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By Daimone Siulapwa

Guest Writer: Nkonkomalimba Kafunda

Zambian Parastal’s Privatisation raises eyebrows
Revelations that a consultancy firm will be paid US$12.8 (K65 billion in local currency) by the Zambian government for facilitating the sell of 75% shares in telecoms parastatal Zamtel to a Libyan company, have been meet with shock and indignation in Zambia, Africa’s largest copper producer.

On Saturday June 5, Finance minister Situmbeko Musokotwane signed an agreement worth US$257 million to sell the majority stake in Zamtel to GAP Green Networks of Libya. Of this sale price 5% or US$12.8 million will be paid to Cayman island registered RP Capital Partners. This is in line with a contentious memorandum of understanding signed between government and the RP Capital in 2008.

The transaction has been clouded in controversy from the word go. Independent newspaper the Post in an expose in 2008 revealed that RP capital had links to president Rupiah banda’s son Henry, who had in fact introduced the company to the Zambian government. When then Communications and transport minister Dora Siliya went ahead and signed the memorandum of understanding with RP capital against the advice of the government’s chief legal advisor the Attorney general the public and opposition politicians alike bayed for minister Siliya’s blood.
Subsequently Chief Justice Ernest Sakala was forced to constitute a code of conduct tribunal to determine if there was any illegality in Siliya’s actions, after a complaint was filed by a former communications minister William Harrington. Though Siliya was forced to resign under pressure to pave way for an independent inquiry,l she was reinstated a few months later when the high court overruled the tribunals findings which had found that she had acted illegally. The inquiry had found that Siliya had breached Article 54 sub article 3 of the constitution when she selected RP capital partners to value the assets of Zamtel against advice of the attorney general. The high court on appeal ruled that the tribunal had acted excessively, quashed the tribunals findings and cleared Siliya.

She was, unashamedly, reinstated the same day she was cleared, raising speculation that the deal she had signed was beneficial to people above her.

Zamtel is the oldest phone company in Zambia. It was formed after the break up of the Post and Telecommunication s Corporation which separated into telephone and postal divisions at the end of the 1980’s. With the coming of mobile telephony and the internet age, Zamtel branched into the new areas but with little successes. Cell Z the Zamtel mobile phone division has the tail end of market share while the internet division, Zamtel Online, is generally seen as inefficient at best and down right unreliable at worst. The company, however, has a monopoly on fixed line services.

Normally this would make a solid case for privatization but Zambia’s experiment with privatization in the 1990’s had resulted in poverty and pauperism for the majority of the workforce due to closures and retrenchments. As a result the country’s vibrant civil society and opposition fervently opposed this particular privatisation.
Leaders of the Patriotic Front and the United Party for National Development have, throughout the process of privatizing Zamtel, maintained that they will re-nationalize when they get into office. The two parties are in an electoral pact that has a more than fair chance of unseating the MMD in next years general election.

Following the announcement Patriotic front President Michael sata charged that this was just another form of plunder of national resources and the current regime will one day be called to account.

“They have sold Zamtel because of corruption not for the benefit of Zambian people so the Zambians will not get anything out of this.” Charged Sata in an interview with Post on June 7.
The Zambia Association of Chamber sof Commerce and industry was of a more optimistic view. President Handson Sindowe told the state owned Times of Zambia that the deal created opportunities. He said the transaction was good because government had maintained a 25% stake with options to offload this to the Zambian public through the Zambia Privitasation Trust Fund (ZPTF) and the Lusaka Stock Exchange (LuSE).

Without commenting on the intricacies of the transaction Sindowe said though people viewed the 25%v as small it translated into almost US$100 million.
Apart from the US$257m purchase price LAP Green Networks had agreed to invest an additional 62 million dollars , take over government guarantees of US$75 million and settle redundancy packages for 2,314 Zamtel workers bring the total package to US$394million.
It remains to be seen who the ultimate beneficiaries of this deal are: Certain members of the Zambian government or the Zambian people as a whole.