NATIONALIZATION & MANAGEMENT IN ZAMBIA

Conclusions

Zambian officials remained unperturbed last year by the discrete pressure from international banking circles urging them to announce that the Mulungushi reforms were only “temporary”. They apparently prefer to maintain their flexibility by bargaining on an open market where bids can be entertained from all quarters. Former Minister of Foreign Affairs Elija Mudenda, captured the spirit of their strategy when he surveyed the Zambian investment climate: “We have the French on coal, the Yugoslavs on power, the Italians on the oil line, the Chinese on the railway and the Japan on textiles,” he observed. “But the American are not participating.”

When a Parliamentary critic attacked the Mulungushi reforms in 1968 on the ground they would frighten off foreign investors, Simon Kapwepwe told him: “Money is not flowing. I can quote some countries which have made very liberal conditions to attract investments in their country, but they have nothing. Everyone in Paris, London or Washington is threatened, they may be going into slumps of 1931- 32 and no one is prepared to part with their dollars, pounds or francs.”

Large American companies with fresh investments in South Africa appear to be waiting for the Rhodesian tantrum to die down so that Zambia’s “normal” relations with Southern Africa can resume. But this “wait and see” policy also reflects the fact that corporate executives do not regard the settlers and Zambian private businessmen as viable partners with real investment potential. The corporations seem to be groping for a new’ interface between themselves and the national or mass markets in countries like Zambia. That is what management consultants like McKinsey and Company are trying to develop. The irony is that state enterprise organizations like lndeco may become in their eyes the only suitable vehicle for large scale industrial projects with foreign private participation.

President Kaunda’s speech at Mulungushi along with the mining reforms present Indeco and its counterpart Mindeco with an economic program geared to promoting Zambian enterprise and rural development rather than servicing the corporations. Chairman Sardanis seems to be attempting to enlarge Zambian initiative by casting his organizations as the administrative brains in an expanding network of subsidiaries loosely controlled by the state. “One of the major and more immediate tasks ahead.” says Sardanis in lndeco’s 1969 annual report, “is to develop the Corporation into a uniform integrated group and establish its corporate image.” This language reveals how far the management philosophy has eroded the conventional concept of nationalization. There is hardly any trace of the socialist thinking normally associated with state control. The practical effects of the Zambian takeovers may simply be the creation of a modem capitalist organization which will tend increasingly to emulate its economic environment rather than change it.

The ambiguity surrounding the future of state enterprise in Zambia stems from the relation of these administrative agencies to the Zambian government. Public corporations in Africa were originally designed to insulate foreign capital from the political arena. For this reason both INDECO and MINDECO have a large degree of autonomy from the government. “They have created a state within a state,” observed one government economist of INDECO shortly after Mulungushi.

Rather than seeing Zambian “nationalization” simply as a strengthening of state power over international business, we might be better advised under these circumstances to consider whether it might not also have the opposite effects. Now it would seem that the corporations are extending their management structures into the government sphere itself. The Zambian case demonstrates the necessity of turning conventional concepts like nationalization inside out and seeing them with fresh eyes.

Editor’s Note: We intend, in forthcoming issues to engage in further discussion of this topic.

 

[i] On April 6, 1970, the Zambian government awarded mineral prospecting licenses to six foreign mining companies following the yielding of 65,000 square miles of copper-mining tracts by Roan Selection Trust and Anglo-American.

[ii] “Where Copper is not quite King”, Business Week, Dec. 7, 1968.