The author believes in that domain of philosophy called empiricism; the doctrine which holds that the most reliable source of human knowledge is experience. Put simply, empiricism is the modern Western intellectual tradition of learning by observation. In the first article, I canvassed the case for Zambia to ensure 50/50 ownership of the coming electric vehicle battery venture. I relied on the empirical evidence published in Zambia, and that discerned in this neighbourhood and elsewhere; noting the beauty of that management philosophy; as acclaimed by many Zambian intellectuals.
In this second article I continue to cite discrete examples of state-owned enterprises, anchored on strategic mineral resources in other jurisdictions. The first for today’s discussion, is Alaska; the second is Saudi Arabia. In Alaska since 1982; that is to say forty-one years ago, the government of Alaska has been ploughing substantial part of the income generated by its oil reserves to set up a giant trust fund for its citizens, paying a ‘social dividend’ worth thousands of dollars every year. Yet Alaska has not earned itself a negative ideological label from the political taxonomy; such as “communism” or “commandist economy”.
In the case of Saudi Arabia, history shows that since the 1930s, Aramco (Arabian American Oil Company) began producing oil for commercial export. Aramco was formed on the basis of 50/50 ownership between the host country and an American company. AS from 1973, state ownership accelerated in Aramco. Today the Kingdom of Saudi Arabia is a petrostate of serious reckon! Any citizen of the World can Google and verify this history. This is why this author loves empiricism. The kernel of all these examples is STATE OWNERSHIP of stakes in a strategic industry! Now, back home, the law that will regulate the COBALT EV venture is still under preparation: according to the Minister of Mines Honourable Kabuswe on ZNBC TV on Sunday, January 29, 2023. We have reason to hope that the draft of that law will not originate from outside Zambia; already loaded with tax holidays and impossible to interpret clauses. The law must originate in Zambia; and both the framers and the legislators should be inspired by what is best for Zambia.
State ownership of 50% of the equity MUST BE THE CENTRAL ISSUE. Corporate social responsibility (CSR), is always at the discretion of management; as we all know, as such it is therefore of peripheral consideration. Note carefully, in the past, Foreign Direct Investment (FDI) in the Zambian Mining industry, demanded and was granted long tax holidays, in addition to almost free power from ZESCO and SECRET TRADE AGREEMENTS that effectively superseded the laws of Zambia. But when it came to paying tax, the mines claimed ‘high costs of production’. Zambians will hope for maximum transparency; this time round; and not a repeat of SECRETE TRADE AGREEMENTS that will supersede the laws of Zambia.
This author holds the view that only 50% share equity in the Cobalt EV venture will afford GRZ the key to escaping the eternal bondage called VAT refunds; which the Treasury has waded in the last decade.
Further that, instead of grappling endlessly with the bane of VAT refunds, the Treasury should spend time and energy on, like in Alaska, investing substantial part of the income generated by our cobalt resources to set up a trust fund or equivalent mechanism; to benefit the citizens. NO COLOUR BAR; Zambia should not be treated by FDI as the Nadir, to invest in. In the view of this author, the bottom line is this: We must make a fresh start; as any Sovereign State would, by deciding on this path. The Cobalt EV Venture Act must take care of this fresh start!
Finally, about the siting of the Cobalt EV plant in Ndola; as announced by Honourable Kabuswe in the fore mentioned statement on ZNBC TV. The project is greenfield; meaning it will be a completely new development. Zambians’ expectation is that like Kalumbila Trident Mine, Lumwana Mine, or Maamba Collieries Mine Ltd, the Cobalt EV project should start and open a new town. A new town means; developing all essential amenities and thereby adding value to the Copperbelt Province by among other things, creating decent and regulated jobs in accordance with the Labour Code; Act NO.3, 2019. The employees must have their statutory contributions remitted to NAPSA, in full compliance with the NAPSA Act NO. 10, 2000 as amended.
Zambians do not expect, in the least, to hear through the media that the investors want to set up a hashed camp near existing residences and have demanded the removal of Twapia residents in the next 90 days, before the project can begin.
In conclusion; State-owned ventures work viably, once corporate management aspects are in place. In our case, we may have to begin with hired management (experts from outside) if we feel that is necessary. The question of owning a major stake in a strategic mineral by the host country, is a red line: it is that country’s indefeasible right, anchored on its sovereignty. Whether you choose to call it ‘Resource Nationalism’ or something else, is beside the point. That is what the experience from Alaska, Botswana and Saudi Arabia shows; so, let us learn from observation: and ignore ideological appeasement games. It is time to take a leaf from the past and have firm opinion on what is in Zambia’s best interest and STAND UP to conflicting pressures that are bound to be placed on the leadership of Zambia, in favour of strong foreign commercial interests. Part of the aim of this article is to stimulate debate on this important subject. All Zambians are invited; as time is running out.
The author is a social chronicler of matters of national importance: contact; 0972947972.