African govts losing out on shareholding in foreign firms

Zambian policy analyst Humphrey Mulemba, who is also a member of the Civil Society for Poverty Reduction, has warned African governments that poverty on the continent will persist if they do not change their strategies on share ownership in  foreign firm.

He warned recently when making his presentation to 25 journalists drawn from the Southern Africa Development Community (SADC) countries who were undergoing a two-week Journalism Summer School (JSS) course in Lusaka, Zambia. The training was sponsored by Open Society Initiative for Southern Africa (OSISA). Mulemba warned that African governments and indigenous investors own few companies as compared to foreign investors, an issue that has a direct impact on national economies.

“Even without mentioning names, we all know the companies. Ask yourself, how many companies are owned by locals in your country?” he queried.

“They are few and it is the same story here in Zambia. Big Companies such as Coca-Cola and those in mining are owned by foreign investors and, if you ask, you may be shocked to learn that no indigenous investor owns a share in the investment.”

Mulemba said African governments should be proud that they have many companies, but are not benefiting because the profits are sent back to their headquarters based outside the continent.

He cited countries such as Zimbabwe and Zambia where mining activities have been ongoing for years, but are still poor with its people still living below the poverty line.

Mulemba said this is because mining investments are owned by foreign firms and they also hold majority shares.

“It is true that most countries have no capacity to own investments, but what we are lobbying for is a room for the indigenous investors in big investments owned by foreigners. If the locals hold substantial shares and perform other roles such as value addition to products by foreign investors, money raised will be distributed locally and this brings a direct impact to the economy and citizens,” he said.

Mulemba advised African governments to come up with mechanisms that will help them to finance investments and support small-scale ventures by creating a platform that allows locals to add value to products.

Country director for Action Aid Zambia, Pamela Chisanga, concurred with Mulemba, saying Africa’s poverty is a result of locals not getting direct benefits from major investments in their countries.

She hinted that most African governments lose track in share ownership through privatisation of government-owned companies although it helps to improve performance of companies. n