By Amb. Emmanuel Mwamba
It’s in 2017.
The Industrial Development Corporation (IDC)of South Africa CEO came to our Pretoria Office.
Through his office, we had facilitated the provision of the $20million line of credit for small and medium-scale businesses in Zambia.
The Development Bank of Zambia(DBZ) was identified as the institution to manage the Fund.
“It’s been one year and DBZ has not taken up the fund!” disclosed the IDC representative.
This is one frustrating feature I have consistently witnessed and faced in Zambia, where the bureaucratic system hampers, stalls or literally kills development initiatives and projects.
How can a country with an army of young entrepreneurs, crying for capital funding, fail to accept, absorb and disperse such a $20 million fund availed on a silver platter?
Imagine how many entrepreneurs such a fund could help!
And this was with the background that in the last few months prior, infrastructure projects began to stall in Zambia, as more and more new ones, some commissioned by the Head of State were being shelved, and the debate about the rising foreign debt associated with the construction of infrastructure, took centre stage.
Recognizing this economic environment, I tried hard to leverage on the funding available from the South African Government, its agencies and its private sector financing infrastructure that exists for trade and infrastructure development.
For example, I met the CEO of Export Credit Insurance Corporation of South Africa (ECIC), whose agency provides export credit funds.
I wanted the ECIC to be linked to Zambia’s local suppliers of equipment to the mines, to use the credit lines and overcome the lack of funds that beset them on big supply orders.
“Sir, let us pursue the Infrastructure Fund, it’s a novelty idea we are exploring and Zambia could be the first country to benefit from it,” advised the IDC representative.
South Africa commits up-to 30% of its own resources annually, to the development of regional initiatives such as continued development of transport corridors and its infrastructure, provision of trade and export credit lines.
Other initiatives support industry performance aimed at promoting their export trade.
We had just inaugurated the Bi- National Commission (BNC) between Zambia and South africa.
Besides the usual trade issues that the BNC is preoccupied with, we decided to use the state-to-state vehicle to achieve and institutionalize these funding mechanisms.
Then came an innovative Minister of Finance who was a wonder to watch as he pursued the agenda aggressively and overcame many hurdles.
THE INFRASTRUCTURE FUND IS BORN
Infrastructure is a crucial driver of economic growth.
As government resources face competing needs from social and other sectors,
Governments worldwide have turned to the private capital market for financing infrastructure and have collaborated with the Public-Private Partnerships.
There is a huge stock of private capital that is available out there, while public financing
continues to dwindle, or is limited or insufficient to meet the country’s infrastructure deficit.
Instead of acquiring traditional sovereign loans or direct financing, the mechanism is different and is based on the understanding that the private financing provided, will be recovered directly through user charges as they provide protection to the investor.
We were targeting the first funding to concentrate in commercially attractive sectors.
I shared the idea with the Minister of Finance, Felix Mutati. He was on his way to Washington.
Hon. Mutati was not your ordinary Minister of Finance. He was highly innovative and was always attracted to new ideas.
He was also keen to resolve and unlock bureaucratic bottlenecks that hinder or delay developmental initiatives.
Upon his return a few days later, he had good news.
“I have spoken to my counterpart from South Africa”.
“The Infrastructure Fund idea is brilliant. We are setting it up”, he said to my amazement at how quick an idea was being realised.
“Proceed to set up the meetings with South Africa Treasury, I will travel back here with my team”, he said in his usual way of simplifying technical matters.
We started the process in earnest and before long, our technocrats from Zambia and South Africa governments and associated agencies began to meet.
Hon. Mutati also visited South Africa twice to give impetus to the process.
THE INFRASTRUCTURE FUND MODEL
The model was based on creating a Basket Fund in Zambia, independent of the national budget, but dedicated to building and supporting infrastructure development.
The Fund would attract investment from Zambian, South African and other international institutional investors, such as pension funds, long term insurance companies, sovereign wealth funds and collective investment schemes.
The subsequent meetings were fruitful and various drafts of Memorandum of Understanding (MOUs) were prepared and ‘flew’
between our capitals for our government lawyers to resolve.
We had gathered development, financial and pension institutions as the core group to raise the initial funds for the basket.
We were also concerned with the outstanding or stalled projects in Zambia and the initiative raised pledges of $1.1billion to complete these projects.
The Development Bank of South Africa’s (DBSA’s) Project Preparation Unit (PPU) team, were given the mandate to explore ways of delivering on the projects quickly.
The MOU included the Ministry of Finance of South Africa, Ministry of Finance of Zambia, the Development Bank of South Africa(DBSA), the Public Investment Corporation(PIC), Land Bank, Airports Company South Africa, Industrial Development Corporation-South Africa, Industrial Development Corporation-Zambia, the Public Private Partnership Unit-South Africa, Zambia Railways Limited and Transnet.
We also created sector-specific sub-committees to drive the areas of their interests such as the agro-processing sector.
A second MOU was prepared to be signed between Zambia and South Africa to strengthen the Infrastructure Fund MOU among the various funding parties in Zambia and South Africa.
Despite the sourcing and provision of $1.1billion as seed money for the Infrastructure Fund, the bureaucratic process to legally establish it rolled extremely slow.
And as it sadly happened, both Ministers of Finance in Zambia and South Africa were replaced.
The establishment of the Infrastructure Fund lost momentum.
We tried hard to ensure that it obtained the same traction but new priorities appeared to have overtaken the drive.
Despite the approval of two final draft MOUs, the signing has not taken place.
In sharp contrast, in his 2020 address to Parliament, President Cyril Ramaphosa announced the establishment of the Infrastructure Fund to quicken the drive to develop infrastructure in South Africa.
I kicked myself!
How can a good development idea we started in 2017 fail to take root but be established and celebrated elsewhere?
Have we missed the golden opportunity to deliver infrastructure development using other innovative mechanisms? It is yet to be seen.
As it is, there is a moratorium on new infrastructure projects, contraction of new loans and government is implementing austerity measures.
It is in this environment that the Infrastructure Fund would have thrived well to continue to deliver development to our country.
About the Author
He served as Permanent Secretary in Northern, Eastern and Western Provinces.
He was also Permanent Secretary at Ministry of Information and Broadcasting Services.
He also served as Zambia’s High Commissioner to South Africa.
He is currently the Zambia’s Ambassador to Ethiopia and Permanent Representative to the African Union (AU).
Battle for Ultimate Insurance Company shifts to Lusaka High Court
ONE of the Directors of Marshlands Consortium, a company whose directors claim to have bought Ultimate Insurance Company, has failed to show evidence in court.
Tobias Haanyimbo Milambo, 48 years, of Woodlands, Lusaka appeared as a witness before Judge Kazimbe Chenda in the Lusaka High Court.
In his testimony, he conceded that he failed to pay for the shares and failed to explain why his name appears as one of the shareholders of Ultimate Insurance in the records held at the Patents and Companies Registration Agency (PACRA).
This is in matter in which Mr. Chanda Katotobwe and Mrs. Felistus Kabwe Chibamba Katotobwe, have sued for restitution of Ultimate Insurance Company.
Milambo appearing as defendant, was represented by Mr. Nchima Nchito SC, and Mr. Chisuwo Hamwela, while the Katotobwes were represented by Mr. Sakwiba Sikota SC and Jeah Madaika.
In his testimony, Milambo also stated that the valuation submitted as securities, and now established to be forgeries, were submitted by the other directors of Marshland Consortium; Nachi Musonda and Richard Lubemba.
The three appointed themselves as Directors of Ultimate Insurance while the Katotobwes were abroad.
Earlier another witness and one of the original owners of Ultimate Insurance, Justin Phiri, 43 years and of Ibex Hill in Lusaka, testified before Judge Chenda that as previous owners, they sold Ultimate Insurance Company to Mrs. Felistus Kabwe Chibamba and the purchase price of K1.5m for the shareholding was paid by Mr. Chanda Katotobwe as issued receipts would show.
He stated that Klein Syampongo, Maybin Silavwe and himself(Justin Phiri) have never dealt with Milambo and other Marshlands Consortium directors on the sale transaction of Ultimate Insurance Company.
The civil proceedings will resume on Tuesday 20th October, 2020 before Judge Kazimbe Chenda for continued trial.
On Thursday last week, Tobias Milambo, Richard Lubemba and Nachi Musonda were granted bail by the Lusaka Magistrate Court in a criminal matter, were they are charged with uttering forged documents, purporting to own Ultimate Insurance Company.
Marshlands Directors Granted Bail
THE Lusaka Magistrate Court has granted bail to three Marshlands Directors; Tobias Milambo, Richard Lubemba and Nachi Musonda.
The criminal matter has since been adjourned to tomorrow for trial because their Lawyer, Osbourne Ngoma was not available.
The three accused have been put on bail of K10,000 each with working sureties in Managerial positions.
Last month, Magistrate Alice Walusiku revoked their bond when it was established that their lawyers submitted forged Covid-19 medical records.
Magistrate Walusiku also reported Nchima Nchito, Mutembo Nchito and Chisuwo Hamweela to the Law Association of Zambia Disciplinary Committee the defence lawyers, for unethical behaviour aimed at delaying a legitimate criminal trial, and for tendering forged documents in a Court of law.
The defence lawyers have since abandoned the Marshlands Directors.
Marshland directors have since hired a new lawyer, Mr. Osborne Ngoma who has applied for a fresh bail application.
Last week, a witness, Maybin Silavwe, one of the previous owners,testified before Magistrate Walusiku, that they sold Ultimate Insurance Company to Mrs. Felistus Kabwe Chibamba Katotobwe and the full purchase price of K1.5m was paid by Mr. Chanda Katotobwe.
Silavwe becomes the second witness to testify this way.
In the Lusaka High Court, another witness, Justin Phiri told Judge Kazimbe Chenda, that the Katotobwes bought Ultimate Insurance Company and paid the agreed full purchase price for the shareholding.
Katotobwe’s bought Ultimate Insurance, witness tells High Court
A WITNESS has testified in the Lusaka High Court that Ultimate Insurance Company was bought by Mr. Chanda Katotobwe and his wife, Felicitus Kabwe Chibamba.
Mr Justin Phiri, 43yrs of Ibex Hill testified on Tuesday afternoon before Judge Kazimbe Chenda that as owners of the company they sold Ultimate Insurance Ltd to the Katotobwe’s who paid the full purchase price of K1.5m.
He said this payment was made to Klein Syampongo, Justin Phiri and Maybin Silavwe as former owners and shareholders.
He stated that the previous owners have never received any form of payment or instruction from a company called Marshlands or its directors: Tobias Milambo, Richard Lubemba and Nachi Musonda.
This is a matter in which Chanda Katotobwe and Felistus Kabwe Chibamba have sued in the High Court for damages and restitution of their company, Ultimate Insurance Company Limited.
The directors of Marshlands Company are appearing in the Magistrate Court accused of fraud of illegally changing the ownership of Ultimate Insurance Company to a company created for this purpose, Marshlands company.