26 May 2005
interview
Washington, DC — Debt relief for Africa is a top issue under discussion in capitals around the world and is a lead item on the agenda for the G-8 summit in early July of the leading industrial nations. One country that has received some good news on debt recently is Zambia, where successive presidents have campaigned to have funds redirected to health care, education and infrastructure, with backing from civil society organizations.
This week, the so-called Paris Club of nation creditors agreed to cancel $1.4 billion that was owed to its members, and Britain announced forgiveness of an additional $550 million. Last month, Zambia signed an agreement under the Highly Indebted Poor Country (HIPC) initiative that will reduce outstanding obligations by about $3.9 billion - out of a total $7.1 billion owed.
The agreement was the conclusion of a long process of reform and consultation, said Ronnie Shikapwasha, Zambia's Foreign Minister, who visited Washington, D.C. last week to discuss U.S.-Zambia bilateral relations with U.S. officials and promote trade and investment opportunities in Zambia. Shikapwasha, who is a Member of Parliament, served previously as Minister of Home Affairs and is retired from the Air Force, talked about the significance of the HIPC agreement and other key issues in an AllAfrica interview . Excerpts:
How did the HIPC agreement come about?
It's been a huge struggle for Zambia to reach that milestone. President Kaunda [Zambia's first president] tried for a considerable period of time. For almost 27 years we struggled with the IMF and World Bank and we couldn't get our numbers correct. The second president, President Chiluba, also struggled for 10 years and we couldn't get our act correct.
It's necessary to understand that we had to carry out some surgical operations within ourselves. The economy in Zambia during the one-party state was a 'commandist' economy, and we had to move out of that. We had to privatize many of the mines and companies that the government was holding on to. At the same time, we had to introduce a very, very young democracy in the country. Therefore it was very difficult for President Chiluba in 10 years to try and get things in order.
President Mwanawasa has come on the scene and, out of huge fiscal discipline and sacrifice, we have reached the HIPC completion point. It is a big achievement for Zambia, and we believe we are on the threshold of moving forward.
What does it mean to reach the HIPC completion point?
There are a number of things that happen. Half of the debt that Zambia owes the world [has been cancelled], and we are working to get the rest cancelled. The money that was meant for us to service these debts can now go toward the resurrection of infrastructure, the improvement of the health sector, the fight against HIV/Aids, and improvement in schools.
Also agriculture. Zambia used to be one of those countries that was always on the list for food relief. Now we have put our agricultural policies in order. This year, there's been a quite severe drought in southern Africa and many countries have been affected, so we need assistance in order for us to give the same ratio of food to our people as we have had in times past. But, in the last two and a half years, we had surpluses and were able to export to a number of African countries. We believe that we can do even better.
How did Zambia incur so much debt?
It is important that people understand where Zambia's coming from, where Zambia is, and where Zambia is going. Zambia is surrounded by eight countries: [the Democractic Republic of] Congo, Burundi, Tanzania, Malawi, Mozambique, Zimbabwe, Botswana, Namibia and Angola. The liberation [struggle for] independence took a great toll on Zambians and on Zambia's economy, and the world needs to understand this. Zambia hosted the African National Congress to liberate South Africa. Zambia hosted Swapo to liberate Namibia. Zambia hosted Frelimo to liberate Mozambique. Zambia hosted Zanu-PF and allied parties to liberate Zimbabwe. Zambia hosted MPLA and Unita to liberate Angola, and Zambia continues to host and to stabilize the Congo area.
Resources that were meant for the local people went out - not only to support the liberation struggle, but also to support the hosting of many, many refugees in the country. This took a toll on the Zambian economy. In 1964, the Zambian kwacha would buy four dollars. Now, we are talking about the dollar buying 5,000 kwachas. This is the kind of depreciation that has gone on for a number of factors, and one of them is the support to the liberation of the other countries.
We felt as Zambians that the independence of Zambia, the freedom and justice of Zambia, would be incomplete unless our neighbors also were free and had democratic governments and independence. Therefore we put ourselves in the frontline states, and many others joined in from east Africa, from west Africa, and all of us pushed [toward] a common goal until we had the independence of Namibia, Angola, Mozambique, Zimbabwe, and the liberation of South Africa. Now we have a stable southern Africa..
What has to happen for the rest of Zambia's debt to be cancelled?
We need fiscal discipline. We need to stay on track on our programs that we have laid out with a number of cooperating partners. Our cooperating partners must see that our fiscal discipline and our vision is meeting the expectations of the rest of the world, that we are pursuing good governance, the fight against corruption, the fight against Aids, etc.
What impact does this fiscal discipline and economic reform have on opportunities for private sector investment in Zambia?
Zambia graduated through many steps to [get to] the HIPC completion point, and we have priorities that we have put across as the Zambian government. The kwacha has stabilized considerably for the past three years and has given confidence to those that would like to invest. We think the atmosphere is good.
What areas of the economy is the government promoting for greater investment in Zambia's economy?
Zambia is opened up now in many areas for investment. We have a stock exchange where you can invest. You can invest in agriculture, you can invest in the health sector, you can invest in water, you can invest in mining, Zambia has huge natural resources. You want to come into tourism? We have 19 parks [and] more than 30 game management areas. We've divided some of those parks for sale to those who would like to be investors. You can have your own tourism business, and this is available to everybody.
We have wonderful parks and wildlife. We have wonderful scenery. We have the seventh wonder in the world - Victoria Falls - and we believe that it is important for us to sell it. Our Minister of Tourism [has] declared this year the year of "Visit Zambia," and there's an aggressive policy that's being pursued to bring as many tourists to Zambia as possible. It's working well so far.
We've also given incentives in the commercial sector to attract investors into the country, that are not available in many other countries. Zambia now is the only country that I know of in southern Africa that doesn't have foreign exchange restrictions. You come into the country, you invest your money, you take out your 100 percent profit to wherever you want to take it. This is a great incentive for anybody who wants to come.
There's [been] a wonderful reaction in the mining sector, where we are now having lots of people coming to invest in mines, and we're opening new mines in areas where we have huge deposits of copper. We have a one-stop shop for investors that provides for them to do good business and carry out their investment portfolio without much delay.
We have loosened immigration laws to allow investors to come to Zambia, and we are seeing many people visiting and many people coming to invest. We must attract huge investors and small investors, [and] the local investment portfolio must be lifted up for our own people so that they too can invest in areas they want.
What does Zambia need to do to become eligible from the Millennium Challenge Corporation that has been set up to provide U.S. assistance to developing countries?
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