Zambia: Presidency of Chiluba (1991-2001)

Updated January 2006

The new President of the new multi-party democracy, Fredrick Chiluba, was a trade unionist who had been detained in 1981. The MMD which had sponsored his candidacy, despite its massive electoral mandate, was little more than a coalition of a range of different opposition groups bound together by the common agenda of establishing multi-party democracy in Zambia and removing Kaunda and UNIP from government. It had been brought to power by a massive economic crisis that had emerged in the mid-seventies and which the previous government had failed to resolve satisfactorily. It had been elected on a platform of transparent, accountable and democratic governance and economic reform (Holmes 2004, Thurlow & Wobst 2004). To implement its economic plank, in the words of Holms (2004), "It abolished foreign exchange controls, passed new investment laws, set up a stock exchange, and embarked on a privatisation programme which at one point was dubbed by the World Bank as the best on the continent".

A key part of the reform programme was to reduce the massive state budget deficits which dragged Zambia ever deeper into the cycle of increasing debt and rising costs of debt servicing. To this end controlling bodies such as marketing boards were abolished and parastatal corporations either closed or rationalized and restructured in preparation for privatization. Food subsidies were abolished and prices of food and key commodities that had been government administrated were left to the market. This led on the one hand to higher prices for key goods, especially of food, and to greater unemployment on the other, thus deepening rather than reducing general misery. To discipline government spending current expenditure would only be made from collected revenues. Measures to increase revenue did not succeed and the government did not tackle the problem of the bloated civil service, but rather reduced social and investment spending leading to a steady decline in health care and education through the 90's (Hansungule et al 1998, Mwanawina & Mulungushi 2002, Thurlow & Wobst 2004).

Further measures to increase international competitiveness were successfully implemented by 1996, through eliminating quotas and reducing tariffs on imports, while the currency was permitted to depreciate thus discouraging imports and encouraging exports. This led to the failure of inflexible state enterprises and a loss of manufacturing sector jobs. Inflation, which had reached an average of 127% from 1090-1993 was reduced to 25% by 1995, a level it maintained until the millennium (Thurlow & Wobst 2004). Begun in 1994, privatisation proceeded rapidly, for according to Thurlow & Wobst (2004) "By 1997 over 80 percent of state enterprises had either been dissolved or sold to the private sector". The more difficult problem of privatizing the mines (which were losing some $1 million a day) was only begun after the 1996 election, but the process was hampered by fluctuations in the price of copper and mired in political controversy and only completed in March 2000 (Mtembu-Salter 2002, Thurlow & Wobst 2004).

References

HANSUNGULE, M, FEENEY, P & PALMER, R 1998 "Report on Land Tenure Insecurity on the Zambian Copper Belt", Oxfam GB in Zambia, [www] http://www.oxfam.co.uk/what_we_do/issues/livelihoods/landrights/downloads/full1998_ landtenureinsecurityreport.pdf [PDF document, opens new window] (accessed 26 Oct 2007).

HOLMES, T 2004 "The History of Zambia" IN The Zambian, [www] http://www.thezambian.com/history/ [opens new window] (accessed 26 Oct 2007).

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 26 Oct 2007).

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 26 Oct 2007).