ZAMBIA LEGISLATION: THE CITIZENS ECONOMIC EMPOWERMENT ACT NO. 9 OF 2006

I. P. A. Manning
20 March, 2007


THE CEE ACT

1. Is an Act to establish the Citizens Economic Empowerment Commission and to define its functions and powers; to establish the Citizens Economic Empowerment Fund; and to promote the economic empowerment of citizens, in particular, targeted citizens – defined as someone who is or has been marginalised or disadvantaged and whose access to economic resources and development capacity has been constrained due to various factors including race, sex, educational background, status and disability;

2. In the performance of the Commission's functions under this Act, the Commission shall effectively liaise and consult appropriate State institutions and shall have the power to give such instructions or directions to any State institution or a company

3. The President may give to the Commission such general or specific directions with respect to the discharge of its functions as the President considers necessary and the Commission shall give effect to such directions.

4. The commissioners shall be appointed by the President.

5. The Commission shall be empowered to take whatever actions necessary to ensure broad based economic empowerment of targeted citizens, citizen empowered companies, citizen influenced companies, citizen influenced companies and citizen owned companies.

INTRODUCTION

The Zambian Citizens Economic Empowerment Act of 2006 (CEE) is legislation which will centralize further power in the Presidency, give wide powers to a Commission reporting directly to him, enrich – in the short term, the political elite, freeze foreign investment, ensure continued impoverishment and the unsustainable use of natural resources, and greatly exacerbate the already unacceptable erosion of the national life by corruption and theft in the name of black indigenous empowerment.

This is exactly what has happened in South Africa through the imposition of the South African legal instrument: Broad-based Black Economic Empowerment Act No. 53 of 2003, which is being implemented by the Black Economic Empowerment Advisory Council directly under the control of the South African President.

Prior to the promulgation of the CEE Act, the civil service were instructed to start implementing it, resulting in a racial bias on such issues as lodge leases and the arrogant manner in which Legacy Holdings Zambia advanced on its plans for Mosi oa Tunya National Park. This does not auger well for the future.


PRESENT INTERNATIONAL CONTEXT

The CEE Act is being introduced to Zambia at a time when the Commission for Africa was formed to assist Africa raise the living standards of its people. After extensive consultations and lobbying it persuaded the G8 group of nations at the Gleneagles Summit to write off much of Africa’s debt in return for undertakings by African countries to improve standards of governance. As a result, once Zambia achieved the Highly Indebted Poor Country Initiative (HIPC) Completion Point in April 2005, most of the Paris Club creditors cancelled Zambia’s public debt, and the African Development Bank, the IMF and the World Bank - under the Multilateral Debt Relief Initiative borne out of the 2005 Group of 8 Gleneagles proposal, are now busy doing the same. If to this is added the agreed commitment to the mission of NEPAD, the UN Millenium Development Goals and the African Peer Review Mechanism, Africa is supposedly bent on self improvement – with the help of the world.

Zambia played a full role in the consultations with the Commission, and through its Zambia International Business Advisory Council (ZIBAC) – a member of which sits on both the Business Council of Zambia and ZIBAC (and is also Chairman of the CEE Commission – as well as Chairman of the Tourism Council of Zambia - and what may be described as the first Indigenous Zambian business group), therefore appeared set to become a role model for Africa.

ZAMBIAN CONTEXT

Zambia has evolved in a hundred years from a land of isolated tribes, through rudimentary administration by a public company, to colonial protectorate status - where rule was indirectly managed through the chiefs, to political independence. Unlike Zimbabwe, it was not a Crown Colony where large areas of land were alienated to European settlers; and unlike South Africa it did not suffer Apartheid legislation and the repression of its black population.

The CEE Act appears therefore to to rectify a mythical colonial wrong, to remove some of the control and ownership of businesses from those who came here more recently and who are not black Africans – in the case of some of the first European settlers, fifty years after the arrival of the Ngoni. It does not encourage people to come here and to enter into partnerships with citizens as Mauritius and Ireland and China is doing. And it is likely to give expression to the simmering national xenophobia, which will metaphorically close the borders and harvest what has been produced by foreign and local non-black investors alike.

And Zambia is, by all credible economic performance measures, upholding a tradition of poor economic governance and the continued plundering of the national purse. At Independence, Zambia’s per capita income was the same as the Asian Tiger nations; now Hong Kong is 75 times richer, South Korea 25 times richer; and over the last twenty years – as reported by Transparency International Zambia, only 16% of national expenditure went on agriculture, health, education and local government – the very areas supposed to serve the poor.

The translation of shocks brought about by economic mismanagement – particularly when allied with volatile copper and oil markets, can elicit reactions from political leadership which further impoverish their countries. In 1975, following on from a fall in copper prices and a rise in oil prices, President Kaunda issued the infamous Watershed speech, an edict which overnight restructured the economy and lost Zambia a critical mass of private enterprise and government expertise, consigning its poor to a permanently impoverished state, accompanied by the rape of much of its natural resources. The CEE Act of President Mwanawasa will now negate a wave of new investment, of innovative new partnerships with tribal communities that do not alienate the land; and will diminish the growth of democracy.

The CEE has already negated the work of such bodies as the Natural Resources Consultative Forum (NRCF), a neutral platform for stakeholder participation in the management of natural resources - particularly policy formulation, established by the Ministry of Tourism, Environment and Natural Resources (MTENR). Now civil servants of that Ministry are unwilling to participate in its deliberations, knowing that they and the private business sector will be subject to the control and direction of the proposed Citizens Economic Empowerment Commission, itself directly under the control of the President.

SOUTH AFRICAN TEMPLATE

The immediate impression of this Act, is that it closely resembles Lenin’s decree for the establishment of the People’s Commissariat of State Control in 1919, with Stalin as its first Commissar. It is not surprising, therefore, that the only country in Africa still with a communist party, South Africa, has supplied the model for the CEE Act. The legislative template is the South African legal instrument: Broad-based Black Economic Empowerment Act No. 53 of 2003, which is being implemented by the Black Economic Empowerment Advisory Council directly under the control of the South African President. The impact of this Act, applied to a rich country with a thriving business sector and a generally ably managed economy has been to enrich a small coterie of the black elite, provide considerable advancement opportunities for the emerging black middle class, ensure the unemployment of most of the black poor, and cause young and well-educated whites, Indians and Coloureds to emigrate.

But Broad Based Black Empowerment Act (BBBE), is now considered by the Peer Review Mechanism Report on South Africa to pose a serious obstacle to that country’s development –something the South African Government is trying to downplay. Why would Zambia escape such a judgement when the APRM gets round to its report on us?

THE WAY FORWARD

For the CEE Act to have any credibility, it must be taken out of the hands of the State President, have its Commissioner removed and replaced by someone not involved in business, and must arm the Private Sector Development Forum in the fast-tracking of Greenfield projects through Trust structures - as inculcated in the Zambia Development Agency Act No. 11 of 2006, and already agreed to by the House of Chiefs and submitted to the 5th National Development Plan. It is time the Zambian poor receive the attention and support they deserve. The CEE Act could here become an Act serving their deliverance from deep poverty.