Zambia has signed a US$146.5-million agreement with a Tanzanian company called Africa Inland Container Depot (AFICD) for the establishment of a Dry Port in Kapiri Mposhi, the Industrial Development Corporation (IDC) announced last Friday.
For those who do not understand what this is about, the Dry Port will be an integrated logistics and industrial hub that will be responsible for providing services to transportation industry clients across Eastern, Central and Southern Africa. According to the IDC and national newspapers that covered this story, the dry port will handle 10 million tones of cargo per year.
This is not a small development. When international trade experts say Zambia is one of the most strategically located land-linked countries, this is what they mean. Indeed, Zambia and Kapiri Mposhi in particular can easily be the regional trade logistics hub.
We therefore would like to start by commending President Edgar Lungu who is the board chair of the IDC, Chief Executive Officer Mr Mateyo Kaluba and the rest of management for securing this deal. We are aware that this business opportunity has been on the Zambia Development Agency (ZDA) books for many years, but it was never actualized. Managers and board members of ZDA and IDC have come and gone, they never seized this massive investment opportunity.
Why are we praising the IDC for this achievement? This dry port is so strategically located that even the 10 million tones of cargo maybe understated. We are talking about cargo that comes in and out through Nakonde border, cargo coming in and out from Mpulungu Harbour, cargo destined for Kasumbalesa, cargo coming in and out from Chirundu, Kazungula and the Eastern boarder with Mozambique.
This is a serious cash generating business and we can say with confidence that 10 million tones of cargo is not small activity. Simple mathematics tells us that if this port will be charging a paltry US$100 per tone of logistical transaction, this will translate into US$1 billion annually. And we are being very economical here because there is no way that they will be charging US$100.
But we have a serious concern with only one part of this achievement. In announcing this development, the IDC which is the investment arm of the Zambian government on behalf of the Zambian people, went further to disclose that we, the citizens of this country who own the land where that port will be constructed, shall hold 15 per cent of shares in this project while the Tanzanian firm shall hold 85 per cent.
The IDC investment strategy is perplexing on this score because in such a lucrative business, you would expect them to secure more than 15 per cent share holding for the Zambian people. Why has the IDC accepted to walk away with such a minority share? In fact, from as far as we remember, the IDC investment guidelines dictate that in a worst-case scenario the Corporation would not go below 25 per cent in any investment agreement with a private company. What has happened to those guidelines?
It is so strange that when investing in loss making companies such as oil plantations, milling companies, airlines and banks, they get all the shares, leaving very little stake for the equity partner. Where revenue and profit is not guaranteed, IDC buys majority shares but in this money making project in Kapiri Mposhi where cargo is already passing through, our investment arm has settled for 15 per cent. Does this make sense?
We heard the Chairman of the IDC, President Lungu, complaining recently about how the 20 per cent subcontracts in the construction industry are not benefiting Zambians. We have heard government officials complain that the 20 per cent shares in the mines are not benefiting citizens. They even blame previous governments that negotiated those deals for signing such lopsided agreements.
Now, it is confusing that the IDC can accept such a small and insignificant share holding in a cash cow which can even help us revamp other State Owned Enterprises. What was so difficult about getting a 50-50 stake in this deal? We would understand if this private company is Zambian and IDC doesn’t want to nationalize the whole investment opportunity, but this is a foreign company that will externalize 85 per cent of envisaged US$1 billion revenue.
We don’t want our country to continue signing deals which when a new government comes in place, we start reversing and losing money through compensation. Leaders must learn from experience.
We have not forgotten what happened on the Kasumbalesa Border Concession agreement with those Israelis, signed under the Rupiah Banda MMD government. When Michael Sata’s PF came into power, that transaction was reversed, exposing the country to litigation from the investor. What has happened again today? Mr Lungu’s PF has reversed the reversed decision. All this confusion is because there was no national interest in the deal from the beginning. Anyone at Zambia Revenue Authority can tell you that the Kasumbalesa Concession was bad for Zambia.
We know that the IDC may argue that Zambia does not have resources to spend in the construction of the Dry Port facility and it was difficult to negotiate a higher stake. We disagree totally with this and we will demonstrate in our Opinion tomorrow how defective that reason is.
Ivo simuzacita ba IDC, talesa!