Friday, May 29, 2009




I feel greatly elated at the same time humbled to appear before the Committee on National Security and Foreign Affairs which has set itself the task to study Zambia’s membership to the United States of Africa. I have been assigned the task of dealing with the following question: “what are the security, economic, political and other benefits of Zambia’s participation in the United States of Africa and what are my recommendations for the way forward regarding Zambia’s membership?” This question requires the response to questions such as: Why do Africans since the days of slavery and colonialism been yearning for a United Africa? What are the benefits and what constrained the realization of this dream?
I must admit from the very outset that this is the first time in my non-public life to address a committee of our National Assembly. It gives me a curious sensation to do so, since great clarity of the issues is required and furthermore, this is a subject of current passionate debates by Africans both at the African Union Summits and the press. At a personal level, I was recalled as Ambassador to Libya in 2008 for having inadvertently commented on the historical necessity and inevitability of the Federated United States of Africa.
I would like to submit that in the case of our country, our policy position on the United States of Africa question has always been ambivalent. Our first government in 1964 supported Mwalimu Nyerere’s gradual approach on African Unity as opposed to Kwame Nkrumah’s push for a revolutionary approach. This world outlook has continued in all our governments of UNIP and MMD where it is contended that the formation of an African Union Government must be “ based on a Multi- Layered approach” whereby after basic contradictions at the national level are resolved- i.e. national consensus reached - the next step shall be to identify and clearly assign specific roles to states, sub-regional entities and the continental framework. This approach is based on the principal of “gradual incrementalism” in which the Regional Economic Communities ( REC’s) shall be used as the building blocks for the continental framework. This approach is of course reactionary and non sustainable as we have argued elsewhere in the appendix to this presentation.

This paper is prepared as a contribution to the committee on National Security and Foreign Affairs of the National Assembly of Zambia who in their letter dated 15th April,2009 requested me to provide the following information.
(i) The security benefits of Zambia’s involvement in the United States of Africa;
(ii) The economic and political benefits of Zambia’s involvement in the United States of Africa
(iii) Any other benefits of Zambia’s involvement in the United States of Africa
(iv) Disadvantages of Zambia’s involvement in the United states of Africa ; and
(v) Recommend the way forward regarding Zambia’s membership to the United States of Africa
I am unable present the “disadvantages of Zambia’s involvement in the United States of Africa” as requested in (iv) above as, in my view, there are absolutely no disadvantages to the Scheme. I am alive to the arguments raised by thousands of people on the internet and general press following my article I published in the Tripoli Post on 26 January, 2008. The arguments included such outlandish assertions like: Africa cannot unite because of its diverse cultures, languages, ethnicity, racial composition between Arabic North, Nilotic North East, Negroid Western and Bantu South; that Africans are cursed by God to be inherently quarrelsome and stupid; that globalization will make it impossible for Africans to unite; and that Africans fear the loss of their sovereignties and therefore never subscribe to the African Union Government. These and many other opinions are simply detractions to a progressive initiative that has the capacity to finally address Africa’s poverty and underdevelopment. The arguments should therefore be contemptuously ignored.

It is a recognized fact that the African Continent (without distinction to race, language or religion) has been central to the development of the world in terms of epistemology (development of knowledge), the arts and spirituality. Africans have also suffered systematic degradation through slavery, colonialism and now neo-colonialism Slavery and the colonial system were hated by Africans and hence since the late 19th and early 20th centuries, there evolved Pan Africanism, initially as a reaction to many centuries of slavery and later against European Colonialism in Africa.

2. The drive for Africans to regain their dignity began with the development of formal Pan Africanism after the 1900 London conference organized by Henry Sylvester Williams. Other notable organizers of Pan Africanism included W.E.B Dubois-co-founder of the NAACP-convened the first Pan Africa Congress in 1919. Other meetings took place in 1921 (in London, Paris and Brussels), 1923 ( in London and Lisbon) and 1927 ( in New York).

3. In the early 1940’s , Kwame Nkrumah together with George Padmore, Jomo Kenyatta and Hastings Kamuza Banda sponsored the 5th Pan-Africa Congress in Manchester, England and fostered African Leadership of the Pan -African movement and the struggle for independence of African colonies then.

4. In 1957, Ghana became the first sub-Sahara African State to gain independence with Nkrumah as Prime Minister and Nkrumah created a Pan- African secretariat to organize for
- Total African Independence and
- Continental Political Union
The Pan- African movement was based on three pillars:-
- Shared historical and cultural values
- Political freedom
- Collective self sufficiency

5. In May 25, 1963, representatives from 32 African Nations met in Addis Ababa, Ethiopian and founded the OAU, now the African Union as a loose federation of independent African States. Political differences among the independent African Nations and their poverty kept political Union from becoming a reality.

6. In 1965, Nkrumah clashed with Mwalimu Nyerere over Nkrumah’s call to establish a Union Government in Africa. The OAU embraced Mwalimu Nyereer’s approach that assumed regional federations would step by step metamorphose into a united Africa as opposed to Kwame Nkrumah’s push for a revolutionary approach. This reactionary position ushered in the stage in Africa of destructive coups and costly secessions.

7. Since becoming politicaly independent, the small balkanized states of Africa have attempted to address their poverty and underdevelopment including national security but have been unsuccessful and there is now a realization that they must act collectively.

8. The continent now comprises of 53 countries and since the founding of the OAU, the African states have been following Nyerere’s line of graduality on Africa Unity. Some successes were achieved following this line. Some of the important milestones of the OAU included the work of the Liberation Committee and the freedom fight in countries still under colonial rule and the struggle against apartheid in South Africa and minority rule in Rhodesia.

9. Africa’s search for collective self reliance and development have included advancing several programs such as the Lagos Plan of Action ( LPA), The Final Act Lagos ( FAL), the Abuja Treaty establishing an African Economic Community ( AEC). All these were attempts to unite Africa economically ever a period of 34 years. The AEC treaty also called for the creation of a PAN African Parliament (PAP), an Economic, Social and Cultural Council ( ECOSOCC) and an African Central Bank ( ACB). Progress towards the creation of these institutions has been, anything, but successful on account of political indecisiveness by Africans and their misguided love of the so called national sovereignty, which in reality has been the continuation of the hegemony of comprador and despotic neo colonial forces in service of global capitalism.

10. As regards Africa‘s integration, the Conference on Security ,Stability, Development and Co-operation in Africa ( CSSDCA) which was established in May , 1991 stressed the integration of all governance matters including popular participation by African peoples. Again, these were lofty unrealizable ambitious as history has testified.

The most advance has been in the creation of divergent and irrational Regional Economic Communities (REC’s). As at 2009, there were 14 overlapping RECs with duplication of programmes, cross-cutting membership and corresponding inefficiencies as follows:

SACU (Swaziland, Botswana, Lesotho, Namibia, South Africa);
SADC(SACUCounries, Mozambique, Tanzania, Malawi, Zambia, Zimbabwe, Mauritius, Seycheles, Congo DR, Angola)
COMESA(Comoros,Madagascar,Seycheles,Mauritius,Swaziland,Angola,Rwanda,DRC,BurundiMalawi, Zambia, Zimbabwe,Ethiopia,Kenya,Uganda,Djibouti,Eritrea,Sudan,Egypt,Libya)
CEN-SAD(Libya,Morocco,Tunisia,Somalia,Djibouti,Eritrea,Sudan,Egypt,CAR,Chad,Gambia, Nigeria,Liberia,GuineaBissau,BurkinaFaso,Benin,Mali,Niger,Senega,Togo,Coed’Ivoire,Uganda)
ECOWAS(Cape Verde, Ghana,Nigeria,Gambia,Liberia ,Guinea, and UEMOAcountries)
This multiplicity of overlapping membership of RECs coupled with institutional weaknesses of the RECs,the political problems arising from fears of by some members of domination, is a real danger to peace and stability as these SECs will continue to competefor the same economic space and engaged in wasteful duplication of effort. The danger for armed conflict is ever present as occurred in balkanized Europe.

11. Against this background, African countries at the Lusaka summit in 2002 agreed to move towards Political Union and, as a first step, established the African Union (AU) which was launched in July, 2002 in Durban, South Africa to replace the OAU. In theory, political union is the highest form of the integration process. The African Countries also launched the NEPAD as an economic program to support African infrastructure development. In both cases, progress has been very slow.

12. The African Heads of states have since concluded that the “necessity for eventual Union Government is not in doubt.” However, two viewpoints in arriving at Union government still persists. One view is that the Union government should be based on the principle of “gradual incrementatlism” and that the RECS should be used as the building blocks for the continental frame work. The other view argues for the establishment of a Union Government as a political transitory arrangement towards the United States of Africa. Such a union should possess Executive Authority on matters delegated by union members as is the case in the European Union In the current scenario, the functions of the Executive Council of the AU are supposed to include the following:
- Foreign Trade,
- Energy, industry and mineral resources
- Food, agriculture, animal resources and livestock production
- Forestry, water resources and irrigation
- Environmental protection
- Humanitarian actions and disaster response and relief
- Transport and communications
- Education, culture, health and human resource development
- Science and technology
- Nationality, residency and immigration matters
- Social security
- African awards, medals and prizes
Even on these common sense objectives, there are still some African countries that are still dragging the integration process backwards.

13. The need and rationale for African integration is well known. The elements that should necessitate this historical inevitability include the following:

a) Pooled efforts and joint approaches is the only road that will allow African Countries to be really in charge.
b) The small size of National markets in African countries is a major handicap in attracting private investors. A common market can reduce this disadvantage
c) The emergence of regional trading blocks such as the EU, NAFTA, and elsewhere gives added impetus to African integration.
d) Most African Countries have porous and artificial borders that make it difficult to implement economic reforms which are not synchronized with policies in neighboring countries. African Integration will resolve this negativity.
e) The idea of one African Economic policy will be a great unifying idea.
f) Engaging all African Countries in Co-operative ventures will build African solidarity so necessary in reducing the incidence of conflict.

14. The constraints that adversely have been affecting the drive towards African integration and co-operation can be summarized as follows:

I) National Level
a) Lack of political commitment to actually implement agreed measures. This arises from actual or perceived conflict between national and African objectives.
b) Inappropriate economic and political polices which have tended to constrain the development of consensus in governance matters and economic policy.
c) Limited administrative and managerial capabilities and capacities to plan and manage continental projects and programmes and ensure consistency between national and continental programmes.
d) Donor conditionalities which rob African countries of policy space but rather aggravates or deepens ties and subserviency to donors
e) Inability to convince civil society of the long-term benefits of continental projects and programmes which h may cause discomfort in the short term.
f) In ward- looking development strategies such as import –substitution strategies that encourages protectionism rather than trade creation.
(ii) Continental level
(g) Over –ambitious objectives
(h) Low level of development in most countries
(i) Weak transport and communication links
(j) Over lapping and inadequacy institutional arrangements. Institutions virtually lack resources.
(k) Differences in levels of development of the countries and lack of means to implement compensatory policies.
(l) Uncoordinated structural adjustment programmes.
(iii) International level

(m) Conflicting actions of donors in their drive to dominate African countries.
(n) Lack if support or outright hostility to projects and programmes that advance Africa’s integration. Donors fear that Africa’s integration may become a hindrance to multilateralism and neo – colonial control.

15. Security Benefits of Zambia’s involvement in the United States of Africa Initiative

In roughly 60 years, Africa has experienced some eighty coups d’ etats and countless number of coup attempts. Zambia alone has been a subject of at least five coup attempts. Civil wars have erupted in more than twenty countries and are still ranging on a large scale in Somalia, Sudan, Ethiopia, Mauritius, Congo, Burundi, Niger, Britrea and so on. Zambia also suffered after 1973 the Mushala insurgency which led to widespread internal dislocations in North Western Zambia. Ten African countries have been subjected to external military interventions. The continent remains a fertile ground for mercenaries and an object of external security manipulation. Almost all African countries lack the capacity to curb the flow of arms into their countries and many of them lack capacity to deal with any large scale security crisis whether domestic or external. As examples attest in many of these countries, internal conflicts will soon end up in a state of anarchy that will further compromise the security of Africa in general.

The major causes of Africa’s security problems in addition to governance issues are essentially two.
a) Africa’s fragmentation into small unviable states without capacity for effective security management and
b) Africa’s balkanization which has been compounded by artificial borders tends to perpetuate a tenuous sense of nationhood.
Generally, the outcomes of Africa’s security problems have resulted in four dimensions:
a) The loss of human life and widespread suffering of the people.
b) The destruction of Africa’s resources
c) The unnecessary high budget expenditure levels for the military infrastructure and
d) The dominance in Africa of foreign powers.
The combined effects of these two limitations on the security of Africa has been border disputed leading to cross boarder armed conflicts and tribal or ethnic rivalries.

What Africa requires is an environment within which a harmonious evolution of society takes place. Peace and stability in Africa can only be further enhanced if a federated union of Africa’s states is established. The effects of peace and stability on the process of integration are best demonstrated by the European integration process. The launching of the process took place in a context of restored stability after two world wars caused by national rivalries. The council of Europe – founded in 1944 led to a situation where European countries sought to bury their differences in order to integrate their economies so that they could have bigger markets and be more competitive as well as provide assurance for security. With the treaty of Rome signed, first by six members, the European Union has expanded to nine, then to 12, then to 15 and now to 28 countries. And this Union is now the Central factor of maintaining peace and stability in Europe. In North America, thiere is the NAFTA and in Asia, there is the ASEAN.

16. Economic and Political benefits.

As is well known, most of the national economies in Africa are classified as micro-economies: Individually, in the context of globalization, they can not rid their populations of poverty and underdevelopment, because of their small markets, and inability to generate national development. This is most true for Zambia as well. In general, 15 African countries are landlocked and transport and communication on the continent is still rudimentary. Only 5 countries have a population of more than 30 million. 8 countries have a population of less than 1 million each .14 countries have a population of between 1 and 4 million. It shows that the national markets of Africa’s 53 states are not only too small to attract FDI flows but are also too Balkanized to generate meaningful economies of scale in diversification efforts. It is really possible for Zambia alone to bargain with China or India or the EU on any thing meaningfully?

On the other hand, considered as a union, Africa has a potential market of over 700 million people, a natural resource base of huge dimensions and a diversity unsurpassed by any other continent. Africa’s integration is an essential and indispensable part of the strategic policy approach to eradicating poverty and underdevelopment. The unionization of Africa into the USA will enable national economies of such countries like Zambia to build capacities in all critical areas. The present status quo of policy reforms without strategic direction are inadequate if Zambia wants to meet the challenges of the global economy of the 21st century.

17. The Future Perspectives

As is well appreciated, all continents on earth are moving towards integration. In all cases, there is agreement on limited surrender of national sovereignty to super national organs. Let there be no mistake. Whereas Europe, the Americans and Asia need economic integration for strength and prosperity, Africa needs it as matter for survival. Many African states are simply too small to form viable economic investment markets or trading partners. Africa needs a federated union government as argued in the appendix to this text.

For a country like Zambia, in a accepting and reaffirming the Constitutive Act of the African Union, the country committed itself to accelerate the integration process. At the national level, it must be seen to creating structures for this. There is need to build the necessary constituency for advancing political integration. It would for instance be progressive to set up a Ministry in charge of integration as an important conduit to harmonize instruments, institutions and programmes of the Union Government. A national Association or Commission for the union government could be set up as a way of building the national constituency and popularizing the idea. It is advisable for Zambia to play the lead in this as it is a historical necessity and inevitability.


Opinion: The Federal Union of African States Must be Established NowBy Ambassador Mbita Chitala26/01/2008 16:29:00 Available on Internet

This presentation addresses the subject of the historical necessity and inevitability of the federated African state. The central argument of the article is that continental integration and empowerment can only succeed if the coordination of efforts is at a continental level through first, the formation of one all African State, that is, by way of a political decision and that economic integration shall only be complementary.
This article does not discuss the benefits that will be derived from Africa’s political integration (insure peace keeping, combat disease, environmental concerns, poverty, corruption, oversee good governance, equi-distribute Africa’s wealth) as this is already a settled argument nor does it discuss the method and road map for achieving this historical inevitability as this is a detail to be designed by professional managers.
This write up is aimed at imploring African leaders to make the political decision and establish the united one African state as they meet at Addis Ababa, Ethiopia on 31 January, 2008.
Status of Africa’s Unity
Post independence Africa presents a divided and balkanized states, weak, and for more than four decades has continued to be a play ground for unabated abuse, exploitation and oppression of its peoples by other more organized political regions as exemplified by the hegemonic control the Europeans and Americans still hold on Africa.
Africa’s age old yearnings for political and economic integration have been thwarted, of course variously explained by many factors and interest opinions. These factors include the influence of self-seeking, narrow-minded nationalist African leaders who have continued to opt for personal glory and fame at the expense of the larger Africa using the legalistic excuse of sovereignty, the influence of the vestiges of colonial aberrations and neo-colonial psyches and dominion where Africa in the international division of labour has continued to play the role as a supplier of raw materials and net importer of manufactured commodities which in the process condemns Africa to continue being exploited by way of unequal exchange.
In the area of consciousness, cultural imperialism has been ensuring that Africa is divided between two blocs – Anglophone and Francophone – and this division has been sustained by the former colonial powers variously such as establishing institutions like the British Commonwealth with their British Council, and the French Francophone with their Alliance Francais.
These have continued to sew divisions among Africans by false ideologies such as the Christian-Moslem dichotomy, the Arab-African dichotomy and the ethnicity or tribal ideologies that are used to divide and weaken Africans. With globalization, Africa has further deepened its integration to the global finance capital from a weak stand point where it cannot get an equal share of the benefits of globalization.
African countries have attempted to unite the many small post colonial social formations to address this issue of poverty, underdevelopment and insecurity of Africa but often have fallen short because of the above reasons or because they used unsustainable unworkable methods such as desiring to have economic integration before political unity.
The most notable attempt was the Abuja Treaty – Regulation CM/464 of the 26th OAU Council of Ministers who wanted to create five regional communities who would play the role of the future continental common market. The recommendation was based on the realization that integrating 53 differently ruled African States would be unsustainable because of the unripe consciousness, the influence of geography, ecosystems and operational precedence. This attempt failed and more regional communities continued being formed.
In pre-Abuja Treaty, there were 8 Regional Economic Communities (RECs) including SACU, MRU, ECOWAS, CEPAL, ECCAS, IOC, IGAD and UMA. In post Abuja Treaty, more RECs have been established. These include SADC, UEMOA, CEMAC, COMESA, CEN-SAD, EAC.
All these have been set up in spite of duplication of programmes and their multiplicity, cross cutting membership and inefficiencies have compromised African integration. An attempt towards rationalizing them has failed because of lack of political will and resentment and opposition by the established public service supported by entrenched rules and contracts.
It is unacceptable for African leaders to continue procrastinating or making lame selfish excuses of going to consult their peoples and so on such as has been the case in the last ten years. There is no need for these countries to hold referendums as Muammar Gaddaffi challenged his colleagues at the Accra Summit.
The opposition to integration that was exhibited by Kenya, Nigeria and South Africa in Accra is regrettable as it was based on the false assumption that these three countries would on their own develop to be sub imperialist powers.
It is gratifying that Liberia, Senegal, Ethiopia, Chad and Libya came strongly for immediate political unity. The rest remained look warm. It is no wonder the Africans in South Africa and Kenya have already shown their leaders what they think of their acts in Accra. What is required as the first act is to agree on political integration by establishing the Federated Union of African States.
This was the consensus that was reached after the transformation of the OAU into the AU on 9th September, 1999 at Sirte in Libya where all African Leaders committed themselves to the establishment of the United States of Africa.
“Those who want to move on a snails pace or are opposed to Africa’s political integration should be left out for now. Their own nationals will deal with them in due course and compel them to join the bigger good – the Federated United States of Africa.”
It was therefore amazing at the meeting in Accra, Ghana in July, 2007 that about 50% of African countries continued to give lame excuses at delaying this historical necessity which has as a result continued the tendency of the marginalization of the continent in global affairs as well as deepened the underdevelopment of its people.
As the leaders go to meet again in Addis Ababa on January, 31st, 2008, all progressive Africans are hoping that the final solution to African Unity and integration will be found. Now, Africa has entered the globalization process from a point of weakness.
New constraints have emerged, particularly with timeframes imposed by initiatives such as the EU, the WTO, China and so on. It is therefore imperative that a new momentum and initiative within a better structured continental framework with improved follow up on both the political leadership and rationalization and implementation of one African economic set up be launched.
Political Integration First, then Economic Integration
Former Zambian President Dr Kenneth Kaunda and former Algerian President Ben Bela are the only two Africans still living who can attest from first hand account the ideals yearned by Africa’s founding fathers of a strong and independent one African State that was championed by African heroes such as Kwame Nkrumah, Patrice Lumumba, Toure, Gamal Abdul Nasser, Emperor Haile Sellassie, Jomo Kenyatta and other African patriots.
These ideals have been taken up by a few progressive African leaders notably Muammar Gaddafi of Libya, and the Senegalese President Wade who have been trying to persuade fellow African leaders to move forward on this African integration process. In the last ten years, Libya has had to spend a lot of money and effort trying to have the project realized.
Muammar Gaddafi and the leaders of this progressive tendency have been opposed by a conservative fringe whose chief response has been that they are not ready or they must first consult their people or that they are afraid of losing their sovereignty or simply remain non committal. This bloc has been lukewarm and has chosen the road towards Africa’s integration by first strengthening regional economic groupings and assumed that the integration process will ripen on its own. The logic of this route is to further divide Africa. This is the route championed by African colonial masters now united as the European Union.
It has been argued by some African leaders and supported by neo colonial think tanks at the secretariats of the Economic Commission for Africa, the African Union and the United Nations that the challenges Africa faces is for the Regional Economic Communities ( RECs) to harmonize their programmes so as to attain convergence and ultimately the African Economic Community.
Even though the REC’s are not among the organs of the African Union (AU), it has been argued by these think tanks that they can still be used as building blocks of the African Union government as they were anticipated to be for the African Economic Community under the Abuja Treaty.
It has been obvious from all and sundry that such an approach would forever thwart the advancement of the African confederation and would play in the hands of Africa’s enemies who want to continue subjecting the continent to age old disadvantages such as imperialist exploitation and marginalization of the Africans in global affairs.
To the progressive Africans, it must be obvious that this incremental approach is not only unsustainable but must be overthrown and be replaced by a Nkrumah/Nasser and currently Gaddafi/Wade approach that argues for “seek ye the political kingdom first, and all would follow”.
The argument that Africa should first rationalize and harmonize the more than fourteen (14) regional economic cooperation groupings and use them as the basis for advancing to Federal Africa is a view point that is against historical experience.
In practice, it is utter mechanistic nonsense and is a road to continued balkanization of the continent, weakening Africa and ensuring that it continues to be a market for imperialist capital. Only political unity can advance the economic integration agenda and break the suffocating tentacles of imperialism which have for the last 200 years constrained Africa’s advancement.
The only Question at Addis Ababa and Africa’s Prayer
It is important that Africans, as they meet at Addis Ababa on 31st January, 2008 realize that unless they create political space in the sense of an all Africa Federal State, all what Africa has always aspired for will be in vain. We will have to wait for another generation to attempt at unity again. What a waste of ten years investment of our time and resources!
At the Accra Summit of the African Union in July, 2007, the decision to establish the federated State of Africa was postponed for six months to allow for further national consultations. About 50% of African States mainly in the CEN-SAD group were for the immediate establishment of the United States of Africa. Another group mainly from the SADC area was lukewarm to the ideal and politely opposed the immediate creation of the African Union State.
They regressed to the outdated Abuja Treaty argument of basing unity on the gradual development of regional groupings.
Today, Africa faces the challenges that Nkrumah and his colleagues faced at the beginning of this argument which resulted in the creation of two blocs – the Casablanca and Monrovia blocs among African leaders. The question then was principally how to advance the decolonization of Africa.
The bloc led by Nkrumah, Nasser, Nyerere, Haile Sellasie, Ben Bella, Kaunda, Toure, Lumumba and others won the day against the African reactionaries who advocated for some regulated independence. Today, there are about 53 politically independent African States – most of them are weak and are simply outposts of imperialist exploitation and subjugation.
It is necessary, nay, a historical inevitability that Africa must first address and achieve political unity under one State for any meaningful progress to be made towards playing any equal role in the global community. The harmonization and rationalization of the REC’s will also follow naturally as politics will lead.
The argument which has been advanced by some of our leaders that political unity will only be reached if and when all African States accede to the ideal by way of consensus is obviously, not a useful position. For practical reasons, this 100% unanimity is utopian as some African States are under the hegemony of imperialism or are simply reactionary and/or will never be allowed by their imperialist masters to accede to Africa’s political integration. These countries should not be allowed to hold progress of other Africans. They should no longer delay this movement towards Africa’s emancipation and unity.
Those who want to move on a snails pace or are opposed to Africa’s political integration should be left out for now. Their own nationals will deal with them in due course and compel them to join the bigger good – the Federated United States of Africa.





1.0 Introduction

The causes of the current systemic crisis of capitalism and the way forward for countries such as ours are a matter of great debate and any meeting by citizens organized to discuss and seek solutions is always useful. I feel greatly honored to appear before the Committee on Economic Affairs and Labor to orally brief you on the issues of the impact of the global economic crisis on our country and the challenges that our country faces. I am not surprised to notice that many Zambians are currently yearning for change in the way we have been conducting our economic policies. In this recession where economic activity has slowed, there is a slowdown in our GDP growth rate, slowdown in investment, low capacity utilization in our industries, and there are low real incomes of households and lower profits for companies, governments usually respond by adopting expansionary macro economic policies, such as increasing money supply (monetarists) increasing government spending (Keynesians), decreasing taxation (supply side economists) while laissez faire economists recommend that governments should not interfere with the so called market forces. What should be apparent in our country is the fact that the current international financial crisis points to the collapse of laissez faire economics and discredits market fundamentalism. This collapse of the Chicago School of Milton Friedman further implies the fact that Zambia, as is the case in many African countries, must break free from these failed neo-liberal policies and their institutions that have promoted them and define its own path of growth and development.

2.0 Causes of the crisis

The US sub prime mortgage crisis and the bursting of other real estate bubbles around the world were symptoms that helped create the global financial crisis. The real cause was however imbedded in the vagaries of the international capitalist system. The so called globalization simply refers to a phenomenon where the world is controlled by the financial oligarchy or what my good Egyptian friend Professor Samir Amin described as the “financiarized” groups – the oligopolies who do not produce profit, but rather, they just swipe the monopolies rent through financial investments. My other Ugandan friend Professor Dani Wadada Nabuere, in agreeing with Amin correctly argued that the core of the crisis is over-extension of credit on a narrow base resulting in a phenomenon where money has become detached from the material base of a money commodity that can measure its value such as gold or silver.

What do these observations by these eminent African scholars mean in reality? To understand this, we must go back in history. After the Second World War, the expansion of the world economy was based on the United States Dollar which provided the link between money and the gold standard. This link collapsed in the 1970s under the reign of President Nixon and the US Dollar became the global currency, but without a backing to this currency from a money commodity like gold as was the case previously.

Since the collapse of the gold standard, there has been unmatched expansion of global credit – growth of paper money and monetary instruments such as derivatives, future options and hedge funds at a faster rate while the productive base grew at a slower rate. Consequently, the “financial bubble” which the world has been experiencing lately became the logic of this imbalance. Samir Amin estimated that “the gross amount of financial instruments in 2008 amounted to Two Thousand Trillion Dollars while the world Gross Domestic Product (GDP) was Forty Four Thousand Trillion Dollars. This phenomenon was what precipitated the crisis. The growth of “speculative capital” has over-run the growth of “productive capital”. In other words, there are currently large amounts of credit circulating without the backing of any production at all. This “loose money” has completely run wild and is in a wild search to be given value. In other words, the owners of this “fake” money, those holding United States Treasury Bills and bonds, want to preserve their wealth and prevent themselves from financial collapse.

3.0 Results of the Global crisis

Capitalism or more appropriately, this aging capitalism cannot re-invent itself. It is doomed by its greed to wither away. Its logic has resulted in or engendered global stagnation of production with its side effects of recession in the north and economic depressions in the south. The shrinking wages, the increasing levels of unemployment, the worsening of poverty and disease of many nations of the South – all this is symptomatic of aging capitalism gone senile.

For the Northern countries, the only way their aging capitalism can stay afloat, is by these states nationalizing many of their key banks and corporations which can no longer survive because of the shortage of liquid cash. The world is now witnessing a situation where these capitalist countries are being forced to move back in the direction of central planning and management of economies - a phenomenon they hated so much not long ago.

Furthermore, this systemic crisis of capitalism is leading to a rapacious struggle for the earths resources. The 15% of the planets population who currently consume 85% of world resources want to continue with their opulent life styles at the expense of the rest. That is why the United States under President Bush wanted to continue with its global military control of the world by establishing Coricom on the African continent to secure the exclusive access to Africa’s resources against impediments that India and China may wish to introduce. Similar clouds of war as occurred in pre 1914 and 1938 are building up and the world should be preparing for self destructive acolyptic wars.

With respect to Zambia, the Hon Minister of Finance and National Planning Dr. Situmbeko Musokotwane informed the Indaba on Global Economic Crisis on 4th April, 2009 that “our banking system has not been severely affected by the crisis”. At the same time, Musokotwane informed the meeting that “the initial impact of the global crisis on the Zambian economy was felt in the foreign exchange market. Quite a contradiction. The Minister could have been more candid. He further informed that the government has earmarked 1.8% of GDP or about K750 billion as domestic borrowing and defined it as a stimulus. He also called the K101 billion that the government would fore go on PAYE tax cuts and VAT revenue on agricultural implements as part of the stimulus. This, of course is not adequate. In the financial sector,the truth is that , Zambia’s banking and financial sector , as has been the whole economy, continued to suffer severe shocks and need stong government intervention. A few areas could include the following areas;
a. As a result of capital flight combined with reduced forex inflows from copper exports,the Kwacha has been depreciating. Between July and end December, 2008, it depreciated by over 60 percent. The effect of this meant that imports became expensive, which in turn led to depressed production and loss of income from small traders who simply collapsed. It is strange that the Minister appeared elated at this outcome when he informed the Indaba that “it was important (necessary) that depreciation did take place so as to re-establish a new equilibrium between reduced supply of foreign exchange and the demand for it.” This mechanistic approach to the welfare of our people is not consistent with the duty of maximizing the benefits to people as is required of all governments.
b. The financial houses, particulary the indigenous institutions that depend on debentures from the commercial banks and other asset managers have all become insolvent as these big largely foreign banks and houses have continued to recall their debentures. There is need to rescue the indigenous financial institutions by converting their provisions into debt by way of bond sales and other uninflationary ways.
c. Large job losses in the financial sector and in companies that borrowed, as they too, are becoming insolvent following the recall of loans on account of defaults explained or induced by this credit crunch, is the result of this crisis. It is of course worse in the Mining Sector where government could provide a stabilization trust fund to, among other functions, insure that all miners losing their jobs are guaranteed some living income.
d. To stabilize the exchange rate, there is need to stabilize the capital account in order to reduce the country’s vulnerability to global markets which has been worsened by denationalization of the banking system and dollarization of the economy. There is need to control capital flows without restricting outflows or restrict For instance, a compulsory interest free deposit before repatriation can be introduced as is the case in countries such as Chile. It is also possible to introduce a forex register to minimize tax evasion and capital flight.

4.0 Collapse of market fundamentals

It has now dawned even to our most zealous market fundamentalists that markets are not impersonal beings. They are man-made forces influenced by greed and selfishness. Markets do not have self-correcting mechanisms. To most honest people, this neo-liberal dogma has collapsed. The devastation caused by the current international financial crisis where tax payers have been forced to spend Trillion of Dollars to clean the toxic mess left by this collapse is a clear attestation to the collapse of market fundamentalism. Now, the ghosts of John Maynard Keynes and Karl Marx are coming back to haunt the neo-liberals. Now, policies such as nationalizations of Banks and Financial Institutions, rescue plans for companies, the need for state intervention and attacks against unbridled capitalism – are now the real thing in global practice. The economist magazine of 2nd February, 2009 eulogized Karl Marx and put him on their cover page with the question “what would Marx think?”

The lesson for our country is that we must strive to free ourselves from the shackles of neo-liberal capitalism and explore new paths of development. In all religions of the world, countries are moving away from this discredited neo-liberal paradigm. Gordon Brown correctly characterized it as the collapse of the Washington Consensus. Of course, this change will require the political will of our leaders who must be willing and able to explore alternative development policies and programs. Our own Guy Scott prescription (The Post of 14 April,2009) that we must continue with the failed paradigms of the Washington Consensus is obviously a misreading of our history and a road to continued disaster.

5.0 SAPs are discredited

The G20 group of nations who met recently in London realized that the priority of all nations must no longer be inflation but jobs and economic recovery. The IMF and the World Bank who forced our countries to adopt Structural Adjustment Policies (SAP) have now changed their views and they are now supporting fiscal stimulus – that is, expansionary fiscal policies, rescue plans and nationalization. These policies have since 1980s been denied to Zambia and all developing countries as these policies could impede the interests of global capitalism.

We must challenge and reject all the failed SAP policies. This is the same conclusion arrived by the Prof. Joseph Stiglitz Commission appointed by the UN General Assembly. We must use both fiscal and monetary measures to mitigate the impact of this financial turmoil. We must restore capital controls and reverse liberalization of the capital account which, since 1993 in Zambia, simply opened doors to speculative capital flows, tax evasion and capital flight and has contributed to lowering of Zambia’s domestic savings while increasing our dependence on foreign aid.

We must do away with fiscal and monetary austerity as prescribed by the Breton Woods Institutions as this has been choking our economic expansion and limiting our public investment and social spending. We should learn from President Obama’s USA that stimulus policies in times of crisis are a historical necessity; while fiscal restraint has no economic logic.

We must reject trade liberalization and restore protection of our domestic market. Trade liberalization has simply increased Zambia’s external dependence, destroyed our domestic industries, accelerated our de-industrialization and led to the deterioration of our terms of trade. Our ability to feed ourselves has been compromised by the foolish conditionality that we must invest in cash crops at the expense of food production. The forced privatization translated into massive job losses and social exclusion of our people. We must learn from what is happening in the USA, Latin America and Asia where governments are taking back what was sold off to foreign interests in order to restore their people’s sovereignty over their nations’ resources.

6.0 The need for a Developmental State

President Ronald Reagan in the 1980s wrongfully stated that the state was a “part of the problem and not of the solution”. As a result of this policy prescription, there was massive de-regulation and assault on the state, public service and ownership. Zambia and many African countries were subjected to devastating Structural Adjustment Programs (SAPs). Our countries were characterized by the so called Washington Consensus, as being “predatory, wasteful, rent seeking, corrupt and inept”(Thandika Mkandawire 2001 o.p.cit). They tried to weaken our states and forced us into imposed fiscal austerity programs, downsizing of our public service, dismantling our public sector and privatizing all state enterprises. These were policies to nowhere. It is now apparent that a strong developmental state is an indispensable and indisputable agent of development. It is now clear in all observations of countries’ experiences, that deregulation and market fundamentalism are part of our problems. We must restore the role of a strong and active interventionist state.

7.0 Financing Development

Since it is foolhardy to expect external sources of finance to develop our country, we must raise resources internally. This policy prospective is also the view of the AFDB who have recommended that our countries must boost domestic resource mobilization, increasing domestic savings. The ecumenical organization Christian Aid (2008) in their publication “Death and Taxes: the true toll of tax dodging”, noted that our country has been losing billions of tax revenue due to lack of enforcing agreements with foreign mining companies who have been resorting to various means to avoid paying taxes. Our country has a large enough tax base to fund our own development. Judicious use of our pension funds as well as prudent use of our annual budgets can meet all our developmental needs. The argument as advanced by some right wing scholars that we must attract Foreign Direct Investment (FDI) is not sustainable as none will come however much we try.

8.0 Restoration of our self-confidence

How does Zambia get out of the mess? The conditions for a genuine positive answer to this question must be a return to the mixed economy where state capitalism co-exists with strong social democratic policies. We must return to democratic socialism (not totalitarian communism which is easy to vilify). The dream for democracy and socialism has been the dream of the pioneers of the Democracy Movement (MMD) in their draft program which was substituted later by the doctrines of Milton Friedman and the Chicago school of economics – privatization, deregulation and cuts on government services. We must address our budget expenditure policy to reduce wastage by re-introducing Government Stores and eliminate unnecessary costs. It is unbelievable that a rim of paper that costs K18,000 in normal shops is bought by government departments at anywhere above K70,000. Tarring a kilometer of road which averaged $200,000 in the sub region is anywhere above $1 million in our country. Since the current foreign banks that dominate our financial sector has failed to channel their money to productive priority and welfare-enhancing economic sector, we must set up state-owned banks to address this limitation

We must restore our self-confidence and trust in our own people and aggressively accelerate regional and continental integration of Africa. We must institute a public works program to address the employment needs of the more than five million Zambians that are currently unemployed or underemployed and many who hover between suicide and madness. We must nationalize those mining companies that want to stop mining and place their mines on care and maintenance, as well as increase our stake in all the other mines which must be declared strategic to our nation. Our government must raise capital and invest in power generation and restructure ZESCO, re-introduce an agricultural marketing board, re-capitalize NCZ, re-establish an agricultural bank, empower our own middle class, and invest in the social sector. The truth is that we are our own makers of our history and foreign aid as we have known it so far tends to make us complacent and non creative.