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close this bookThe Courier N 121 March-april 1990- Dossier Refugees - Country Reports: Botswana - Zambia (EC Courier, 1990, 104 p.)
close this folderCountry reports
close this folderZambia: Copper, a fickle friend
View the document(introduction...)
View the documentPresident Kenneth Kaunda: “ Some encouraging developments...”
View the documentThe social consequences of the crisis
View the documentEducation and health
View the documentAgriculture, key to economic recovery
View the documentInterview with John Hudson, Executive Director, Commercial Farmers’ Bureau: “An enormous agricultural potential”
View the documentProfile
View the documentEEC-Zambia cooperation

(introduction...)

“We Zambians were born with a copper spoon in our mouths” President Kaunda used to say to underline the importance of “ red gold” to his country’s economy. “ The curse of copper”, the distinguished French agronomist Renumont called it, going one better. The Zambians still have that spoon in their mouths 26 years later, and copper has shaped the whole of the country’s political, economic and social life. It was wanted by the colonialists, it created the wellbeing and even the majesty of Zambia in the past and it is losing it today- a situation which can be understood by looking at the role “red gold” has played in the history of Zambia, at the development of its prices and at the way the whole development policy has been conditioned by the mines.

It is from Ndola, the capital of the Copperbelt, and moving on to Kitwe, Chingola, Konkola and Nchanga that the profound realities of the economy and maybe some explanation of the origins of President Kaunda’s policy can be found.

In northern Zambia, by the Shaba region of Zaire, an area of some 6000 km² contained what was the fourth biggest copper deposit in the world. It was the empire of British South Africa (BSA), which handed over the working of it to two companies. The revenue was taken a long way from the country, then called Northern Rhodesia, but it was still copper, the only product in which the administrations of the period took any interest, which shaped the whole history of what, in 1964, was to become Zambia. Economic and urban development largely followed the railway, which penetrated the south in 1904 and was extended to the Katanga (now Shaba) frontier in Za a few years later. In 1935, the capital was moved from Livingstone to the more central Lusaka on the (mainly ore-transporting) railway line to the Copperbelt. The Copperbelt mines constitute the main sector of Zambia’s economy and are the Government’s main, if not only, source of export revenue and the capital and all the other important centres have developed around the station and other routes to this focus of the mining industry.

So although Zambia is the most heavily urbanised country of Africa, with more than 50% of its estimated 7.5 million people living in the towns, it still has no real dynamic commercial or industrial centres along the transnational highways which cross the main parts of its vast 752 620 km² territory. This may also be partly due to the fact that the economy has been focused on just one thing, external requirements, and that, in 1964, on independence, any attempt at breaking with the neighbouring country to the south would have stifled the economy of the new State, whose only access to the sea was indeed through its neighbours (some were still colonies), some of which were hostile at the time. So no sector which would have made it possible to start moving away from the long-standing mono-product economy in fact grew up around the copper industry. The production figures, of course, could well have created euphoria and even justified illusions about the nation’s economic potential and, between 1964 and 1973-74, Zambia indeed had one of the most prosperous and promising economies, growing at the rate of at least 12% p.a. It had good reason to think it was rich. But for how long’?

The question did not arise. It seemed superfluous, even, when confidence abounded and the mines were so generous. With more than 721 000 tonnes of copper every year and first-class production of cobalt, zinc and lead, Zambia was one of the world’s biggest exporters of these very remunerative minerals. So generous mines and a generous heart were what determined the nation’s whole political and economic philosophy.

A “ humanist democracy “

President Kaunda described Zambian democracy as being, first and foremost, “ the replacement of the old colonial society with a new society based on the concept of humanism, which meant placing man as God made him, at the very centre of all things. “We want man to be unfettered in any shape or form by what he builds around himself”, he explained, and he had therefore “indentified those forces that worked against man’s happiness “- including “ exploitative international capital “. Such was the theory which had to be put into practical effect.

The first economic step of Zambia’s “humanist democracy” was to bring under national control the nation’s natural resources- i.e: its one resource. In 1968, for example, four years after independence, the Government decided to take a 51 % stake in the country’s 25 biggest private firms as part of the “Mulungushi reforms”. And in early 1975, the Zambian leaders were also put at the head of the ZCCM, the new mining company formed by the merger of the two firms running the country’s mines. A single mineral marketing company, the Metal Marketing Corporation of Zambia (Memaco) was set up at the same time.

The economic developments

In the euphoria of independence when the coffers were full, it was thought that the Zambian economy had to break with the so-called “ capitalist exploitation “, “ straight and problem-free”, which had dogged the people in the colonial era. The external reserves of the new sovereign State were an estimated $2-3 billion in 1965, a fortune certainly, but the people who lived there were poorer than the country... The Zambian in the street, the Government thought, could not get rich by himself, so the State had to help him by taking charge, appropriating all the wealth and redistributing to it to the people. The idea was kindly welcomed in some Fabian circles and by indulgent partners- without any thought as to whether it was the sort of kindness that kills in the long run.

But cracks soon began to appear in a welfare state dependent on an economy which relied heavily on just one product, copper. Copper production declined over a 20-year period, from 721000 tonnes in 1969 to about 500000 tonnes, 70% of the original figure, in 1989, and wild variations in the prices on the international markets drastically reduced the income of both the State and the population. Per capita GDP went from US $682 in 1980 to $387 in 1985 and $257 in 1986 and has probably declined further over the past four years with the worsening economic crisis, inflation (about 170 % p.a. and 160 % for top earners) and the huge external debt (upwards of $7 billion) which would cost the State 83 % of its export revenue in servicing if it paid it back. Zambia has the biggest per capita debt in the whole of Africa - $930 as against $260 in Za and $480 in Sudan- and it is therefore comparable to middle-income countries such as Brazil, which has a per capita debt of $880. The Zambian debt, mainly contracted on a commercial basis when the per capita income was particularly high, shows that the country’s poverty today is one of the consequences of yesterday’s wealth. Copper, with its plentiful earnings of the ‘60s, led the Government into extraverted consumption, but it is also a fickle friend, dependent as it is for its prices on a large number of exogenous factors over which the State has no control. This essential sector of the national economy apparently only brought in $ 1.2 billion in 1988-89 and there is about $25 million to subtract from this for ZCCM expatriates’ salaries and other external services. The whole mining industry employs 64 500 people, with expatriates representing 1.7%.

Is copper levelling off?

These are not the only pessimistic figures. There are others- the foreign exchange wage bill (30%) and capital expenditure (40%), totalling 70% of mining revenue m operating costs. But since the State does not always pay up in time and the projected foreign exchange allowances, production and particularly the equipment- a large and increasing number of machines are being cannibalised to repair others- are badly affected.

The financial handicap is not the only one. Mining could also fall off rapidly when the copper runs out and all geological studies run to date suggest that both the deposits and the grade of the ore are levelling off fast. Technicians and managers in the field in the Copperbelt say that Zambia still has mineral reserves, but not enough to produce 500 000 tonnes p.a. because of the low grade-although it is higher-grade ore than in Za’s mines, they told me. This is no consolation to Zambian miners, who are “ aware that their mineral resources will soon have run out”, Francis Kaunda, President of Zambia Consolidated Copper Mines confirmed. And his opinion is particularly important because he is at the head of the key firm in the Zambian economy, ZCCM indeed being the sole supplier of foreign exchange in the development model used since independence. “ There is a close linkage between ZCCM and the economy of the nation”, Francis Kaunda emphasized, “ albeit reflected in a strong dependence on the mining companies”. “The Government is preparing to handle the decline in mining activity”, he added. But how?

First of all, Francis Kaunda said, you have to bear in mind that there are two periods in ining life, the first determined by the size of the reserves and equipment and the second, an economic one, conditioned by the infrastructure. If we take the first period, “ we can continue mining until the end of the next century”. But considering the second phase’ under the present level of production, “we can only think about the short term “, which “ implies cutting the costs to fit with lower production”. And the accent indeed should be put on this second period, which in this country is strongly determined by the foreign exchange problem. “The use of foreign exchange by ZCCM is affected by the nation”, Mr Kaunda said, “ and if ZCCM could dispose of all the foreign exchange it earns, it would be able to carry on mining without any difficulties”. This is where the shoe pinches in mining and the Zambian economy in general. “ For the foreseeable future, “ Mr Francis Kaunda said, “ the ZCCM remains the main foreign exchange earner of the nation... and we know that the more the nation relies on ZCCM, the greater the risks it may run “. “ ZCCM minimum reserve requirements for 1989-90 (i.e. April 1989 to March 1990) are $ 479 million “ and “ assuming we get half this amount, “ he emphasised, “ the production will suffer”.

The close link between ZCCM and the nation can also lead to lively polemical arguments between the State (the Government and the Party) and public opinion. In November 1989, for example, Zambian TV reported on Parliament’s debates about the Government’s purchasing of Toyota vehicles for leading figures in its “ “Inside the Parliament “ programme. In view of the focus on these transactions on television and in the newspapers, I put the question directly to Francis Kaunda, who denied that there were as many cars or as much spending as that. “ Because the Government did not have foreign exchange,” he pointed out, “ ZCCM became a channel to borrow from lenders. The Government will pay back the amount to ZCCM, which will reimburse the creditors in turn”. He also said that utility vehicles accounted for a total of $ 10 million of the vehicle bill. All this shows how sensitive public opinion is to the foreign exchange issue, “ a real nightmare in Zambia “, where such things as the shortage of food products and the decline in education and health exacerbate some feelings about the Government.

“If alternatives could be found to the economy’s extreme dependence on copper now, while the infrastructure is still operational,” Mr Francis Kaunda said, “ that would facilitate the transition to diversification”. Take Chile, which was “ 90 % dependent on copper revenue 20 years ago- almost as in Zambia- and now it relies for its foreign exchange only for 40 % on copper. The Chilean mines are still doing well because the country does not depend on copper to finance its economic investments”, he emphasised. Although it would be as well to know whether the two countries’ economic policies are in fact comparable...

“They did not make hay while the sun shone “

However, in looking at Zambia’s economic development- one of decline of the resources and revenue of the copper industry- development priorities and the use of the State’s financial resources (i.e. investments) constitute a major element of appreciation which cannot be separated from the other causes of the crisis. As a recent World Bank/Government document on Zambia’s economic and financial policy framework in 1989-93 said, “ Zambia experienced a sharp turnaround in economic fortunes in the early 1970s from which it has not recovered “. “ Between 1970 and 1986, a secular though erratic decline in copper production combined with 80 % deterioration in the terms of trade contributed to a one-third drop in real GDP per capita”. And, it continued, “ the financial policies over this period were geared to maintaining consumption levels and living standards by anticipating a recovery in copper exports”. But in the absence of any sustained recovery, the policies resulted in large budgetary and external deficits, a rapid build-up of external debt, and distortions in the savings/investments patterns. So the “ savings ratio to investments dropped, fixed investment shrank from about 30% of GDP in 1970 to around 10% in 1986, while diversification out of the mono-product copper economy was hindered by insufficient incentives for non-traditional exports, price controls, subsidies and reliance on exchange rate and trade restrictions “.

Poverty in Zambia is an unexpected consequence of its initial wealth, a farmer from Batoka south of Lusaka felt. He sees economic subsidies as the main cause for the Zambians finding it difficult to bring about recovery themselves. “ How can you subsidise a whole nation?”, he wondered. “The whole population of Zambia (age over 40) has been spoiled from Day One by the subsidies”... “None of the active population has ever been used to work hard” and this is why “ they did not make hay while the sun shone”, he felt, with pure peasant wisdom. And President Kaunda now admits: “ We subsidised consumption instead of subsidising production”.

Reforms

The oil crisis, the decline in raw material prices and IMF-World Bank policies have all had their turn as the main cause of Zambia’s economic problems and, since 1987 in particular, the Government has agreed to reorient the economy to make a success of structural adjustment and take the needs of the low-income and vulnerable groups of the population into account. It has embarked upon a new economic recovery programme (NERP) with results that are good but nonetheless lower than expectations, particularly as regards improvement by the “ use of own resources “.

Zambia is setting up an efficient policy of economic rationalisation with the help of the World Bank, the IMF and other funders, such as the European Community. In September 1989, the Government put an end to a three-year rift over reform policies with the Bretton Woods institutions and, in an agreement with the IMF and the World Bank in July 1989, accepted the suggested plan of economic reforms from these two international financial organisations. The agreement covers macroeconomic policy reforms, sectoral adjustment programmes and parastatal restructuring, public expenditure programming and control and measures to protect the most vulnerable groups of society during the structural adjustment period (see President Kaunda’s speech).

Decontrol by “confidence trick”

The first steps to be taken under this agreement were the devaluation of the Kwacha (the national currency) from K 10 to K 16 per US dollar and the removal of controls on all prices except maizemeal, the Zambian staple, which will also go up with a reduction in its State subsidies. Maizemeal prices have indeed gone up substantially, particularly because of what the consumers sarcastically refer to as a “confidence trick”, whereby the bearers of subsidy coupons are unable to redeem them because stocks have run out or the date of validity is past or because they have more coupons than their family is entitled to. This covert liberalisation of maizemeal prices means the Government can avoid having to rescind the measures, as in the Copperbelt in 1987 when the sudden price surge led to uprisings in which 15 people were killed.

Other Government measures include a 50% increase in civil service wages, a necessary departure in a period of heavy inflation (more than 170 % for the middle-income bracket), and a higher bank rate to try and contain household consumption and reduce inflation through better control of the money supply. However, it is by no means easy to get control of the money supply in Zambia, as it is not always clear how many banknotes are in circulation, particularly since the parallel exchange market does far better than the banks ( US $1 = K 35-40 on the parallel market and K 16 at the official rate).

Although the IMF and the World Bank suggest that resuming cooperation relations with them is a basis for dialogue on Zambia’s urgent problems, this does not currently mean that the country is eligible for the Enhanced Structural Adjustment Facility or for rescheduling of the $ 7 billion debt. Both institutions in fact felt that Zambia had to take “ another important step forward “ and pay them its arrears of about $1 billion ($820 million to the IMF and $180 million to the Bank).

The Work Bank felt that the Government’s recent actions were “ encouraging “, but also that “ the challenges and risks “ were “formidable and should not be underestimated”. “Zambia’s economic distortions are numerous and deep-seated”, it said, and “ the outlook for its major export product, copper, is not good; the financing required is large” and skilful economic management will be called for over a long period.

So the answer to Zambia’s economic problem is not copper, but agriculture and industrialisation, where potential is great.

Lucien Pagni

President Kenneth Kaunda: “ Some encouraging developments...”

The Interim National Development Plan was launched for the period I July 1987 to December 1988. The underlying message was a reorientation of the economy in a way that best achieves structural adjustment while bearing in mind the basic needs of those in the lower income bracket.

How did it work? Last year, in June, President Kenneth Kaunda addressing the nation, explained the Plan. This is what he said:

“I must point out that the Fourth National Development Plan launched in January 1989 carries on the need to continue meaningful economic adjustments and at the same time take into account the social aspect of adjustment. It is still the intention of the Party and its Government to continue to find ways and means of making the economic adjustment process bearable, particularly to the vulnerable sections of our society.

With this approach to economic policy formulation, we have already made considerable progress. In 1987, when the New Economic Recovery Programme was initiated, gross domestic product grew by 2.2% in real terms. This has risen to 6.7 % in 1988, with agriculture growing at 21 % and the manufacturing sector at 15%.

The significant growth in agriculture is attributable to incentives the Party and its Government have put in place such as increased producer prices; timely provision of inputs; availability of credit and foreign exchange; adequate provision of extension services and improved marketing. Good weather conditions also complemented the efforts of the farmers. Record harvests were scored in maize, our staple food, sorghum, cotton and tobacco.

In the short period, Zambia has moved from a maize deficit country to a surplus and net exporter of maize.

The encouraging performance of the manufacturing sector is attributable to the deliberate policy by the Party and its Government to increase allocation of foreign exchange to this sector. This led to increased industrial capacity utilisation. The role of FEMAC in achieving this objective has been positive.

Mineral production has remained at reasonable levels. This has been achieved through the rehabilitation programme which ZCCM has implemented.

Non-traditional exports have picked up and reached US $ 118 million in 1988 compared to US $80 million in 1987. This is an encouraging outcome. However, more still needs to be done in this area of our economic activity.

Subsidies on consumption have been reduced. The savings achieved through this reduction will be channelled into productive activities.

The transport sector which had virtually collapsed in 1987 showed signs of recovery in 1988. Public transport has started to ease with the importation of buses and mini-buses by United Bus Company of Zambia, Mulungushi Traveller and the private sector. This programme is continuing and it is my hope that the problem will be contained soon.

In the health sector, the supply of drugs has improved considerably. Essential drugs are now readily available at most of the hospitals, clinics and rural health centres. This has been achieved despite the economic constraints the nation is facing.

I should hasten to say that, notwithstanding these encouraging developments, there continues to be a number of problems militating against a sustained economic recovery and diversification of the Zambian economy.

Unemployment has remained high with formal employment stagnating at below 360000 for over a decade now. Inflation is raging on and the latest estimates for 1988 put inflation at 70% compared to 60% in 1987. The fiscal deficit in 1988 stood at 12% compared to 14.6% in 1987. The deficit recorded in 1988, while lower than in 1987, exceeded the budget target of 9.5%. The increase in the deficit is partly explained by the exceptionally good performance in the agricultural sector, particularly in maize production which entailed a large outlay in the handling of subsidies. The Party and its Government are nevertheless determined to bring down the deficit even further. The growth in money supply, which was above 60 % in 1988, is another source of worry. The debt burden continues to grow, largely on account of high interest charges that these debts attract.

After many years of inadequate rainfall we must thank God that there had been good rains for two consecutive seasons. However, the heavy rainfall experienced in the last season caused considerable damage to the roads and dams and indeed reduced the output in agriculture, particularly that of maize. As a result the yield of maize will more or less be at the 1988 level.

Consumption has remained high, representing 80% of gross domestic product, while investments have been declining. The causes of this imbalance are the high rates of inflation, negative real interest rates and lack of adequate foreign exchange.

The foreign exchange shortage has become one of the major constraints in the economy. The major source of foreign exchange is still copper, which accounts for over 90% of all foreign exchange earnings up to the end of the next century, albeit on a progressively reducing scale. However, the economic life of our mines based on existing infrastructure is limited to between 15 and 20 years.

The more the country looks to copper as the major source of foreign exchange, the more the economic life of the copper mines will be shortened. It is therefore desirable that each company strives hard to boost non-traditional exports and earn some foreign exchange. Only in this way will we be able to extend the economic life of our mines beyond 20 years.

The non-mining parastatals and the private sector utilise more foreign exchange than they generate. This is an unsatisfactory position. Both these sectors should take up the challenge of boosting non-traditional exports. Non-traditional exports should in the medium term be enhanced not only to fill the gap that will be left by earnings from basis of known copper ore reserves, copper but to levels that can mean-Zambia can continue to mine copperingfully sustain the economy.”


Zambia: historical indicators, 1970-86

The social consequences of the crisis

Lusaka is one of African’s best-known capitals. Is this a reputation or legend such as Chicago, Amsterdam, Copenhagen, Lagos and many another city have fashioned for themselves over the years? The image of Kenneth Kaunda, that veritable apostle of peace in Southern Africa, has of course rubbed off on Zambia’s capital, but, independently of KK, as he is familiarly known, the city’s reputation is becoming something of a legend in the economic and social crisis which has been particularly acute for the past 10 years. Many an angle on Zambia’s problems gives an inaccurate view of the reality, as is clear when one arrives in Lusaka and brings an attentive eye to bear on the country, on Zambian society now, in contrast with what it used to be. The difference is striking.

Only one or two nationals and travellers from Europe now come to Lusaka’s once-busy airport. Flight arrivals and departures in the ACPs tend to attract huge crowds of people who think planes are really spectacular and this used to happen in Zambia. But in late 1989, all’s quiet at Lusaka airport- to the left, a twin-engined army aircraft painfully preparing for take-off, to the right, two uniformed men, one of them armed but apparently not convinced of the usefulness of his weapon, and outside, nothing like the feverish activity of the airports in central and western Africa. And a little further on, beyond a vast, deserted parking lot, under a slightly cloudy sky, sprinklers gently water a green, English-style lawn in the heat. This is always the scene at the airport at this time of the year and the beauty of it all is even more apparent from the air.

The town centre is a few miles away down a fine, open road like a race track before the flag. Putting one’s foot down is a temptation- but resisted with the appearance of the wrecks by the side of the road and the mangled cars abandoned on the highway itself. Spare parts are a problem here. They cost a small fortune. A set of headlights, for example, costs K 10000 ($ 600) and a tyre K 5 000 ($ 300)- the first sign of the extent of the economic crisis here in Zambia. And indeed not only here. The many wrecked cars in most of the ACP countries show that the difficulty of keeping large numbers of vehicles on the road is considerable and often out of all proportion to the real needs of the individual and the economy.

In Lusaka, the crisis has had profound effects downtown and in other areas. There are not the people in the streets there were 10 years ago, day or night, and even the Cha Cha Cha Road, the city’s red light district, is no longer busy and bustling the way it used to be. Zambians still do their traditional rounds of the bars, of course, but custom is dwindling and the atmosphere is not what it was. The pubs called “clubs” here- are the best place to take the social temperature of the nation. The Zambians have not yet got over the social consequences of the crisis and it is obvious. “They look grim”, was the way one Britisher, come to visit a friend and potential partner in joint ventures, put it. Economic difficulties often hit harder in the towns than in the country, but they have affected a particularly large number of people in Zambia because the population is a highly urbanised one, indeed the most highly urbanised of the whole continent, and the effect is felt from Lusaka to Livingstone, in the Copperbelt, in Kabwe and in Chipata and Luangwa, in the eastern province, too.

Lusaka to Livingstone, for example, is a 500 km drive through uninterrupted savannah with no incentive to stop. The only breaks in the monotony are the townships (Chilonga), places like Mazabuka, “a tiny little town “ where the 10 000-hectare Mazabuka Sugar Estate factory spews thick columns of smoke into the heavens, and Monze, whose claim to fame is, alas, a hospital where 50% of the patients have AIDS, the disease which is the scourge of the late 20th century. Sometimes customs officers appear, because the Livingstone road is the main highway between Zambia, Botswana and Zimbabwe and it runs along the railway line between the Copperbelt and Johannesburg in South Africa. Livingstone is still a straggling town whose main attraction is the spectacular Victoria Falls on the Zambezi between Zambia and Zimbabwe, the bridge between the two countries, with its one international hotel and its railway museum. It has not progressed since the colonial era and at the Fairmount and North Western hotels, once said to be the pride of the local hostelries. there is no longer anything but the signs and the odd drink to be bought in settings that bear no relation to their former glory. The crisis has hit here, too, and the one or two tourists pass through quickly, leaving little money behind them.

Family life and social relationships hit

The economic figures (on inflation, debt, unemployment and so on) may well not mean much to many Europeans, but here in Zambia, they caused 15 deaths three years ago- the equivalent of 300 deaths in Venezuela with its debt of $ 34 billion. The economic crisis is beginning to have very profound effects on Zambian society, as I heard from an expatriate who has been living in the country since independence in 1964. “ Everybody here has had a rough deal, especially the middle-income workers who are used to luxury goods”. One of the results of this is that Zambia’s social relations are developing in a way that is much closer to that found elsewhere in Africa, a much more “ self-interested way “. Why should this be? Because “ What characterises Zambians more and more today is the collapse of family life and unregulated social relationships” the expatriate said, maintaining that he feared for the future of the country which he said he really loved.

His point of view is clearly not unrelated to the realities of the crisis, but it is more a reflection of the behaviour of people in Lusaka and maybe the Copperbelt than the way of life of the Zambians as a whole- as is clear from the peasants living a long way from the main urban centres.

What do Zambians themselves think? Most of them are resigned to living through the crisis although there are those want to understand it and its effects. “Any profound and lasting economic crisis will inevitably shake the socio-cultural foundations of society”, a Zambian manager at the mining company in Kitwe, told me. And Kenneth Kaunda took an entirely new line in a speech he made in 19X9 when he said that “the deterioration in our standards of living, the poor state of our economic infrastructure, poor standards in our health and education institutions, rising unemployment, rising crime rates, black marketeering, smuggling, acute shortages of consumer goods, and low productivity, were all leading to more poverty” for the Zambians. And this poverty, the Zambia Daily Mail said recently, has also resulted in the country “ losing about US $ 300 million to unscrupulous businessmen who are under-invoicing exports, over-invoicing imports and selling foreign exchange on the black market”. But who are these businessmen? An interesting question- which the newspaper fails to answer.

Penury may also he a source of income...

L.P.

Education and health

Health and education reflect a country’s economic mood and since in Zambia’s case generosity is no longer the order of the day, there are far-reaching consequences for the education, training and health of the population.

Education was one of the Government’s priorities on independence in 1964, in particular because very few men or women had been trained before that time and the authorities, which only had a pool of 100 university graduates and 1120 secondary school diploma-holders to work with, embarked upon a huge programme of nationalisation and Zambianisation of managers. The training process was speeded up by making education free, so that everyone, regardless of the family’s rung on the social ladder, had equal access to it. But after 10 years or so, during which the system ticked over fairly smoothly, galloping demographic growth, dwindling financial resources and a lowering of teaching standards silted up the workings of the educational machinery. The result, especially before the economic crisis worsened, was a constant increase in the number of Zambian youngsters sent abroad (to Europe and to neighbouring countries such as Zimbabwe) to study at all levels at their parents’ expense.

Today, the problem is such that the Government has decided to bring in a three-shift system in the primary schools to try and ensure that all children of this age can be taught. But it is a makeshift solution, as the school day now only lasts about three hours.

A “decline in quality”

And then there are the costs of schooling. Public finances by themselves are no longer adequate to cover educational spending and free education is now a myth, as the Government is asking for contributions from parents and local authorities alike. “Local communities will be expected and encouraged to play a more active role in the construction, operation and maintenance of the educational institutions” so as to “relieve Government of part of the budgetary burden” is how the document which the Government and the IMF-IBRD produced on economic policy in 198993 puts it. For the Government both wants and “ is determined to reverse the decline in the quality of, and access to education, particularly in the very, poor urban and rural areas”.

However, since the requirements of education cannot be reduced to a minimum, the private sector did not wait for the change in official Government policy to set up private establishments, such as the International School of Lusaka, the American School (not open to Zambians) and many others, with annual fees of $300-800 (K 5000-14000), which are very high for a Zambian to pay, and even $4500 at the American school.

But, typically of a situation of this sort, the high cost of the education is not reflected in the standard of the teaching and the level in some of Lusaka’s private secondary schools can be three or four times below that of the most average of European establishments. The situation is even more critical in the nation’s primary schools, where the obligatory uniforms and “leather” footwear represent outlays- and worry- for many families, which tend to be large and unable to afford to send their children abroad. A pair of “leather” shoes costs K 1000-1200 and the average wage is K 1500-2500 ($94-156 approx.).

The university, comfortably situated on a fine campus, is faced with a similar financial problems, coupled with graduate under-employment and unemployment.

Health too...

Health standards have suffered from the crisis, too, and ailments like diarrhoea and malaria have become endemic. The development and resistance of the various strains of malaria have put it “ at the top of the list of the five most prevalent diseases in Zambia,” the Head of Public Health at the Ministry said. “ The exact figure of malaria victims is not known”, Dr Ben Chirwa said, “but the situation has deteriorated over the last few years. The advantage, of course, if it can be put that way, “ he went on, “ is that many of these endemic diseases can be cured if you have the means of getting the medicines and developing a policy of prevention. “ The Government plans to cope with the decline in public health by taking “ extensive measures involving transferring new resources to the rehabilitation, consolidation and maintenance” of facilities. The situation in some hospitals and dispensaries is such that staff are having to re-use certain equipment (such as delivery gloves and syringes), which are then sterilised by boiling- which does not necessarily guarantee a high standard of treatment. “The non-governmental organizations could help us”, said a nun who is a doctor in a number of dispensaries in some of Lusaka’s poorest suburbs.

One syndrome may mask another..

AIDS, the acquired immuno-deficiency syndrome, is also one of the major concerns of the Zambian health authorities and of the State itself, as it is everywhere else. But, the heads of the medical services say, the HIV virus is being propagated in conditions which could well increase the dangers of contamination. Although the worst-affected groups are those with sexually-transmitted diseases (STD), those who have had blood transfusions and the babies of infected parents, another section of the population running the gravest danger is the teenagers (“ 15-30% of HIV-positive patients’?), because of the “ high-risk behaviour “ of some Zambian adults. Dr. Ben Chirwa, who is also director and coordinator of the national AIDS control programme, says that here in Zambia, “ definitely there is what you might call a ‘sugar-daddy’ syndrome, where you find older people have a tendency to go for sexual relations with younger girls, teenagers particularly”, a phenomenon which is discussed in both medical circles and the Lusaka newspapers. “ Therefore there is a potentially greater risk of transmitting the infection to younger girls” Dr Chirwa concluded. An example of “ unreasonable behaviour “ whose “syndrome” may well mask another syndrome, AIDS.

Ultimately, the risk to young men (in the 20-25 age-group) is greater too, as they are the natural partners of these girls once they are post-adolescent.

Of course, the WHO officer in Lusaka says, there is no point in getting more alarmed about Zambia than other ACPs like Barbados, which has the highest rate of AIDS victims and carriers in the Caribbean (figures as of 31 March 1989), or African countries on a line between Congo and Malawi and crossing Zaire, Burundi, Rwanda and Zambia. And the Zambian Government should be congratulated for its open-minded approach to the AIDS issue.

However, the economic consequences of a high rate of HIV-positive youngsters are more serious for the country in the long term, they say in Lusaka. And, given the conditions described, when these young people reach the age at which they should be going to work, they will already have AIDS and be unable to take over from the older workers if nothing is done about the problem- which is why special attention has to be given to this aspect of transmission of the virus.

And the huge efforts which the WHO, the European Community, bilateral aid and the Government itself are making to control AIDS are beginning to bear fruit, particularly in the field of sexually-transmitted diseases.

L. P.

Agriculture, key to economic recovery

Zambia’s economic problems have long been focused on copper, probably because it has shaped the country’s history. Yet Zambia is more than just a mineral, however important that mineral may be in the lives of the people. It is a large country with a small population and its natural conditions are particularly good when it comes to switching from the production of a single mineral to a diversified industrial economy with farming as the driving force.

Agricultural development is the most promising way of righting the national economy. In 1984 and 1985 it was the only sector with positive growth (up to 9 % even, in 1985), doing far better than all the others. The land is fertile, there is adequate and reliable rainfall, there is a varied tropical climate and the country’s agricultural potential is as good or better than that of neighbours such as Zimbabwe, Za and, to some extent, South Africa. And the moderate average temperature means that most tropical and some temperate products can be grown here.

However, this potential has been ignored or under-exploited since independence, partly because of the predominance of copper (90 % of exports) and partly because of an inefficient and discouraging agricultural organisation and marketing system. Exchange rates kept artificially high have encouraged the consumption of cheap imports, while local products at consumers level have been heavily subsidised by the Government, which fixed low prices for the producers to ensure an inexpensive source of staple agricultural products. So following the first changes to the agricultural policy in the late ‘70s (to cater for the oil crisis and the decline in copper prices), agriculture accounted for an average of 17 % p.a. (about 2 % of export revenue) in 1984-88, although it employed 50% of the population, the other 50 % being in the towns. It is thought that urban drift could reach dramatic proportions if rapid steps are not taken to improve rural living conditions and make farming attractive to people from the towns. Agricultural prices, transport and an unsecured land tenure system are just some of the major constraints on the development of Zambian farming. And although the National Agricultural Marketing Board (Namboard) and the Provincial Cooperative Unions distribute most of the inputs (fertilizer, seed, etc) and provide most of the marketing services, there are still major financial and logistical difficulties to cope with.

The Kabwe peasants

We visited the small peasant producers of Kabwe, in the Central Province, in order to get a better grasp of the difficulties facing Zambian agriculture, and discussed the life of a smallholder with a family from Lifwambula.

They talked about agricultural prices. “We don’t understand any of the price fixing machinery”, the head of the family said. “ A bag of fertiliser cost K85 in 1988, but it went up to K385 (a 353% rise) in one go in 1989. A bag of maize (90 kg) went up to K 125 from K 108 (16%) over the same period. How can the producer pay for all the inputs he needs per unit with K 125?” they wondered. There is LIMA bank, the farmers’ bank, of course, and this typical peasant family applied to it for a loan, but “ they told us the bank had run out of money”, the man said, resignedly. Yet the headlines in that week’s papers were all about the Government’s release of K1 billion to help the peasants through “ their” bank. Maybe. But, as a technician who has been working in the region for 15 years asked, when will they get their loans, if they are ever granted?

One of the first results of all this is that the peasants tend to reduce their acreage. The farmer in Lifwambula was planning to go down from 30 acres (about 15 ha) to 20 acres (10 ha), particularly since it was already time to sow and the 1988-89 harvests delivered to the cooperatives between May and September had still not been paid for. The State, through the cooperatives, owed this small Kabwe village peasant K 75 000 for the 600 bags of maize he had delivered at K125 per bag. “The farmers need the money to buy the inputs which, to cap it all, the State won’t let the cooperatives supply for anything but cash”, he said.

And not only is there a financial problem. Transport, too, is a serious handicap to economic and social life throughout the country and a genuine cause of discouragement and maybe bankruptcy for the small peasant. At the end of 1989, there were still 50 000 bags (4 500 toones) of maize from the 1988-89 harvest in Lifwambula and 49 000 (4 410 tonnes) in Chowa, stored in sheds built by the European Community, or piled up on wooden supports, prey to insects and the elements.

Livestock

The situation is much the same in the livestock sector, too, although the rearers could well think they are better off than the rest of the farmers. “Cattle prices tend to revolve round the beef prices”, a Batoka farmer explained, “ and since with 2 kg of feed you can put up 7 kg of beef”, at K 30 per kg,- the daily wage of a manual worker herding is doing better than the rest of Zambia’s agriculture. And it is in livestock that the big farmers are investing the most and having the greatest success with their move to change Government policy through the action of their organisation, the Commercial Farmers’ Bureau (see interview with Director John Hudson).

How do people manage with wages ever more inversely proportional to the cost of living? “ People don’t shop according to their budget because of inflation, which is approaching the Latin American rate”, one expatriate employer said. And there will be no solution, they say in Lusaka, until the economy provides its own answer through the machinery of supply and demand and a proper financial and monetary environment.

“The sleeping giant of African agriculture”

This is the title of a brochure from the Commercial Farmers’ Bureau and it is by no means just a partisan opinion by people wanting to be judges in their own case. All the analyses by international organisations agree that Zambia’s agricultural potential is one of the best in Africa and that it is this sector as a whole that will make it possible to right the economy.

But this means removing a number of constraints to do with financing, marketing and the system of land ownership- - which is as uncertain as the system of price fixing. Investors need to “feel some confidence in State policy and the laws governing land usage”, John Hudson said, but this is not yet completely the case, particularly when it comes to land ownership. Other important measures should be taken, too, particularly to do with small producers, agricultural credit facilities and the development of the extension services.

John Hudson said that the Government had begun to move in the right direction. “Zambia is one of the last farming frontiers in the world. It has enormous potential. It could become the breadbasket of South-central Africa” he maintained.

It is up to the Government now to create the conditions for the success of the sector which is the key to Zambia’s economic recovery.

L.P.

Interview with John Hudson, Executive Director, Commercial Farmers’ Bureau: “An enormous agricultural potential”

In this interview Mr Hudson outlines the commercial farmers’ analysis of the agricultural development policy.

· You said Zambia has great agricultural potential, but it only has 1.5 million hectares, or 6 % of the total of 25 million hectares, now under cultivation. Why?

- Well, there are several reasons for this, some of them historical. But basically, Zambia has been distracted from agriculture by the presence of very valuable mineral deposits, principally copper, on which this country relied for many years for its foreign exchange (and also government revenue).

This was the case really until the mid-’70s, by which time the world price of copper began to fall and oil prices began to rise. And it also came to be realised that the copper deposits would not last for ever and in fact would run out by the end of the century. And so, really, from those years there was greater realisation of the need to develop agriculture and also, I think, the realisation of the enormous agricultural potential that there is, and which had never been fully developed in the past.

· What is the situation today? Before the mid-’70s, 1 understand, the government gave priority to the state farming system...

- When the Government had decided that more attention had to be paid to farming, the initial reaction was to set up a number of large state ranches and farms in various provinces in the country. In fact, the results did not match the expectations. They then turned to the private sector and realised that the provision of suitable incentives and, particularly, better producer prices and certain tax concessions was the best way of getting the production they wanted.

· How many states farms are now operating in Zambia?

- I’m not exactly sure, but I think one or two have actually started, and they only have a very limited scale and are run by the Zambian National Service. But there are, of course, some much more successful state enterprises run by Zambia Agricultural Development Ltd., which has large cattle ranches in Southern Province and Northern Province, and I think some in Central Province. That is a parastatal company, not a direct government agency.

· But do the ranches, or let’s say cattle, take priority over food production?

- Well, I don’t think it’s true to say it takes priority over food production. It’s an alternative to food production and supplements it. Beef, of course, is a form of food. But there is a choice facing every farmer, and to some extent, every government, and that is whether grain produced should
be fed directly to humans in the form of meal or bread or whatever it may be, or should it be fed to livestock to produce beef and other meat.

And there’s still a certain tendency in government circles here to feel that grain should be reserved for human consumption rather than fed to cattle, but because of the rather low producer price of maize, in particular at the moment, some farmers find it more profitable to feed maize to their livestock rather than to sell it to the government marketing agencies, and this is the situation we’re in at present.

“It is unusual to have beef shortages... “

· Nevertheless, beef prices are still very high in Zambia. What is your view about this?

- The price of beef is a very interesting illustration of how a free market price operates. Until about 1970, the price of beef was controlled by government legislation at a level which was not an incentive for farmers. The result was constant shortages of beef and the necessity to import beef from Botswana to make up those shortages. Early in the ‘70s, the government decided to de-control the beef price and to ban imports from other countries. The result was that the price shot up initially, but as resources were attracted into the beef industry, the price fell back again to a much lower level because of the additional supplies that came onto the market, and since that time a very thriving beef industry has been built up in Zambia. It is very unusual to have beef shortages and they only occur, possibly, because of localised restrictions on cattle movement due to disease outbreaks, and we have in fact now developed an export industry for beef. A good deal of beef is being exported.

· To which countries?

- To Za, Angola and Gabon, largely. We can’t export to the EEC because of the presence of endemic foot-and-mouth disease here. But the fact that the market was free to respond to supply and demand meant that we have become self-sufficient, and not only that, supply and demand are being kept well in balance with seasonal fluctuations, so successfully in the case of beef that the price of beef has risen much less than the prices of almost any other foodstuff in the country since the early 1970s- even rolled meal. Rolled meal has gone up more than the price of beef even though it is price-controlled. So, in real terms, the price of beef is lower now than it was in the 1970s and we always quote this as an example of the benefits of a free market and the evils of price control.

· How many commercial farmers are there in Zambia compared to other neighbouring countries, for instance?

- It depends on how you define a commercial farmer, and there’s a good deal of argument about that. The definition we usually take is a very rough one- a farmer who is cultivating more than 40 hectares of land. But this is not a really satisfactory yardstick because it’s possible to be a highly profitable commercial farmer on very much less than that if you are farming intensively, for example, poultry, or pigs, or irrigated vegetables or fruit. But, on that basis, I suppose there are between 500-600 commercial farms, ranging from the 40-hectare level right up to big estates. In Zimbabwe, for example, there has been far more farming development in the past and I think the number of commercial farms, in the sense I’ve mentioned, probably runs into several thousand. In Malawi, there are far fewer. There are some large estates for tea and tobacco and cotton and sugar, but very few large commercial farmers in any other sense. In Tanzania, I think there are some fairly large state farming concerns, but generally speaking it’s overwhelmingly a peasant operation there.

· What do commercial farmers produce?

- Well, almost any sort of crop can be grown in Zambia, both tropical and temperate. The main crop has always been maize and that counts today for about 70% of the cultivation done in Zambia.

· Compared to the needs of the country, is that enough?

- In recent years we’ve had some good seasons and quite an increase in the planted acreage and we have achieved self-sufficiency in maize. If we had another bad year, or the price was found unattractive, as it has been in this current season, that may change.

· Apart from maize, what other crops are we talking about?

- Well, I should say after maize, the biggest crop is probably soya beans at the moment. These were introduced only about 10 years ago on any scale in Zambia and there has been a very steady increase in production. We are now about half way to self-sufficiency and we hope to achieve that very soon. Groundnuts are substantial, so is sunflower; coffee is increasing and almost all are exported. Coffee is expanding fairly rapidly and although the present level of world prices has been a bit of a setback, I think expansion will continue, though at a rather lower level.

Farmers feel that, ultimately, the price will pick up again and we do produce a particularly good variety of coffee in Zambia. It is Arabica and its quality and flavour command quite a good premium on world markets. So we’re rather better off than the people who are producing Robusta coffee.

· Is there a wheat problem in Zambia?

- There is, indeed, a problem of wheat. The fact is that Zambia is quite capable of producing all its own wheat requirements and exporting wheat. Wheat grows exceptionally well here under irrigation and even to some extent under rainfed conditions. In 1990, local production, though increasing very fast will not meet more than about half the requirement. There will be a shortfall.

“A painfully slow pace”

· Transport and storage- what repercussions do you feel because of the shortcomings of these two?

- We have probably fairly adequate storage overall for the maize crop, but it is located in certain central points, mainly along the railway line, but also in some provincial centres. The problem arises because a lot of maize is produced in very remote rural areas and it is extremely difficult to organise transport to collect it from these places and bring it in to the storage areas before the rains start.

There are a number of reasons for this: due to foreign exchange shortages, the size of our transport fleet has been going down over the past line. few years as vehicles wear out and are not replaced’ or spare parts can’t be found, and so our transport fleet is no longer really up to the job, though it could probably do it even at the present, reduced level if there was greater efficiency in loading and off-loading and turning it round. But the pace of this is painfully slow.

· Under LomII, we put emphasis on agricultural anti rural development . How did that work here?

- I think a lot of your aid to Zambia has been very positive. You have sent us funds for agricultural inputs, fertiliser, machinery and equipment, drugs and vaccines and so on. This is precisely the sort of aid that is most useful to us. It enables us to produce ourselves instead of relying on the outside world for food and we feel the EEC attitude is very positive.

· So other donors should do the same?

- I wish they would follow that line.

Interview by L.P.

Profile


Map of Zambia

Area:

752 620 km².

Population:

7.5 million (estimate mid-1988).

Birth rate:

3.7% per annum.

Urban population:

53%, increasing by 6.6% per annum.

Main towns:

Lusaka (capital, 870 000 inhab.); Kitwe (472 000 inhab.); Ndola (443000 inhab.); Kabwe, Mufulira, Chingola, Luanshya, Linvingstone (98 000 inhab.).

GDP:

(kwacha): at current prices 18 080 million (1987); it amounted to k 12 954 in 1986; at constant (1980) prices, 1986 GDP was 3 209 million kwacha.

GDP per capita:

2 487 kwacha; at constant (September 1989) prices: $ 156 and at 1988 official rate of exchange it was estimated at $ 538.

Exports:

Copper (90%); cotton, coffee, tobacco (total 2%) and some stock farming products to Za and Gabon.

Imports:

Food crops, equipment.

Main trading partners:

EEC Member States, USA.

External debt:

$ 7 ten; it was $4.354 bn in 1987 (22% of GDP).

Debt service:

83 % of export receipts.

Currency equivalents

Currency Unit Zambian Kwacha (K).

US$ 1.00 = K 6.33 (Quarterly average for July-September 1986).
K 1.00 = US$ 0.16.

As of October 1, 1985, the value of the Zambian Kwacha was set by a weekly foreign exchange auction conducted by the Bank of Zambia. The following are average annual exchange rates for selected years. But since two or three years ago a fixed exchange rate had again been adopted.

1970

K 1.00 = US$ 1.40

1975

K 1.00 = US$ 1.55

1980

K 1.00 = US$ 1.27

1981

K 1.00 = US$ 1.15

1982

K 1.00 = US$ 1.08

1983

K 1.00 = US$ 0.80

1984

K 1.00 = US$ 0.56

1985

K 1.00 = US$ 0.37

1989 (September)

K 1.00 = US$ 0.06

Source. World Bank.

EEC-Zambia cooperation

Cooperation between the EEC and Zambia has developed considerably since Lom took effect in 1975. The Community let the country have something like ECU 348 million in grants, emergency aid and indicative programme, Sysmin and NGO contributions under the first three Conventions- EDF aid worth ECU 183.6 million for the indicative programmes, for example, and ECU 83 million for Sysmin- and there has been ECU 77 million from the EIB’s own resources on top of this, bringing EEC aid to Zambia in 1975-90 up to about ECU 425 million. Regional organizations such as the Preferential Trade Area and SADCC, of which Zambia is also a member, received assistance from the Community too, so EEC aid covers a vast area of the nation’s economic and social development.

Food aid

It was in 1982 that the Commission, of the European Communities announced that Zambia was in the first group of countries which the EEC would be joining in new schemes to help right their food imbalances and assist the development of farming and the rural world by helping devise a food strategy and giving the authorities assistance with running it. The Community has been giving the Government its support in the shape of food aid ever since. For various reasons to do with the economic situation, this has not reduced the need for European food aid- and President Kaunda has even said it tended to discourage the Zambians from making an effort to improve their agriculture. Yet food aid has been very useful to these people.

Sysmin

Sysmin, the Lomining support system, has made a major financial contribution to maintaining and developing Zambia’s copper and other mineral industries. Copper makes up the bulk of the country’s export earnings and a combination of lower world market prices and dwindling production hit State finances hard. Sysmin has been a great help in keeping Zambian mining afloat since October 1981 and Francis Kaunda, the head of ZCCM, stressed the importance of this Community aid, which has made it possible for the company to handle its equipment and management problems. By early 1990, the Community had ploughed something like ECU 83 million into getting Zambian mining off the ground again.

Agriculture

The Community has always attached a lot of importance to agricultural development and it gives assistance with every aspect of food production and livestock throughout almost all the country’s nine provinces. And there have been projects too, often very large ones, such as the Maize Development Project (Kabwe, Centre Province) involving 35 000 km² and 30 000 smallholders.

The Community wants to develop vast areas and grow maize, the Zambians’ staple food, by improving the extension service, using draught animals and providing technical assistance and follow-up for the smallholders in this area.

The cost of this, ECU 13.154 million, is being covered by EDF (ECU 12.350 million) and the Zambian Government.

The Community is helping in the livestock sector too, with a financial contribution to a big (9070 hectare) dairy ranch in Batoka. The idea here is to improve both the farmers’ income and the diet of the rural population and it is working, as the scheme brought in ZK 3 213 246 (about $ 201000 at the official exchange rate in September 1989) for an outlay of ZK 1 515692 ($95000) in 1988. And there were expected to be similar developments in 1989, in spite of a fivefold increase in the price of inputs due mainly to inflation and the devaluation of the kwacha.

Other aspects of Community aid

Zambia’s external payments problem led the Community to speed up both commitments and financing, payments going up from ECU 21 million in 1987 to ECU 25.5 million in 1988. And about ECU 20 million have already been committed for the special import programme in 1990.

On the health front, Zambia will be getting about ECU 1.5 million of the ECU 35 million the Community is earmarking for AIDS control in the ACP States.

The Community as such is one of Zambia’s biggest providers of aid and is seen as such by the Zambian authorities. Figures for this aid are set out in the tables.

Summary of Community financing in Zambia (4th, 5th and 6th EDFs)

The 4th, 5th and 6th EDFs totalled ECU 191.4 million, divided as follows: 4th EDF ECU 45 100 million, 5th EDF ECU 58.00 million, 6th EDF ECU 88.3 million. The situation as of 23 March 1990 was as follows for the 5th and 6th Funds, the 4th being virtually closed.


5th EDF programmes and projects financing and 6th EDF programme and projects financing