Zambia: Escalating economic and political crisis (1975-1991)

Updated January 2006

Economically the situation of the country had deteriorated since independence. Government spending had increased rapidly, private foreign investment and economic growth declined while inflation accelerated. The economy itself became increasingly rigid, dominated as it was by state controlled firms, which set prices throughout the economy and crowded out private borrowing, monopolizing what little credit was available. Political considerations, nepotism and patronage increasingly underpinned decision making in the public sector resulting in the employment of unqualified people in key positions, uneconomic resource allocations and growing inefficiencies of every kind. Investments were capital intensive and heavily reliant on foreign imports, placing continual pressure on foreign exchange reserves and requiring expensive foreign experts to implement and maintain them (Mwanawina & Mulungushi 2002).

Shortages of foreign exchange made the import of key inputs difficult and the private sector and formal employment began to shrink. Agriculture was neglected and the little diversification that took place was focused around the mining industry, so that Zambia's overwhelming dependence on copper was in no way reduced. Despite ideological commitments to self-reliance, foreign donor aid and expertise remained critical to the functioning of the economy. To this must be added the economic costs of maintaining sanctions against the renegade settler state of Rhodesia (Mwanawina & Mulungushi 2002, Columbia Encyclopedia 2005).

The economy was thus already in poor shape when the oil price shock of the 1973 took place. The price of oil rose five-fold, sending the world economy into recession and raising the cost of capital and consumption goods. Between 1974 and 1979 commodity prices, including copper, went into decline as a result of world-wide recession and Zambia's balance of payments deteriorated sharply. The government, supposing that the situation was temporary, attempted to sustain and control imports of capital and consumer goods through borrowing, subsidies, rationing of foreign exchange (through preferential allocation to the public sector) and price fixing. Thus instead of adjusting to the situation through austerity and economic diversification the economy became even more locked into state regulation, intervention and resource allocation, low economic growth rates, spiraling public debt and increasing difficulties in servicing debt (Thurlow & Wobst 2004, Andreasson 2001).

Matters deteriorated further when Angola became independent in 1975 and the civil war there escalated, resulting in the Benguela railway being closed and a flood of refugees into Zambia. By 1976 the spiraling food prices, shortages of consumer goods and rising unemployment led to widespread social unrest and Kaunda responded by declaring a state of emergency (Mtembu-Salter 2002, US State Department 2005). In 1978 the government, under pressure from creditors and international financial institutions, implemented a structural adjustments programme, but this was pursued half-heartedly and was overtaken by the second oil price shock of 1979 when oil prices increased more than three-fold. However rail links with Rhodesia were restored in 1978 and Rhodesian raids into Zambia halted in December 1979 as Zimbabwe moved towards independence in 1980 (Thurlow & Wobst 2004).

Increasingly economic dissatisfaction as a result of the crisis became political dissatisfaction with the government's handling of it. Shortages, cuts in food subsidies and unemployment induced misery while failing to resolve the structural problems in the economy. Social unrest continued with an alleged coup attempt in 1980, the suspension from UNIP of leading trade unionists and a strikes and riots in 1981. Further strikes for higher wages in the public sector in 1985 led to the banning of strikes in essential services, while periodic student unrest and wage strikes occurred throughout the 1980s. Renewed adjustment measures under IMF pressure in 1985 such as the abolition of maize subsidies provoked widespread food riots and subsidies were restored in 1986, while attempts to raise fuel prices in 1987 led to protests and the rises were withdrawn. In 1987 Kaunda abandoned the IMF dictated programmes for home-grown economic policies, but this alienated international finance, failed to address growing economic misery and did not transform the economy in the ways required (Mtembu-Salter 2002, Thurlow & Wobst 2004, Columbia Encyclopedia 2005).

In 1989 and 1990 there were further rounds of riots, strikes and demonstrations alongside further increases in the prices of food and other essential commodities by the state (Mtembu-Salter 2002, Lambert Undated Holmes 2004). Opposition which had been sporadic and mainly spontaneous now took on an increasingly organized character as the Zambia Congress of Trade Unions (ZCTU), churches, and student groups took the leadership. Demands for a return to multi-party democracy were increasingly heard from December 1989 onwards and the Movement for Multiparty Democracy (MMD) emerged as an umbrella body for opposition groups. After initial resistance Kaunda and UNIP accepted the principle of multi-party democracy and appropriate constitutional amendments were made in December 1990, while elections were set for October 1991 (Mtembu-Salter 2002, Lambert Undated, Columbia Encyclopedia 2005).

In the run up to the elections the MMD and several other groups registered as political parties. Several prominent members of UNIP defected to the MMD which further received the endorsement of the ZCTU (Mtembu-Salter 2002, Lodge et al 2002). Despite great difficulties such as UNIP's use of state resources and media for campaigning, denial of meeting permits to the opposition, a defective voters' roll and conflicts between constituencies delimited and the voters roll, the MMD won an overwhelming victory at the polls. Its candidate Frederick Chiluba won 81% of the vote and the party took 125 of 150 seats in parliament and UNIP the remaining 25 (Lodge et al 2002, Lambert Undated).

References

ANDREASSON, S 2001 "Divergent Paths of Development: The Modern World-System and Democratization in South Africa and Zambia", Journal of World-Systems Research, 7(2), fall, 175-223, http://jwsr.ucr.edu/archive/vol7/number2/pdf/jwsr-v7n2-andreasson.pdf [PDF document, opens new window] (accessed 9 Mar 2010).

COLUMBIA ENCYCLOPEDIA 2005, "Zambia", Sixth Edition, [www] http://www.encyclopedia.com/doc/1E1-Zambia.html [opens new window] (accessed 9 Mar 2010).

LAMBERT, T UNDATED "A Short History of Zambia", IN Local Histories, [www] http://www.localhistories.org/zambia.html [opens new window] (accessed 9 Mar 2010).

LODGE, T, KADIMA, D & POTTIE, D (eds) 2002 A Compendium of Elections in Southern Africa, EISA, 373-403.

MWANAWINA, I & MULUNGUSHI, J 2002 "Explaining African Economic Growth Performance: The Case Study for Zambia" (DRAFT), Global Development Network, [www] http://www.gdnet.org/pdf/draft_country_studies/Zambia-Mwanawina-RIR.pdf [PDF document, opens new window] (accessed 9 Mar 2010).

THURLOW, J & WOBST, P 2004 "The Road to Pro-Poor Growth in Zambia", International Food Policy Research Institute, [www] http://siteresources.worldbank.org/INTPGI/Resources/342674-1115051237044/oppgzambia11.pdf [PDF document, opens new window] (accessed 9 Mar 2010).

US STATE DEPARTMENT 2005 "Background Note: Zambia" [www] http://www.state.gov/r/pa/ei/bgn/2359.htm [opens new window] (accessed 9 Mar 2010).