Debating Undermining Development?

The Post again reported on the new Undermining Development? report on Friday.

The article, “IMF, World Bank pressured govt to privatise mines – Nawakwi” quotes extensively from the interview prepared for the research with former Finance Minister Edith Nawakwi. Nawakwi, who is now leader of the opposition Forum for Democracy and Development told the authors, “We were told by advisers, who included the International Monetary Fund and the World Bank, that not in my life time would the price of copper change. They put production models on the table and told us that there (was) no copper in Nchanga Mine, Mufulira was supposed to have five years life left and all the production models that could be employed were showing that for the next 20 years, Zambian copper would not make a profit… Conversely, if we privatised we would be able to access debt relief, and this was a huge carrot in front of us – like waving medicine in front of a dying woman. We had no option (but to go ahead).”

This article, and the report itself have provoked very interesting discussions on the excellent ‘Zambian economist’ blog, – read particularly the comments at the end of the post. Cho, the blog’s author, criticizes Nawakwi for not resisting more aggressively donor pressures on Zambia, “The 'devil made me do it' has never got anyone off a crime. For indeed it appears that we came under pressure from young graduates at the IMF and World Bank who spent one week in Zambia and flashed a few models on the table and we crumbled.” The discussion raises important questions about the degree of dependence of Zambia on foreign aid donors, the relationship between dependence and ‘post-colonial’ mentalities, the competence of the civil service, and the potential role of corruption in the signing of the Development Agreements. It doesn’t reach many conclusions, but the contributors are asking some interesting questions. Should we say that the World Bank ‘forced’ Zambia to sell the mines? Or is the relationship between donors and aid recipient Governments more complex than that? What is or was the relationship between the World Bank and IMF and particular mining houses? Did they (do they) actively collaborate? Why? Were the Bank and Fund ‘on Zambia’s side’, trying to get the best deal for the country from the sale? Or were they so ideologically committed to the need to sell that their interests and those of the companies co-incided? What difference does Government part-ownership of the mines (through ZCCM-IH) make? And what about the role of the World Bank, whose ‘finance arm’ IFC is also a shareholder in some of the privatised entities? One discussant adds a link to a Post article on a March 2006 exchange in Parliament between current Finance Minister Magande and Nawakwi - “Nawakwi had no choice over mines tax incentives – Magande”. Nawakwi is quoted as saying, "The conditions were near to blackmail. Mining houses demanded blood out of the Zambian people."

I am not sure anyone has really written a convincing account of those negotiations. As a number of commentators in the discussion note, official secrecy about the negotiations and the contracts has hardly been helpful in this field. The same blog includes a lengthy discussion on the original Undermining Development? report with a discussion amongst a range of Zambian economists about how best to move forward. The many points would take too long to summarise. Read it yourself here.