2019!ZAMBIAN ECONOMY NOW MORE ROBUST THAN THAT OF NIGERIA
BY ABDULMUMINI ADEKU[LAGOS,NIGERIA]
The news office Desk of the E.N.M.Paedia Express Multimedia
Group of Lagos,Nigeria now hears that the state of Nigeria's economy ,the famed
giant of Africa is so bad that Zambia's economy was much more robust as at
press time.
In a chat with this reporter ,an impeccable source whose
wife had just returned back to base in Lagos,Nigeria after spending a week
attending a seminar in Lusaka ,Zambia attested to this fact.
The source affirmed that Zambia's official currency ,The
Kwacha as against Nigeria's naira was now pegged at 1 Kwacha to 24 Naira.
He showed this reporter a version of a canvas which his
better half had brought on the streets of Lusaka during her trip at the rate of
Five kwacha to justify his view points .
On critical examination of the shoes or canvas that helped
this reporter to gauge the state of Zambia's economy ,it looked like a
Madein-Zambian commodity.
picture credit:Lusaka Times,State House in Lusaka,Zambia
Economy of Zambia
Zambia is one of Sub-Saharan Africa's
most highly urbanized countries.
About one-half of the country's 16 million people are concentrated in a few
urban zones strung along the major transportation corridors, while rural areas
are under-populated. Unemployment and underemployment are serious problems.
National GDP has actually doubled since
independence, but due in large part to high birth rates and AIDS per capita
annual incomes are currently at about two-thirds of their levels at
independence. As of 2015 the GDP per capita stands at $4,300.[8] Zambia is one of the fastest growing
economies in Africa and
its capital, Lusaka is the fastest
growing city in the Southern
African Development Community (SADC).[9]
|
Currency
|
Zambian
kwacha (ZMW)
|
|
calendar year
|
|
|
Trade organisations
|
|
|
Statistics
|
|
|
23.137 billion (2017)
|
|
|
GDP rank
|
|
|
GDP growth
|
|
|
GDP per capita
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$1,342 (2017)
|
|
GDP by sector
|
|
|
Population below poverty line
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60.5% (2010)
|
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Labour force
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6.906 million(2015)
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Labour force by occupation
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agriculture: 85%, industry: 7%, services: 9% (2004)
|
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Unemployment
|
13.3% (2014 est.)
|
|
Main industries
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copper mining and processing, construction, foodstuffs,
beverages, chemicals, textiles, fertilizer, horticulture
|
|
External
|
|
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Exports
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$6.316 billion (2015 est)
|
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Export goods
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copper/cobalt 64%, cobalt, electricity; tobacco, flowers,
cotton
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Main export partners
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|
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Imports
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$6.798 billion (2015 est)
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Import goods
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machinery, transportation equipment, petroleum products,
electricity, fertilizer; foodstuffs, clothing
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Main import partners
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Public finances
|
|
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$21.73 billion (2019)
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Revenues
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$3.643 billion (2015)
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Expenses
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$5.189 billion (2015)
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Economic aid
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recipient: $640.6 million (2002)
|
|
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars. |
|
Zambian exports in 2006
For the first time since 1989 Zambia's economic growth reached the 6%-7%
mark (in 2007) needed to reduce poverty significantly. Copper output has
increased steadily since 2004, due to higher copper prices and the opening of
new mines. The maize harvest was again good in 2005, helping boost GDP and
agricultural exports. Cooperation continues with international bodies on
programs to reduce poverty, including a new lending arrangement with the IMF in
the second quarter of 2004. A tighter monetary policy will help cut inflation,
but Zambia still has a serious problem with high public debt.
Contents
Economic policies soon after independenceEdit
GDP per capita (current), compared to
neighbouring countries (world average = 100)
The British South
Africa Company (BSAC, originally set up by the British
imperialist Cecil Rhodes)
retained commercial assets and mineral rights that it acquired from a
concession signed with the Litunga of Barotseland in 1892 (the Lochner
Concession). Only by threatening to expropriate the BSAC, on the eve
of independence, did the incoming Zambian government manage to get the BSAC to
relinquish the mineral rights. The Federation's government assigned roles to
each of the three territories: Southern Rhodesia was assigned the
responsibility of providing managerial and administrative skills; Northern
Rhodesia provided copper revenues; and Nyasaland provided the Black labour.
After independence, Zambia instituted a program of national development
plans, under the direction of a National Commission for Development Planning:
the Transitional Development Plan (1964–66) was followed by the First National
Development Plan (1966–71). These two plans, which provided for major
investment in infrastructure and manufacturing, were largely implemented and
were generally successful. This was not true for subsequent plans
The Mulungushi Economic Reforms (1968)Edit
A major
switch in the structure of Zambia's economy came with the Mulungushi Reforms of
April 1968: the government declared its intention to acquire equity holdings
(usually 51% or more) in a number of key foreign-owned firms, to be controlled
by a parastatal conglomerate named the Industrial Development Corporation
(INDECO). By January 1970, Zambia had acquired majority holding in the Zambian
operations of the two major foreign mining corporations, the Anglo American
Corporation and the Rhodesia Selection Trust (RST); the two
became the Nchanga Consolidated Copper Mines (NCCM) and Roan Consolidated Mines
(RCM), respectively. The Zambian government then created a new parastatal body,
the Mining Development Corporation (MINDECO). The Finance and Development
Corporation (FINDECO) allowed the Zambian government to gain control of
insurance companies and building societies. However, foreign-owned banks (such
as Barclays, Standard Chartered and Grindlays) successfully resisted takeover. In
1971, INDECO, MINDECO, and FINDECO were brought together under an omnibus
parastatal, the Zambia Industrial and Mining Corporation (ZIMCO), to create one
of the largest companies in sub-Saharan Africa, with the country's president, Kenneth Kaunda as Chairman of the Board.
The management contracts under which day-to-day operations of the mines had
been carried out by Anglo American and RST were ended in 1973. In 1982 NCCM and
RCM were merged into the giant Zambia
Consolidated Copper Mines Ltd (ZCCM).
Unfortunately
for Kaunda and Zambia, the programs of nationalization were ill-timed. Events
that were beyond their control soon wrecked the country's well-laid plans for economic
and national development. In 1973 a massive increase in the price of oil was
followed by a slump in copper prices in 1975, resulting in a diminution of
export earnings. In 1973 the price of copper accounted for 95% of all export
earnings; this halved in value on the world market in 1975. By 1976 Zambia had
a balance-of-payments crisis, and rapidly became massively indebted to the
International Monetary Fund (IMF). The Third National Development Plan
(1978–83) had to be abandoned as crisis management replaced long-term planning.
A significant part of the problems encountered by Kaunda were due to the way in
which policies of nationalization or as it was more commonly known
Africanization was implemented. There was a strong movement to replace managers
of European ancestry with those seen to be of native African descent. While
this was undoubtedly a desirable long term goal in bringing equality to the
population it repeatedly led to the over promotion of unskilled and/or
inexperienced managers, engineers etc. An example of this would be Zambezi
Sawmills where the senior managers were replaced and the engineers fired. It
quickly transpired that a years training in managing logging of softwoods in
Finland is not good preparation for logging tropical Teak and basic mechanical
training does not qualify a person to maintain a 50yr old steam train used to
move lumber. This was a prime example of how an understandable desire to
achieve "africanization" could be taken too far, too fast and destroy
the assets being nationalized.
By the mid-1980s Zambia was one of the most indebted nations in the world,
relative to its gross domestic product (GDP). The IMF was insisting that the
Zambian government should introduce programs aimed at stabilizing the economy
and restructuring it to reduce dependence on copper. The proposed measures
included: the ending of price controls; devaluation of the kwacha (Zambia's
currency); cut-backs in government expenditure; cancellation of subsidies on
food and fertilizer; and increased prices for farm produce. Kaunda's removal of
food subsidies caused massive increases in the prices of basic foodstuffs; the
country's urbanized population rioted in protest. In desperation, Kaunda broke
with the IMF in May 1987 and introduced a New Economic Recovery Programme in
1988. However, this did not help him and he eventually moved toward a new
understanding with the IMF in 1989. In 1990 Kaunda was forced to make a major
policy volteface: he announced the intention to partially privatize the
parastatals. Time, however, was running out for him. Like many African
independence leaders Kaunda tried to hang on to power but unlike many he called
multiparty elections and lost them (to the Movement for Multiparty Democracy
(MMD))and abided by the results. Kaunda left office with the inauguration of
MMD leader Frederick Chiluba as president on 2 November 1991.
Chiluba's economic reformsEdit
Zambia's
Economic System of Government is Unitary because of that the Frederick Chiluba government
(1991–2001), which came to power after democratic multi-party elections in November 1991, was
committed to extensive economic reform. The government privatised many state industries, and
maintained positive real interest rates. Exchange controls were eliminated
and free market principles
endorsed. It remains to be seen whether the Mwanawasa government will follow a
similar path of implementing economic reform and undertaking further
privatization. Zambia has yet to address issues such as reducing the size of
the public sector,
which still represents 44% of total formal employment, and improving Zambia's social sector delivery systems.
After the
government privatized the giant parastatal mining company Zambian
Consolidated Copper Mines (ZCCM), donors resumed balance-of-payment support.
The final transfer of ZCCM's assets occurred on March 31, 2000. Although
balance-of-payment payments are not the answer to Zambia's long-term debt
problems, it will in the short term provide the government some breathing room
to implement further economic reforms. The government has, however, spent much
of its foreign exchange reserves
to intervene in the exchange rate mechanism.
To continue to do so, however, would jeopardize Zambia's debt relief. Zambia
qualified for HIPC debt
relief in 2000, contingent upon the country meeting certain performance
criteria, and this should offer a long-term solution to Zambia's debt
situation. In January 2003, the Zambian Government informed the International
Monetary Fund and World Bank that it wished to renegotiate
some of the agreed performance criteria calling for privatization of the Zambia
National Commercial Bank and the national telephone and electricity utilities.
CopperEdit
The Zambian
economy has historically been based on the copper-mining industry. The
industrialization of the copper industry is owed partly to Frederick Russell
Burnham, the famous American scout who worked for Cecil Rhodes.[10] By 1998, however, output of copper had fallen to a low of 228,000 tonnes, continuing a 30-year decline in output
due to lack of investment, and until recently, low copper prices and
uncertainty over privatization. In 2001, the first full year of a privatized
industry, Zambia recorded its first year of increased productivity since 1973.
The future of the copper industry in Zambia was thrown into doubt in January
2002, when investors in Zambia's largest copper mine announced their intention
to withdraw their investment. However, surging copper prices from 2004 to the
present day rapidly rekindled international interest in Zambia's copper sector
with a new buyer found for KCCM and massive investments in expanding capacity
launched. China has become a major investor in the Zambian copper industry, and
in February 2007, the two countries announced the creation of a Chinese-Zambian
economic partnership zone around the Chambishi copper mine.[11][12]
Today copper mining is central to the economic prospects for Zambia and
covers 85% of all the country's exports, but concerns remain that the economy
is not diversified enough to cope with a collapse in international copper prices.
In January
2013, the Zambia Environmental Management Agency (ZEMA) approved 27 mining and
exploration licences, with more rumoured to be confirmed.[13]
InflationEdit
Lack of balance-of-payment support
meant the Zambian government did not have resources for capital investment and
periodically had to issue bonds or otherwise expand the money
supply to try to meet its spending and debt obligations. The government
continued these activities even after balance-of-payment support resumed. This
has kept interest rates at levels that are too high for local business, fuelled inflation, burdened the budget with domestic
debt payments, while still falling short of meeting the public payroll and
other needs, such as infrastructure rehabilitation. The
government was forced to draw down foreign exchange
reserves sharply in 1998 to meet foreign debt obligations,
putting further pressure on the kwacha and inflation. Inflation held at
32% in 2000; consequently, the kwacha lost the same value against the dollar over the same period. In mid- to
late 2001, Zambia's fiscal management became more conservative. As a result,
2001 year-end inflation was below 20%, its best result in decades. In 2002
inflation rose to 26.7%. However, in 2007 inflation hit 8%, the first time in
30 years that Zambia had seen single digit inflation.
On January
27, 2011, it was reported by the Central Statistical Office that inflation rose
to 9%.[14]
AgricultureEdit
The agriculture sector represented 20% GDP in
2000. Agriculture accounted for 85% of total employment (formal and informal) for
2000. Maize (corn) is the principal cash crop as well as the staple food. Other important crops include soybean, cotton, sugar, sunflower seeds, wheat, sorghum, pearl millet, cassava, tobacco and various vegetable and fruit crops. Floriculture is a growth sector, and
agricultural non-traditional exports now rival the mining industry in
foreign exchange receipts. Zambia has the potential for significantly
increasing its agricultural output; currently, less than 20% of its arable land is cultivated. In the past,
the agriculture sector suffered from low producer prices, difficulties in
availability and distribution of credit and inputs, and the shortage of foreign
exchange.
GrowthEdit
There are,
however, positive macroeconomic signs,
rooted in reforms implemented in the early and mid-1990s. Zambia's floating exchange
rate and open capital markets have provided useful
discipline on the government, while at the same time allowing continued
diversification of Zambia's export sector, growth in the tourist industry, and procurement of inputs
for growing businesses. Some parts of the Copper Belt have experienced a
significant revival as spin-off effects from the massive capital reinvestment
are experienced.
Standard
economic theory and empirical data indicates that second-hand clothing import
can have positive effects in a country like Zambia (one of the least developed
countries in the world). The salaula market
reduces the proportion of income that a family has to spend on clothing. It
also helps to keep employments like repairs and alterations in business and
forces tailors to proceed into more specialize production of styled garments.[15]
There is a downside to such imports, however; the massive importation of
used clothing from the developed world has resulted in a near-total collapse of
the Zambian indigenous textile industry. In the face of cheap used clothing,
tailors' specialized production may be irrelevant - customers will buy the
least expensive clothing available, irrespective of style. Those who might
otherwise work at textile mills or clothing factories are left jobless, or else
make significantly less money in the salaula resale business.
DataEdit
|
Years
|
1980
|
1985
|
1990
|
1995
|
2000
|
2005
|
2006
|
2007
|
2008
|
2009
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
|
GDP
in $
(PPP) |
8.0
Bln.
|
10.6
Bln.
|
13.3
Bln.
|
13.5
Bln.
|
17.6
Bln.
|
26.6
Bln.
|
29.6
Bln.
|
33.0
Bln.
|
36.2
Bln.
|
39.9
Bln.
|
44.5
Bln.
|
47.9
Bln.
|
52.6
Bln.
|
56.1
Bln.
|
59.8
Bln.
|
62.2
Bln.
|
65.3
Bln.
|
68.9
Bln.
|
|
GDP
per capita in $
(PPP) |
1,356
|
1,526
|
1,655
|
1,461
|
1,659
|
2,212
|
2,393
|
2,587
|
2,761
|
2,951
|
3,197
|
3,342
|
3,555
|
3,679
|
3,802
|
3,836
|
3,908
|
3,996
|
|
GDP
growth
(real) |
3.9 %
|
1.2 %
|
−0.6 %
|
2.9 %
|
3.9 %
|
7.2 %
|
7.9 %
|
8.4 %
|
7.8 %
|
9.2 %
|
10.3 %
|
5.6 %
|
7.7 %
|
5.0 %
|
4.7 %
|
2.9 %
|
3.7 %
|
3.6 %
|
|
Inflation
(in Percent) |
11.7 %
|
37.4 %
|
109.6 %
|
34.9 %
|
5.1 %
|
18.3 %
|
9.0 %
|
10.7 %
|
12.4 %
|
13.4 %
|
8.5 %
|
8.7 %
|
6.6 %
|
7.0 %
|
7.8 %
|
10.1 %
|
17.9 %
|
6.6 %
|
|
Government
debt
(Percentage of GDP)
Source of
report:Wikipeadia/Google
|
...
|
...
|
...
|
...
|
261 %
|
76 %
|
25 %
|
22 %
|
19 %
|
21 %
|
19 %
|
21 %
|
25 %
|
27 %
|
36 %
|
62 %
|
61 %
|
62 %
|
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