Saturday, December 13, 2008

The secret copper industry in Zambia

By Son Mumbi, Lusaka Times, 12/12/2008

I realize that by not giving context of what our copper industry looks like today most of you must be imagining that our copper industry comprises only the big mining multi-nationals. I imagine that some of you flying home may have seen the very positive images of the booming copper industry in your in-flight magazine. Well that is not the entire copper industry. There is a parallel market that I only hinted at in the earlier article. I will describe it from the perspective of a braver, some may say less ethical colleague of mine. My colleague who I shall call, Mwaiche was approached by a number of foreign businesspersons looking to invest in copper but at low cost. Their interest in particular was in recovering copper and other minerals from the copper dumpsites left by ZCCM.

Mwaiche lives in a neighbourhood located near such a dump and one where people in the neighbourhood had already been collecting copper by-product for various uses such as paving the increasingly potholed township roads. What he set out do, without formally registering his business (because of course he knew he would be excavating from dump sites he had no legal title to) was too informally recruit what is now a workforce of 300 to 500 people.

The arrangement was that this workforce (normally young persons because they are less likely to be prosecuted if caught on prohibited territory) would individually excavate the equivalent of 10 tonnes of copper ‘waste’ product per week. This product would be transported at the back of taxis (evading police checks) to his holding house where he would have it arranged to be transported to mini-smelters where it would be melted and reduced to an impure metal mass. When I asked a colleague who owned these mini-smelters, I was told that I should look to those that drove the most expensive military style cars on the Copperbelt.

Mwaiche’s business has been successful and has funded entrepreneurial s

pin offs in transport, property and trade. On the Copperbelt, Mwaiche is lauded as a Robin Hood figure who by appropriating the copper dumps has distributed wealth better than the multi-national companies have.

What Mwaiche was pragmatically aware of was that the cost of doing formal business in Zambia is very high. One has to factor in time lost in lengthy bureaucratic processes, dealing with officials constantly waiting for kickbacks and high taxes. In addition, he was also aware that the most effective way of doing business is along kinship ties (fictious or otherwise), so rather than formally employing a whole lot of strangers, people are recruited along personal networks, very much like highly organised gangs.

Mwaiche has been one of the few local success stories of the copper boom. If he curbs his propensity for expensive cars and women and diversifies into low-tech, ecologically sustainable business, he will still be a success in the long term. Other colleagues who made a short term success through the mine supply business might not be so lucky and may already be feeling the pinch. The reduced investment and cost cutting measures of the mines, means that most are not making the 300% profit margins there were previously and are actually now making losses. Most did not save when their businesses boomed; and we know as Zambians that our propensity for lavish lifestyles and live for today is our undoing. For the masses, the majority who suffered ZCCM retrenchments (with no guarantee of benefits), they will likely retreat to subsistence agriculture; a difficult prospect with the high value on land. However, if my friend Mwaiche used the capital he has gained from the copper to diversify into sustainable business ventures appropriate for our context; and employing our increasingly low skilled populace, we might still have some hope.

As we face the unfortunately harsh realities of the times, what are We as Zambians going to do?