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If Vedanta, KCM deal was bad, Kapiri Dry Port project is a scamBy Diggers Editor on 28 Oct 2019
Last week, we questioned why the Industrial Development Corporation accepted 15 per cent shares in a lucrative Dry Port business project earmarked for construction in Kapiri Mposhi. Before they can give us their explanations, we would like to defeat the argument that the IDC does not have the financial capacity to pump resources and demand significant stake in the Dry Port equity.
For starters, our contribution as a country to this deal is the land itself. This Tanzanian company, which is getting 85 per cent shares in this project, would not have come to us if they had a strategic location like Kapiri Mposhi in their country. They are here because they can foresee that there will be increased trade from the Great Lakes region. So before we even discuss the monetary contribution to this project, we must discuss the value of our land resource.
Now, it is very likely that the argument from IDC would be that the US$146 million for the construction of the dry port came from the Tanzanian company. But our argument is that this is a clear lucrative business, and IDC should be able to find at least even US$50 million for this investment; if we add that to the land value, we will be in the driving seat of the project.
Yes, Zambia is broke. But where is the money for by-elections coming from, where did the US$135 million for buying the presidential Gulfstream come from? How can you fail to find money for a billion dollar business when you are on your knees begging the IMF for the same amount of money? Like we said, if IDC tells us that they will be processing 10 million tones of goods per year, it means they will be making a cool one billion dollars annually by charging only US$100 per tone. This is one business that the banks would be happy to lend capital for. The IDC has the mandate to invest money in lucrative businesses and if the banks can see the clear revenue streams for this Dry Port, they would not hesitate to finance.
We must add that, in fact, the IDC has the capacity to find the entire US$146 million and build this Dry Port by themselves, so that the whole US$1 billion revenue stays in Zambia. But we don’t encourage that and we don’t have a problem with this equity partnership. We would like to believe that what the Tanzanian company brings to the table is port handling experience, probably technology and an existing network of clients. So we salute the IDC for identifying this equity partner, but our issue is the minority shares that we have been given.
We don’t understand how the IDC board, chaired by an experienced learned lawyer, a sitting Finance Minister, a former finance minister in the name Alexander Chikwanda, the Minister of Commerce and the Secretary to the Treasury can reason like this. These are people who don’t need to be told about how desperate Zambia is for revenue right now.
Members of Parliament must join us in demanding access to this contract so that we review this deal. Once this agreement is actualized, it will be costly for Zambia to undo. This will be another Vedanta situation where a President of Zambia and all his economic advisers approved a very bad deal for the cheap sale of Konkola Coper Mines, and later on, government comes back to start attacking the investor on grounds that the deal is not benefiting citizens. KCM was not stolen from government, it was sold at a give away price and the investor did as they pleased with the mine.
Now, as a country, we must know that the same way that it is impossible for Zambia to take over KCM by force without losing billions of kwacha in compensation will be the same way it will be impossible to push away this Tanzanian investor who has offered Zambians 15 per cent of their own land. If you are complaining about the 20 per cent that Zambians own in KCM, think about the 15 per cent offered in this multibillion-dollar dry port business.
We don’t want to be seen to be criticizing all the time, but this is a bad transaction because we are struggling to see national interest in it. National interest decisions take into consideration the people’s wish, including the citizens who are not yet born. These shares are supposed to be held on behalf of the Zambian people, and we don’t think the Zambian people would be happy to have insignificant stake in this project. The mining agreements are still chocking us up to this very day, so we must be very foolish to make the same mistake and expect a better ending.
Some of the IDC’s investment transactions need to be audited because they defeat common sense. We wonder what these people discuss when they sit as a board to discuss IDC investment decisions? When was the last time President Lungu chaired the IDC board to look at these things?
Dear readers, we are being ripped off as a country. These people can’t tell us that they don’t know how lucrative the Dry Port project will be. But they have chosen to be ripped off just like that. In our view, it’s either they have eaten already or they are in the process of eating.
Sometimes we must try deworming, it may help us make national interest decisions.
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