1997. Thereafter they borrowed money in 2000 or thereafter as a private company from ZANACO bank which they failed to pay. And ZANACO appointed a receiver to recover the money they were owed by RAMCOZ which was then a private company. Completely misleading herself and the public. And I’m shocked that a former Minister of Finance can fail to understand basic facts. It can only prove one thing, political malice. Get HH at all costs even if he is not a criminal. Complete malicious because the facts are there. How do I know that the facts are there? When you are appointed Receiver under the Insolvency Act, you have to register your receivership deed at PACRA, that time it was called Company Registrar. You also go to court and register that receivership Deed and you are appointed as a receiver as an individual, the law is very clear. I can invite Zambians who might be doubting what is going on to say go to PACRA or go to court and see the Receivership Deed on who was appointed receiver only to recover the money for ZANACO and not to privatize RAMCOZ because it was already privatized 3-4 years earlier. I think my colleagues who did the receivership for ZANACO did a very good job as they recovered the money which was a very difficult thing to do to recover. The rest is the detail for court. We shall see what she says in court.

INTERVIEWER: The third of the issues raised by Madam Nawakwi concerns Mosio-tunya Hotel in Livingstone that you sold yourself the shares after evaluation and all that. Give us a picture of this transaction and concerns raised by Madam Nawakwi.

HH: In the privatization process, if there is an asset that is delivered more than expected, it was that project in Livingstone. World-class asset, competitive product internationally, delivered meticulously following the objectives that were set in the privatization program. If I was not Hakainde Hichilema and was not seeking public office, I would have been praised every day on the way that the transaction was handled. Completely first class following the set objectives. There was an allegation that I was a shareholder when the bids came through, they never came to me but to ZPA. The bids under the program were received by ZPA and then decides who they think can help them to structure the transaction following the set objectives and the agency would call people like us, not just me but there were other people there. But the way everything is being made to look like there is this troublesome chap called HH seeking Presidency who is not allowed to be Republican President of this country. He must just be a citizen of Zambia. I aspire to be President. The bids went to ZPA and the insinuation is that I was a shareholder of Sun International and when I was appointed to assist in putting this transaction together, I had vested interest in Sun International and therefore awarded the assets to the bidder. The material question is did I have a shareholding in Sun hotel to be able to declare a conflict of interest when I was asked to assist by the MMD Government through Cabinet and ZPA, the answer is NO. I was never a shareholder and I invite Zambians to go to the registry at PACRA and see if HH was a shareholder because that’s what Nawakwi said that I was a shareholder and therefore gave myself Sun International, she is wrong, I was not a shareholder