Zambian-American Relations

U.S. Ambassador Eric Schultz speaking to University of Zambia students on March 18, 2015.
U.S. Ambassador Eric Schultz speaking to University of Zambia students on March 18, 2015.

Speech at the University of Zambia, March 18, 2015

Thank you very much for the invitation to come and talk to you today – and for coming to listen to me.

People sometimes ask what an Ambassador does, indeed what a diplomat does. Believe me it’s not all receptions and dinner parties. And thank goodness – that would be pretty dull.

Our job is to represent our countries, in my case the United States, and to advance its interests and values.

One of the ways we do this is simply by talking to people; all people.

Some of the Embassy’s Facebook fans — of whom I’d guess a few are here today — ask why I meet with certain people; sometimes controversial people. The answer is that I believe in dialogue; in talking with everyone. That’s the best way for me to understand Zambia better.

And that is why I’m here today, by the way, because there is no one more important for me to talk to than Zambia’s future elites — the students of this university.

So what are America’s interests in Zambia? And what values are we trying to promote?

I’ve been in Zambia for six months now, long enough to confirm some things I had learned while waiting to come here; and long enough to learn some new things about your country.

One of the things that I’ve learned is the extent to which Zambians, especially the young, want their country to develop economically. I think Zambians can feel the economic changes that are coming to Africa, especially the growth of a middle class, and they want to be a part of those changes. They want what every middle class everywhere wants: a good job, a nice home, a comfortable life, and a good retirement. And most of all they want enough money to raise and educate their children so that they in turn can aspire to greater things.

One of the things that I’ve had confirmed is that Zambians don’t want their relations with other countries to be defined exclusively by assistance; they want it to be defined by investment as well. They want foreign companies to help drive economic development and they don’t mind if those foreign companies make money in the process so long as the Zambian people also derive benefits from those investors: jobs, taxes, maybe most of all new skills.

I have said on many occasions since my arrival that my number one priority is to bring American business — trade and investment — to Zambia. I know American companies can do well here; there are several examples already.

And they can do well while also doing good — helping develop Zambia.

American companies have a long-tradition of hiring locally, including local managers; of using local contractors and materials; and of training their employees.

I believe strongly that Africa’s growth will continue and that it will become the most important emerging market in the global economy in the coming decades. And I want to see more American businesses on the ground floor of that growth.

And I believe strongly that Zambia is well-positioned, maybe uniquely well-positioned, to emerge as one of Africa’s fastest growing economies.

I believe that because you have everything needed for economic success. You have abundant natural resources, not just minerals but fertile soil and plenty of water. You have human capital: for instance, no country has done better on a per capita basis than Zambia in the competition for the Mandela Washington Fellowship. And you have stability and peace, founded on maturing democratic practices.

What would such a Zambia look like — an economically successful Zambia?

It would be a breadbasket, with a thriving commercial agricultural sector exporting foodstuffs throughout the world. It would have well-run extractive industries, with vibrant, value-adding, downstream companies generating well paid jobs. It would be an electricity exporter, with hydro dams generating large power surpluses. And it would have a world-class tourism industry, anchored by Victoria Falls, one of the world’s natural wonders, and with some of the best safaris and game-viewing in Africa, all of which would employ hundreds of thousands of Zambians to service millions of foreign tourists.

So what must Zambia do to realize this vision and to ensure its place as one of the brightest of Africa’s emerging economies?

Democratic Values:

Zambia has a rich democratic heritage. Foreign investors, indeed all investors, are attracted to stability. But true stability, the kind that endures for decades, is always based on democratic values; on the will of the people.

There is an argument of sorts in the world today about how best to govern a country and how best to develop one economically. There are countries that will say they have found a better way – managed democracy or sovereign democracy or one-party democracy – all of which are simply euphemisms for dictatorships.

Zambia and its multiparty democracy are on the right side of this argument.

An authoritarian government may provide a brief period of seeming stability, but it is an illusion. When an authoritarian leader dies, or they begin to age and fall into ill health, chaos frequently ensues. Worse, political leaders tend to have shelf-lives. They may have a few good ideas but after a while they are merely clinging to power, unable to move the country in the right direction. Finally, authoritarian governments are usually corrupt governments where the absence of accountability leads to rent-seeking by the politically-connected.

Democracy is the antidote to all of these evils: as Winston Churchill once famously said: “democracy is the worst form of government; except when compared to all other forms.”

And it is in a country like Zambia where the truth of Churchill’s words is revealed. For half its independent life the country was ruled by one party – and the economy stagnated. It is only since the advent of multi-party democracy that Zambia’s economy has begun to grow and the country’s economic potential has become clear.

President Obama said several years ago something you all know to be true: that Africa needs great institutions; not great men. Democracy is built on great institutions, including especially a free media and an active civil society.

It is also built on citizen involvement. Citizens must hold their governments accountable through active involvement in the country’s political life, through civic activism, thereby raising the country’s level of political discourse. But they must also hold its officials accountable through the most basic act of all in a democracy – by voting.

It is a source of concern to all who care about Zambia’s future that the turnout for the presidential by-election was so low. And it is of particular concern that it was so low among Zambia’s young people.

The single biggest determinant in how a country grows and prospers is governance. And there are no good governments where the people are uninvolved or disaffected.

Economic Reform:

Zambia also has a solid record of economic growth over the last ten years. Part of that growth was the result of a global boom in commodities; high copper prices helped drive Zambia’s economic growth.

But that growth was also the result of policy changes that successive Zambian governments have undertaken, in particular a commitment to the private-sector. The privatization of Zambia’s mines 15 years ago was a seminal moment. It brought large amounts of foreign investment into the mining sector – which created jobs both directly, in the sector, and indirectly in related industries.

There is a saying in economic circles that compound interest is the hidden miracle of wealth creation. A corollary “hidden miracle” is the multiplier effect. Strong performance in one sector creates positive knock on effects, especially employment, in other – related –sectors. And good jobs are what Zambia needs most with so much of its population still living in poverty despite years of economic growth.

However, government spending largely does not create the same multiplier effect as private investment. Instead it tends to crowd out private sector investment by monopolizing capital and driving up interest rates. High interest rates, in turn, are one of the biggest obstacles to maintaining and accelerating Zambia’s growth.

And commodity prices started to fall at the same time that government spending began to increase.

The result is an increasingly difficult fiscal situation.

The fuel shortages and the mining tax impasse and the depreciating currency are all manifestations of this situation.

If Zambia is to achieve its enormous economic potential, the Zambian government needs to reduce government spending, thereby reducing domestic interest rates, and allowing the private sector to drive growth.

Zambia also needs to recommit to private-sector driven growth and to reduce the lingering vestiges of state control of the economy. Zambia has fallen in the World Bank’s 2014 Ease of Doing Business rankings — and stands well below its neighbors, Botswana, Namibia and South Africa. A better business environment, for foreigners and Zambians alike, will lead to greater growth and more jobs.

And Zambia must also commit to more open and transparent policy making. Investors, foreign and domestic, need predictability in economic-decision making in order to make long-term decisions about where to put their money. In this age of globalization, capital flows across borders virtually at will. It will seek high rates of return but it will also seek safe and secure investment climates.

This includes American businesses. As I said earlier, attracting them to Zambia is my highest priority. They are already active in many sectors, especially agriculture, but they can be still more involved. American companies bring some unique attributes to the table. To start with, they bring the most advanced technology in the world. When

American companies bring information and communication technology, agricultural technology, architectural know-how, or management practices to Zambia, they are bringing the best globally.

And, as I said before, American companies employ and train locals. American companies do not rely on American labor when they invest and partner abroad. Our companies employ locally, train locally, and create opportunities for local employees, transferring skills to build a sustainable, local workforce.

American businesses also respect local law and insist on good governance. When the Zambian government or private sector does a deal with an American company, they can be confident it will be an honest deal that will not later be at risk of being challenged or reversed for corruption.

And American companies are increasingly “green.” They care about their image globally and will help Zambia to conserve its natural heritage, especially its forests and wildlife.

Increased American participation in Zambia’s economy will bring more investment, more employment, better business practices and better technology to Zambia. And I’m convinced that they will come when they realize this country’s economic promise.

Health and Education:

Yet another aspect of attracting investors, be they American, Zambian, or from some other country, is health and education.

Foreign companies are not looking for “cheap” labor.

This is something I think is widely misunderstood. Rational investors want inexpensive labor, yes, but they want labor that is well-educated, healthy, and productive – that they can train and trust to work hard and to be honest.

As I said before, sixty percent of Zambians still live in poverty. In order to raise them up, they must first and foremost be well educated. This has to be one of the Zambian Government’s principal goals if it is to achieve a bright economic future. The countries that have emerged as economic success stories in recent decades have devoted time, attention and money to education.

Another aspect of building a successful economy that is not well appreciated is health. Companies want a healthy work force. No company wants to take on the expense of caring for a sick work force, which is why it is so essential that Zambia take the next step forward in the battle against HIV/AIDS and be among the first African nations with an AIDS-free generation.

Since 1953, the United States has provided more than $3.5 billion to Zambia’s development much of it focused on education and health. Support to Zambia’s health sector has been more than $2 billion in just the last ten years, the bulk focused on Zambia’s national HIV response, through the President’s Emergency Plan for AIDS Relief, known as PEPFAR.

I hope U.S. generosity in this regard will continue for years to come but at the same time Zambia needs to begin preparing for a day when it might not; when Zambia will have to assume greater responsibility for its people’s health.

And we are helping as well to prepare for that day by increasing the capacity of Zambia’s health system.

Conclusion:

In conclusion, let me just say that America wants for Zambia what Zambia wants for itself: peace, democracy, and prosperity.

Zambia can be a huge success story, politically and economically, and the United States wants to help it achieve this through private investment as well as through development assistance.

And a successful Zambia can help to bring stability to Africa, playing an ever greater role on the continent.

I helped preside over a ceremony yesterday to send off to the Central African Republic a battalion of Zambian peacekeepers, trained and equipped by the United States.

This is Zambia as an African leader, a country proud of its commitment to democracy and a country growing economically and set to grow even more with the right policies.

Zambia’s young people – its future leaders — are known for their entrepreneurial spirit.

But more is needed.

I urge you, the future elite of this country, to be involved both politically and economically and to push Zambia toward its bright future, including a greater leadership role in Africa.

And as that bright future unfolds, I predict that our already close and strong relations will become closer and stronger.

I predict that the friendship between Zambia and the United States will deepen and that our partnership will make Africa, indeed the world, a better place.