Mining industry: Lesson from Zambia
During colonial days in Malawi, we were being taught in civics that the relationship between a colony and its mother country or colonial power was of mutual benefit. The colony contained the raw materials or natural resources which it exported to the mother country. The mother country transformed those raw materials into finished products such as textiles, bicycles and cigarettes and exported them to the colony.
But to what extent was this arrangement of equal benefit? In the distribution of wealth whether within the same country or between countries, politics always plays a role.
The natural resources which we wish to dwell on in this essay is mineral, particularly the copper industry of Zambia which owns the country’s natural resources. Is it the government of the country, the nearest chiefdom and its people or someone who identified or discovered the mineral? It is not a straightforward question.
Imagine a relatively unsophisticated tribe has been scratching the surface of the land sowing maize or millet seeds for generations. It has managed subsistence living. A foreigner with advanced knowledge of geology visits the tribal land and says deep underneath it, there is gold or copper. Without their expertise and insight, no one knew that the piece of land was worth more than the annual scantly harvest. What reward are we to give to this geologist for discovering the mineral?
A wealthy businessperson also a foreigner comes along with capital, goods, equipment and skilled workers and offers to open up a mine there, and export the mineral overseas where there is a market. What kind of contract should the governments’ chiefdom and the foreign investor sign that will be fair to all the three parties?
During the struggle against the continued existence of the federation of Rhodesia and Nyasaland, Zambia’s leaders Kenneth Kaunda and Harry Nkumbula were saying through the federation their country was being milked of its wealth. How was this being done?
Of the three countries, Nyasaland, Northern Rhodesia and Southern Rhodesia by the time the Federation was imposed, Northern Rhodesia was the wealthiest by far thanks to its booming copper industry. To talk of towns such as Ndola, Mufulira, Chingola, Broken Hill (Kabwe) and Kitwe was to talk of a cluster of El Dorodos. There was fabulous wealth there. But to what extent was it improving ordinary people’s standards of living? Very little.
From books and newspapers, we used to read of Northern Rhodesia as being multiple-richer than Nyasaland. This used to puzzle me a bit whenever I visited villages in Lundazi district where I had relatives. There was nothing to prove that the wealth of the Copperbelt was actually trickling through to the village.
Zambia’s history as a colony started as part of the multi-millionaire Englishman, Cecil John Rhodes’ empire from which it got the name Northern Rhodesia. The British South Africa company (BSA) was the landlord of the whole Copperbelt and up to the year 1936, most of Rumphi and Karonga in Malawi was owned by BSA Company. Whatever wealth was being generated on the Copperbelt, a big chunk of it was being handed to BSA a typical case of rent seeking, earning more without providing more services in exchange.
The copper industry of Zambia was dominated by two foreign companies which were highly capitalised. Most of the profits it made were transferred overseas to enrich shareholders. What Zambians earned in the form of wages was negligible compared with what went abroad. Some of the profits were sent to Southern Rhodesia where the headquarters of BSA was located.
It is usually claimed that multi-national companies are channels through which technologies move from developed to developing companies, but Zambians were denied the opportunity to acquire advanced skills because of the colour bar. Managerial and major skilled jobs were reserved for expatriates who used to remit at least 25 per cent of their earnings abroad where they generated multiplier effects.
Zambia had a dual economy. The Copperbelt was a modern economy urbanised and industrialised. The rest of the country was agricultural, managed by traditional skills. Had the wealth generated in the mines on the Copperbelt been reinvested in the rest of the country, today Zambia would not be one of the developing but developed countries. When I was working in Dar es Salaam in the 1950’s, it used to surprise me that though Northern Rhodesia was one of the richest regions in Africa, there were as many Zambians in Dar es Salaam as Malawians. Though the Copperbelt was wealthy, but it was capital intensive rather than labour intensive; hence, did not generate enough jobs for Zambians school-leavers.
When they attained independence in 1964, the Zambians took immediate action to restructure the copper industry. They nationalised land owned by the BSA Company and used the profits of the mining industry to develop the hinterland, the peasant economy.
Between 1975 and 1982, copper prices tumbled. Companies closed thus government budgets were in the red. But at present, the copper boom is back and Zambians are making sure that foreign companies do not take out most of their mineral wealth.
