Foreign investment

THE plight of Zambian publishers who are about to lose over US$4million in a textbook publishing deal to foreign publishers is quite distressing.

Details are not clear but it would appear that, following the introduction of vernacular as a language of instruction, there was need for new text books. These are the books that the Ministry of Education has decided to award to  foreign publishers.

Six Zambian firms tendered and lost. They did not take the loss lying down. They decided to petition the courts of law to stop the process. They succeeded in getting the award delayed as courts of law considered the matter. The courts have now refused any further delays in the award of the contract, which means that the Government can award the contracts to the foreign companies.

Without details on how the evaluation was conducted it is difficult to give a very clear assessment of the matter. It is quite possible that the foreign companies proved attractive because they provided a shorter lead period compared to the indigenous one, but time is no longer an issue, given the lengthy court process that has invariably negated this consideration.

The real issue is: Given that we are an open economy; to what extent should foreign capital be allowed to compete with local entrepreneurship.

Put differently; can local capital compete with foreign capital?

The answer is very clear. There is no accumulated local capital to speak of. We have human capital that is bereft of the means of production. Even our education system does not prepare our graduates for enterprise. It prepares them for white collar investment.

For example, most of our building contractors fail to make the grade because they lack equipment which their counterparts from developed countries will readily provide. Therefore a business evaluation based on equipment alone will invariably knock out the Zambian bidder.

Granted that a number of Zambians have abused loans, the reality is that not many indigenous businessmen will offer performance bonds for large scale projects. They therefore remain in the lower leagues.

It is however a fact that international capital will flow to those areas which offer the highest possible returns. The benefits of such flows have been a subject of considerable debate and controversy because Africa, like other developing countries are suffering a negative flow of investment. More money is flowing out than is coming in by way of investment and loans.

There is a huge disparity between the capital inflow as measured against capital outflows to the extent that most African countries suffer balance of payment deficits because they are not able to match imports with exports.

It would seem counterintuitive for a poor country such as Zambia to spend and externalize US$4million on textbooks that our local publishers are capable of producing. Indeed they have shown a previous capacity to do so.

Why should the Zambian Government support this needless outflow that robs local entrepreneurs?


Categorized | Editorial

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