Zambia: Land and people

Extracted from: Illona Tip, James Gadin and Maureen Moloi 2009 "Chapter 14: Zambia" IN Denis Kadima and Susan Booysen (eds) Compendium of Elections in Southern Africa 1989-2009: 20 Years of Multiparty Democracy, EISA, Johannesburg,.

Zambia is a land-locked country lying between latitudes 8 and 18 degrees and longitudes 22 and 34 degrees. It has an area of 752,620 square kilometres with much of the land being of plateau formation. Zambia shares boundaries with eight countries: Angola, Botswana, Democratic Republic of Congo, Malawi, Mozambique, Namibia, Tanzania and Zimbabwe. (See see Fact File for country, economy and population details).

As a land-locked country, an efficient means of communications is essential. A reliable network of roads and railways is required to keep goods flowing to and from seaports. Zambia has a total of 91 440 km of roads (paved 20 117 km) and a total of 2164 km narrow gauge railways that includes 891 km of the Tanzania-Zambia Railway Authority (Tazara).

Telephone service is provided by the state-owned Zambia Telecommunications Corporation (Zamtel) and although the facilities are aging they are still among the best in Sub-Saharan Africa. However, the telecommunications sector has been liberalised and private service providers have been established. Internet service is widely available in the country.

Public radio and television broadcasting services are dominated by the state-owned Zambia National Broadcasting Services (ZNBS). The Zambia National Broadcasting Corporation (ZNBC) remains the country's sole television broadcaster and despite the change in government from Unip to MMD, is still perceived as a state broadcaster. There are no private television stations. ZNBC runs three government-orientated radio stations. There are two church-owned stations and the privately owned Radio Choice.

Zambia's literacy level is one of the highest in Sub-Saharan Africa, with a 68 per cent literacy rate: 76.6 per cent among men and 58.3 per cent among women (UNDP 2007/2008).

Zambian poverty levels are relatively high despite a drop from 71 per cent in rural areas in 1998 to 53 per cent in 2004. However, Zambia still has a 68 per cent extreme poverty rate, according to the Zambia Human Rights Development Report (UNDP) (2007), with 63.8 per cent of the population living on less than US$1 a day. The report notes that overall unemployment rates dropped from 12 per cent in 1998 to nine per cent in 2004 and urban unemployment rates declined from 27 per cent in 1998 to 21 per cent in 2004. The report shows an unequal distribution of income, with Zambia's richest 10 per cent having a shared income of 41.0 per cent and richest 20 per cent having a shared income of 56.6 per cent. This contrasts with the poorest 20 per cent of the population, which has a shared income of 56.6 per cent. Social indicators indicate a life expectancy at birth of about 40.9 years and maternal mortality of 830 per 10 000 pregnancies.

At the time of independence Zambia inherited an economy dominated by copper mining. The exporting of copper accounted for about 95 per cent of export earnings in the first decade of independence and the mining industry contributed significantly to government revenue through mineral royalties and income tax. The development of the copper mines also set in motion the process of urbanisation of the African population, the creation of a modern labour force, and formation of the trade union movement. The Copperbelt, the area where mining was concentrated, became a political hotbed during the struggle for independence, as politically conscious African miners came to play a pivotal role in agitating for independence. The population of the Copperbelt has remained a major political and economic force.

In contrast to copper mining, the manufacturing sector was underdeveloped, with most of manufactured goods imported from Zimbabwe and South Africa, with whom the country had historical and economic ties. Other major sources of imports were Britain, Germany, and Japan. Copper has been produced primarily for export, mainly to Japan, Europe and America.

A policy of import substitution industrialisation was pursued and tariff barriers were put in place to protect local industries. However, the development of heavy industry lagged behind. In general, the mines and manufacturing industries were highly import-dependent. The mines required expensive imported spares and equipment for efficient operation and manufacturing industries relied mainly on imported raw materials and/or machinery. Commercial agriculture required imports of large quantities of fertilisers, in addition to farm machinery.

In agriculture, co-operative societies played a significant role of distributing agricultural inputs and marketing produce throughout the country. The state also extended credit to farmers through the cooperatives. Cooperatives were not always efficiently run and the recovery of loans that had been extended to farmers was poor. Inevitably, they became loss-making ventures.

The drop in copper prices in the mid-1970s in the wake of the world recession, triggered by the oil crisis of 1973, seriously jolted Zambia's economy. A combination of falling production and falling prices of copper, a three-fold increase in the price of imported oil and the economic cost of supporting liberation movements in neighbouring countries seriously suffocated the economy. Against this background the country started borrowing from the International Monetary Fund (IMF) and the World Bank in 1973. Unable to keep up with repayments and caught between the conflicting demands of the people and the lending institutions, the government decided in May 1987 to abandon the IMF and World Bank programmes and to stop the process of economic liberalisation started in 1985 (UNDP 2007/2008).

The government adopted the New Economic Recovery Programme in its place, resorting to administrative control of the exchange rate and allocation of foreign exchange. External debt repayments were limited to 10 per cent of export earnings. In response most bilateral donors cut off aid, linking its resumption to the country reaching agreement with the IMF and the World Bank. The result was a severe shortage of foreign exchange, precipitating shortages of imports for industries as well as consumer goods, and accumulation of arrears.

The government cleared World Bank arrears in March 1991 and reached agreement for a Rights Accumulation Programme (RAP) in April. However, the RAP was short-lived as it was suspended within a few months. In September the World Bank also suspended lending over the government's failure to adhere to the agreed timetable for phasing out subsidies. $21 million arrears with the World Bank accumulated. At the same time faithful adherence to the IMF/World Bank programme was costing the government popular support. Hence it had no easy way out of the subsidies dilemma, given the impending multiparty elections and the fact that previous attempts to reduce the debt had triggered riots, including those which took place in 1991.

After the successful outcome of the 1991 elections, the Chiluba government committed itself to an economic reform programme. The government privatised most of the parastatals, maintained positive real interest rates, eliminated exchange controls and endorsed free market principles. In 1992 the government reached agreement with the IMF and the World Bank for a comprehensive Structural Adjustment Programme (SAP), which included:

• removing subsidies on social services;
• privatising state-owned enterprises;
• liberalising the foreign currency market;
• liberalising agricultural marketing;
• removing trade barriers; and
• reducing government expenditure.

Output of copper had fallen to a low of 228 000 metric tons in 1998 after a 39-year decline in output. This was due to a number of reasons, including lack of investment and low copper prices. In 2002 copper production rebounded to 337,000 metric tons. Improvements in the world copper market provided an increase in revenues and foreign exchange earnings. Copper output has increased steadily since 2004, partly due to higher copper prices and the opening of new mine. However, the global economic climate of 2008 onwards has also had an impact on the price of copper. Since the beginning of the credit crunch in the United States copper prices dropped from record highs of nearly $9000 a metric ton between 2005 and 2007 to about $3000 a ton (Mail & Guardian 2008). As copper has accounted for 80 per cent of Zambia's foreign earnings, thus helping to deliver sound economic growth of 5 per cent in the six years up to 2009, any drop in the price of copper was set to adversely affect Zambia.

The year 2005 yielded a good maize harvest, which helped boost GDP and agricultural exports. Zambia also entered into a new lending arrangement with the IMF in the second quarter of 2004 and qualified in 2005 for the Heavily Indebted Poor Countries Initiative. In that same year following the G8 summit, Zambia had its debt reduced from over $7 billion to $500 million (Pambazuka News 2005). Subsequently, the Zambian government has been pursuing an economic diversification programme to reduce the country's reliance on the copper industry. As the MMD's Rupiah Banda was the successful MMD candidate in the October 2008 elections, it was anticipated that this approach would continue until the presidential and parliamentary elections of 2011.

References

MAIL & GUARDIAN 2008, December 12 to 18.

PAMBAZUKA NEWS 2005 "Zambia: A debt case study", [www] http://www.pambazuka.org/en/category/features/27214 [opens new window] (accessed 26 Mar 2010).

UNDP 2007/2008 "Human Development Report Country Fact Sheets", [www] http://hdrstats.undp.org/countries/country_fact_sheets/cty_fs_ZMB.html (offline 26 Mar 2010).