Diversification, industrialisation, technology

Two pieces in today's Post, one reporting comments from British High Commissioner Alistair Harrison, the other an editorial on the same subject: diversification of the Zambian economy.

Harrison commented, "the boom in mineral prices is likely to continue, but higher commodity prices cannot last forever; hence, government should seriously embark on economic diversification on the Copperbelt to sectors such as agriculture."

Copperbelt minister Mwansa Mbulakulima replied: "We are on course with diversification and soon this region will be able to balance food production and mining but we cannot just abandon mining."

President Mwanawasa agreed: "A few years ago when the price of copper was very bad, government stressed that it was necessary to encourage other sectors like agriculture so that livelihoods that had been lost in mining can be replaced by some in agriculture and we should not lose sight of this important goal even when copper prices are high."

So, we're all agreed then? Zambia needs more than just a mining sector. OK, but the question it seems to me is 'diversification' (a word implying the growth of a range of industries) into what sectors? Harrison and Mwanawasa seem obsessed with food production. Hmm. Another primary commodity. Why? Well food is advocated on two grounds i) for the self-sufficient survival of households left out of the formal sector, ii) for export to the major rich country markets, principally in Europe. Until there is a formal sector base of waged employees, earning decent wages, the domestic market for Zambian agricultural will be seriously limited.

Is that really a model of 'development'? Export-based mining, plus export-based agriculture to take advantage of globalisation. And for the vast numbers left out of the labour force for these export industries - peasant agriculture, probably with quite a lot of aid industry and government funded primary health and education provision to keep the peasants alive.

James Ferguson's brilliant 'Expectations of Modernity' argued that the historical attraction of the Copperbelt for the many Zambians who have moved there has been the idea of breaking away from rural life, from the toil of agricultural production, from the insecurity that results from relying on nature's whims. The region, one of the first and the fastest in Africa to urbanise and industrialise, when 'booming' as now, has represented something radically better than the poverty that pervades much of Zambia, indeed Africa. At times, the opportunities offered have supported aspirations and dreams of achieving for mass populations the same levels of consumption enjoyed in the West. Older Copperbelt residents won't tire of stories of the 'good old days' that Ferguson discusses if you ask them.

Is there a way from agriculture back to that dream? Or are Zambians being told that the benefits of mining itself, and the industries that might grow around mining, will always accrue to a minority and to foreigners?

What seems to me missing in this vision is a discussion of industrialisation, of moving up the value chain to see Zambia competing to manufacture complex goods? After all, donors, especially the World Bank and DFID have been pushing this diversification = agriculture line for decades. They have traditionally argued the fiscal impacts of mining and the political choice of Zambian Governments to protect the sector (and its politically powerful urban workers) have frustrated agriculture. Structural adjustment was precisely designed to redress this 'imbalance'. Well, it wasn't a huge success! The Post's editorial picks up similar questions. I will quote it here at length but it's well worth reading the whole of the original.

"There is no need to pretend, as Copperbelt minister Mwansa Mbulakulima is trying to do, that we are on course with diversification. We are not on course with diversification on the Copperbelt – we are very far away from even making a good start. There is no reason that being mineral-rich should result in an inability to farm or nurture a dynamic industrial structure. In fact, a developed mining sector like Zambia's could easily be the motor for a fast-growing economy. A large mining sector has resulted in a concentration of population on the Copperbelt. This population, if it were well paid, would have the potential to generate an increased demand for various agricultural and industrial products. The sophistication of the industry would also generate skills that could be used in the other industries. Furthermore, demand for industrial equipment would produce a large enough demand to justify local assembly and later manufacture of industrial equipment."

But why hasn't this happened in the past? The Post argues, mining "has never been used as the integrating force in the economy. There are many reasons for this gross omission. First, the mining industry has always been treated as an external part of the economy. Second, the dominant position of large international firms in the industry re-enforced the alienation of the industry from the rest of the economy. Consequently, the large mining corporations were left to fashion and determine the country's mining policy. In turn, this re-enforced the view on the part of the government - both colonial and post-colonial - that the industry was only good as a foreign exchange milk cow."

The lesson picked up from colonialists in the 1920s onwwards was: "only mine copper, cobalt, lead and zinc; procure inputs from external suppliers; only export ingots and wire-bars without moving into semi-fabrication; consistently undermine the power of the ministry and by all means never let yourselves be integrated with the rest of the economy. On the part of the government, the mining industry has always been treated as a special one to an extent that most Zambians, including policy-makers, are ignorant about it. The mystique associated with the mining industry turned into a sacred cow. ‘Touch me not,’ became the industry's clarion call. It was certainly the goose that laid the golden egg."

The editorial concludes that the strategies of multinational mining houses have not benifited Zambia: "There is no effort to adapt to our country’s environment nor is there any incentive toward scientific and technological development because research and the choice of technologies is carried out in the transnational’s home country. So-called technological transfer is reduced to a very fragmentally apprenticeship to employ technologies that are alien to our country’s national realities and therefore precluding all possibility of adapting or producing them. Therefore, the results are almost nil because modern technology makes it possible to fragment more complex production processes into a number of more elementary phases. This, of course, makes it possible to carry out the greater part of the process with unskilled labour whose training requirements are reduced to a few specific operations.

However, in such vast international operations, the transnationals are obliged to divulge a certain amount of technological know-how. But then the strategy is to limit and control the process. Restrictive trade measures taking the form of technological contracts that forbid the export of products manufactured with a given technology are one of the mechanisms that the transnationals use to implement this strategy.

The features of the alleged transfer of technology attempting to copy the consumerist pattern of the parent company in the midst of our country’s unemployment, social inequality and extreme poverty, are clearly inadequate for the needs of our backward country. Far from being directed toward solving social problems, they contribute to the individual consumption of the higher-income minority.

So, the heart of the problem of diversification lies in the measures that we as a nation wish and are able to take at a given moment, in the political orientation and the nature of our economic development, and thus, in the resolute attitude of our leaders to struggle for the adoption of fundamental measures to meet the interests of our people."

Absolutely wonderful stuff. Well done The Post!