CUTS ARC SOUNDS Vol. 1 No. 2

Policy Coherence in Economic Governance is considered to be a key to economic growth and development. Policy inconsistency has been identified by many as one of the major reasons for the dismal economic performance of poor countries especially in sub-Saharan Africa. This has failed the countries to reap benefits under not only the ambitious economic liberalisation programmes of the 1990s but also the several regional and multilateral arrangements including the World Trade Organisation (WTO) and the ACP-ECU cooperation agreements. Not only this policy inconsistency is evident in most of the economic governance activities of the countries in the sub-Saharan African region; it is also in the formulation and implementation of foreign trade and the domestic regulatory framework of these countries.

For instance, during the negotiations leading to the Cotonou Agreement in 2000, ACP countries failed to give convincing and credible reasons why they had failed to take advantage of preferential market access provided under the Lome conventions. Though supply side constraints has been widely considered as reasons for the declining trade share of poor countries in the international trading system, there has been no serious attempts to correct this lacunae. For example, the development aid received by the countries was rarely used rationally to address supply-related constraints and rigidities.

As a result of the policy inconsistency, the countries failed to make rational links between the various trade liberalisation provisions as embodied by the WTO, Africa Growth and Opportunities Act (AGOA), New Partnership for Africa’s development (NEPAD), and Cotonou Agreement, etc to enable the countries to establish interface among all these programmes in a manner that does not overwhelm their technical, absorptive and implementation capacities.

As a follow up of the economic liberalisation/de-regulation programmes at the national level, several new agencies have been set up to regulate the business entities and to encourage competitive business environment thereby consumer welfare. A serious problem one would observe in this area is the prevalence of conflicting pieces of legislation, which guide the operations of such agencies. For instance policies governing investment often conflict one another.

Further more, the “culture of secrecy” which prevails in economic policy making and implementation process make it difficult for the non state actors in these countries to obtain relevant information thus severely limiting their capacity to meaningfully participate in the economic policy making process. The meaning of partnership approach is relevant in this context.

This issue of the CUTS-ARC Sounds sheds light on some of the issues linked to policy coherence and economic governance in the context of Southern Africa.

Editor

ACTIVITY REPORTS:

1. Partnership Conclave on Governance and Its Relationship with Poverty Reduction

Poverty has in the recent years become a worldwide crisis, in particular for the majority of developing countries; this is in spite of the structural adjustment programmes and economic liberalisation that have been implemented by most countries. Zambia is seen as a distinct example where economic liberalisation programmes of 1990s are believed to have escalated the levels of poverty. The current statistics indicates that between 70-80% of the total population is poor. This would naturally raise the question whether governance has a major role to play in the eradication of poverty in Zambia or not?

Consumer Unity Trust Society (CUTS) for the last 20 years has been involved in extensive policy research and advocacy, aims at promoting a people-centred development. CUTS-ARC hosted a Partnership Conclave with the theme “Governance and Its Relationship with Poverty Reduction” to commemorate the 20th anniversary of CUTS’s existence at Lusaka on the 10th of March 2003. The Conclave brought together, participants from various economic sectors, who contributed to the interactive dialogue on how the aspects of Zambia’s governance issues including the way its economic liberalisation process was being pursued intertwined with the extent to which poverty would be halved by 2015.

Speaking at the function, the guest of honour, Mr. Steven Moyo of the Integrity Foundation said that it was imperative for the country to prioritise the goals of development, that is, economic and social rights, if it were to meet one of the United Nations Millennium Development Goals, of reducing poverty to minimal levels. At present the Zambian legislation classifies the social services, such as education and health (key in the reduction of poverty), as “privileges given by the state” and not as “rights of every Zambian citizen”. Furthermore, most people tend to lack knowledge of their rights and the deficiencies in their environment. Hence, greater efforts are needed to ensure genuine democracy by ensuring equal justice for all, especially for the poor.

From the discussion, it was further highlighted that without the incorporation of consumer protection in the strategy of poverty reduction, efforts would go only so far as to achieve the desired end. Taking the case of Tuberculosis (TB) medication, Mr. Martin Sampa of the Copperbelt University, Zambia argued that though the Zambian government had engaged itself in the procurement of the medicines to fight the disease, little was being achieved as a result of the lackadaisical attitude of the medical authorities and responsible health officials. They failed to enlighten the consumers on the requirements and precautionary measures needed while on medication. Consequently, most families were drawn further into poverty through a more than necessary drain on their resources (including the death of economically active members). Studies also revealed that some of the medical drugs brought into the country were of a sub-standard quality.

While analysing the agricultural reform policies of Zambia since 1990s, Mr. Tim Connel of Participatory Ecological Land Use Management (PELUM) Association, observed that the policy action plans did not even mention supporting the participation of the farmers who constitute the largest producer in agriculture. The role of the farmers is restricted to that of a recipient of credit being viewed as a vehicle for increased agricultural production and profitability and not part of the equation for sound policy development. As a result, this sector which was set to drive the country’s economic growth (and hence contribute extensively to poverty reduction) so far failed to achieve the desired objectives.

In conclusion the Conclave came up with a number of policy recommendations. It was suggested that more efforts need to be directed towards popularising consumer rights. This could be achieved through building capacity of Zambia Consumers Association (ZACA) in strengthening the advocacy work on consumer rights. Further, the government must ensure desired quality standards for both local and imported goods through the Zambian Bureau of Standards. There is a need for the government to seriously consider incorporating the civil society views in the national planning process (a tenet of good governance) in terms of formulation of both policy and law. (For further details and papers please contact: cutsarc@zamnet.zm
lusaka@cuts.org)

2. National Consultation on FDI

CUTS-ARC hosted the Third National Reference Group (NRG) Meeting of the Investment For Development (IFD) project at Lusaka on 16th April, 2003. The purpose of the meeting was to discuss three documents viz. (a) Investment Policy, Performance and Perceptions in Zambia (b) National Advocacy Document for Zambia and (c) Coordination among Sector Regulators for a Sustainable FDI Environment. The first two documents were prepared by CUTS-ARC whereas the last one was from the Zambia Investment Centre (ZIC).

The meeting brought together 40 stakeholders representing government departments, regulatory bodies, inter-governmental organisations, trade unions, business chambers, research and civil society organisations, independent experts and the media. Mr. Trevor Simumba of Africa Trade Advancement and Development Partners (A-Trade), and Mr. Chibembe Nyalungwe of the Zambia Trade and Investment Enhancement (ZAMTIE) moderated the discussions. The meeting called for the adoption of a national investment policy for Zambia which would harmonise conflicting regulations on investment to enhance the inflow of Foreign Direct Investment (FDI).

Mr. Eric Kalimukwa of CUTS–ARC presented the draft report, National Investment Policy, Performance and Perceptions in Zambia. The presentation began by providing an overview of the policies that the Zambian government had put in place towards attracting FDI to Zambia. These included inter alia the following: -

· restoration of macroeconomic stability through monetary and fiscal reforms

· facilitation of private sector growth by removal of price controls and exchange- rate and import and export controls

· shifting agriculture and industry from public monopolies to private and decentralised institutions

Mr. Richard Chavula, Project Development Manager at the Zambia Investment Centre (ZIC) emphasized that there was a need to harmonise operations of conflicting investment regulations to enhance the inflow of FDI. He alluded to the fact that there were conflicting areas in pieces of legislation under which various regulatory sectors operated in Zambia and that these were negatively impacting the FDI regime. He added that these conflicting areas present themselves as negative factors that adversely affect the FDI. As a direct consequence of these factors, investment was rendered burdensome making Zambia become less attractive for FDI.

Apart from the conflicting pieces of legislation, the other negative factors for FDI that are apparent in Zambia include issues such as the delay in processing permits and lack of appreciation of each other’s pieces of legislation by all sector regulators; e.g. ZIC has to liaison with a minimum of three or four sector regulators while processing an investment application in any sector. Mr. Chavula therefore opined that the sector regulators should work together to improve the FDI regime by putting in place measures that would identify the conflicting areas of the Act under which they operate. This would then serve as a lynchpin for sector regulators to harmonise, streamline and synchronise all aspects of investment procedures. (For details: cutsarc@zamnet.zm
lusaka@cuts.org)

3. Seminar on COMESA Competition Policy

Zambia Consumers Association (ZACA) in liaison with the Secretariat of the Common Market for Eastern and Southern Africa (COMESA), organised a half-day consultative and awareness creation seminar on the newly drafted regional competition policy and regulations on 29th April 2003 at Lusaka. The purpose of the seminar was to gather inputs from the stakeholders on the COMESA Competition Policy and Law. Ms. Val Imber of the Oxford Management Group provided a brief outline of the law and regulations and also clarified the questions of the stakeholders. Eric Kalimukwa of CUTS-ARC made a written submission at the meeting on the possible areas of improvement in the draft competition policy and law, from the consumers’ perspective. (For further information, please contact: zaca@zamnet.zm)

4. Meeting on Cotonou Agreement and the launch of ESANAF

Freidrich Ebert Stiftung (FES) and the Secretariat of the Common Market for Eastern and Southern Africa (COMESA) organised a regional non-state actors meeting on Cotonou Agreement at Lusaka on 28th and 29th April 2003. The meeting aimed at making THE participants understand the practical details of Cotonou Agreement between the European Union (EU) and the African Caribbean and Pacific (ACP) group of countries and also exploring the possibilities of meaningful participation of non-state actors in the implementation of the agreement at the national and regional level. One of the major outcomes of the meeting was the formation of Eastern and Southern African Non state Actors Forum (ESANAF) and the adoption of a plan of action for the non-state actors. CUTS-ARC has been nominated by the meeting as a focal point for ESANAF’s liaison arrangements with the COMESA secretariat. (For details: cutsarc@zamnet.zm
lusaka@cuts.org)

5. Review Meeting of IFD Project

An interim review meeting of the seven-country project on Investment for Development (IFD), which began in October 2001, was held at Geneva on 9-10 May 2003. The meeting not only reviewed the progress of the project but also discussed a draft advocacy document, which was prepared on the basis of the research outcomes. Professor Oliver Saasa of the University of Zambia presented a paper titled “Importance of Mining Sector for Africa” which was prepared on the basis of the IFD research in Zambia and Tanzania. The paper examines the economic relevance, policies and perceptions regarding FDI in mining sector in the context of national development strategies of Tanzania and Zambia (For further information: ifd@cuts-international.org)

NEWS BRIEFS

Namibia to Pull out of COMESA

Namibia recently decided to pull out of Common Market for Eastern and Southern Africa (COMESA). The decision announced by the Cabinet in mid May 2003 will become effective by May 2004, as a year's notice is required under COMESA rules for withdrawal of membership. However, Namibia has stopped participating in COMESA activities from May 2003.

The reason given for the pull out was that the benefits for being part of COMESA do not outweigh the costs. Under this decision, Namibia's taxpayers stand to save at least N$2mn a year, which was being contributed to COMESA activities. While announcing the decision the government made it clear that they would focus on SACU (the Southern African Customs Union) and SADC (the Southern African Development Community), as the bulk of Namibia’s trade is with SACU countries.

Namibia was not a part of COMESA’s free trade area, which allows countries trading within the bloc to pay lower import taxes, or none at all. It is instead part of SACU, a customs union with South Africa, Botswana, Lesotho and Swaziland, and could not be part of two such organisations at the same time.

However, analysts consider the Namibian decision as a result of growing competition between SADC and COMESA over regional economic arrangements in Southern Africa. (Source: www.namibian.com.na)

FORTHCOMING EVENTS

Regional Preparatory workshop on Cancun, July 2003

CUTS-ARC proposes to hold a regional preparatory workshop at Dar es Salaam in July 2003 prior to the 5th Ministerial Conference of the World Trade Organisation (WTO) at Cancun to be held in September. The objective of the workshop is to evaluate the outcomes of the ongoing new round of negotiations called “Doha Development Agenda” from the perspective of the stakeholders in the region and to provide inputs for the national and regional preparations on the 5th Ministerial. The workshop proposes to bring together 40 stakeholders from Eastern and Southern African countries to prepare a plan of action for Cancun. (For details: cutsarc@zamnet.zm
lusaka@cuts.org)

PUBLICATIONS

Market Practices in Zambia

This report, prepared by Zambia Consumers Association (ZACA) in cooperation with CUTS-ARC, analyses the status of consumer protection and competition policy scenario in Zambia from the consumers’ perspective supported by relevant facts and figures. This publication is part of the capacity building and awareness creation activities of CUTS-ARC and ZACA on consumer protection measures and economic welfare. (For details contact: cutsarc@zamnet.zm
lusaka@cuts.org or zaca@zamnet.zm)

(For further information please visit: www.cuts-international.org )

Contact Us

Africa Resource Centre

Suite 4.11, Main Post Office Building,
Cairo Road, P.O. Box 37113, Lusaka, Zambia
Ph: (00) 260-1-224992
Email: cutsarc@zamnet.zm
lusaka@cuts.org

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