Chairman's Report 2007
for the year 1st July 2006 to 30th June 2007
(presented to the Zambia Society Trust AGM on 22 November 2007)
Zambia's economy continues to improve. The trade surplus in 2006 was (US)$ 1.18 bn, up from $34.6 million in 2005. The increase in value of exports is nearly all due to the high price of copper (up 400% over the past five years) and cobalt which are in great demand by China and India. Copper constitutes 75% of export earnings, so Zambia is vulnerable. The kwacha did not appreciate during the year; a great help for exports of agricultural produce.
Cancellation of multilateral international debt by the World Bank and IMF reduced this from $7.2 bn to $500 million. Interest and repayments which would be due annually are released for Health, Education and Poverty Reduction initiatives. However, some of the bilateral debt, which Zambia owes to specific countries, has been bought up by 'Vulture' Funds. An example is $4 million owed to Romania, acquired in 1999 by Donegal, a private company based in the USA. This year Donegal claimed $55 million from Zambia. A High Court in London ruled they be paid $15 million, so $11 million was lost to Zambia. The World Bank and IMF, backed by Britain and other creditor nations, are trying to disallow such iniquitous activities in future which deprive the poor.
The Chingola to Solwezi road and beyond to the Lumwana Mine is being upgraded, financed by the owners, Equinox of Australia and three linked companies. Extraction of copper ore is expected to begin by mid 2008.The start in construction of a new railway to link the Copperbelt to Lumwana and on to the Benguela railway in Angola is imminent. Investments worth $250 million from the UK, US and RSA are forthcoming.
The Zambian government bought 382,000 tonnes of surplus maize from farmers during the 2005-6 season (79% from small farms). A total of 110,000 tonnes was exported to Zimbabwe at a reduced price ($200 instead of $250/tonne). 10,000 tonnes was given to the World Food Programme. Most of the balance is held as a strategic reserve.
However Zambia is still a very poor country - the ninth poorest in the world and the cost of living is rising fast. 68% of her people have to manage on less than one US dollar a day. Also the HIV/AIDS pandemic is almost overwhelming. Life expectancy is 37.5 years, but some progress has been made. The numbers with HIV did not rise during the year: 16% of adults are infected; about 52% are women, 48% men. Incidence is falling especially where intensive health education programmes have been active for more than a decade, in contrast to Britain. The availability of antiretroviral drugs (ARVs) to combat the virus has increased enormously. In 2003 two centres were providing free ARV drugs, now there are 85. Effective treatment is being received by 100,000 people of the estimated 250,000 who need it. This adds several years of active life, so important in bringing up children; two thirds of whom, born to HIV positive mothers, are not infected. Funds for the ARVs are provided by the World Health Organisation and the US President's fund. Zambia provides free health care in the rural areas again, but this has led to more attendances and drug shortages.
The conditions for mining companies are very favourable because they bought concessions when the copper price was low and plant run down. An agreement was made to pay only 0.6% royalties to the Zambian government and no tax on the ore extracted for 10 years. Now they are making a huge profit. Nchanga and Konkola Deep (Bancroft) produced ore worth $1bn in 2006, but paid only $6.1 million to the government. These mines are owned largely by Vedanta, a British based FTSE 100 company. Canada's First Quantum company has agreed to pay tax voluntarily. The World Bank and IMF are backing Zambia in requesting all the mining companies pay tax at 3.0%. (The average paid for mining in developing countries is 5-10%).
Enrolment in Primary School, which is now free, has increased to 97% (from 71% in 2000) but adequate clothing, exercise books and pens have to be bought and contributions made towards Parent Teacher Associations which undertake most school maintenance. This is particularly difficult for the one million orphans: about 25% of the girls do not complete their seven years.
The Trust whose objects are to help the poor, especially orphans and to promote better health, education and acquisition of skills in Zambia, has about £25,000 to spend on projects each year: half comes from subscriptions; the balance from donations and events. The Trust hopes for more. During the year nine Orphans Support Programmes received £10,000 between them. Priority is given to projects to assist orphans, living with related families or friends in their communities, to complete primary school and receive nourishing food. Twelve Education Bursaries were funded with £6108 for courses of one to two years in agriculture, applied sciences, health education and journalism. Other projects assisted were the Football and Netball scheme which supplies match-grade balls to 50 schools each year. This yields very happy and grateful letters with photographs. APTERS, where handicapped workers make brightly painted papier-mache mobility aids for physically handicapped children, is very successful. The Ridge Bursary fund for health workers bought textbooks for 5 specialist Zambian doctors. Also some health workers based in rural areas had the chance to attend 2-4 week in service courses.
All members of the Committee have specific responsibilities: no member is a passenger. As always I express members' thanks to them. This year particularly to Eileen Hamilton, who is standing down as Treasurer on completing 12 years. The Committee is able to recommend Accountant Jack Galaun, well known in Zambia, to take over from her. Particular thanks go to our most successful fund raiser and President, Frank McGovern, also to Jo Herkes, Honorary Secretary, who copes with much work other committee members generate, particularly myself. Very special thanks are due to the late Maggie Currey who edited and produced News from Zambia and Spotlight so well. Also to Anne Fraenkel who has taken over from her.
We are very grateful to Mr Anderson Chibwa, the High Commissioner and his staff, particular his deputy, Mrs Eunice Luampa, who is our host today, also to Mrs Evelyn Manda, Trust Committee member. We look forward to hearing from Mr Gracewell Mwansa, formerly Director of ZAL Holdings, London and Chairman of the Zambia Society, who will speak on 'Beyond HIPC Cancellation: Hopes for Improved Education and Health in Zambia'.
James Cairns OBE FRCS
22 November 2007