Zambia will remain Africa’s best place to do business – Allan Thomson

DRIVING THE COUNTRY FORWARD- President Sata goes behind the wheel of an earth-moving equipment during the launch of the 45.5km Chingola-Kitwe dual carriage way in Kitwe yesterday. – Picture by EDDIE MWANALEZA
DRIVING THE COUNTRY FORWARD- President Sata goes behind the wheel of an earth-moving equipment during the launch of the 45.5km Chingola-Kitwe dual carriage way in Kitwe yesterday. – Picture by EDDIE MWANALEZA

Three years ago, Allan Thomson made “an incredibly stupid decision” that led to his resignation as a director at the JSE. In his efforts to stop abusive practices by sharp traders, this highly principled, disciplined futures market expert got caught up in the chase and inadvertently broke the JSE’s strict rules on director’s trading. But Thomson has bounced back with his Dreadnought Capital making huge strides into the African continent. Including in Zambia, where it has been instrumental in creating the country’s rapidly expanding derivatives market. We invited Thomson into the CNBC Africa Power Lunch studio today for insight into the way the late President Michael Sata has been reforming Zambia’s financial sector – and asked whether his passing will affect the attraction of this veritable magnet for South African businesses. – AH


ALEC HOGG: In the studio with us to talk a little more about the Zambian financial sector, is Allan Thomson. You’ve been doing quite a lot of business in Zambia.

ALLAN THOMSON: Yes, we have been and, first of all let me please express my condolences to Zambia and to the Zambian people, on the death of President Sata. Alec, to answer your question, yes, we’ve been doing a lot of work there. I’m involved in setting up the derogative exchange in Zambia, which is a new concept, obviously to the African Continent,  and to Zambia in particular. I must say it is one of the nicer places to do business, it really is. The people are very open to new business and, while things are a little bit slower than I would like, I think that perhaps anybody venturing on a new venture like that, it does become a bit slower. Government Officials and Government Organisations are very keen to do the right thing. They are very keen to grow their financial sector and they are keen to learn and implement them.

ALEC HOGG: When you say, “Government Officials,” and we heard from Noel about the reforms that the late President had introduced, in the financial services sector. Is it likely that these will continue?

ALLAN THOMSON: I can’t see that they are going to change. My experience is a limited one and my interaction with Government Officials is with the Regulator and with the Central Bank, and these organisations are very forward thinking. They know where they want to go. They know that they need to do the right thing and I’ve been just really, blown away with how efficient they really are, and the urgency to do something and to do the right thing.

ALEC HOGG: Urgency relative to South Africa?

ALLAN THOMSON: Look, it’s always relative and we’re involved, our group is involved in a number of different African countries at the moment, and dealing with the Zambian public sector are by far the easiest bar none.

GUGULETHU MFUPHI: Clearly, there are lessons we should learn from them.

ALLAN THOMSON: Yes, I think so. I can only speak from limited experience, in the last two years, but I’ve always come back saying, I’ve never had a bad meeting in Zambia ever. Implementation takes a little bit longer but the willingness to do, to learn, to understand what is happening in the rest of the world, and to apply it to Zambia is almost universal across…

ALEC HOGG: Why’s that?

ALLAN THOMSON: I don’t know.

ALEC HOGG: Who are the people? Where do the people come from? Have they come through the system?


ALEC HOGG: Are they the best in the world that’s been, brought from abroad?

ALLAN THOMSON: No, I think there was a large emphasis on education, Zambia has a very, well-educated populous, and a lot of people were educated overseas (through the Government), Harvard, Oxford, etcetera and there were a lot of people coming back to Zambia and are wanting to make a difference. I think when you go into some Senior Government Officials the people there are usually foreign educated, they know what’s happening in the rest of the world, they understand what needs to happen in Zambia and they are very keen to do the right thing. I think, sometimes we get a little bit clichéd about thinking in Africa that Africa has its own way of doing things and it only wants to go that way. That certainly is not the case in Zambia.

ALEC HOGG: Well, it’s an extraordinary situation, given that this is the African Continent that they now have a white President. As a white man yourself, have you felt the different racial engagement perhaps in Zambia or is this just an outlying…?

ALLAN THOMSON: Alec, you and I have had this conversation before and I say it quite openly, I have never experienced any form of racism in Zambia whatsoever. It is not that it might not exist but it is just not a factor in the country. I don’t think they have the history that other African countries have had, so it is not really even on the agenda. It is just not an agenda. It is not that there’s a conscious effort to move away from any form of racism. It is just not on the agenda.

GUGULETHU MFUPHI: Surely, from an economic perspective, this provides them with the best setting to only go upwards from here.

ALLAN THOMSON: Yes, I remain very bullish on Zambia. I don’t want to paint it overly. It is not sunshine and roses. Doing business in Africa is not easy. If it were, there would be far more economic activity. There would be 100’s of exchanges. It is not easy but Zambia seems to have the bedrock and the base correct. They have the willingness. They want to do the right things. They are not always sure. I think they’ve been given – in my opinion and certainly in our industry, some pretty dubious advice in the past and they are very cautious as to how they want to implement it. It doesn’t always happen as quickly as you want, but I think given the dubious advice they’ve been given in the past, one can understand that. I think the willingness is  the difference. There isn’t an arrogance of ‘we know better’ and ‘we’re going to do this’ etcetera, ‘and this is how we are going to run it’.

There’s a willingness to do the right thing. ‘We’ll do it cautiously and we’ll do it slowly, but we’ll do the right thing and the right thing for the country’.

ALEC HOGG: Are you finding other South African companies…


ALEC HOGG: Taking an interest in the way that you are.

ALLAN THOMSON: Yes, without a doubt. I think the Zambian economy is a small one, off a very small base, but I think the propensity to grow and certainly, the death of Sata is tragic but it’s a stable economy and it’s a stable democracy. They’re not going to implode with the death of a politician. Things will continue. They will elect a new President. There won’t be fights and there won’t be riots, (this is my prediction). I certainly can’t see it happening and the economy will continue to grow, albeit off a very small base.

ALEC HOGG: What about that issue that Ed Cropley raised about when one of the mining companies wanted to lay off 1.500 workers that the late President got personally engaged and he wasn’t scared of using dirty tricks.

ALLAN THOMSON: Yes, look, I haven’t had any personal experience in that – and I have heard a couple. There were some companies, I think that were a little bit upset and the view was, perhaps that the President hadn’t necessarily, or wasn’t following what was set by previous Presidents, and the statements. Perhaps there are some companies that thought, ‘look this was a little bit off side and not quite what was promised’. I haven’t had any experience of that.

ALEC HOGG: But that would have been an exception rather than the rule?

ALLAN THOMSON: I would think so. I would think that if everything was absolutely hunky-dory and sunshine and roses, everybody would be in there. It’s not. There are certain barriers. There things happen slowly but it is a willingness to do the right thing and I think that’s the difference, in my mind. To answer your question, are there South Africans there? I stay in a little hotel which is full all the time. Who is it filled with…with South African businessmen.

GUGULETHU MFUPHI: Clearly, something is happening in that economy and maybe you can give us an idea of which sectors are picking up because often, copper mining has been a stronghold in the Zambian economy.

ALLAN THOMSON: Yes, I think obviously copper is there but I think farming…I was a guest at the Zambian National Farmers’ Union last week, where unfortunately I missed an opportunity to meet Guy Scott, (I had a plane to catch) but I had an appointment with the ‘now’ President. Once again, I was impressed. They have their issues. There’s no doubt there’s an infrastructural issue but the farming community, I think has got massive growth potential. I think if I remember correctly, it contributes 19 percent to GDP, with huge potential to grow. They have the land. They have the water. They are looking to do all the right things, to grow that industry. There are problems. There are different views but the view is ‘we can grow so much more but what is it that we need to do’? Agriculture, to answer your question, I think financial services and I think the labour force is a lot more stable.

ALEC HOGG: Labour Legislation?

ALLAN THOMSON:  I’m not an expert on Labour Legislation but I certainly don’t see the strikes and all of the labour ……..

ALEC HOGG: Unemployment?

ALLAN THOMSON: Once again, I’m unqualified to speak on unemployment.

ALEC HOGG: But do you see people at the street with cardboards saying…?

ALLAN THOMSON: No, you don’t see it but it is an African country where, with the past there isn’t the same GDP per capita as it is in the West and in South Africa, so I wouldn’t say that it’s a wealthy country but people are busy. You don’t see beggars, certainly not in Lusaka. There are street kids but I think it is coming off a low base and to summarise, I think it is a stable economy. It’s a stable democracy. There are a lot of ex-Zambians coming back, wanting to do the right thing and to grow the economy and are aware of it. I think ‘watch that space’ in ten to 20 years.



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