By IPS Correspondents
LUSAKA, Jun 3 2003 (IPS)

In a show of arm-twisting, western donors are withholding financial support to Zambia over Lusaka’s reluctance to privatise the remaining three state-owned firms considered strategic to the southern African country.

Jubilee-Zambia’s Jack Zulu says Lusaka has only received 462 million U.S. dollars, or a third, of the 1.3 billion U.S. dollars that donors pledged to Zambia this year.

Jubilee-Zambia is part of the international lobby group which is seeking debt relief in developing countries. In Zambia, it is lobbying for the total cancellation of the country’s external debts of nearly 7 billion U.S. dollars.

In July last year, the donors pledged 1.3 billion U.S. dollars in financial support to Zambia this year. It was pledged during the 2002 Consultative Group (CG) meeting between the donors and government officials in the southern resort town of Livingstone.

Speaking at the end of the meeting, World Bank Regional Director for Zambia and Zimbabwe, Yaw Ansu, said the pledge was a marked increase over the previous year’s 900 million U.S. dollars.

Ansu said the financial pledge was in response to government initiatives to curb corruption and widespread poverty and the smooth implementation of the privatisation programme that has seen the transfer of around 80 percent of the economy to private hands.

Some 258 state-owned firms were privatised by Dec. 31, 2002. Twenty others are pending transformation into private hands, according to the Zambia Privatisation Agency (ZPA).

They include the Zambia Electricity Supply Corporation, the Zambia Telecommunication Corporation and the Zambia National Commercial Bank which the government of President Levy Mwanawasa considers to be strategic to the southern African country.

Reason advanced by the government for its reluctance to sell the three firms is that since the objective of any business venture was to make a profit, privatising the firms would make the cost of electricity and telecommunication services too expensive for the poor.

The government also says it feels uncomfortable to entrust the private sector with the responsibility of extending electricity, telecommunication and banking facilities to rural areas where such business ventures are economically unprofitable.

Early this year, the Zambian parliament resolved that government keeps the three firms, citing Britain where, they say, electricity and postal firms remain in government hands.

The parliamentary resolution was immediately followed by sporadic demonstrations across the country by members of the public and civil societies in support of the stand taken by their representatives.

In reaction, the IMF country representative, Mark Ellyne warned that Zambia risked losing donor support if it did not privatise the three parastatals.

"The privatisation of the three firms is crucial to accessing financial support from western donors," Ellyne warned, earning for himself a barrage of criticisms across Zambia.

Zulu says the IMF and the World Bank have been forcing poor countries to implement a wide range of unpopular economic and social policy reforms such as trade liberation and privatisation.

”These reforms have contributed to increasing social misery of the local people,” he alleges.

Since government embarked on selling state-owned corporations, formal employment in Zambia declined from 537,300 in 1990 to 476,400 in 1991 and to a further 200,000 in 2000.

In the Copperbelt, the employment figure that stood at 148,050 in 1993 decreased to 100,500 by 1998 following privatisation of the mines, as the new owners drastically cut-down inherited workforce they considered bloated.

Financial watchers in Lusaka also have attributed foreign currency scarcity in Zambia to withholding of balance of payment support by western donors.

Excerpt: