ZAMBIA'S DEVELOPMENT STRATEGIES AND CHALLENGES
2.1 The Boom Period 38
2.1.1 Post-Independence Development Planning
2.1.3.4 FNDP Priorities
To the above factors should be added rapid urbanization which took place during the period of the FNDP. Planners of the FNDP were well aware of the social and economic impact of this urban drift especially on social services including access to water (FNDP, 1966). Increased migration to the urban centres was mainly propelled by the attraction of rising wages in urban employment relative to rural incomes, prospect of a better life (Elliot, 1971) occasioned by the "social wage," and the post- independence removal of restrictions on movements of people47. It was during this period that most of the peri-urban areas which have persisted to this day sprouted up.
economy. Apparently there seem to be a divergence between politicians and bureaucrats. Burdette highlights this:
Trained mainly in the Western schools and often sympathetic to precepts of 'Western Capitalism', these technocrats found themselves often in conflict with the national politicians who act [sic] more in accordance with their own political survival and do not appear so bound by the legalistic traditions of Western Capitalism (1984: 52) .
This probably is one reason that can help explain the apparent discrepancy between policy and political speeches, on the one hand, and the actual programme implemented on the other. It seems that politicians' goals differed from those of the state bureaucrats who were expected to implement the programmes.
The other main priority area identified under the FNDP was the need for an import-substitution industrialization (ISI) strategy. Essentially the strategy to locally or domestically produce certain goods, consumer as well as capital goods which were previously imported, was premised on the understanding that such a move would lessen pressure on the current accounts and shift resources to cover the rising demand for capital goods which could not be produced locally. In the Zambian context, the ISI strategy was perhaps relevant given the enclave nature of the copper economy and all the risks this implied.
The major instrument for the government's industrial policy was Industrial Development Corporation (INDECO)49 which was created in 1965. According to Dr. Kaunda,
INDECO had a major task in the Economic Reforms and I am pleased to report that it has discharged it well. I am pleased to report that the overall performance of INDECO has been excellent since 1965 when Government allocated to it the task of developing the industrial sector and looking after the interest of the Nation in business(1969: 16).
The main industrial strategy adopted during the 1960s was largely protectionist in nature mainly in the form of targeted loans as well as rationalized licensing for wholesale and retail enterprises (Faber, 1971).
The marketing and pricing of farm products is one of the examples. In effect the fixed producer price paid to poor rural small scale farmer went to subsidize the urban population including the high income households. See Evans, 1984;
Woldring, (984c)and more especially Siedman (1979a) who argues that the "political figures" who were the owners of the estates ensured that they paid farmers low prices to keep their operations more profitable (43).
In fact INDECO existed before independence but only as a development finance company operating like a development bank providing loans and other forms of financing to business enterprise (See Tangri, 1984). It only became a parastatal company in 1965 as indicated by the quote from the President Kaunda above.
Creation of "real" jobs was another priority identified by FNDP. Job creation was critical not only for reasons of widening the tax base to increase government revenue, but also to improve the quality of life of the people. With an average of about 15.7% growth in GDP between 1965-67, the expanding economy created a huge demand for skilled, but also unskilled labour (Jolly, 1971). There was also the thinking that providing people with employment was the surest way of redistributing the country's wealth fairly to achieve objectives of equity and economic justice.
The FNDP also identified bringing development to areas other than the line of rail as one of its priorities with the overall aim of reducing the rural-urban disparities. Justification for this was based on the fact that development in Zambia during colonial times occurred along the narrow strip—the line of rail.
At independence in 1964 Zambia inherited a highly dualistic economy. Along the central line of rail running from the then Rhodesian border to the Copperbelt were all the visible signs of
"development"; towns, mines, factories and large scale settler farmers. Away from the line of rail the situation was in sharp contract: a large hinterland of poor smallholder agriculture, remote from markets and starved of services and infrastructural investments (Jolly, 1984: 89).
However, even a quick glance at the industries established during the post independence era reveals that only a few were actually located away from the line of rail. Out of the five new industries created during the period of the FNDP, only one—Mansa Batteries—was located away from the line of rail!
2.1. 3.5 Mulungushi/Matero Reforms
Within this period of the FNDP, the most significant reforms as far as development policy is concerned were the Mulungushi and Matero Reforms. The major components of the Mulungushi reforms was the government's decision to ask 25 major foreign owned companies other than the mining companies to offer 51% of their shares to the government parastatal company. The aim of these reforms51 has been stated as opening the "gates to economic independence" and increasing the participation of Zambians in the economy (Kaunda, 1969). However, both the Mulungushi and Matero Reforms did not amount to
The five are Livingstone Motor Assemblies, Kapiri Glass Products, Mansa Batteries, Nakambala Sugar (all subsidiaries of INDECO), were all created with the view of bringing development and creating job opportunities to areas other than the line of rail, but they are all located along the line of rail.
It is important here to note that the Mulungushi Reforms did not affect the mining companies—purchase of 51 % shares were demanded from non-mining companies. The purchase of 5 1 % shares of the mining companies—Nchanga Consolidated Coper Mines (NCCM) and Roan Consolidated Copper Mines (RCM) came as a result of the Matero Reforms.
After the the 5 1 % government takeover, the South African mining giant Anglo-American held 49% shares in NCCM and 12.5% in RCM while the US mining giant American Metal Climax (AMAX held 20% shares in RCM with the remaining 16.75% held by smallholder companies (see Meyns, 1984 and Kaunda, 1968, 1969).
nationalization52. Background comments on the Mulungushi reforms make this clear: "The measures announced in His Excellency's speech, although they involve in many cases assuming controlling interest in some enterprise, fall far short of nationalization as conventionally known" (ibid., 104).
Kaunda in his Matero Reforms Speech makes it clear that government was not taking over entirely from private capital:
We decided to allow for 100 per cent ownership of certain industries by private entrepreneurs.
In future therefore, we shall welcome foreign capital as in the past. We remain committed to this policy for we need foreign capital in considerable amount. All we ask of our investors is the understanding that we welcome them as participants, and not controllers, of our economic development process (1969: 43).
Rationale for acquiring controlling interest in these companies seems to be inter alia that the country attained political independence in 1964, but that independence meant little until the local people took control of the economic affairs. Kaunda repeatedly refers to the fact that the country could not be fully independent unless it took control of the economic power (Kaunda, 1969:6, 36).
It should be further noted that all these reforms were preceded by the declaration of the philosophy of Humanism53 in 1967. Humanism was an eclectic philosophy with emphasis on the central position of
"man/woman" in society. In a sense it was not a philosophy as such, but rather an ideological that sought to exhalt human abilities without religious mediation. In its origianla form in Europe, Latin America and Cuba, humanism was an anti-religious movement. Surprisingly, Dr. Kanda baptized it and used it as a Christian value. I do not intend to deal with this matter here, but interested readers can refer the abounding literature on the topic mainly by Dr. Kaunda himself, particularly his book Humanism in Zambia Part I and Part II. And also Patrick E. Idoye's (1988) article, "Ideology and the Theatre: The Case of Zambia."
There are a number of things to note about these reforms. For our purpose here, it is vital to note that these reforms appear to have been designed outside of the FNDP. It is reasonably justifiable to argue
Burdette defines nationalisation as simply the government takeover from private enterprise of physical or financial asset both foreign or domestically owned within its geographical territory (Burdette, 1977; 1984:25). In this sense, the Mulungushi and Matero Reforms did not amount to nationalization as they are often quoted to be in the sense that they did not constitute a complete state takeover. The turning over of 51% shares or controlling vote to the state that took place after the Mulungushi and Matero Reforms did not amount to nationalism. Nationalisation understood as the complete take over of assets previously under private (domestic and international) ownership by the sate through force or a massive buyout did not happen in Zambia. In fact 11 of the 30 companies in which the state parastatal INDECO bought shares by 1968, INDECO had less than 50% share; for example, in companies such as Zambia Sugar, INDECO had only 12% (Fortman
1969)
that the FNDP did not envision the Mulungushi/Matero reforms. Political imperatives may have occasioned this move with the objective of concentrating economic power in the state. Meyns is confident that "[t]he timing of the economic nationalistic measures was not unrelated to the power struggle that was going on within the national elite" (1984:17). Similarly, Burdette (1984) argues that the emerging ruling class sought to exert its influence by capturing control over economic power using the state. Bearing in mind that these reforms are introduced at the time when there was an insurgence and possible splinter groups within the ruling party (Chikulo, 1979), one would ague that the reforms seem to constitute a timely move to deal with possible threats to the authority of the "party and its government" rather than a genuine development strategy. At the time of the Mulungushi Reforms, it was apparent that the popularity and legitimacy of UNIP (the ruling party) was waning as can be deduced from voter turn out shown Table 2.5 below.
Table 2. 5 1964-1978 Voter Turn-out
Year of Election 1964 1968
1969 (Referendum)
1971 (Parliamentary By-Elections) 1973
1978
Voter Turnout (%) 94.9 82.47 69.63 35.35 39.8
68
Source: Election Office, Lusaka (in Chikulo (1979))
In view of the president's declaration in the preface to the FNDP that "[n]o investment or development will take place outside the Plan itself," adding further that "each one of us, wherever we may be, must realise that all our activities must now be taken within the structures of the National Development Plan, for it is to be our pattern and programme of development"(vi), the apparent diversion from the strategies of the Plan that the Mulungushi and Matero Reforms represent is not easy to explain outside the move to consolidate both political and economic power.
Attempts to explain this apparent riddle are few, and one of the cogent explanations advanced so far has been that the political expedience had an overriding effect over the development imperatives, such that the focus was on consolidating economic power to take control of the political situation (Meyns, 1984; Burnell, 2005). Beveridge (1974) in an assessment of the take-over measures argues that the purported control of business was only symbolic for many ordinary Zambians who did not benefit form
the measures. Whatever the reason54, failure to stick to plans often results in implementing programmes haphazardly55. Now this may be a major challenge in achieving economic growth and development which requires long term planning and discipline in implementing plans.
The other reason advanced in support of the state acquisition of controlling shares in private companies is that if government acquired control over a number of manufacturing industries it was going to quicken the process of providing basic services to the people as well as protecting the interests of the consumers by reducing profit margins on the sale of essential goods (Fortman, 1969). Further, it was assumed that if government participated in the private enterprise, which at this time were said to have been making profits, the dividends were going to be ploughed back into the economy or used to provide social services such as education, health cares, roads, housing etc.