Making Africa Work. Greg Mills

African Republic

      CBD central business district

      CEO chief executive officer

      DRC Democratic Republic of the Congo

      DTC Diamond Trading Company (Botswana)

      ET Ethiopian Airlines

      EU European Union

      FAO UN Food and Agriculture Organization

      FDI foreign direct investment

      GDP gross domestic product

      GMO genetically modified organism

      ICMM International Council on Mining and Metals

      IMF International Monetary Fund

      IPO initial public offering

      IPPUC Instituto de Pesquisa e Planejamento Urbano de Curitiba (Curitiba Institute of Urban Planning and Research)

      MIT Massachusetts Institute of Technology

      NAFTA North American Free Trade Agreement

      NGO non-governmental organisation

      OECD Organization for Economic Cooperation and Development

      PAN Partido Acción Nacional (National Action Party, Mexico)

      PRI Partido Revolucionario Institucional (Institutional Revolutionary Party, Mexico)

      SAA South African Airways

      SADC Southern African Development Community

      SOE state-owned enterprise

      SWAPO South West Africa People’s Organization

      SWOT strengths and weaknesses; opportunities and threats

      UAE United Arab Emirates

      UN United Nations

      UPND United Party for National Development (Zambia)

      ZNBC Zambia National Broadcasting Corporation

      Introduction

      Africa faces a difficult, possibly disastrous future unless it acts quickly to consolidate democracy, liberalise its economies, invest in people and infrastructure, and ensure the rule of law.

      Given sub-Saharan Africa’s population is projected to double to 2 billion within a generation, without leadership taking these decisive actions to encourage long-term investments, the continent will be overwhelmed by the growth in people, especially in its cities. If the right policy and institutional actions are taken, however, they will help to create the conditions for a high-growth demographic dividend.

      The nature of the challenge that Africa faces is on display on the Great East Road, which runs from the Zambian town of Chipata, on the Malawian border, to the capital, Lusaka. The journey along this national road is at best harrowing. Although the 570-kilometre road from Chipata has mostly been rebuilt, and the traffic speeds have consequently gone up, it is still a dodgem ride of four- and two-wheeled vehicles, tractors, trucks, herds of goats, cattle, oxcarts, donkey carts, pedestrians, dogs and even disabled carriages. Travelling along it, we braked to a near-stop no fewer than 20 times for errant goats. After that we stopped counting.

      The trucks add further confusion, especially as the road descends towards the Luangwa River and its great 222-metre suspension bridge. Built with British aid, a plaque on the western end of the bridge commemorates its inauguration by President Kenneth Kaunda in 1968. The pinstriped paramilitary act as traffic police, allowing only one truck over at a time, whose loads consist of mainly processed food and fuel for Zambia and the Democratic Republic of the Congo, their cabs emblazoned with biblical treatises and other urgings, from ‘God only Knows’ to the intriguing ‘Third Base’.

      The road is a reflection of the situation in Zambia. There are ever-more people and they are on the move to the cities. By 2030, the population will grow from the current 16 million to about 25 million. An increasing number will be attracted to the urban areas because, despite the country’s rich soils, agriculture has consistently performed below its potential, not least because of government interference in maize pricing, lack of land tenure, and difficult and expensive logistics.

      Lusaka, built for 1 million people, houses 2.5 million today and will, at current rates of increase, be home to double that number in 15 years. Who will employ the young people looking for work in the next few years?

      Zambia has yet to provide an answer. The presence of so much two-wheeled traffic reminds one of Kenneth Kaunda’s attempts, as president of the First Republic, to spur economic diversification with the creation of a number of new domestic industries, including Luangwa Industries, which made the Eagle brand of bicycle in Chipata. Zambia also manufactured Mitsubishi trucks and cars, assembled Fiats, Peugeots and Land Rovers, produced batteries in Mansa, glass and clothing in Kapiri Mposhi and Kabwe, canned pineapples in Mwinilunga and processed cashews at Mongu. Dunlop made tyres in Ndola for export in the region; Serioes International stitched designer suits for export to the UK and Germany; Lever Brothers, Johnson & Johnson and Colgate-Palmolive manufactured household goods and toiletries; and ITT Supersonic produced televisions and radios in Livingstone.

      Yet, while Zambian industries used to rank only behind Zimbabwe and South Africa in the region, by 2016, very few remained. The Chipata bicycle factory had become a beer warehouse, Livingstone Motor Assemblers (then one of only seven Fiat factories worldwide) a small timber factory, Kabwe’s Mulungushi Textiles a piggery, and Kafue Textiles a maize-storage site. With the disappearance of tariff protection and the tax incentives once administered by the government’s Industrial Development Corporation, the centrepiece agency for the import substitution industrialisation strategy, these industries left too. Local consumers voted with their money for cheaper, and often better-quality, imported goods.

      The attempts at industrialisation were hampered not only by a lack of competitiveness and the size of Zambia’s market, but also by the simultaneous nationalisation of key industries. In April 1968, Kaunda announced that the state would take control of all private retail, transport and manufacturing firms, in what came to be known as the Mulungushi Reforms. Eighteen months later, the Matero Reforms were announced, whereby the government purchased 51 per cent of shares from the existing mining companies, Anglo American Corporation and Roan Selection Trust. In 1973 both companies were fully nationalised and transferred to the state’s Zambia Consolidated Copper Mines (ZCCM). That year, the mines produced at least 720 000 tonnes of copper and employed 48 000 people.

      Over time, however, burdened by poor state management, the copper industry collapsed and along with it the economy. As will be further explained in Chapter 5, ZCCM production fell to 257 000 tonnes in 2000, when it employed just 21 000 people. The contribution of mining to the economy fell from one-third of total output in 1973 to under 8 per cent 30 years later, before slowly recovering again.

      And Zambia has not been able to grow other sectors that might employ new workers. For instance, the World Bank noted in 1966 that, ‘There is considerable untapped agricultural potential and scope for further development of the tourist industry.’4 This, as will be seen in Chapter 4, remains sadly the case – one of potential and promise rather than delivery and progress.

      And, similarly, half a century later, tourism, a sector that should be able to generate a large number of jobs, is weighed down by continually changing regulations, a permit culture, and the cost and difficulty of getting to and around the country. Zambia’s potential is poorly marketed and its national parks only partly developed. As a result, despite extraordinary offerings, including Victoria Falls, considered as one of the Seven Natural Wonders of the World, the country receives a maximum of just 150 000 international tourists a year.

      Still, Zambia was a poster child for a new era of African growth in the 2000s, when its economy grew at 7 per cent annually from 2004. The country’s performance was supposedly down to better governance and policies. But when the copper price went down, growth slowed, the effects worsened by an inconsistent tax policy and a spendthrift government. Zambia’s economic growth fell to just 3 per cent by 2015.5 This rate is barely enough to maintain