Before You Even Think of Copying The Chinese Economic Processing Zones Model…

By Professor Mwiine Lubemba

Before you think of copying even one of these innovative Chinese multi-facility economic processing zones… there are a few things you absolutely need to know.

At the same time as Taiwan, China, India, Thailand, Malaysia and South Korea, Zambia had the Village and Small and Medium Scale Industries concept in place. In Lusaka the village industries built the Chinika complex to house village scale industrial clusters and the Small and Medium Scale had their own complex along Kafue road opposite the Castle shopping mall. Many traditional goods, hoes, axes, bees wax candles, embroidery clothing, crude tallow soaps, vegetable seeds cooking oil expellers, hummer mealie meal, oven and air dried fruits and vegetables, non security printing services, etc were carried out by both the village and small scale sector in these premises. Most operators in the sector collapsed and blamed the lack of working capital and government support to prosper. The Zambian village and the Small and Medium Scale Industries model is currently not functioning with the same enthusiasm as at inception.

Meanwhile in China, India, Taiwan, Thailand, Malaysia etc their models have prospered. Many of their village industries graduated to Small Scale Industries and Small Scale Industries graduated into medium scale industries and medium industries into large corporate. The grandaunts from medium scale industries went into Industrial clusters and the larger ones that required additional sophistication went to multi facility economic processing zones. To date, these countries still maintain the old graduation model of village industries and Small Medium Scale Industries and the big boys and girls go into industrial clusters or multi facility economic processing zones MFEPZ.

The principle is easy to grasp when viewed as an educational school grading system. You begin from grade 1 and go on passing your exams until grade 12 then you either pass with good grades say Division one with 6 points and go to university or if you are not lucky and get division two points you go to a technical college or go on to do less strenuous work that doesn’t demand helicopter thinking capabilities and become a politician. If at any one point of your business cycle you fail, the business dies or if you have money, you have the opportunity to keep trying until you are able to pass and go to the next level. At each level of your business, sophistication demands increase and additional innovation skills are required. Those in the evolutionary sciences know this as the law of natural selection. Those with weaker business models die first and as you go on only the strong business men and women remain.

In Zambia, Mr. Robert Sichinga, an accountant, found this Industrial Clusters and MFEPZ concept on the drawing board at the Ministry of Commerce and Industry and quickly jumped into the deep end. He did not stop to think it through. The country will now have MFEPZ at Chambeshi on the copper belt, and two are under construction in Lusaka near the Airport and another somewhere south of Lusaka. Mr. Alexander Chikwanda is already in China to look at the Chinese model and cut and paste it for Zambia. In other words Zambian entrepreneurs from towns and villages will go straight from subsistence village scale business models into the deep end of say-final Year University Chemical engineering degree examination room and of course expect them to pass with flying colors. The learning curve consisting village and Small Scale industries equipped with possible monetary failure cushions to protect those weaker innovators will be removed-the result of course is that those who fail will fall to a painful cashless violent death.

Long ago during the UNIP era there was a prominent lady in the Central Committee whose English speaking abilities were charming, I am sure faced with such a challenge she would have said:-“If China did it-Why can’t Zambians did also”? She coined the famous lines…“Mr. President we are tired of men being on top of us”, when she departed from her prepared speech.

Indeed it would be foolish for Zambia to re-invent the wheel. So my elder brother Alexander Chikwanda is in China to ensure the Chinese economic processing zones and industrial cluster model does work and Zambian tax money which he controls can be used prudently to replicate the model all over Zambia. The only trouble is the Chinese model is not fool proof and that’s the major part of the MFEPZ he will not be able to see immediately. There have been more casualties than winners in the Chinese model.

Stop and think for a moment…

The entire Chinese economic model is partly responsible for creating massive foreign reserves in excess of US$3 trillion; it is based on exports of gadgets made in these economic zones for export to the world. Now imagine if the Chinese had to create competition for their manufactured goods and services by showing the entire world how to achieve massive growth. Trade with Africa alone is estimated at US$200 billion in 2012 and growing.

I have my doubts…

Whatever the merits or demerits of such friendship and plan on the part of the Chinese Government, what conceivable purpose can be served by showing Zambians everything they need to know to be able to manufacture gadgets and compete in the same market with them? If all that it does is lower their prospective export business. Did the Chinese become a prosperous nation by acting stupid? NO!

So, since when has it been considered smart to tell your enemies what your plans are? So are the Chinese really showcasing their secretes of economic success to Mr. Chikwanda and Mr. Chenda or merely giving two oxen, an ox and cow, for breeding and then ask Mr. Chikwanda to leave the cow behind as security? The Chinese manufacture and sale anything from sand to state of the art military hardware and recently unveiled their space age capabilities. Did Mr. Chikwanda visit Chinese space and nuclear research laboratories or engineering and environmental research centers or could it be that he was taken to see village industries and small scale foundries making bows and poison arrows?

But let’s take this simplistic example of Sand. It is found all over Zambia. It is a major ingredient of mortar, plaster, concrete, ceramic tiles and asphalt paving. In villages, building houses with bricks made of clay or lime mixed with sand are harder and will bear a greater weight than bricks composed of clay only. Molds used in foundries for casting metal are made of sand with a clay binder. Villagers can also used it in simple wooden crafted filter plants to purify their drinking water and industry can make abrasives by gluing it to paper to make sandpaper. It can be blown through a hose by compressed air or steam as sandblast to clean the walls of brick or stone buildings, to remove paint, and to clean metal articles. In the pottery and glassmaking such as at Kapiri Glass factory, very pure quartz sand is used as a source of silica. Similarly, sands are used for lining the hearths of acid-steel furnaces, because pure silica is heat-resistant. Do we need to go to China to copy how they make useful products from sand?

What’s the handicap?

To get to a sand quarry site you need to bribe the area chief for a letter, then you need a mining license but before its given the environmental council have to be bribed, then you have to deal with the local politicians wanting jobs for their carders and when you think you are done you have to deal with ZESCO for power who have to be bribed, then you have Banks demanding stupid documents such as 3 years audited accounts even if they know this is a new start-up and they demand security equivalent to twice the cost of the project before they can lend you the money for plant and equipment. By the time you are done with all bureaucracies its 12 months meanwhile the kwacha would have depreciated making you want additional funding then the Bank will refuse and demand its money back. And once in production and become lucky you have an export order, the Bank of Zambia will want all your export proceeds before you even have sight of it and if you refuse they slap you with a 10 year jail term. This is a speculative scenario but imagine going through such nonsense. This is one of the reasons why only the well connected have access to loans which they don’t have a clue what to use it for and instead buy luxurious cars and not engage in development projects.

Why do Zambians hate themselves? The Citizens Economic Empowerment facility was meant to benefit all Zambians. Today the names on the list of previous and current beneficiaries is composed of the same people who have accessed the funds before only this time using other proxies. When you look carefully, the majority of the projects are in hospitality and Luxury Bus transport industry hardly do you cross over a serious manufacturing start up of note. Yet when you again look at similar funds in Chindia (China –India), deliberate bias is given to manufacturing start ups. The Economic Zones and Industrial clusters will end up being given to politicians and civil servants as retirement packages and the whole purpose will come to naught. Eventually they will all become drinking places.

Why am I saying this…?

Innovation is an essential strategy for sustaining prosperity and coping with globalization, Chinese economic zones encourages innovators that then go on to set the pace in global markets, as the rest of the world merely become followers who just copy and adapt to compete. Zambian economic zones will merely copy and produce whatever equipment they’ll acquire and import from China will be designed to churn out.

Just a thought…

Sincerely,

 

 

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