THE NEXUS OF PUBLIC –PRIVATE PARTNERSHIPS AND NATURAL RES - PowerPoint Presentation

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THE NEXUS OF PUBLIC –PRIVATE PARTNERSHIPS AND NATURAL RESOURCE MANAGEMENT IN ZAMBIA. THE CASE OF THE MINING SECTOR. A PAPER PRESENETED AT ZSPA CONFRENCE ON 17 JUNE 2016 BY HAMUSWA SHAKESPEARA LECTURER OF INTERNATIONAL RELATIONS AND DEVELOPMENT AT MULUNGUSHI UNIVISITY. A PHD FELLOW AT UNUVERSITY OF KWAZULU NATAL. Slide2

INTRODUCTION Natural resource governance has gone through tremendous transformation especially after the decolonization of Africa.The exploitation of the natural resources either by the private sector or the government controlled companies has always been fraught with problems. There is an urgent need to rethink the current natural resource governance methods.Adoption of PPPs in the mining sector can yield better results. This presentation explores the benefits that PPPs bring to the mining sector in Zambia. Slide3

INTRO CONTINUE…..It seeks to provide answers to the following questions:What are PPPs?Why PPPs in Zambia’s mining sector?How Zambia can benefit from PPPs?What are some of the challenges that can stand in the way of effective PPPs in Zambia’s mining industry?What needs to be done?Are there any success stories of PPPs in the mining sector?Slide4

WHAT ARE PUBLIC PRIVATE PARTNERSHIPS (PPPS) Collaboration between the public sector (government and or its agencies) and the private sector.Slide5

For the purposes of sharing the benefits and risks in undertaking specific projects (ZDA, 2004).PPPs involve strategic partnerships. They are done to introduce Private Sector Resources and expertise to help deliver public sector assets and services. In Zambia there has been no policy governing PPPs until 2008.A policy framework was approved in 2008 followed by the enactment of PPP Act in 2009. PPPs can take either of the following: Public-Private Joint Ventures; Build-Operate and Transfer (BOTs) (Rondinelli). Slide6

The Development of PPPs: From a Global Perspective to the Zambia ScenarioThe dual role of the World Bank: 1. Introduction of the Structural Adjustment Programmes (SAPs) and2. The positive reaction to the criticism levelled against SAPs.The response was done to help states through the application of the bank’s good governance policies.The World Bank’s advanced that PPPs will meet the interests of the civil society, the sate, the communities without compromising those of the private sector.While the Zambian case fit within this evolutionary path it is defined by its own unique developments. Slide7

The Mining Sector in Zambia: A Compelling Case for PPPsWhat has been the situation in Zambia’s mining Industry?What makes the adoption of PPPs in Zambia’s extractive industry a necessity?Slide8

How the mining sector evolved in Zambia Historically, the mining sector has been the mainstay of Zambian economy, accounting at its pick, for about 80 per cent of the total export earnings of the country.The control and management of the mining sector had gone through major phases.The control of the colonial powersGovernment control (Nationalisation)The control of the private sector (Privatisation) Slide9

Resource Nationalism: Achievements and FailuresThe government purchased 51 per cent shares of the existing mining companies based on the view that political independence without economic independence is meaningless. Economic independence leads to social, cultural and scientific progress. Nationalism advanced an egalitarian economy.The government invested heavily in social infrastructure eg Education and Health. Thousands of schools, colleges, and district hospitals which did not exist in the colonial era were built (UNDP, 2003).Slide10

Youth development schemes were established Women’s clubs were also sponsored (Fraser and Lungu 2006:8).Affordable housing facilities were provided. Slide11

The Challenges of Resource Nationalism The government’s capacity to manage the mining sector has proved to be weak especially when the copper prices slump. From1974 and 1994, per capita income declined by 50 per cent. Zambia became the twenty-fifth poorest country in the world (Fraser and Lungu 2006).In the 1990s for example, Zambia Consolidated Copper Mines LTD (ZCCM) failed to develop new mines and to effect adequate investment in the sector. Companies that had offered heavily subsidised social services became drains on the economy.ZCCM production collapsed from 750,000 tones in 1973 to 257, 000 tones in 2000. Slide12

The Privatisation Period The Successes of Privatisation Was successful in getting the government out of business including in the mining sector.Improving macroeconomic indicators such as the government budget deficit and inflation rate (Mutesa, 2007: 26).The improved performance was only true with regard to large enterprises that were acquired by the foreign investors. Slide13

The weaknesses of the Private Sector. Did not broaden equity participation by the Zambian private companies. Benefitted the foreigners as compared to the indigenous Zambians. Failed to create local linkages with local industries. Fraser and Lungu (2006) observed that the private companies failed to protect social infrastructure.  The process was fraught with deep controversies that continue to emerge especially during election campaigns.  The agreements signed with new mine owners have given leverage to mine owners and greatly reduced their potential to contribute to government revenue and expenditure” (Matesa, 2007: 27)Slide14

Environmental Pollution Slide15

How PPPs can benefit Natural Resources Governance The PPPs will address the weaknesses of both the private sector and the government. Sustainability-comes from the new regulatory framework.PPPs enhances community participation (Dansereau 2005).PPPs offer better ways of addressing environmental issues.Benefits to the communityEnvironmental protectionLead to greater transparency (of both state and industry), poverty alleviation, Slide16

EXPERIENCES FROM OTHER COUNTRIES In Ghana, mining companies were keen to support communities as a way of earning a social license. The state distributed royalty revenues collected from mining companies to communities via district assemblies and traditional rulers. However, the development in the communities was far below the expectations (Bernnerman 2004).In Chad, 8% of revenues from exploitation of oil are earmarked for development. But there is little to show. In South Africa, PPPs led to the establishment of a Jewellery Industry. Slide17

CHALLENGES The challenges are concerned are many and multifaceted. The enabling Act of Parliament that gives legal guidelines to the establishment of PPPs is narrowly construed to the extent that it does not specifically cover the mining sector. The public part of the PPPs is limited to the government and it remains implied that the government represent the people who are the ultimate owners of the resources. Slide18

CHALLENGES Other countries that have implemented PPPs such as Ghana, Chad and SA have little if not nothing to show. Misplaced priorities. The government of Chad was awarded a $25 million bonus from the oil deal but it spent the money on arms.In addition, cash settlements were paid to farmers along the oil pipeline but little long term projects were created. Creating a win-win PPPs structure.Slide19

Conclusion A new approach for natural resource governance in Zambia is long overdue. While PPPs are not a panacea to the problems in natural resources governance, they offer a starting point for policy reforms.They come with perceptible benefits not only to the mining companies but to the government, the civil society and the communities affected by the mining activities. There is need to have proper regulatory frameworks; fair dialogue; stakeholder consultation. Learn from what other countries have done.