I found this really informative website called Fatal Transactions. It says it’s “a network of different European and African NGO’s and research institutes.” Their website offers a list of publications on the practice of resource extraction and its effects on local communities here. Professor Lungu and Alastair Fraser’s work, which was introduced to me in an excellent seminar can be found on the website as well.
Since 1991, government, heavily in debt, moved towards privatization with pressure from the IMF and World Bank. The consequences have been quite devastating; the report calls what has happened in the Copperbelt a “social crisis”. The authors identify six problems with privatization:
1) Deals were made in unequal circumstances. Because the Zambian government was heavily in debt, they had to make concessions in the “Development Agreement” that significantly benefited private investors at the expense of workers.
2) The Zambian government’s regulatory powers have been undermined; thus, it seems unlikely they will be able to govern the behavior of foreign investors to ensure that workers receive proper social services.
3) Nearly half of the workforce is casual labor, which means while this scheme is profitable for mining companies, temporary workers are unjustly deprived of health care, pension and other social services.
4) Pension funds continue to dwindle. There’s a tragic story on page 34 about a mineworker who was promised pension for his labor since 1981 and was cheated out of the money after he was retrenched as a worker for a privatized mine. At the time of the report, he was living hand to mouth.
5) Something I had not thought about and this article points out is the loss of businesses, suppliers and manufacturers tied to the mines. The report argues for industrial policy concentrated on building more copper smelters and manufacturing bases so that local Zambians will benefit from these investments. However, the government is held in a bind due to restrictions by the IMF and World Bank.
6) Companies failing to provide social services. Zambia Consolidated Copper Mining (ZCCM) used to provide health care, housing, HIV-AIDS and malaria prevention programs. The article states: “according to free-market ideology, and the Development Agreements, these goods and services should now be provided either by the local authorities or by market forces.” Free market ideology complete misses the point. How will locals provide social services when they cannot afford them? Certainly, some workers were retrenched after privatization but many were not. Those who were retrenched have received meager pay and no social services, since free market ideology also dictates that hiring casual labor is cheaper for the companies. Thus, stating that it’s up to the free market to provide social services is really an evasion of the problem at best and most definitely, a rejection of responsibilities incumbent upon the mining companies to provide for the well-being of workers and local community members.
Karen Transberg Hansen has written about the detrimental effects of neo-liberal development in Lusaka, Zambia. In her article, she observes that since the housing market was privatized, most people are forced to live in informal housing with inadequate electricity, water or transportation. From 1992 to 1999, formal employment declined from 17 to 11 percent. IMF policies such as the removal of food subsidies have engendered adverse effects. Some of the adverse effects are most evident in the expansion of the informal economy and the black market.