KWESA

10/06/2023

10/06/2023

THE STARLINK SYNDROME

By Nkonkomalimba Kapumpe

President Hakainde Hichelima's plan is to navigate a debt ridden economy through private capital using foriegn direct investment. We are broke and need outside money without sliding into more debt.

This is the reason they are using for example Public Private Partnership to build roads. He also intends to use the private sector to sustain Mining, which is opposite of what the PF started "Nationalism". We saw ZCCM IH investing alot in mining, today they are selling shares from major mining companies like Mopani and FQM. That's another debate.

The idea basically is that since we are debt and almost bankrupt, let's use other people's money to get what we want and they also profit.

With the influx of foreign direct investment there is a need to protect the local industries that can't compete with international big companies. This idea is that new and small companies have an extremely difficult time competing against well-established, well-funded, extremely profitable companies in developed countries. New companies in developing nations do not have the economic and financial resources, as well as the technology, physical equipment, and research and development expertise to compete against older, established firms. Best example is Zambian contractors competing with AVIC or the new starlink with Zamtel? You put in mitigation for Zamtel to also survive. We will end up like South Africa where almost are locals are just workers.

In order that infant industries and new companies gain market-share and a competitive edge against well-established firms, governments must put into place short-term support mechanisms for these infant industries until they have reached a level so they can compete with foreign companies. A developing nation in attempting to diversify its economy, must protect its infant industries.

The objective of trade protectionism is to protect a nation’s vital economic interests such as its key industries, commodities, and employment of workers. I think we messed up abit on privatization, we should not have sold everything we sold. Our parents died in and of depression in the 90s, they could not dare bein destitutes.

Don't let the Western world lie to you that Protectionism is wrong, when they do it themselves. Look how they protect their motor industries and technology companies against the Chinese, their major source of income or employment; but here we want believe in the nonsense of free trade and free market for everything.

We have over $3.5 billion coming into Solwezi but it's still a compound with poor roads and Infastrature, because most of their business or contracts by the mines are given to their sister Foriegn companies. Is that development?

The premise is that without trade protectionism Zambia could lose long-established industries and companies that first made a product or service; like what happened in the 90s under FTJ. This may eventually result in the loss of jobs, rising unemployment, and eventual decrease of a nation’s gross domestic product (GDP). No wonder this country can't produce billionaire locally but any forigner that comes is rich in two years and we foolishly blame laziness.

I totally agree that we need Foriegn investment to move the Nation from muddy waters of debt; yet we should not start regretting after 10 years that we gave our economy and resources away for song in desperation. Hence, the need to have a mitigation plan so that local or traditional industries don't die eg China or Dubai. We have bein crying to that idea less Minister of Commerce to handle the challenges of local business like cost of capital and cost of doing business so that we can compete with FDI but to no avail. Example Muslims and Chinese borrow money for almost free but we borrow kaloba at 30% to 50% ati compete how? Then you even add price index ati 10% profit? Where is the free trade you are believing when it comes to locals? Slave and colonial mentality of selling ourselves for salt in our food.

Compiled by Nkonkomalimba Kapumpe EFF
Reference: The Economic Effects of Trade Protectionism by Arthur Guarino

NB: Title is derived from the first debate on starlink impact on Zambia. Ngosa Chibesakunda Andrew Butcher Hendrix M Bwalya

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