Selling off the nation?

Author:Somerville, Keith
Position:Zambia
 
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In the last week of April, the Chiluba Government finally got the privatisation show on the road with the announcement that it was offering shares in Chilanga Cement to the public. Keith Somerville reports on the tortuous path of Zambian privatisation, and the prospects for the sale of Zambia's big one - ZCCM

The second and final phase of Chilanga Cement's privatisation is finally under way. The Government wants to sell 27.4% of the company's shares, and to have them listed on the Lusaka Stock Exchange by May 22. This is the first of 20 state companies which will be fully or partially privatised. Others including the mining giant Zambia Consolidated Copper Mines (ZCCM), Zambia Steel and Building Suppliers, the Mufulira Hotel and National Air Charter of Zambia Ltd.

Once Chilanga's shares appear on the exchange, President Chiluba will be able to answer those critics who have accused the Government of failing to get privatisation off the ground.

Mr Chiluba came to power in October 1991 promising to divest the Government of loss-making or inefficient parastatals. In February 1994 the Stock Exchange was established as part of the promised privatisation campaign, but Chilanga is the first to be listed.

Chilanga had in fact been technically privatised in October 1994. The Government had offered Britain's Commonwealth Development Corporation (CDC) its stake in Chilanga as early as June 1993 under CDC's pre-emptive rights to shares in the company (CDC already held a 24.5% stake, having set the company up in 1949). But while CDC bought enough of the Government's stock to give it a 50.1% controlling stake - and the responsibility for management - it waived its rights to the rest of the Government stock so that it could be sold to the public.

The way was finally cleared for the final share sale when, on March 31 1995, Finance Minister Ronald Penza announced the winding up of the Zambia Industrial and Mining Corporation (ZIMCO), which had overseen the Government's holdings in, or control over, some 150 companies. The dissolution of ZIMCO was the fulfilment of a promise made to Western donors at the donors' meeting in December 1994.

But the acid test of privatisation will be the fate of ZCCM - the copper and cobalt mining monopoly which is at one and the same time the major pillar of the economy and the major drain on economic resources.

ZCCM has been an economic disaster area for years, with accumulated debts of $700m and severe production problems. The...

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