Thursday, October 28, 2010

Success (part 2)

In my last post, I mentioned how I came to the conclusion that investment was the answer to the development of Zambia. I also mentioned that Zambia has to become more productive to compete on the global markets so that it can first get ahead before having the capacity to refine the way it operates to reach some sort of equilibrium state.

If I were President, I would look at the entire country the same way I look at my company. I want everyone to be busy, to be productive, and to be happy. There are millions of people though, all of different skills and different ages – meanwhile what is required to run the country has a complexity beyond what I can know. So instead of thinking of all the things I don’t know, here is my best guess based on what I do know.

There are three different time frames for the investments that are needed.

Short term (under 5 years), Medium term (5-19 year), and Long term (20+ years)

Short Term

Zambia needs to first improve its low skill work force. Simple things like the trades (construction, mechanics, etc). The life expectancy for the average Zambian today is just 39 years. So if we want to see changes in the next 5 years, we need to look at trade schools which can improve a person’s skills within 2 years. Right now the state of the government trade schools is pathetic and this forces Zambian companies to import these skills to get the job done, thus increasing the cost of doing business, and decreasing the competitiveness of its exports on the global market.

Medium Term

Zambia needs to look to two things, its health care and its infrastructure. Infrastructure, at least, has grabbed a lot of attention from the government, however, the purpose for this attention isn’t to improve the enabling environment for businesses to operate in, and instead, it is to gain votes for the next election. There are hundreds of km’s of roads that were built just 2 years ago and are already falling apart because the contractors who built them were not monitored properly, or the gov’t used cheap specifications when accepting bids for those contracts. Regardless, the end result is a perpetual state of repair which is so inefficient that it hurts.

Then there is health care. A year ago there was a photo of a woman giving birth to child in the parking lot of a health care clinic (with no nurse or doctor in sight) which was published on the front page of the news. The photo captured the essence of a defunct health care system where the vast majority of the population is effectively without access to any health care professional. The impact this has on the quality of life, and on the economy, is astounding. In a country where some 25% of adults are HIV positive – and not living to the age of 40, clearly this is an area that has to be addressed before Zambia can feel any success. I remember the day my friends wife went into labour, and we drove from one clinic to another, continuously being turned away because either the power was off, or the water was off, or the doctor was out. Then I learned that the biggest hospital in the country, UTH (University Teaching Hospital) was no different – they didn’t have a water tank!!!! Seriously, the hospital shuts down when the city turns off the water, which is often.

Long Term

Investing in education. There are many days when I think of stopping everything I’m doing with Rent-to-Own and refocusing all my effort towards education in Zambia. There are so many reasons why this is the most important thing for Zambia’s long term development. The first reason is for health awareness. The link between education and health is undeniable. There is a stat that indicates something like every extra year a girl spends in school; the chances of her getting HIV go down by 10%. Then there is the use of family planning – which reduces the average size of a family, which allows parents to invest more in each child. Then there is the skill level of Zambians and their ability to contribute to the economy. The talent pool. The list goes on, and the reason I think I care about this so much is because I believe that a good education should be a human right. It’s true that Zambia has mostly free primary education, but it’s also true that the quality is outright pathetic. Kids are in class a maximum of 60 days a year, and most of those days they’ll receive less than 4 hours of instruction. This is how someone can graduate from high school without knowing what a percentage means, or knowing how to spell simple words.

Please don’t rush out and donate to an organization that is building schools, because much like hospitals, the problem isn’t to have another building, the problem is to have qualified people doing the teaching and providing the health care. I’ve been to schools here where there are over 300 students and just 2 teachers. I’ve seen how the average student receives just 12 hours of instruction a week, and how failure rates for standardized tests can reach 95% in rural areas.

What does the first step look like?

Unfortunately, underlying all these investments, there needs to be a tax base. Luckily for Zambia, there are thousands of tons of copper being produced every week. So what is the problem here? Low royalties. The current government scrapped windfall taxes that earned Zambia some $400 million when the price of copper goes above $6000/ton. Well, prices are now above $8000 and the same tiny taxes are being collected. I could go on and on about this, but instead I’ll put a link to a blog that does this for me - It is common knowledge that the Chinese (and other) mining companies that operate in Zambia, pay bribes to the government to control these taxes – and that the Zambian government accepts these bribes. So if I were to add an “immediate term” change that is required, I’d adjust the royalty scheme so that more money is paid in taxes and less in bribes. I also wonder why the president didn’t immediately come out and condemn the shooting of 10 miners by a Chinese manager! Seriously, what is going on here? Chile’s president comes to save their miners trapped underground, meanwhile not a peep from Zambia’s president when his miners are being shot at. -

With adjustments to the royalties collected, the gov’t could work towards training better teachers, paying wages on time, paying better wages, and starting to privatize the trades institutes, and paying for more research into HIV and Malaria prevention, and focusing on quality infrastructure.

The bottom line here, don’t forget, is to run the country like a business. Have happy citizens, healthy, educated and productive citizens. Somehow I feel that this isn’t the goal of the current government, and somehow I feel like Zambians don’t expect their government to live up to these standards.

Time to put my head back down and just keep doing what I know. Rent-to-Own. More productive SME’s in the rural areas and more jobs.

Tuesday, October 12, 2010

What is Success


Before coming to Zambia, I spent 4 weeks training with 10 other people in Toronto. The training is part of EWB’s program to prepare us for a new culture and to explain why the development sector operates the way it does. Within those 4 weeks, the most useful exercise I found was examining a single word. Accountability was my favourite.

Now I wonder about SUCCESS, what does it mean? What does it mean to me, and for Zambia, and especially for the millions of households across rural Zambia?

Since I arrived in February of 2008, my personal success has been divided into different areas. I knew I wanted to help rural Zambians get ahead. I knew I wanted to help my partner organization which purchases Honey from 6000 farmers every year. And I knew I wanted to contribute to a team of EWB volunteers who are all working to achieve the same goal. So I analysed for over a year, trying to figure out how I could help more. There were hundreds of epiphanies along the way, including one where I realized that everything is a process. From a cooked meal and all that goes into it, to the movie I watch on my laptop. So if everything was a process, then everything required work – and thus jobs. It might be true that one job can create 20 more jobs, but how do you get started when the biggest concern most people have is just on surviving. How do you go from subsistence living to a life where you can specialize in one area, and develop those skills to compete with people in other countries? I thought about this and finally came up with Investment as my conclusion. But how can this happen, and why isn’t it happening already? This opened up a million other questions about the world and the way the economy works. The simplest answer I could come up with for why it wasn’t already happening was that it wasn’t easy, and it wasn’t profitable.

Let’s get back to success. In short, my conclusion was that more investment in rural Zambia would bring success. I later added the idea that equipment was the way to invest since equipment increased efficiency and productivity, thus competitiveness.

But I have to back up, and ask if I went the wrong way somewhere. I have an amazing friend in Regina who has this ability to take everything I have considered success and put a new light on it. To question it from the foundation. She asked me two questions that stumped me at the time. The first, was about the end goal for rural Zambia. She asked if increasing productivity was really the answer. True that it might increase incomes, but in her mind, that was following the same path that Canada and other western countries have taken. Is this the right path? Flying into any major city, I have to admit that the pollution seen in the air makes me second guess everything. Then looking at the morals of our society, I also second guess. Then even worse still, looking at the spiritual health of our society – and our pathetic connection to the food we eat and the land we live on, makes me really doubt that this is the correct path.

The second question she asked was about a year later. I told her that the best part about helping businesses for development, rather than NGO’s, was because every business transaction has two players who are both empowered and have the freedom to choose if they want to transact or not. (whereas most donation type transactions are a one way street, and thus the recipient is actually powerless in the process) Her response was that even business influences the way a population develops, and who am I to direct this?

She had taken my success and ripped it up from its core. I stopped everything and had to question my own actions, the actions I believe in and have dedicated so much time and energy towards.

After some time reflecting, I realized that the question to her first question was simple. I don’t know how else a country can develop. The world has been effectively globalized, and the benefits of being part of this global economy outweigh the costs. Education and health care are the biggest benefits. My belief is that Canada and much of the west are only at stage 5 out of 10 in their development, and that my friend is right, the end goal is not for Zambia to be like Canada – however, Zambia does have to follow a similar path to reach that final goal. Look at the possibilities of where Canada can go in the next 50 years. It’s amazing. I picture people thinking more long term, making smarter purchases based on quality rather than satisfying an imaginary need - and I picture electric cars and cleaner energy sources. I picture stronger communities. But all of this isn’t possible without first becoming productive and wealthy. Maybe Zambia won’t spend as much time at stage 5, but first it has to get through stage 3.

To answer her second question, about whether it is morally right to guide the changes for another culture, whether through business or otherwise, I have to say that I don’t know. I have to say that it’s true that my actions, whether with other Canadians or with Zambians, will affect both myself and the person I’m with. If I’m in Canada, maybe I create a change that is bad for Canadians. The same can happen in Zambia. The important thing to me is that I try my best to always have a holistic perspective so that my actions aren’t selfish, but rather beneficial to everyone involved. What I do know for certain, is that giving something for free is a terrible way to try and help someone. Selling something with a subsidy is much better since at least there is some buy in from the customer (this includes health care and education) but definitely the ultimate goal has to be straight up business.

So my personal success seems to be back on track for now.

Then there is Zambia’s success. What does this mean?

I’ll get to this in my next blog post.