Tuesday 29 June 2010
Monday 21 June 2010
Thursday 17 June 2010
Issues dogging International Investments in Zambia
According to details available in the public domain, the Zambian government has always had an ambitious plan for developing the telecommunication industry. Unfortunately, attracting international investment has always been a difficult area for policy makers as the Country has attempted to maintain control of the industry through the formation of various bodies that oversee the industry. The formation of ZAMTEL in 1994 as a result of the division of the Post and Telecommunications Corporation, Zambia Telecommunications Company Limited (“Zamtel”) became Zambia’s exclusive fixed (PSTN) network operator, curtailing any involvement of the private sector. The organisation had operations spanning the entire ICT sector, including fixed-wireless (wireless local loop), mobile, fibre, VSAT (very small aperture terminal) and internet service provision. The government has therefore been in direct control of licencing, dictated the entire spectrum of assignments and network assets and maintained a firm hand in the control of the telecommunication services as the sole supplier to the consumer, enterprise and wholesale telecoms markets in Zambia. There was in fact, a direct self-defeating policy established as very little international investment ever became an incentive for investors.
ZAMTEL provided services to the government of Zambia’s ministries on a “credit” arrangement policy that became a financial pitfall as the Company rarely received payments for services that the government was served with. The Zambian government emerged as the highest stab into the organisation’s financial liabilities. With this aspect developing from the mid-1990s, the organisation was doomed to fail from the onset though there were several positive attempts by the government to make the organisation a modern entity. An attempt to develop ZAMTEL’s mobile network to be expanded by over 60%, with slightly over 80 cell sites being deployed with EDGE-enabled concepts to allow the company to offer mobile internet access and other value-added services was seen by many interested international investors as a gateway for future investment if only the organisation could be allowed to be privatised and touted on the liberal market.
The equally ambitious policy to have a National fibre optic backbone network that the government promoted and commenced laying stirred the international investor’s community in giving the Zambian telecommunication industry a second glance. Invariably, the completion of the national fibre backbone and its connection to subsea fibre network system are expected to have a considerable impact on the Zambian telecommunications market. Zambia telecommunication industry has struggled to compete internationally due to a profound lack of bandwidth and international voice capacity. International interest in the Zambian industry spurred the Zambian government to seriously consider having 75% shares of the ZAMTEL assets to be sold on the open market.
The sale of these shares to a Libyan company in 2010 has created confusion on the general public response as the details of the process indulged in has been dogged by rumours of untoward dealings by politicians. Though the sale was handled by privately owned professional companies, there have been serious misgivings that clandestine agreements have been engaged in. Lack of transparency by the government to release the details of the valuation of ZAMTEL has not been made public. The sale has been concluded before the public could have a say in the way forward for the industry. Politicians have found it extremely difficult to explain why a Libyan company has been awarded the 75% shares at what is considered as a give-away price as ZAMTEL was a public organisation with vast physical assets spurning the entire Country. According to the Minister in charge of Commerce and Industry, Felix Mutati, the valuation of ZAMTEL was simply a maze of “figures” that Zambians would not understand and as such irrelevant for scrutiny and publication in the public domain. This has caused great indignation from professionals and relevant watch dog bodies like Transparency international demanding the release of the valuation. ZAMTEL was a public organisation and any decisions, including the details of the assets and liabilities were expected to have been published before politician’s awarded the sale to the Libyan company.
Surprisingly, the government has suddenly moved a step further by allowing the hitherto bottleneck of license fees that kept investors out of Zambia to be reduced considerably to bring the Country into line with other African countries that already benefited from low entrance license fees. Below is the communiqué that is circulating in most of the County’s media tools:
Zambia lowers international gateway license fee (17/06/2010)
The Zambian government has finally reduced its international gateway license fee from US$12 million to $350,000 in a bid to attract international investment in the country’s telecom sector and reduce the high cost of communications.
The new gateway license fee puts Zambia at the same level as other countries in the region including Uganda, Tanzania and Kenya, which are experiencing massive investment in the telecom sector. International gateway fees are $214, 000 in Kenya and $50,000 in Uganda.
Private mobile operators in Zambia and other telecom sector stakeholders — including Zain, the World Bank, and the U.N. Conference on Trade and Development (UNCTAD). — had been expressing concern at the high cost of doing business in Zambia.
The decision to lower gateway fees comes in the wake of the government sale of Zamtel, which controlled the gateway and charged private operators high fees for its satellite system. Zamtel has been sold to Libya’s LAP Green Networks in a bid by the Zambian government to level the playing ground in international call services.
“ The move by the Zambian government would enhance the performance of the telecom sector because high tariffs put pressure on customers’ pockets,” said Walter Tapfumanei, communications officer for Africa Agency for ICT Development.
Despite the reduction in international connection fees, the high user tariffs are not expected to decrease anytime soon, since the Zambian government has not come up with a law to govern the use of the gateways. Service providers are still using the old tariffs for international calls as they wait for the enactment of the new law that the Zambian government has drafted to guide service providers on the use of the gateways. The new law is yet to be presented to Parliament for approval, which might take months.
The above is an attempt by the government to smooth the spikes caused by the sale of ZAMTEL and indirect liberalisation of the telecommunication industry. This is hoped to attract international investment in the industry. Many will see this as long overdue as the Country has suffered considerably in competing with other regional and African Countries due to the severe controlling hand the government of Zambia has played in the industry. The lowering of the license fees should not be seen as an end in itself but rather a catalyst for other policies in opening the industry to foreign direct investment in the ravaged industry.
ZAMTEL provided services to the government of Zambia’s ministries on a “credit” arrangement policy that became a financial pitfall as the Company rarely received payments for services that the government was served with. The Zambian government emerged as the highest stab into the organisation’s financial liabilities. With this aspect developing from the mid-1990s, the organisation was doomed to fail from the onset though there were several positive attempts by the government to make the organisation a modern entity. An attempt to develop ZAMTEL’s mobile network to be expanded by over 60%, with slightly over 80 cell sites being deployed with EDGE-enabled concepts to allow the company to offer mobile internet access and other value-added services was seen by many interested international investors as a gateway for future investment if only the organisation could be allowed to be privatised and touted on the liberal market.
The equally ambitious policy to have a National fibre optic backbone network that the government promoted and commenced laying stirred the international investor’s community in giving the Zambian telecommunication industry a second glance. Invariably, the completion of the national fibre backbone and its connection to subsea fibre network system are expected to have a considerable impact on the Zambian telecommunications market. Zambia telecommunication industry has struggled to compete internationally due to a profound lack of bandwidth and international voice capacity. International interest in the Zambian industry spurred the Zambian government to seriously consider having 75% shares of the ZAMTEL assets to be sold on the open market.
The sale of these shares to a Libyan company in 2010 has created confusion on the general public response as the details of the process indulged in has been dogged by rumours of untoward dealings by politicians. Though the sale was handled by privately owned professional companies, there have been serious misgivings that clandestine agreements have been engaged in. Lack of transparency by the government to release the details of the valuation of ZAMTEL has not been made public. The sale has been concluded before the public could have a say in the way forward for the industry. Politicians have found it extremely difficult to explain why a Libyan company has been awarded the 75% shares at what is considered as a give-away price as ZAMTEL was a public organisation with vast physical assets spurning the entire Country. According to the Minister in charge of Commerce and Industry, Felix Mutati, the valuation of ZAMTEL was simply a maze of “figures” that Zambians would not understand and as such irrelevant for scrutiny and publication in the public domain. This has caused great indignation from professionals and relevant watch dog bodies like Transparency international demanding the release of the valuation. ZAMTEL was a public organisation and any decisions, including the details of the assets and liabilities were expected to have been published before politician’s awarded the sale to the Libyan company.
Surprisingly, the government has suddenly moved a step further by allowing the hitherto bottleneck of license fees that kept investors out of Zambia to be reduced considerably to bring the Country into line with other African countries that already benefited from low entrance license fees. Below is the communiqué that is circulating in most of the County’s media tools:
Zambia lowers international gateway license fee (17/06/2010)
The Zambian government has finally reduced its international gateway license fee from US$12 million to $350,000 in a bid to attract international investment in the country’s telecom sector and reduce the high cost of communications.
The new gateway license fee puts Zambia at the same level as other countries in the region including Uganda, Tanzania and Kenya, which are experiencing massive investment in the telecom sector. International gateway fees are $214, 000 in Kenya and $50,000 in Uganda.
Private mobile operators in Zambia and other telecom sector stakeholders — including Zain, the World Bank, and the U.N. Conference on Trade and Development (UNCTAD). — had been expressing concern at the high cost of doing business in Zambia.
The decision to lower gateway fees comes in the wake of the government sale of Zamtel, which controlled the gateway and charged private operators high fees for its satellite system. Zamtel has been sold to Libya’s LAP Green Networks in a bid by the Zambian government to level the playing ground in international call services.
“ The move by the Zambian government would enhance the performance of the telecom sector because high tariffs put pressure on customers’ pockets,” said Walter Tapfumanei, communications officer for Africa Agency for ICT Development.
Despite the reduction in international connection fees, the high user tariffs are not expected to decrease anytime soon, since the Zambian government has not come up with a law to govern the use of the gateways. Service providers are still using the old tariffs for international calls as they wait for the enactment of the new law that the Zambian government has drafted to guide service providers on the use of the gateways. The new law is yet to be presented to Parliament for approval, which might take months.
The above is an attempt by the government to smooth the spikes caused by the sale of ZAMTEL and indirect liberalisation of the telecommunication industry. This is hoped to attract international investment in the industry. Many will see this as long overdue as the Country has suffered considerably in competing with other regional and African Countries due to the severe controlling hand the government of Zambia has played in the industry. The lowering of the license fees should not be seen as an end in itself but rather a catalyst for other policies in opening the industry to foreign direct investment in the ravaged industry.
Monday 14 June 2010
Felix Mutati Insults Zambians
The Government of the republic of Zambia have eventually sold and got rid of the non-performing only telecommunication parastatal organisation, ZAMTEL. The process to sale the Company has been done under very questionable clandestine atmosphere resulting in several unpalatable whispers going on in the grapevine. The sale of ZAMTEL on the Lusaka stoke market has been characterized by several meetings being held away from the public eye and the watchful gaze of watch-dog organisations. 75% of the sahres were touted on the market and several international companies attempted to participate in the negotiations that took place under extremely difficult conditions. FDI that would have loved to participate were very carefully disqualified until only the Libyan company that has finally been awarded the Company reigns.
The sale of ZAMTEl has brought a rather sour taste in the mouth in the manner that the Company has finally been sold off. As History would have it, Libya does not in itself boast of a fantastic telecommunication infrastructure that would have attracted the Zambian government to have confidence that the telecommunication industry in Libya would be replicated in Zambia! The unspoken vocabulary that individuals and organisations that were involved in the practical selling of the Organisation are going to benefit immensely has left Zambians fuming and totally dismayed that the repeat of the Sale of the Zambian Mines by the FTJ government was at hand.
When businessmen like Hanson Sindowe, the chairman of the Commerce and business fraternity in the country requested for details of the capital valuation of ZAMTEL to be published for the general public to view and make informed opinions, the Minister of Commerce Felix Mutati has gone on record stating that "Zambians would not understand the figures contained in the report" and as such irrelevant to even fathom the publishing of the report. This is utter arrogance and there is need for a retraction of this statement. The author has written to the local Post newspaper to demand that Mr Felix Mutati should apologise and retract the statement as it boarders on insulting the general public. Below is the letter to the post:
Dear Editor,
I am a Zambian Architect who lives in the UK but has great interest in the Political and economic developments that take place in Zambia. I write to your uncompromising paper to express my personal and several other concerned Zambians’ disapproval of being insulted by COMMERCE minister Felix Mutati who has said that Zambians would not understand government’s decision to privatise ZAMTEL even if the RP Capital valuation report was released.
As a Zambian citizen, I demand Felix Mutati to retract and apologise for having such a diabolical opinion of Zambians that they are so inept, dull and incapable of understanding “figures” of the RP report. It is this attitude that makes some of us Zambians to detest politicians and their actions in the way the Nation is run. If Mutati has been able to understand the figures and has approved them, what right does he have to assume that Zambians would not understand them?
By way of this letter, I demand that he apologises to the Nation and immediately release the RP report for the Nation to make a judgement independently. We are able to understand even more complex figures than accounting figures that are contained in the RP report. What we may not understand would be why politicians are reportedly pocketing great revenues in their private accounts as a result of this clandestine sale of ZAMTEL!
The Eye
Typical response from the government will normally be docile and dismissive but I realize that the truth and desires of the general Zambian Masses will eventually be clear for all to see.
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