Mark Ashurst Africa Business Editor

In Africa, many people see privatisation as a threat, but giving workers a stake in their companies is one way of making capitalism popular.

In Zambia, ZAL Elevators, formerly Otis Zambia, is the country's only successful management buy-out.

As Zambians, we had an arrangement with the government where we could defer payments, but the danger there was that if you didn't pay and continued to make losses the government would snatch it away and sell it to someone else

Smart Phiri XZAL Elevators

It is unusual to find a working elevator in Lusaka, capital of Zambia.

Still rarer in this part of central Africa, the company that built and maintains these elevators, ZAL Elevators is controlled by the people who work there.

Otis was sold to its staff in 1996 by the Zambia Privatisation Agency when managing director Smart Phiri led the country's first management buy-out.

"Before privatisation, we had too many employees, I think 67, now we have 24. We used to employ cousins, uncles and relatives. Whether the company was making a profit or not was irrelevant." said Mr Phiri.

Parental guidance

Workers at the company were helped by Otis South Africa in Johannesburg, which put up an interest-free loan of $85,000.

"As Zambians, we had an arrangement with the government where we could defer payments, but the danger there was that if you didn't pay and continued to make losses the government would snatch it away and sell it to someone else," he said.

The new company was renamed ZAL Elevators, with its shares split between Otis America and the Zambians.

"We have three groups, Otis is the 'A' shareholder with 49%, management and some senior advisors own 26% and workers own 25%."

Uplifting outlook

Trading conditions were slow then, and remain slow now.

Mining in the Copperbelt, the backbone of Zambia's economy, is in long term decline.

The spate of new building work that might have been triggered by a revival in the copper industry has not materialised.

Twenty years ago, the Taj Pamodzi hotel was Zambia's finest, but the decor is past its prime and the furnishings are dated.

For Zal Elevators though, the hotel is a faithful client.

In the absence of new contracts, the company has prospered from maintaining and upgrading old lifts.

"If you look at the figures in 1995/6 we made a loss, but from 1996 to now the company is doing well," said Mr Phiri.

"Under the previous arrangement the attitude was that 'This is the company's', but now it's 'It is mine', so it has changed."

Share ownership

With the company in robust financial health and shareholders enjoying an annual dividend, Zal is anxious to discourage staff from selling their shares.

"The government idea of selling this company was that Zambians must own shares."

"We discourage them by telling them if you are going to sell your shares, they're only worth the dividend of that financial year."

Share ownership is still a novel concept in Zambia and management buy-outs were almost unheard of.

For many employees at Zal, receiving a stake in the company seemed a far-fetched idea.

"Basically, it was illusionary, it was a question of how it was going to work out. That illusion has gone," said Robert Kiseka who represents "C" group shareholders, the workers at Zal Elevators.