Zambia’s Economic Revolution. Address by K. D. Kaunda at Mulungushi, 19th April, 1968 PDF
Preview Zambia’s Economic Revolution. Address by K. D. Kaunda at Mulungushi, 19th April, 1968
StanfordUniversityLibraries 3 6105 120 784 694 Kaunda , Kenneth David, Pres . Zambia . Zambia's economic revolution . STANFORD LIBRARIES JQ 2919 A98A35 APR 1968 K2 V i l h S E I R A N E Toni HOOR INSTITUTION Ter, Revolution, and Peace A FOUNDED BY HERBERT HOOVER, 1919 GIFT OF II TITOR REPUBLIC OF ZAMBIA Usled national Independence rahinal Cormal Party Zorg Dessum , Bril 1908 Launda Kenneth David Peamine 1924 ZAMBIA'S ECONOMIC REVOLUTION Address by His Excellency The President Dr. K. D. Kaunda at Mulungushi, 19th April, 1968 PUBLISHED BY ZAMBIA INFORMATION SERVICES PRINTED BY THE GOVERNMENT PRINTER, LUSAKA geft of the President Zambia Feb. 1970 9 1 9 5 JQ2 A 3 k2 8 8 9 s 6 AAl 19 ZAMBIA'S ECONOMIC REVOLUTION Address by His Excellency The President Dr. K. D. Kaunda at Mulungushi, 19th April, 1968 L T 感 24 PresidentKaundaandtheCommissionerofPolice,Mr. Michael Mataka, arrive at the historic conference rock atMulungushi where many major nationaldecisions have been taken 1 BACKGROUND Like most ex -colonial territories Zambia, on Inde pendence, took over the reins of government but the economic sector remained entirely in hands of non citizens, particularly Europeansand Asians. This was the directresultofthecolonialpolicyofdenyingeconomic opportunities to local citizens. This policywas imple mented to the worst degree in Zambia which was not only dominated by the colonial administration but by South African apartheid influences, so much so that exclusion from economic activity and opportunity for Zambian entrepreneurship wasabsolute. Despite this unpleasant history, Zambia has hitherto maintained the most liberal exchange control policies of any African country on the continent; this was intended to ensure confidence amongst the expatriate community and ex ternal investors and to allow them not only to invest more oftheirprofits in the country, but also forsome of them to acquire Zambian citizenship and identify them selves and their enterprises with the country. In the last three years, Zambia has, in spite of in tractable problems, experienced an economic boomand growth unprecedentedelsewhere on the continent, which brought considerable financial benefits and profits to expatriate enterprise. Instead ofthe expatriate enterprise accepting their profits and at the sametimeploughing as much aspossible into the development and re-develop mentoftheir businesses,it became evidentthat theywere obsessed with ‘making hay while the sun shines and expatriated increasingly largeportions of their profits. Some of them , not satisfied with honest profits which in themselves have been considerable, resorted to practices intrinsically injurious to the State. For example iii (1) The trend in the use of profits by one large foreign concern over the last eight years has been asfollows (figuresinK000'sand £ 000's): Balance Attributable Balance to the Retained distributed Company in as net as Profit Business Dividends 1960 K9,384 K5,142 K4,242 (£ 4,692) (£ 2,571) (£2,121) 1961 K6,610 K3,514 K3,196 (£3,305) (£ 1,757) (£ 1,598) 1962 K11,248 K2,626 K8,622 ... (£5,624) (£1,313) (£4,311) 1963 K11,858 K2,310 K9,548 (£5,929) (£ 1,155) (£ 4,774) 1964 K11,798 K2,334 K9,464 (£5,899) (£ 1,167) (£ 4,732) 1965 K17,366 K3,852 K13,514 ( £8,683) (£1,926) (£6,757) 1966 K20,464 K3,132 K15,332 (£10,232) (£ 1,566) (£ 7,666) 1967 K20,668 K5,312 K15,356 (£ 10,334) (£ 2,656) (£7,678) This trend, which is repeated in many other resident andforeign companies, both large and small, has led to : (a) gross under -capitalisation; (b) excessive local borrowing; (c) nearly 100 % increase in foreign ex change expenditure on invisibles, it jumpedfrom £16.459 million in 1965 to £ 31.887 million in 1967, although goodspurchased inthat yearamounted to only £44 million. The difference cannot be accounted for even as pay ments for personnel. iv (2) Some resident firms have been purchasing merchandise from parent companies overseas at anything up to 33 % more than cost price in order to increase expatriation of capital. The effectofthis onZambiahasbeenanescalationof cost ofliving. (3) A foreign company with £ 200,000 paid up capital acquired £2 millionoverdraft rights of which it promptlyused £1 million. Obviously no responsible government would allow a situation like this to continue, especially having now experienced the fact that despite very liberal financial policies that may be pursued by a given developing country, investors from developed countries always appearmostsuspectofeveryblackgovernmentregardless. Ithas thereforebeenimperative that in ordertostabilise the economy, restrain unnecessary flow of foreign ex change and ensure that the available capital wenta long way towardsthe developmentofthe country, the Govern ment on behalf of the people must participate inthe major sectors ofthe economyand at thesametime induce an atmosphere in which Zambians must individuallyand corporately share in the commercial and industrial life of the country. The measures announced in His Excellency's speech, although they involve in manycases assumingcontrolling interestinsomeenterprises,fallfarshortofnationalisation as conventionally known. In fact they are on the same basis as those used in many European countries, for example Italy, France, Yugoslavia, and even Britain. Those to whom the word 'nationalisation' is a scare crow should be reminded to draw a distinction between economies in the West and those in Africa, and particu larly in Zambia. In Western economies, all industry is national in the sense that it is to the largest extent con trolled by and with the capital of nationals and in the event, therefore,ofa national crisis, they will place their resources behind the national cause and will not decamp in jets to fly 'home'. V In Zambia, business and industry have been in the hands of non-nationals, most of whom will not be pre pared to face anationalcrisis with the Zambians. Accord ingly, theytherefore work onextreme liquidity, maximise profits on minimum capitalinvestment,always planning to return home when conditions here become, in their opinion, intolerable or when they have sent enough moneyabroad to enablethem to retire in comfort, usually atacomparatively earlyage. Unfortunately, Zambians for reasons of prolonged economic discrimination have neither the capital nor the skill to participate in the economic life other than as employees or as consumers. In the circumstances, there fore, it is only the Government of the people that can participate ontheir behalfand ensure that the nation has control of the vital resources in the country, and also provides avenues for the acquisition of skills pertaining to economic development and participation. With this background, it should be easy for an unprejudiced mind to appreciate thepraiseworthiness of the measures announced by His Excellency the President in the speech following. vi
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