2.1 Pre-colonial and Colonial Era .1 Early mining activity
2.2.4 Enter the multi-laterals
iiiiil^^S^^Ssli^
find suitably skilled replacements. Eventually, the remaining expatriates held largely financial and technical jobs174 while managerial jobs were frequently filled by loyal politicians without proper training or experience.175 The result, according to present day observers, was predictable.
If, by increasing production you have lowered your operating costs to where you are now making money this does not necessarily mean that the shareholders will be receiving dividends/getting their money back. A lot of it you have to put straight back in as capital investment to sustain and improve future operations. What happened in the early Kaunda days when the mines were making good money is that he used this money to build houses and do all the politically popular things he did to remain in power and neglected re- investing in the mines. Mines need continual investment in new equipment and infrastructure has to be maintained so they run properly. This is generally referred to as sustaining capital. The mines were making money but they didn't put enough back in—they sucked it all out and things started to breakdown/stop.
The copper price was good, the mines were working well and all they did is went and nationalized and Zambianized way too quickly with guys being stuck in positions they didn't have the experience to handle. The decline was gradual, but if you look at the statistics, it was continuous until they eventually re-privatized. Since privatization, it has gradually and continuously improved.176
lilSSISiSlSlBSiM^Siiiiiiiis
consultants. As the mines' income didn't appear to match the country's development needs, government began increasing borrowing. Until 1969, this external debt appeared manageable. But, only a few months after the nationalization announcement, things began to change.
The most spectacular change .event was a massive cave in at the Mufulira Mine in September, 1970. The Mufulira Disaster—to this day the country's deadliest mining accident—was not the seminal event in Zambia's economic deterioration but it suddenly made things worse.179 Production dropped markedly while the mine was closed for rehabilitation. Then, between 1969-71 the world copper price also dropped significantly.1
Zambia now struggled to meet obligations to the World Bank.
By 1973, the global oil crisis and Zambia's own economic difficulties prompted the
1 O 1
International Monetary Fund (IMF) to step in. Although Zambia had been a member of
Kaunda was clear in drawing distinctions between foreign aid and "charity" and seemed completely cognizant of the risks inherent in taking foreign aid. These included the rich nations' view that aid was actually charity—which continued the old patronizing relationship—and the inability, due to lack of proper training, for countries such as Zambia to survive without outside help. See, for example, Kaunda, Humanist in Africa, 12Iff.
179 The accident "had a disastrous effect on production both at Mufulira and for Zambia as a whole. Production fell from an average of 617,000 tonnes per month of ore hoisted during the period May to August, 1970 to 30,000 tonnes in October, 1970." Commission of Inquiry Appointed by His Excellency, the President of the Republic of Zambia, Dr. Kenneth David Kaunda, The Mufulira Mine Disaster: Final report on the Causes and Circumstances of the Disaster Which Occurred at Mufulira Mine on the 25 September, 1970 (Lusaka:
Government Printer, 1971) 7. Burawoy (Colour of Class, 91-92) further notes, "Copper mining is inherently risky and uncertain, if only because of the technological problems involved in any mining enterprise and the unknowns that lie beneath the 'surface.' A single unexpected blow such as the Mufulira disaster can kill tens of people and put a whole mine out of action for a period of months or even years. In addition, the copper producer has to gear his production and expansion, and indeed the distribution of profits, to a fluctuating copper price sensitive to all sorts of changes all over the world which can be neither controlled nor predicted. Thirdly, the mining companies have had to be continually adjusting to the changes in the distribution of political power amongst the interested parties." The importance of Mufulira to Zambia's overall economic condition has been further testified to by evidence that Rhodesian sympathizers attempted to take the mine out of commission in 1978. A foiled plot to bomb the plant arose as part of Rhodesia's effort to sew confusion amongst various groups participating in the southern African liberation struggle. Stiff, See You in November, 199ff.
180 See chart in appendices.
1 ' See the work of the New Economics Foundation (www.neweconomics.org) for a detailed accounting of links between OPEC's investment decisions and the initial rounds of multilateral loans encouraged upon newly independent African states. See also Lishala G. Situmbeko and Jack Jones Zulu, Zambia: Condemned to Debt.
How the World Bank and IMF Have Undermined Development (London: World Development Movement Report, 2004).
the IMF since 1965, the country's first loan was only taken from it eight years later. The Kaunda government signed for a one-year agreement in which the IMF offered temporarily to help Zambia meet its debt obligations to the World Bank. Zambia simply had to comply with a few conditions the IMF wished to impose. These included elimination of price controls over certain goods and services.182
Price controls were popular with the people even if government administration and distribution were haphazard. And the extent to which they were simply Kaunda's ideals of socialism and humanism at work may have been questionable.
When the government realized that its policies were failing and people had lost confidence in it, it bribed people by providing free mealie meal and other commodities at highly subsidized prices. Since this did not improve production, it only led to severe shortages.
For now, government agreed to the IMF's conditions and soon the copper price rose as well.
Still, by the end of the 1970s, income from the mines just couldn't keep pace with demands. Less income meant less financing for maintenance and improvement of the Copperbelt's social infrastructure; living standards began deteriorating. ~ In the townships, streetlights and telephones were vandalized and the industry's local newspaper reported an increase in general social problems. Government publicized several interventions such as reducing copper sales and shutting overly costly sections of the mines. But the industry was
Situmbeko and Zulu, Zambia: Condemned to Debt, 20; Interview with Zambian economic policy analyst, 2004.
1 3 The coupon subsidy program did nothing to help increase food production and was also abused. Some of the rioting that subsequently arose can be traced not just to removal of food subsidies but to general frustration with a distribution system that did not function well. Kaoma, "Democratic Crisis in Southern Africa," 18-19.
184 Ibid.
185 Europeans had noticed problems developing with the infrastructure that was important to their way of life even earlier. Many had departed the country as a result. Stiff, See You in November, 86ff.
now obviously suffering from what President Kaunda acknowledged as a combination of management problems and generally difficult economic times.186
Mounting chaos within the mining community mirrored turmoil within government.
The one-party democracy Kaunda had introduced in 1972 was supposed to align Zambia more closely with African traditional values. But it also allowed the president to consolidate power. Within his cabinet there was internal dissention and Kaunda frequently reshuffled ministers' assignments. Ordinary citizens had already begun registering their disapproval by dropping out of the voting process.187