Friday, 18 April 2014

IMPACTS OF NATIONALISATION 50 YEARS DOWN THE LINE

By MacPherson Mukuka

One of world’s largest sources of copper ore is found on the border of Zambia and the Democratic Republic of Congo, in a region known as the Copperbelt. Since the first
Commercial mine was opened at Roan Antelope (now Luanshya) in 1928 copper mining has dominated Zambia’s economy.

In 1968, 5 years after Zambia was liberated from colonial rule, President Kenneth Kaunda raised concerns that, from independence, the two companies that owned the mines had put in little new money.  The companies claimed that the royalty system by which they were taxed dissuaded investment. The Government responded in 1969 by announcing the nationalization of the mines.
The Constitution was amended through a referendum. All rights of ownership of minerals as well as exclusive prospecting and mining licenses reverted to the state. The mining companies were forced to give 51% of shares in all existing mines to the State. The two nationalised companies were combined in 1982 to form Zambia Consolidated Copper Mines (ZCCM).
What exactly pushed the UNIP Government to undertake such a process, Dr. Kaunda who was President then says, much as the decision was tough, Government had to do it so that what the mines where getting could also benefit Zambians
And, a Historian says there was need to develop areas which the colonialists neglected.
Dr. Eusten Chiputa says the government deliberately made the decision in order to develop areas like the education sector.
By 1976, it was anticipated that the Mining sector which had contributed almost one half of the gross domestic product, at the time of independence would supply no revenue to Government.
Surprisingly, cost of production of ore had increased on top of higher prices for imports, economic diversification programmes were slowed down. These problems were particularly critical because the engine of Zambia’s economy was in a period of severe recession because of low copper prices.
Was the nationalization of the key industry largely responsible for the country’s economic chaos?
Mr. Yusuf Dodia is an economist and has a different view, and he says KK’s ideology was a move in the right direction, because so much money was going out of the country, and it was time to develop Zambia which despite been the largest producer of the mineral, was still under developed in terms of infrastructure
Mr. Dodia however says that there was time that some of the nationalised sectors needed to be handed back to private hands.

“Nationalization of key industries was done in good faith, however there was need to put in place initiatives that where going to play as back up if things went sour, and Privatization by the new party in power was seen as the best solution, but it came at a wrong time.” He said.

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