Harnessing the winds of change

The earthquake which struck Jamaica during The Courier's recent visit in connection with this Country Report was a jolt in more than merely the literal sense. Mercifully, casualties were light and damage was limited but the event brought sharply into focus the capacity of mother nature to thwart humanity in its quest for development, prosperity and progress.

In fact, seismic disturbances do not appear particularly high on the scale of development challenges facing this Caribbean island country. Devastating earthquakes are rare and, as those who experienced the terrible effects of Hurricane Gilbert in 1988 will testify, tropical storms pose a much more serious threat. And, of course, there are the man-made challenges or at least those in which mankind is not so much the helpless spectator as the central participant. There is no shortage of these in Jamaica as the country strives to come to grips with a range of economic and social problems in the last decade of the 20th century. In this Report, we examine some of the key issues facing this friendly 'island in the sun' and look at the efforts which are being made to tackle them.

It is fair to say that Jamaica's economic performance, in the thirty years since independence, has not lived entirely up to expectations. During the first decade, the island's traditional dependence on sugar and banana production was reduced as the bauxite sector continued to grow and new investments were made in cement and clothing manufacture. Growth was not spectacular, however, and the high birth rate tended to offset these gains. Government finances were shaky and unemployment remained persistently high.

In the 1970s, these economic difficulties were exacerbated by the first 'oil shock'. Jamaica relies heavily on imports for its energy needs and the crisis was reflected in foreign exchange shortages, further increases in unemployment and general economic stagnation. The People's National Party (PNP), which had defeated the incumbent Jamaica Labour Party (JLP) in 1972, also chose this time to pursue a more active socialist agenda. Some important social reforms were introduced but the economic situation continued to deteriorate. There was a flight of capital from the island and many qualified Jamaicans also left. The vitally needed stability, which local businesses require for expansion and outside investors demand before they will commit funds to new ventures, was also noticeably absent. Indeed, political polarisation, reflected in widespread violence at election times, appeared to threaten the democratic fabric of the country.

The 1980s saw a return to JLP rule and, as the decade progressed, a significant decline in political tensions. The new government introduced a programme of economic liberalisation with a series of structural adjustment measures supported by the IMF and the World Bank. However, the problems proved to be more intractable than the government had hoped and, although there were some signs of progress, not all the targets were met. Modest economic growth was recorded in 1987 but Hurricane Gilbert delivered a major setback the following year, causing serious damage to infrastructure.

Jamaica's balance of payments deficit -aggravated in the early 1980s by an investment policy which drew in capital imports-was financed through overseas borrowings and, as a result, the debt servicing burden grew alarmingly. By the end of 1990, the situation had recovered somewhat but the country's foreign debt still amounted to some US$4.6 billion, or almost US$2000 for every Jamaican.

On the political front, the pendulum swung once again with the election of the People's National Party in 1989. By this time, however, the winds of change elsewhere in the world were already sweeping away the monoliths of centrally-planned economies. The PNP had recognised this and, in adapting to the new situation, had abandoned many of the elements of its previous 'socialist' programmes. As a result, there was no policy 'U-turn' and the new administration continued with a broadly liberal economic strategy and a stringent policy as regards public finances.

When The Courier last reported on Jamaica in 1988, we concluded that 'the recovery is still fragile and, given the openness of the economy, it remains vulnerable'. A number of things have changed since then, but in essence, the same conclusion remains valid today. In overall terms, the Jamaican economy has been expanding slowly over the last five years although GDP per capita actually fell slightly in 1991 as the population increase outstripped economic growth. (Population grew by 0.9% in 1991, a figure which is well below the ACP average). In the same year, the balance of payments deficit fell to US$ 132 million, a significant improvement on the US$340 million deficit of the previous year.

The unemployment figures continued to make for depressing reading. Whilst recurrent expenditure of 1$17.4billion had to be set aside for debt servicing.

Of course, government expenditure cuts inevitably involve pain for those affected. O.D. Ramtallie, who is Minister of Construction, admitted that the recent austerity measures had had a negative impact on his department's budget and the result was a curtailment-hopefully only temporary-in road and construction programmes. Grass-roots discontent was reflected in a series of public-sector strikes during 1992.

Measures to commercialise or privatise a range of state-owned entities have also been undertaken. The National Water Commission, which is responsible for the country's water and sewerage systems, is one such body which has been forced to adapt to the new economic evironment. Claude Stewart, who is the new President of the Commission, explained the plans to restructure the state-owned utility in order to make it more commercially viable and responsive to its customers. (There are no plans to privatise.) The service is being decentralised and, although there has been a reduction in staffing levels from 5000 in 1989 to fewer i than half that number at the end of 1992, Mr Stewart is confident that the service can be placed on a sounder footing, with improved maintenance and more efficient collection of charges. Overseas funders are active in this sector in the provision of new infrastructure.

Currency turmoil

GDP, the balance of payments, unemployment and the government budget are all important issues but in 1992, the economic news was dominated by what was happening in the currency markets. The story of the Jamaican dollar's fall and rise is a dramatic and fascinating one i which would not be out of place in a

Jeffrey Archer novel.

During the latter half of the 1980s, the dollar was held stable-at what was probably an artifically high rate of roughly 5.5 to the US dollar. As pressures built up, the government chose initially to devalue and then to liberalise the currency trading system, allowing the dollar to float. In September 1991, all remaining controls were removed and within a short space of time the Jamaican dollar had plummeted to a rate of almost 30 to the US dollar. The story of how Butch Stewart, a local tourism entrepreneur, 'came to the rescue' is recounted in the box article on the next page. It is a tale which will doubtless enter Jamaican folklore, but suffice it to say here that the rate bounced back to J$22.20 :US$1 where it subsequently stabilised.

In an economy which is highly dependent on imports, the tribulations of the currency have inevitably had an impact on inflation. This reached 80.2% in 1991, having been at a modest 8.5% only three years previously. The rate fell equally rapidly during the latter half of 1992 as the 'one-off' effects of the dollar's fall worked through the system. In November 1992, year-on-year inflation stood at 39.4% and the annualised rate for the fiscal year (beginning in April) was down to 17.3%.

For a private sector view of recent economic events, The Courier turned to Dennis Lalor who is Chairman and Chief Executive Officer of the ICWI Group, one of the Caribbean's leading financial congLomtes. In an upbeat assessment, Mr Lalor described the decision to liberalise the currency, as 'possibly the most important decision since emancipation'. He believed that the Jamaican dollar had been overvalued for far too long and the new rate was now very tempting for exporters-although he did acknowledge the importance of the Butch Stewart initiative in stabilising a situation which had threatened to get out of hand because of the activities of the speculators.

Mr Lalor also praised the liberalisation of import controls. In the past, import licences were needed for more than 1000 items, but most of these had now been removed, making it far easier for companies to obtain inputs from overseas.

While he was enthusiastic about recent liberalisation measures, Mr Lalor recognised what he called 'the continuing fragility of the economy'. The most important element in strengthening the position was a continuing atmosphere of stability and a genuine 'spirit of cooperation'. As he wryly concluded, 'you catch more flies with honey than with vinegar'.

It certainly appears that the macroeconomic indicators are nudging in a positive direction, but a sustained recovery depends-more than ever before in the new economic environment-on the extent to which the private sector seizes the opportunities which have been presented to it.

Notwithstanding the successful economic diversification mentioned earlier, Jamaica, in common with many other small countries, has nevertheless tended to rely for its prosperity on a relatively narrow range of economic activities. A slump in one vital sector, which may be accomodated with greater ease in a larger economy, can therefore have serious ramifications. Although the island is clearly less vulnerable than some of its smaller Caricom partners, there are still three main sectors whose performance can have a big impact on the wider economy.

In financial terms, the most important of these is nowadays the tourist sector (which is discussed in more detail in a separate article later in this Report). Tourism has seen sustained growth over the last decade and this has been reflected in new hotel investments creating additional employment and in the successful expansion of a variety of ancillary activities. Although the tourist 'product' is not something that can be quoted on the world's commodity markets, it is evidently susceptible to external events whether it is war in the Persian Gulf or a recession in the United States. There is not much that Jamaica can do to influence such events, but local tourism entrepreneurs can and do work hard to provide a competitive and quality product designed to keep the visitors coming.

In the primary sector, the country's principal product is bauxite and the alumina which is processed from it. The bauxite mining industry is subject to cyclical trends and, in particular, the level of economic activity in the main western markets for aluminium, which is the end product. In 1991, Jamaica produced and exported more than 11.5 million tonnes of bauxite, which represented a 6% increase over the previous year. Production has been on a rising trend since 1986, when fewer than 6 million tonnes were mined. Alumina production has doubled over the same period from 1.5 million tonnes in 1986 to more than 3 million tonnes in 1991. The main export markets for this product were North America (1.3 million tonnes) and Europe (1.2 million tonnes). The trading relationship which Jamaica previously had with the Soviet Union (see the interview with Senator David Coore), which included a barter arrangement involving bauxite for Lada cars, has been interrupted because of the political and economic upheavals in that former country.

The impressive growth in bauxite and alumina production has, unfortunately for Jamaica, not been fully reflected in the economic returns. Indeed, income fell during 1991 as the average price of primary alumina slumped by almost 20% on the London Metal Exchange. It is nevertheless worth noting that in 1991, more than 11% of GDP was generated from this source. In 1986, the figure was less than 7%.

Agriculture

Traditionally, Jamaica's wealth has been founded on its agricultural production, with a particular focus on sugar and bananas. For a time, it looked as if both crops might be in terminal decline. Sugar production dropped from half a million tonnes in 1965 to well under 200000 tonnes in the mid 1980s. For bananas, the fall was even more dramatic with exports slumping from 150 000 tonnes in the 1960s to as low as 20000 tonnes two decades later. Both sectors have recovered in recent years, however, with sugar production at a 12-year high in 1991 (237 000 tonnes), and banana exports bouncing back to 75 000 tonnes. And while, in overall GDP terms, their contribution is modest, they continue to be important to the country in terms of both foreign exchange and employment.

Under the old system of Commonwealth preference, these two products had access to an otherwise protected United Kingdom market and were largely shielded from the pressures of international competition. Shortly after Britain joined the European Community, new provisions were negotiated in a series of protocols to the Lomonvention which largely preserved the preferential access arrangements. Indeed, quantities of sugar up to a certain level were given a guaranteed market at a guaranteed price (related to the prices set under the Common Agricultural Policy for the Community's own beet sugar). Bananas were to be protected in their 'traditional' markets, which in practice, for Jamaica, meant the UK, while rum. an associated product of sugar, also benefited from a duty-free quota.

It is widely thought that, without these arrangements, the banana and sugar producers would not have been able to withstand the international competition and that large-scale production in the country would, by now, have ended. Recently, such a possibility did, in fact, appear as a dark cloud on the horizon, due to two separate events-the GATT negotiations and the creation of a single European market. The fact that, for the first time, agricultural products were included in the world trade negotiations put a question mark over all forms of protectionism including those rules which gave substance to the preferential access enjoyed by certain ACP products in the Community. The EC's own single market programme seemed to pose a particular threat to the banana trade since the special arrangements vis-is 'traditional' markets were not consistent with the establishment of a genuinely frontier-free Europe.

At the time of writing, the GATT negotiations remain stalled but full trade liberalisation in the agricultural sector is clearly a longer term process and there does not appear to be any immediate threat to the special arrangements which Jamaica and other ACP countries have with the European Community. As regards the specific issue of bananas, a new Community-wide solution has been proposed which purportedly seeks to balance the interests of the ACPs, Community growers and the 'collar-zone' producers. This was still subject to intense debate in the Council of Ministers at the time of going to press.

When Dr Marshall Hall, who is the Managing Director of the Jamaica Producers' Group Ltd (formerly the Jamaica Banana Producers' Association), spoke to The Courier, he was ready to put a brave face on the most recent Community proposals for a new banana regime. These proposals would provide reasonably generous tariff-free quotas for each banana-producing ACP country. Cheaper dollar-zone bananas would also, in effect, be granted a quota, although subject to a tariff of 100 ECUs per tonne. For imports above the determined quotas, a high tariff of ECU 850 would be levied. According to Dr Hall, 'Jamaican producers can live with this scheme' but he recognised the need for the local industry to become more efficient and competitive. He also pointed out that it was only access, and not prices, which would be guaranteed. In fact, the price of bananas in the Community dropped by almost £100 a tonne in 1992 as dollar-zone producers stepped up their exports to the EC in anticipation of the single market, and this is obviously a source of concern to producers in Jamaica and elsewhere in the Caribbean.

Only a rash person would predict where the island's banana sector might be in five years' time, but the Jamaicans themselves have clearly recognised the precariousness of this particular export business. Diversification is seen to be the key. It is not coincidental that the Jamaica Producers' Group Ltd has dropped 'banana' from its title and the company has successfully moved into the export of citrus fruits and other produce, although bananas remain as its core activity.

Among the country's so-called 'nontraditional' crops, yams to the value of almost US$ 10m were exported in 1991 while other products traded included mangoes and cut flowers. Other 'traditional' crops which are exported in modest quantities include coffee, coconuts and pimentos.

Social implications

Although there is considerable enthusiasm in the private sector for recent liberalisation measures, the social implications of these changes-at least in the short term-are an obvious source of concern. Jamaica is certainly not unique in having to grapple with a serious crime problem but the apparently inexorable rise in violent criminal behaviour and, of course, the chronic drug problem, are now among the most serious challenges which the government must tackle. And while the underlying reasons are undoubtedly complex, only the most reactionary observer would fail to see at least some connection with poverty and unemployment. In an attempt to come to grips with the problem in the short-term, the government has focused on improving enforcement. The police force is not widely respected and reforms to this service are being considered. The army- whose discipline and reputation are much higher - has been brought in temporarily to increase security on the streets and they are operating in tandem with the police. A recent decision to end a de facto
moratorium on the use of the death penalty has also been applauded by many Jamaicans but it has attracted some criticism both internally and from outside. No executions had been carried out at the time of writing.

For the longer term, the Government clearly hopes that economic improvements, feeding down to the poorest levels of society, will have a positive impact on crime rates. Unfortunately, the evidence from more developed countries, most of which are also battling with ever-rising criminality, is less than encouraging.

On a more positive note, Jamaica, in common with most of its Caribbean neighbours, puts a lot of emphasis into education and training. The outreach of the school system is on a par with most of the industrialised world and literacy rates are high as a result. Professor Gerald Lalor of the University of the West Indies confirmed that his institution had largely escaped the government's budget cuts and talked of plans to expand the Mona Campus, which is the UWI's base in Jamaica, to accommodate a 50% increase in student numbers. He also spoke of the growing interest of businesses in educational investment, a fact which was reflected in the endowment of four university chairs by the private sector.

The high level of educational attainment is to be seen in many areas of Jamaican life but most notably in the wide range of cultural activities on the island.

Looking to the future

When one experiences the beauty of Jamaica, the hospitality of its people and the vibrancy of its culture, one is sure to be captivated. This is clearly a country with a great deal to offer but also, it must be said, a great deal to do. After years of economic stagnation-by no means all of which has been self-inflicted-the signs are that, at last, it may be turning the corner. A new economic reality prevails and a new political consensus offers hope for sustained economic development in the coming years.

For government, the challenge is a familiar one, faced today by governments all over the world: how to continue fostering an enterprise culture while, at the same time, maintaining social equilibrium.

For the private sector, the challenge is to grasp the new opportunities which have been presented to it and become the engine of a new prosperity.

But, in the final analysis, the main challenge is for the people as a whole. In the quest for human development, it is human resources which provide the key. It may only be a pointer, but the remarkable response of the people last year to their currency crisis suggests that the Jamaicans are willing and able to rise to the challenge. Simon HORNER

P.J. Patterson - The new man at the helm

When Michael Manley stood down as Prime Minister in March 1992, to be replaced by P.J. Patterson, many Caribbean commentators saw it as the end of an era. For more than twenty years, the charismatic and sometimes controversial leader of the People's National Party (PNP) had occupied a central position in the Jamaican political system-as Prime Minister for two terms in the 1970s, as the principal opposition figure during the government of the Jamaica Labour Party (JLP) in the 1980s and then again in the top job following the PNP's victory in 1989.

Since the 1940s, when Jamaica elected its first Parliament by universal adult suffrage, the country's two political parties have vied with each other for power. For much of this time, the rivalry has been characterised by sharp ideological differences with the PNP favouring socialist policies while the JLP, despite its name, argued for a more free-market approach. But it would be an over-simplification to portray the political history of the country purely in terms of a classic left-right divide. The character and personality of the party leaders has also played a crucial role, ever since the founding fathers of Jamaica, the JLP's Alexander Bustamente (the first post-independence Prime Minister) and his PNP rival Norman Manley (Michael's father) locked horns in the early political debates.

Powerful leaders

In the 1970s and 1980s, the political landscape of Jamaica was dominated by the powerful personalities of Michael Manley and his arch-rival, Edward Seaga of the JLP, who is currently leader of the opposition. These two men offered very different visions for their country, and robust debate sometimes spilled over into conflict between their supporters, particularly in the polarised atmosphere of election campaigns. Despite this it was often difficult-at least for outsiders-to think of one without the other. The election of P.J. Patterson has changed all that.

The new Prime Minister, (his first name is Percival, but he is more usually referred to by his initials 'PJ'), took office last year following a decisive victory over Labour Minister, Portia Simpson, in his party's leadership election. He is a lawyer by training, having studied at the University of the West Indies and the London School of Economics. He has been active in the PNP since 1955 and began his Parliamentary career in 1967 when he was nominated to serve in the Jamaica Senate. From 1970-1980, he was an elected member of the House of Representatives and he regained his old seat in the 1989 election which brought the PNP back to power.

P.J. Patterson first entered the Cabinet in 1972 as Minister of Industry, Foreign Trade and Tourism. It was in this capacity that he led the Jamaican team in the negotiations which led to the establishment of CARICOM (Treaty of Chaguaramas, 1974). He has also been closely involved in Lomonvention discussions. In 1978, he was promoted to the post of Deputy Prime Minister and Minister of Foreign Affairs and Foreign Trade. Prior to becoming Prime Minister in 1992, Mr Patterson was Minister of Finance.

New leadership style

The Prime Minister is regarded by many as representing a new and more pragmatic style of politics. He is capable of passionate oratory-a necessity for any political aspirant in Jamaica's Wstminster-style Parliament-but the emphasis in his publicity material, is on his 'ability to work in a 'non-confrontational' manner and to guide discussions in a way that 'allows equal respect for the opinions of all involved'. According to Minister of State, Terence Gillette, the new Prime Minister is 'less flambuoyant, less talkative and more serious' than his predecessor and recent opinion polls suggest that the voters approve of this style.

During his first nine months at the helm, P.J. Patterson has certainly had a stormy passage. Rampant inflation, provoked by currency liberalisation, has undermined an already precarious economic situation. The exigencies of IMF-influenced structural adjustment measures have brought pain to the public sector and provoked widespread industrial action while almost half of the country's J$26 billion budget has had to be set aside for debt repayment. Unemployment levels remain stubbornly high and the alarming crime rate-which must be influenced to some extent by the lack of job opportunities-threatens to damage the crucial tourist sector as well as business investment more generally.

Clearly, the challenges were, and still are formidable but the new Prime Minister is determined to steer the ship of state through to calmer waters. In fact, the first tentative signs of renewed confidence on the economic front appear now to be emerging.

Election forecast

When The Courier visited Jamaica in January, speculation was rife that a General Election would soon be called. Under the country's Constitution, it is the Prime Minister who decides on the date of polling and P.J. Patterson is doubtless anxious to obtain a mandate in his own right. The turbulence of his 'honeymoon' period appears not to have affected his popularity - indeed, he seems to have emerged with his standing enchanced, and this is obviously a major consideration in any decision to go to the polls. Past Jamaican voting habits-or at least those of the crucial 'swing' voters-ought to give the Prime Minister cause for optimism. Traditionally, the electors have given the governing party two 'bites at the cherry' before switching to the opposition and the new incumbent must be fervently hoping that Jamaicans do not choose 1993 to break the habit!

It should be recognised that, in addition to the change in leadership style with a new Prime Minister, the policy environment in Jamaica has also undergone a radical transformation although, admittedly, this process began somewhat earlier. In common with parties of the left in a number of the world's 'traditional' democracies, the PNP has felt obliged to abandon many of the 'socialist' elements of its programme and to turn to policies with a stronger free-market orientation. As a result, there is now a broader consensus in Jamaica on the economic fundamentals. Although this fact is unlikely to diminish the intense rivalry between the parties on the campaign trail, it helps contribute to the business confidence which is so vital for economic regeneration. S.H.

Media brief

The media are an important element in Jamaica's vibrant democratic system. Despite the relatively small market, the country has no fewer than five radio stations as well as the JBC television channel. There are also two daily newspapers (the long established 'Gleaner' and the 'Herald') and a selection of weekly journals. In January, a group of local businessmen launched a new title, the 'Observer', which will be published using the latest print technologies. Initially, it will come out weekly, but the aim is to turn it into a daily as soon as possible.

Journalistic standards are generally regarded as good and reporters do not appear to have any qualms about tackling controversial issues. To an outsider at least, the amount of radio and TV time set aside for political discussion and comment may come as something of a surprise. There are frequent debates about current affairs and all points of view can be heard. But then it must be remembered that Jamaica has one of the most politically aware electorates in the world. They probably wouldn't settle for anything less!

Interview with Senator David Coore, Minister of Foreign Affairs and Foreign Trade

Talks about his country's external relations policies

Keen to deliver

Senator David Coore has had a long and distinguished career spanning politics and the legal profession since he began private practice in Jamaica in 1952. He was elected to the pre-independence Legislative Council in 1959 and served as a member of the special committee that drafted the country's Constitution in 1962. Entering the House of Representatives in 1967, he went on to become Deputy Prime Minister and Minister of Finance, posts which he held for six years. This was followed by a period working for the Inter-American Development Bank with postings to the Dominican Republic, Barbados and the United States.

The election of the People's National Party Government in 1989 saw David Coore return to ministerial office. He was appointed a Senator and given the job of looking after his country's foreign and trade relations. He is also leader of government business in the upper house.

In this interview Senator Coore speaks to The Courier about a range of trade and foreign policy issues. He also describes, in frank terms, the policy of the Jamaican Government regarding the two troubled countries which are its nearest neighbours-Haiti and Cuba.

· Senator Coore. How would you characterise the current relationship between Jamaica and the European Community ?

-It is very good. Aside from our links under the Lomonvention, we have relations with all of the countries of Western Europe and have resident ambassadors in Brussels, London, Bonn and Geneva. We have a fair amount of trade with Europe-for historical reasons, mostly with the UK. On the aid side, there are substantial programmes, notably with Germany and Italy, but also with France and, of course, the UK. And we are trying in particular to develop European tourism. This is a critical sector of our economy and is one of the main focuses of our activity in Europe. I should say that it has been progressing quite well in recent years but we are hoping to see it expand still further. To some extent, however, growth in this area is dependent on us being able to increase the number of direct air links.

In general terms, therefore, we regard the EC as a very important area for trade, investment and tourism, in addition of course, to the programmes that we have under the Lomonvention.

I should also say that we have traditionally had good links with the countries of Eastern Europe through our embassy in Moscow. We had an important trading relationship with the former Soviet Union involving the exchange of bauxite and alumina for cash as well as Lada cars. As you can well understand, that arrangement is in suspense at the moment. The problem is that the bauxite was going to the Ukraine while the cars came from Russia. This was obviously workable while they were both parts of the Soviet Union but things are different now and we are still working to find a new relationship with these countries.

· There has been a lot of fairly heated discussion recently about bananas, and in particular about access to EC markets. The Community appears to have arrived at a formula which seeks to strike a balance between the various producers involved- in the EC itself, in the so-called 'dollar zone' and in the ACP countries including Jamaica which have traditionally enjoyed preferential access. What is your view of the proposal ?

-We are not totally happy with it. We think that it has certain deficiencies but we recognise that, given the sharp divisions which exist in Europe over the banana protocol, it is probably the best that could be achieved to protect our position under the Lomonvention.

Of course, it is all related to the GATT and we can't be certain that the new tarification proposal will actually achieve the same results as the previous regime involving specific licensing and quotas. We will just have to wait and see how it works out in practice.

We also recognise that it is going to take some time for the proposal to be implemented. Consequently, we have been very keen to ensure that interim measures were put in place and this has now happened in that the status quo has been maintained until July.

I should say that we preferred the original Commission proposal which, we thought, met our concerns to a greater extent. The current proposal appears to meet some of our concerns but, as I say, a lot will depend on how it actually operates in practice.

· What about the trading position of sugar, which is also an important export product for Jamaica ?

-Sugar is in a different position. The quota is not really affected by the single market. What it is affected by is the modification that is taking place in the Common Agricultural Policy of the European Community. Under the CAP, beet sugar enjoys a fairly healthy subsidy and since the price of beet sugar is used as a reference price for our own cane sugar, the position has been reasonably satisfactory for us. But the beet sugar price is under continuous siege-because of the pressure to modify the CAP, reduce subsidies and so on. We have to anticipate that the reference price will be eroded. So while there is no immediate problem we can see that there may be difficulties in the longer term.

· I was interested to hear your explanation of the problems in the trading relationship with the countries of the former Soviet Union. Are you exploring other export avenues for the bauxite! alumina industry?

-Yes we are, although we don't have any real problem in selling our bauxite. We could find other markets. The real problem at the moment is that the world price is depressed and, therefore, the returns on it are not as good as they were a couple of years ago. But this is a function of the world economy and there is very little we can do about it. We hope that we will be able to reactivate the trade with Eastern Europe because they were taking over 5 million tonnes of bauxite but our industry was not dependent on that-it was the icing on the cake. I can say that the Ukrainians are very keen on maintaining the relationship and continuing to receive our bauxite. So I am hopeful that, as soon as they can Bet their act together, we will be able to resume the trade with them.

· History seems to be littered with failed-or at least only partially successful-attempts to achieve regional integration in the Caribbean. Indeed, a commentator on local Jamaican television suggested recently that integration may not necessarily be a good thing and that small countries could survive quite happily without such arrangements. What do you think ?

-That is complete nonsense. All of us who are members of Caricom need the organisation. It is of value to us. Admittedly, internal Caricom trade is not as great as it could be but it is still important; for example, here in Jamaica it provides a good market for our light manufacturing industries. But more significantly, the existence of a single market in the Caricom region, which is what we are working towards, will increase its attraction to outside investors. You start with a larger market base and, with different islands having different comparative advantages, everyone is in a position to benefit from investments coming from outside.

It also gives us a forum for negotiating on a more realistic basis, for example with the North American Free Trade Area (NAFTA) or with the countries of Latin America.

Caricom is important to us in Jamaica and we believe that it needs to be strengthened. We also see it as a base from which the English-speaking Caribbean can integrate more closely with the Latin American region of which we are. geographically, a part. It is being recognised more and more that our economic future is bound up with the extent to which we can integrate ourselves into the Latin American region - the wider Caribbean if you like-which embraces the countries of Central America and those of South America that border the Caribbean Sea.

Although progress towards the somewhat grand objectives of the Chaguaramas Treaty ' has been slow, and marked by some disappointments, we have nevertheless moved forward. At the most recent meeting, decisions were taken on the basis of a report presented by the West Indian Commission which is chaired by Sonny Ramphal. These allow us to progress at a pace which everybody is comfortable with. There is no point in trying to move too quickly and not carrying everyone with you.

So the future of Caricom is assured. It is just a question of how fast it is wise to go and the extent to which we can make use of the real benefits that accrue from being able to act as a coherent and cohesive body.

Let me give you a practical example. One of the problems that we all face is the cost of diplomatic representation abroad. As we open up and develop trade and because we need technical and, in some cases, financial assistance from donor countries, it is essential for us to have a diplomatic presence in the outside world but it is an expensive business for small countries to do by themselves. One of the planks in the Commission's proposal is that we should beg,in to share the costs of diplomatic representation and I think that this will enable us-individually and collectively-to have a much wider outreach at lower cost.

In fact, we have already been very successful in operating as a coherent group in fore such as the Organisation of American States (OAS), the United Nations, in our dealings with the USA and Canada and of course, in the ACP Group. We have worked closely together and have benefited from this.

· I believe that the Dominican Republic applied to join Caricom ?

-Yes, we had applications to join Caricom from the Dominican Republic, Haiti and even Venezuela while Puerto Rico has expressed interest in some form of association. The conclusion we have come to is that it would be unwise for us to try and extend Caricom to include countries like the Dominican Republic because you could overburden the structure. The total population of Caricom is five million and the Dominican Republic alone has six million people. Haiti has another six million. So we have accepted the proposal put forward by the Ramphal Commission that the integrity of Caricom should be maintained. We have a lot in common, both historically and culturally, and we have already gone some way towards creating a single market. We think that to attempt to bring in other countries at this stage would set back that process. We aim to continue strengthening and deepening Caricom while at the same time, seeking to establish what is called en 'association of Caribbean States' of which Caricom would be a part. That would enable us to establish functional linkages with the Dominican Republic, Haiti, Puerto Rico, the Dutch and French Islands and the Caribbean countries of Central and Southern America. So that is the way that we see the development of integration in this region-not through the enlargement of Caricom itself.

· What is the Jamaican Government's position on relations with Haiti?

-Our position is extremely clear. We were very active in the run-up to the election which brought President Aristide to power. We provided them with a lot of technical and other monitoring assistance. Working very closely with the Carter Centre in Atlanta, the OAS and other organisations, we helped them to put their electoral machinery in place, to prepare voters' rolls and so on. So we were happy when the elections took place and a democratically elected President took office.

Of course, it is not for us to determine who is the right person to be elected, but given the result of the election, Aristide is constitutionally the President of Haiti and he is the only person we recognise as such. Since he was ousted, we have played an active role in the OAS and elsewhere in seeking to mobilise assistance from the wider international community. We believe, firstly, in enforcing the embargo and secondly, in trying to achieve a political settlement and we will continue with that approach. We are quite uncompromising in our contention that, unless and until Aristide is restored as a functioning President, we cannot recognise any regime there. We will continue to press for the people who have seized control-the junta, or whatever you want to call it-to be ostracised by the international community. We are also committed that once constitutional government is restored, we will do whatever we can to mobilise international assistance to meet Haiti's needs. They need a structure, a civil service and a security force that is separate from the army. They need massive economic assistance to get their economy on the move again and all of this is going to require a lot of development cooperation from the international community as a whole.

We have been very vocal in insisting that the OAS must be concerned not only with solving the legal problem, but also in making a commitment that once constitutional government is restored, it will take on board the larger, long-term problem of creating a viable social, political and economic environment in Haiti.

· You talk of ostracising those in control in Haiti but of course you have another close neighbour which has been ostracised by the United States for a long time. What is the state of relations between Jamaica and Cuba?

-We have good relations with Cuba. They have a resident ambassador here and we have an ambassador to Cuba although he is stationed in Jamaica. Indeed, we have a long standing relationship. Many Jamaicans have migrated to Cuba and still live there. We recognise, of course, that because of the hostility of the United States, we can't push this too far, otherwise the US becomes very critical towards us, but we do not observe the unilateral embargo which they have imposed on Cuba.

There isn't a great deal of trade between us because our economies are similar in many ways but we do cooperate and are doing so increasingly in the field of tourism. Cuba is trying to rebuild this sector and there is no doubt that it could be an attractive destination. We recognise that we can both benefit from working together in this area. Jamaican entrepreneurs are operating tourist facilities in Cuba and there is a regular interchange of visitors between the two countries.

We don't think that this antagonism between Cuba and the United States is permanent. One day it will come to an end and we think that when it does, it will have been very much in our interests to have established joint tourism operations.

We are also about to sign some agreements with Cuba in areas of common interest. These involve exchanges of technology, the simplification of visa procedures and action against narcotics trafficking which is certainly a problem for both of us.

Basically, our policy is to do what we can to help the reintegration of Cuba into the North and Latin American families as quickly as possible. We recognise, of course, that as long as the US maintains its present policy, this can only go so far, but nevertheless we feel-and increasingly this is the view throughout Latin America-that we have to do everything we can to encourage the Cubans to open up their economy, to democratise their system and so on. We think that the best way of doing that is by letting them know that we want them on board, as part of the regional system. I think that with the collapse of their linkages with the Eastern bloc, they themselves are increasingly recognising that this is the only way forward. The one missing element is some shift in American policy. I don't expect that to happen overnight but I am hopeful that such a shift will begin to take place-perhaps even without anyone admitting it.

In short, we think that Cuba has to change, in terms of both its political and its economic system but it is much better if that change takes place in a peaceful way, rather than through another bloody revolution.

· One final question concerning the future of cooperation with the European Community. You have spoken a lot about the common interests of the countries in the Caribbean basin. Yet the ACP Group consists of nations from three very distinct regions of the world, and its composition is based on historical linkages with EC Member States rather than any particular geographical or economic logic. What do you say to the suggestion that it may be time for the Community to look at a new configuration in its development cooperation relationships?

-I haven't really thought about that, to be quite frank. But I do think that it is in the interests of all three regions to continue to work together. Obviously, our concerns are not always identical but, by and large, we have a sufficient commonality of interests to make it worthwhile for us to negotiate with the European Community as a group.

Some people might feel that we in the Caribbean, for instance, could do better if we dealt with Community on our own. I do not hold to that view myself. I think that the European Community will increasingly cease to regard their association under the Lomonvention as some sort of assuagement for their colonial past and more and more as a basis for commercial relationships. With this in mind, it is obviously better for us to operate as a larger grouping.

In short, the best way for us to maintain our links with Europe and to maximise the benefits we can get is under the ACP umbrella. That - at the moment at any rate-is our policy.

Hospitality is big business - Jamaica's tourist sector

Interview by Simon HORNER

It does not take a mathematical genius to recognise that when an island with fewer than two and half million inhabitants welcomes more than 1.3 million visitors to its shores in a twelve month period, this means big business. In fact, tourism is the single most important sector of the Jamaican economy contributing almost a third of total receipts from goods and services. It is also the most important source of foreign exchange, and provides employment, directly or indirectly, for tens of thousands of Jamaicans.

In this article, we take a closer look at Jamaica's tourist industry with particular emphasis on the factors which have made it the most important economic sector in the country and on the challenges which it is facing in an evermore competitive global tourist market.

Beach attractions

There can be little doubt that, from the point of view of the natural environment, Jamaica has what it takes to attract holidaymakers in large numbers. Top of the list must be the beaches. Despite concerns over the possible health implications of exposure to the sun, the mainly light-skinned tourists from the rich (and cold) countries of the North seem to have lost none of their appetite for 'sun, sea and sand' vacations. Armed with their bottles of high-factor sun-cream, they migrate south in large numbers as the gloom of winter descends on the northern hemisphere and many choose to make their landfall in Jamaica. And who can deny the therapeutic effects of relaxing on a pristine beach of the finest white sand, with a glass of rum or fruit punch and one of the world's most pleasant natural swimming pools just a few paces away? But Jamaica has a great deal more to offer than just beaches. Despite its small size, it has a beautiful and rugged interior with mountains rising to a peak of more than 2000 metres. It has river gorges, water falls, cave systems, stunning bird life and an abundance of colourful flora whose lingering scents provide a constant reminder of the tropical setting. When the late Errol Flynn was forced by a storm to seek a haven for his yacht on Jamaica's shores, he was so captivated by the beauty around him that he chose to spend most of the remaining years of his life there. Few overseas tourists have that option, but the story underlines the country's potential for 'capturing' its visitors and inducing them to return year after year.

Good infrastructure

Of course Jamaica is not unique in its tropical beauty and nature alone cannot supply the needs of modern mass tourism. Proper accomodation, facilities for entertainment, good food and high quality service are all essential elements for a successful tourist venture and it is here that Jamaica seems to be offering a winning formula. In the resort areas on the north and west coasts, a great deal of money has been invested in tourist infrastructure from the main point of arrival at Sangster International Airport to the restaurants, hotels and villas where the visitors will wine, dine and (at the end of the day) recline. Jamaica is the third most popular holiday destination in the Caribbean after the Bahamas and the Dutch Antilles and this is reflected in the extensive infrastructure. It is noteworthy that local entrepreneurs have played a prominent part in developing the tourist product and the local staff who run the operations are well-trained and friendly.

Jamaicans are naturally gregarious and this is an important element in the equation as it means that visitors are made to feel genuinely welcome. The country also has a rich and vibrant culture. The natural sense of rhythm for which the Caribbean islander is renowned finds expression in reggae and calypso. The former is Jamaica's own unique contribution to contemporary music which was made famous by Bob Marley, and it provides a lively background in the bars and streets. The latter, which was first popularised by Harry Belafonte, belongs, strictly speaking, to Trinidad and even if it is frowned-on by some cultural purists, there is no doubting its popularity with many visitors.

The negative side

Of course, perfection is an aspiration that can rarely be achieved and there are, as always, some negative elements which ought to be mentioned. The first, which is beyond the effective control of the authorities, is associated with the climate. It is ironic that a country whose principal attraction is its idyllic weather should be thus afflicted, but Jamaica is in the hurricane zone and during the season from June to October, there is always the risk that it will be battered by a fierce storm. To be fair, it is rare for the island to experience the full and damaging force of a tropical storm-the last bad one was Hurricane Gilbert in 1988-and the experience is more likely to be frightening than life-threatening. However, the indirect effects on tourism, as on other sectors of the economy, can be serious when the infrastructure sustains damage.

A second negative factor which, from the point of view of the authorities has attracted unwelcome attention in recent years, is the security situation. In common with many other countries, the problem of crime in Jamaica seems to be growing and there is concern about the capacity of the police to deal with it. Some tourists have been attacked and, in 1991, the US State Department issued a 'travel advisory' which certainly did not help Jamaica's image as a tourist destination. It is important, however, to put the problem into perspective. Much of the island's crime is associated with drugs, poverty and social conditions in the poorer areas, and serious criminal acts tend to be concentrated in these locations. Security-particularly in the exclusive beach resorts-is relatively good, and the reality is that the average tourist is probably more at risk from a traffic accident in his home country as he drives to the airport for his flight to the Caribbean. This, of course, does not mean that the visitor should not take sensible precautions.

From the perspective of the tourist industry, the island's flourishing drug trade appears to present something of a dilemma. There is no question of the authorities openly sanctioning the activity but neither do they appear to be 'striving too officiously' to stamp it out, to paraphrase a well-known legal expression. As a result, soft and reputedly not-so-soft drugs are widely available in the tourist areas. ( The Courier was approached on three separate occasions by young people offering to sell ganja during its recent 'Country Report' visit). It is a sad fact that for some tourists drug availability is a selling point when they choose their holiday destination. Conversely, for some Jamaicans, the trade provides a living in an economic environment where 'legitimate' work is in short supply. It should be understood, however, that offenders (both Jamaicans and foreign) are apprehended from time to time and the penalties can he severe.

Environmental worries

The growth of tourism over the past decade and a half- the number of visitors has trebled since 1976-combined with a more general awareness of 'green' issues, has also given rise to concerns about the environment. Large scale tourist developments, concentrated in sensitive coastal areas, will inevitably have an impact on local communities and wildlife habitats. Mr Roy Miller, who is Deputy Director of the Jamaica Tourist Board acknowledged these concerns when he spoke to The Courier and he emphasised the importance of developing 'eco-tourism' as a viable alternative. Although in its early stages, the first steps have already been taken with the launch in 1991 of the National Park System. New resort projects, particularly in areas such as Ocho Rios and Negril where substantial tourist developments are already in place, are also likely to be subject to more stringent environmental assessment in the future.

Keeping up with the competition

Jamaica was a popular destination for the well-to-do long before the growth of prosperity in Europe and North America engendered the phenomenon of mass tourism which we see today. But the country has had to adapt to meet the changing market in order to stay ahead of the emerging competition both in the Caribbean and elsewhere in an increasingly accessible world. The economic difficulties provoked by the slump in earnings from bauxite and alumina, the structural problems facing traditional agricultural exports and the oil shocks of the 1970s have at the same time increased Jamaica's dependence on tourism while reducing the scope of government to invest in the basic infrastructure vital to maintaining competitiveness.

Despite these difficulties, the government, with considerable help from its overseas partners, has maintained a capital investment programme which is designed to cope with the increase in tourist arrivals. Recent projects have included major upgrading of water and sewerage facilities at Montego Bay and Negril, improvements to the Northern Coastal Highway and the expansion of the terminal at Sangster International Airport. (It is generally acknowledged that a visitor's first and last impressions of a country are particularly important!) These investments should help Jamaica to maintain its position in the forefront of Caribbean tourism.

Local feelings

Jamaican warmth and hospitality have already been mentioned, but it is worth posing the question whether tourism provokes any resentment among the majority of Jamaicans who live outside the resorts. It is certainly true to say that a lot of money has gone into the tourist areas and the largest population concentration is in the Kingston metropolitan area, which sees few holidaymakers. The government is aware of the danger that it might be seen to favour the tourists at the expense of ordinary people and it strives to achieve a fair balance in its investment programmes.

There has been some criticism, notably from small independent operators such as restaurateurs and taxi firms, of the increasing trend towards 'all inclusive' resort holidays, in which the visitor is whisked from the airport to his exclusive hotel by the beach, only to emerge two weeks later to catch the return flight. Cruise passengers, who make up an increasing proportion of 'visitor arrivals' are also sometimes resented for the fact that they reputedly contribute little to the economy in their very brief visits to the island.

Responding to the first of these criticisms, the major hotel operators insist that they must offer what the holidaymaker wants if they are to attract and retain his or her custom. All-inclusive resort holidays are undoubtedly gaining in popularity. In addition, it is stressed that these operations still generate jobs as well as significant business for local entrepreneurs. In 1991, almost 23 000 people worked in the accomodation sector. Many more, employed in areas such as food and beverages, and construction, benefited indirectly. Regarding cruise ship passengers, who obviously spend no money on local accommodation, it is pointed out in their defence that they still bring in substantial amounts to the country overall. In 1991, they spent an average of US$73 each during their short stay. These are powerful economic arguments which are difficult to refute and it appears that the majority of Jamaicans seem to recognise this.

Some basic facts Jamaican tourism

Performance and prospects

As ever, the fortunes of the tourist sector are dependent on a wide range of factors, many of which are beyond the control of the industry or the island's government. Three quarters of the tourists who come to Jamaica are from the United States and Canada. In 1991, there was a significant drop in arrivals from both of these countries, apparently due to a combination of the Gulf War and the economic downturn. However, the figures for the first ten months of 1992 point to a recovery in this market.

The bulk of Jamaica's European holidaymakers come from the United Kingdom and they appear not to have been affected, either by Gulf War fears or by the deep recession in their own country. Indeed, the number of 'stopovers' increased by almost 7000 from 1990 to 1991 and the trend appears to have continued during 1992.

The big success stories for Jamaican tourism, however, are in the mainland European and Japanese markets. The number of European tourists (excluding those from the UK) almost doubled in 1991 to more than 70 000 and that figure had already been surpassed in the first ten months of 1992. In proportionate terms, the rise in Japanese visitors is even greater although the actual numbers are more modest (12 662 from January to October 1992).

The Jamaican Tourist Board obviously keeps a close eye on economic trends in its principal markets and, with indications of a recovery in North America but continuing economic gloom in Europe, more attention is likely to be devoted to the former, at least in the short term.

In the longer term, the industry seems certain to maintain its pre-eminent position in the Jamaican economy. New competitive challenges-perhaps from neighbouring Cuba, if and when it emerges from its cold war purdah-seem likely, while unforeseen natural disasters, or increasing security problems cannot be ruled out. But the remarkable success of the sector over the past two decades, during a period of sustained economic difficulties for the country as a whole, reveals a resilience and adaptability which bodes well for the future. S.H.

Interview with Bruce Gokling Chairman of the Jamaica Labour Party

The ideological battle is over but policy differences remain

During the 1970s and early 1980s, the Jamaican people were presented with a clear choice in elections. The People's National Party offered an interventionist and broadly socialist programme while the Jamaica Labour Party supported more liberal economic policies. Now that the PNP has embraced the principles of the free market, this ideological split has largely disappeared. The current ascendancy of economic liberalism ought to be a source of some satisfaction to the party in Jamaica which has traditionally espoused it but it also presents them with a dilemma: how to project a distinctive agenda which is attractive to the crucial floating voters.

Bruce Golding who is Chairman of the JLP insists that, despite the new economic consensus, there are still important differences between his own party's approach and that of the governing PNP. In this interview with The Courier, he explains these differences and talks about the JLP's electoral prospects.

· Mr Golding, how does your party's approach to solving Jamaica's economic prob1ems differ from that of the Government ?

- The ideological differences have now disappeared to the extent that the governing party has abandoned its socialist commitments of the 1970s. There are, however, some very sharp policy differences over the role of government in the economy. The present government has adopted a 'hands-off' approach. They seem to be convinced that, on the economic front, the best thing to do is nothing. They want to leave it to the private sector, confining themselves to monetary and fiscal management and the provision of basic social services. They say that this is an effort to create an investment-friendly environment. We differ on this fundamental point because we take the view that a country in our position - where there is a lack of investment, no real growth in traceable goods and services, high unemployment and a significant balance of payments deficit-cannot leave the solution solely to the organic workings of the private sector.

Now I am not for one moment suggesting that government should become dominant or that it should start taking economic initiatives in a unilateral way. I believe that if we are to succeed, there has to be a close synergy between government and private enterprise with policies and strategies being worked out together. There is no point trying to drag the private sector, kicking and screaming, into doing things they don't believe in. But we also see the need for an overall investment policy framework that seeks to identify the principal instruments of growth and development and the areas where this will take place. Government has a clear role here in pulling the whole thing together and providing the necessary incentives.

I would not necessarily rule out the possibility that there may be a need for government equity participation, because very often. when it comes to new investment initiatives, the private sector is somewhat timid. Perhaps they need to have their hands held for a little while. We have to recognise that in the past, and particularly during the 1970s, there was a massive migration of capital and skills- management and investment skills in particular. As a result, we have lost much of the investment ethic. The private sector is not as bold or courageous as it used to be in embarking on risk investment. They prefer to play the stock market where money is simply moving around within a particular pool, or to deposit their money at the central bank where they can get a substantial and secure rate of return. But that does not create a single job; it does not put one root of cane in the ground; it does not put one piece of new machinery into a factory so that we can produce and export more.

The government seems to be hoping that, having liberalised exchange controls and taken various other measures to open up the economy, it will all now happen generically. We disagree with this analyses.

Look at the experience of other countries. We can't really compare ourselves with the industrialised nations, but I think we can look for comparisons in Asia and the Pacific. Twenty-two years ago, Singapore was just behind us in terms of growth and development. Today, they are way ahead of us. They succeeded because they had a very proactive government and we support the same approach here in Jamaica.

· You mentioned last year's currency liberalisation which obviously caused a major upheaval. It is widely believed that the 'Butch Stewart initiative', which was taken up by other entrepreneurs and actively supported by ordinary Jamaicans, stabilised the currency. Is this belief correct, in your view?

I think that most of the analyses I have heard have missed the fundamental point. I should stress that we are not opposed to liberalisation. It was in the medium-term economic programme which we produced in 1988 when we were in government. We planned a gradual move towards currency liberalisation to be completed by fiscal year 1993/94. But we also warned that if it happened too abruptly, we would pay the price in terms of movement in the exchange rate and that's exactly what happened. By the end of fiscal year 1991/92 which ended last March. inflation had reached 105%. This had an impact on the poor and middle classes alike. It affected the cost of our debt servicing and the government's ability to provide basic services. That level of inflation also discourages investment and I think that we will be reaping the consequences of that for a long time. We were not opposed to liberalisation as an objective, but we would have been far more gradual in our approach to it.

Now in terms of what actually happened, the Butch Stewart initiative clearly had an impact. I don't think one could argue otherwise. It put pressure on other major foreign exchange earners to take similar action and the people rallied round. But I think it is true to say that that effort, commendable as it was, would not have succeeded if it had not been supported by very tight monetary policies designed essentially to mop up liquidity. And policy in that area has not been as consistent as it should have been. In June 1991, for example, the Prime Minister, who was then Minister of Finance, was announcing with great accomplishment, the reduction of interest rates at a time when they should not have been reduced. That was one of the reasons why the measures in the early part of last year had to be so severe but there is no doubt that they helped to contain demand and therefore to ease pressure on the currency.

I am not sure that we are home yet, however. While we have had a rate of J$22.20 to one US dollar for quite a while now and people are inclined to think that this is a stable rate, there do seem to be some problems in obtaining foreign exchange. I myself needed US$2000 to send my daughter back to school last week and I had considerable difficulty in getting it. Now I do believe that my position does give me a little premium in dealing with bank managers. If I could have had that level of difficulty, where I had to shop around and it took me a couple of days, I can imagine that somebody who needs $100 000 to bring in raw materials probably has problems as well.

· One of the most serious issues facing the country is the crime and security problem. How has this arisen and what would you do to tackle it?

-This is not a new problem but it has become particularly accentuated in recent times. Crime is a factor, principally of two things. The first is social conditions-poverty and all that goes with it as well as a breakdown in traditional community and family structures. These are things which have to be tackled with long-term policies.

But you can't afford simply to wait for the long term treatment to work. It is also an immediate problem which threatens much of what is vital to us. This involves looking at the other factor which is the serious deterioration in our law enforcement capabilities. The police force is run down-not just as regards equipment and resources but also in terms of qualification, spirit and morale. It needs major reform. We have made some proposals, which I don't think have attracted widespread popular support, to amalgamate the police and the army. We really don't feel that a country of our size living in the world that we now live in, really needs an army. They are there, in effect, to come in and clean up where the police have failed and while that has been helpful, we don't believe it is the most effective way of dealing with crime and violence.

A criminal will always look at the odds. If the chances of his being caught are only two in ten, he will probably decide it is worth the risk. And the more he gets away with it, the more he is likely to do it again, so that it becomes a pattern. This is essentially what has happened here.

I feel that we need to get the police back into the community. They are too busy in these great installations that they call police stations. The police officer should be the person whom the community looks to for protection, not someone to be feared.

There have been various reports on this problem and I am optimistic that we will see progress in the coming year. A special task force, which was set up in agreement between the government and the opposition, has been working on the issue. It is too early to say, however, whether their recommendations will go far enough.

· What is the JLP's position on the issue of Caribbean integration?

-We think that the efforts in this area have been misdirected. There is an undue emphasis on political integration which we feel is neither necessary nor workable. Too much of the effort is being driven by some sort of emotional, sentimental idea of commonality, history and culture rather than by the solid economic benefits that can be gained. Because of this, I think we keep missing the goal. Instead of the present crusade for deeper integration within Caricom, we think it should be widened.

Let us consider Caricom. At the moment, it has a population of five and a half million which is a joke in terms of the world economy. That is the size of a European city. We feel that we ought to be looking beyond the English-speaking Caribbean to relationships in the first instance with other countries in the Basin such as Venezuela, Suriname and the French and Dutch Islands. We would then be looking at a population of some 30 million and an economic unit that would make more sense in terms of viability, market strength, skills, investment and so on. And we wouldn't necessarily want to stop there. In the longer term, we should also be looking at closer links with all the Andean countries.

I also believe that we must seek to secure some accomodation within NAFTA. Currently the talk is about preferential arrangements and that may be necessary because of our small size. But the larger you are, the less dependent you become on these types of concessionary arrangement and, even if we have to seek concessions, they should be for a limited duration. Part of the problem of developing countries such as Jamaica is that we never allow ourselves to be weaned from the nipple bottle. We must accept that eventually, we shall have to stand on our own two feet.

· What about the current political situation ? There is a lot of election speculation, now that the PNP has taken the lead in the polls. How confident are you of being able to claw that back?

-We have a very difficult task to win the election. I think that much of what is carrying the PNP along is clever and sophisticated management of public perception. A lot has been said about the Prime Minister's style and about the supposed social tranquility and economic stability. The raw experience of the majority of the population is very different, but they are caught up in a kind of lull having been through a long period when prices were going up almost every week. So there is a general feeling of relief.

The Labour Party of course has its own internal problems that have not entirely been resolved and that has also affected us because it tends to diminish our attractiveness as an alternative government. We are not ready and we do have that problem. But politics in Jamaica are very dynamic and it is difficult to say what the situation will be like in two months from now.

We are mounting a campaign which seeks to point out that the country is just marking time-that it is going nowhere fast-and that a lot of this is due to the fact that the government has abandoned its role and the country is basically being run on autopilot. Deliberate decisions and initiatives are needed and we intend to outline the policies that we want to see implemented. Whether we have enough time to get the message across is another matter.

· One final question. Mr Seaga obviously isn't going to be around for ever. Are you likely to put you name forward for the JLP leadership?

-You know that we are avid cricketers here. Well, in cricketing terms, I don't lift my bat until the bowler has released the ball.

Dancing to a Jamaican tune

Interview by Simon HORNER
A profile of Professor Rex Nettleford

Rex Nettleford is, to use an old-fashioned expression, a 'man of parts'- one of those people whose diverse interests and activities and whose boundless energy prompt admiration and amazement in equal measure.

On reflection, 'boundless' is an unsuitable adjective. For Rex Nettleford is a dancer-as well as being a university professor, historian, trade union activist, choreographer, director, author and all-round cultural oracle.

The Courier met this remarkable man in his office at the Mona Campus of the University of the West Indies, where he is Professor of Continuing Studies and Pro-Vice-Chancellor with responsibility for outreach and institutional relations. A historian by training, his studies included a period as a Rhodes scholar at Oxford University and his current teaching timetable embraces history, politics and culture. but the achievement for which he is particularly renowned is his central role -over thirty years-in the famous Jamaica National Dance Theatre Company

The NDTC came into being in 1962 and the young Rex Nettleford was one of the leading lights in the group which helped to set it up. The inspiration behind the company is perhaps best summed up by the professor's own words, taken from the brochure which was published to celebrate its thirtieth anniversary.

'In setting ourselves the task of finding our own voices (or should l say feet ?) in the art of dance, we have from the beginning pledged ourselves to forging a vocabulary, technique and style rooted in the realities of Jamaican and wider Caribbean life. This has in no way ruled out the fertilising energy of discoveries from other civilisations. But we have been very aware that none but ourselves can... find ourselves. '

Over three decades, the company has certainly succeeded in forging a uniquely Jamaican vocabulary, technique and style -which has been critically acclaimed throughout the world. Indeed, one measure of the success of this still essentially amateur group, is to be found in the 'roll-call' of international venues where it has performed while on tour.

The dance forms evolved at the NDTC do not, however, necessarily fit a single mould or concept. The cultural currents and eddies which have swirled in and out of the Caribbean Sea for centuries have created a kaleidescope where elements of the different original influences mingle, but can still be identified.

Nor are the dances always comfortable to the eye. As Nettleford, who has himself danced in many productions as well as choreographing and directing various works, points out; 'where being 'entertaining' demands little more than what is expected of traditional minstrelsy we recoil from such an easy and demeaning route'. High standards indeed, and ones which do not always equate with commercial success. But the NDTC refuses to 'compromise its vision' and it is worth noting that it has succeeded over the years without direct government subsidy.

The success of the NDTC would have made an interesting subject on its own for an interview, but when Professor Nettleford spoke to The Courier, he chose to tackle a broader canvass, revealing in the process the eclectic nature of his interests. He spoke of Jamaica's economic problems, concerns about social justice and equality but above all about 'an intense engagement in the exercise of creative imagination' which has arguably made Jamaica the cultural capital of the Caribbean. He stressed the impact of his own small island on the popular music of the wider world, referring in particular to Bob Marley as a 'global force'. But even this, he argued, was only 'the tip of the iceberg' with a great deal more happening on the ground in Jamaica.

He went on to refer to the 'excellent partnership which exists between the government and the people' in the field of cultural endeavour, not forgetting the private sector which had always played a role in helping the arts. The collective experience of the Jamaican people had been a 'tremendous source of energy' and the result was a strong sense of cohesion in civil society.

The Professor also spoke about another of Jamaica's unique cultural events- the Pantomime-which had not 'missed a day since 1941'. This event, which bears a certain resemblance to the fairy-tale performances familiar to Englishspeakers in Europe, is a highly popular musical comedy which satirises local situations and people. Jamaican folklore supplies many of the characters and Jamaican music features prominently.

One of the reasons for abundance of cultural activity in Jamaica, Nettleford believes, is the fact that the people have traditionally 'soughs to honour achievers in the area of creative intellect and imagination'.

Finally, when asked about the (pernicious?) influence of American culture, the professor was surprisingly sanguine. He spoke of the challenge to develop organic alternatives but also was keen to point out that Jamaican reggae had gone out into the world. In short, he saw no objection to cross-cultural pollination. Or as he put it; 'by all means, put fertiliser to the soil. All we have to do is to make sure that the fertiliser does not become the soil'. S.H.

Profile

Area: 11 424 km² (4411 square miles)
Population: 2 435 800 (1991)
Crowth rate. 0.9% (over 1990)
Density: 213 per km²
Capital: Kingston
Government: Bicameral parliamentary democracy

Head of State: Queen Elizabeth, represented in Jamaica by a Governor-General. (Discussions are currently under way with a view to moving towards a republican system)

Prime Minister: P.J. Patterson (People's National Party)

Leader of the Opposition: Edward Seaga (Jamaica Labour Party)

Party Representation in the House of Assembly (February 1993): PNP 46 seats, JLP 14 seats (election due shortly)

Currency: Jamaican Dollar (US$ I = J$ 22.20 - January 1993)

Inflation: 1990 - 29.8%, 1991 - 80.2%. The year-on-year rate topped 100% in early 1992 but dropped sharply thereafter. For the first nine months of 1992, the rate was 37%. In September 1992, prices rose by only I % pointing to further steep falls in the annual rate as the one-off effects of the currency devaluation worked through the system.

	1990	1991
Gross Domestic Product: (in J$bn)
at current prices	29.82	42.37
at constant price	16.92	16.95
(1986 base year)
Real GDP growtb rate4.8%0.2%
Balance of payments (in US$m)	- 604.7	- 404.3
Goods	-784.9	- 654.3
Services	+ 180.2	+ 250.0
Principal exports (in US$m)
Alumina	625.3	543.0
Bauxite	103.0	112.9
Sugar	85.8	87.4
Bananas	37.7	45.1
Rum	17.2	15.4

Source: Economic and Social Survey Jamaica 1991 prepared by the Planning Institute of Jamaica.

Map

Cooperation with the European Community

by Jean-Claude HEYRAUD

Since 1976, many of the privileged relations between Jamaica and the United Kingdom have been taken over by the European Community, through the Lomonvention, and are now based on reciprocal interests in a new spirit of equal partnership. They and the EC's relations with the other countries of Africa, the Caribbean and the Pacific have been institutionalised in various ways and one of the institutions, the ACP-EEC Council of Ministers, which takes place at least once a year, met in Kingston, the capital of Jamaica, in May of last year.

The main thing which the Lomonvention provides is a stable, long-term framework, both for the development of trade relations with Europe and for the country's economic and social development in general, while there is also shorter-term support for the stabilisation and structural adjustment of the economy.

Jamaican bananas, sugar and rum-Community alcohol.

Trade with Europe remains dominated by two Jamaican exports, sugar and bananas, once the bulwark of relations with the United Kingdom. Two Lomrotocols guarantee continuing access for these two products, which are vital to Jamaica in terms not just of economic advantage and export earnings (12.6% of the total in 1991, and 78% of agricultural export earnings), but of employment and a safe income to small peasants and rural workers.

As with other ACPs in the region. Jamaican bananas have so far had completely free access to their only export market, that of the United Kingdom. But with the coming of Europe's single market this year and the disappearance of national markets inside the Community there is to be a new system though. as agreed in the Convention, it attempts not to place traditional ACP suppliers in a less favourable situation on the Community market than they were before. Like other countries in the region. Jamaica has remained alert and still keeps a very close eye on Community decisions in this field-on which the ACPs are always consulted first.

Although Jamaica's banana output was hit hard by Hurricane Gilbert in 1988, it recovered fast and exports rose to 75 290 t in 1991, with even better figures expected for 1992.

Bananas and 15 of the island's other agricultural products are covered by the Lomonvention's export revenue stabilisation system, Stabex, which cushions drastic fluctuations in earnings. Jamaica has used it once for bananas in 1981.

ACP producers have to compete with the cheaper Latin American bananas by ensuring high quality and low costs. One of the reasons for spending ECU 1.5 million of EDF money on the rebuilding and extension of Boundbrook Wharf at Port Antonio-due to be the point of export for about 75% of Jamaica's bananas after completion in March 1993 is to cut losses and costs at the port and during transport.

For sugar, the protocol provides an annual quota of almost 119 000 t of white sugar (the ACPs fourth largest) at a price related to the price paid for Community sugar, which is far higher than the world market price. This amount is slightly more than half the island's output, which thus supplies domestic needs and the privileged external markets in the Community and the United States (quota of roughly 22 000 t in 1991). There are also special access arrangements for a sugar product, rum, which are gradually being liberalised, with larger Community entry quotas as from this year. The Community will be laying down the arrangements for stopping the quota (planned as from 1996) in advance, in the light of ACP exports and the situation and outlook on the Community rum market.

Under provisions which are not part of the Lomonvention, Jamaica is also able to purchase European wine alcohol on favourable terms, turning it into ethanol and re-exporting it, also on favourable market access terms, to the USA. This is almost the only example of a commodity imported by an ACP country and re-exported in processed form to the North.

Other trade

Jamaica exports 31 .1% (by value) of its products to the Community. but goods from the Community only account for 13.8% of its total imports (1991 figures). It has managed to boost its foreign exchange earnings and reduce its dependency on sugar and rum over the past decade by increasing its output of nontraditional products (fruit and vegetables, spices, flowers, cigars, textiles etc.), thereby bringing about a substantial and steady increase in its exports to the Community, which levies no import duty on them. Indirectly, this improvement should also go some way towards helping both sides alter the balance of trade.

The Commission wanted to make an effective contribution to this and so, in January of this year, it approved the Target Europe Programme to provide support for the recent, joint initiatives of JAMPRO, Jamaica's public trade and production promotion board, and private exporters in the Jamaica Europe Business Club. The ECU 3 million for this are to come from the first LomV national indicative programme (19901995).

Table 1: Summary of EC assistance to Jamaica since 1975

Structural adjustment

Jamaica has been negotiating economic stabilisation and structural adjustment programmes with the international financial institutions since 1978. The special structural adjustment support provided under LomV is timely, because, over the past two years, Jamaica has taken the most stringent economic stabilisation and liberalisation measures, giving it access to the IMF's Extended Financial Facility (EFF) for the three coming years.

The Community's structural adjustment support includes LomV financing for an ECU 8.4 million general import programme (ECU 2.5 million special support and the balance from the LomV and ex-Lom national indicative programmes) to support the balance of payments. The counterpart funds accruing from this provide social sector budget assistance and in some cases supplement Community activity in other areas-rural development for example. These funds are targeted at a meeting of the Finance Minister, the Planning Institute and the Delegation.

Other EDF projects are also designed to support the Government's programme of reform. For example, plans are being made for an ECU 7 million credit line programme using the balance of the LomI and III NIP special loans and grants to promote employment and production, two vital factors for the policy's success. This programme, in which a good percentage of the loans to final users will be managed by Jamaican NGOs, should not just help small firms. Enterprising individuals who want to open workshops will also benefit. The various organisations will have technical assistance to optimise their distribution and loan recovery. The prospects of success are particularly sound in this developing country, where private enterprise is expanding and industrial production outside the mining sector already accounts for 16% of GDP.

The European Investment Bank, which was involved in the sector before the EDF, has laid on ECU 30 million in the shape of three credit line programmes, via the National Development Bank, and has financed two ECU I million company share operations via the appropriate organisations.

Economic restructuring has also involved the Government in a World Bank-supported civil service reform, of which one of the main features so far is a hefty 20% staff cut. It goes hand in hand with a come-home policy to encourage expatriate Jamaicans to return and use their skills and experience in the national administration to help development. An ECU I million programme (tome IV) is currently being set up under the responsibility of the International Organisation of Migration in Geneva to get more than 40 of these qualified Jamaican expatriates home and settled.

Budget restrictions have hit education hard, but the University of the West Indies has benefited from all the successive Lomegional funds for wide-ranging development of its four campuses in Jamaica (Mona), Barbados (Cave Hill) and Trinidad & Tobago (Saint Augustine and Mount Hope). It has also received ECU 16 million from LomI and III to rebuild the university hostels on the four campuses as well as at CAST (College of Art, Science and Technology) and the CTC (an arts and culture training centre), which are two Jamaican institutions serving the whole of the Caribbean.

Lastly, the Community and various NGOs cofinance a number (more than 32 since 1977) of small projects, mainly in the social field, to help cushion the social repercussions of the adjustment policy.

Focal sectors of Community aid

Jamaica has stuck to the approach of previous Conventions, LomII especially. The first national indicative programme (1990-1995) of LomV focuses funds on economic infrastructure and agriculture, two sectors affected by the adjustment measures.

The rural road repairs begun under LomII (almost ECU 7.3 million) are continuing under LomV (ECU 13.5 million), as are the rural and semirural water supplies (ECU 6.7 million under LomII and perhaps as much as ECU 18 million under LomV). These sums include the institutional improvements vital to the development and better management of the organisations in charge of this work (the Ministry of Public Works and the National Water Commission). There are particularly good reasons for Community involvement in this area given that, with the Negril and Ocho Rios purification facilities (see below), almost ECU 50 million from the past three EDFs have been invested in the water sector. The linkage which is envisaged in this area is in the hands of the United Towns Development Agency, which proposes to extend the Ciudagua programme (already developed with Latin America) to the Caribbean with financial help from the Community. All this financing is of indirect benefit to agriculture and transport (shifting farm produce) and helps raise the standard of living in rural areas by discouraging people from moving to the towns.

The EIB has also helped with economic infrastructure, using capital from own resources to finance a jetty for cruisers in Montego Bay (ECU 5.25 million) and to build a container terminal in Kingston (ECU 16 million).

Table 2: Lom - II - III - IV

Agriculture contributes barely 8% of GDP, but it has considerable potential and, above all, is an essential aspect of any balanced development (employment for 27% of the working population, development of rural areas, food import-substitution and containment of the move to the towns). The aim of financing previous programmes was primarily to back up all the small growers, particularly in the coffee industry, where ECU 3.5 million was provided, mainly in the form of small loans, although cocoa and citrus fruit farmers were also helped, as were goat breeders (the meat features in curry goat, one of the national dishes). This last scheme is in fact being run on a regional scale by CARDI, with LomII financing. The technical cooperation with bee-keeping also developed under LomII is being pursued under LomV (ECU 1.7 million) with similar aims. Preparation of a programme of support for extension services and small farmers is due to start in March 1993, using the balance of several million ECU still available in the LomV national indicative programme.

Lastly, a recent evaluation shows that the support for small peasant farmers in the Saint Anne province, who have switched from ganja-growing to legal crops, has achieved what it set out to do. This is one of the four Jamaican projects financed to the tune of ECU 1.3 million from the Commission budget as part of the North-South drug control cooperation programme. The others focus on prevention and rehabilitation.

Biggest foreign-exchange earner -the tourist trade

The tourist trade, expanding constantly and only slightly dented by the Gulf crisis, has been Jamaica's biggest foreign exchange earner ($750 million) for three years now, with a big interest in visitors from Europe making up for the declining interest on the part of American holiday makers. The bulk of the investments in this sector have been made by dynamic, enterprising Jamaican businessmen.

The Community provides substantial support for this still fragile sector, which is now such an important one for the country. Montego Bay airport, the main tourist point of entry, has been expanded (ECU 7.1 million from LomII) and is already able to cater more efficiently for the ever-increasing numbers this season.

Lastly, Negril and Ocho Rios, the two tourist centres, are getting new sewage collection and treatment systems to make them more hygienic, prevent pollution of the sea and the beaches and protect the coral reef. The financing for this, ECU 25 million (approval in the first quarter of 1993) comes from the Lom1 Sysmin funds, which are being redirected from the bauxite industry to help diversify the Jamaican economy and protect the environment.

Table 3: Allocation of National Indicative Programme resources by sector

Community aid: more closely targeted and better absorbed

Not much Community aid was absorbed in the 1980s. Only an average of ECU 3.5 million was paid over each year of the decade and there was a considerable build-up (ECU 72 million in l 990) as a result, but the rate of disbursement has speeded up a lot over the past few years to reach an average of more than ECU 6 million p.a. But, far more than the increase in payments, it is the present rate of primary (financing decisions) and secondary (contracts) commitments which, combined with the Jamaican authorities' greater attention to projects, justifies the level of Community aid, most of which is in the form of grants. Primary commitments have already been made for 52% of the LomV national indicative programme. The Government knows what is wrong and is trying to cut through more red tape. The needs are still there, urgent and far from being met.

So the technical and financial cooperation schemes between Jamaica and the European Community are many and varied and they are run in many fields, all of them essential, to provide support at the most critical points in the economy of an island which, thanks to its beauty, its culture and the drive shown by its people, is unique. J.-C. H

The score so far: Democracy 2, Economic Recovery 1

Readers should be aware that just as this Country Report went to press the President of Zambia declared a state of emergency amid reports of a plot by the opposition to overthrow his government. In a broadcast, the President said that democracy in Zambia had been poisoned and political stability was threatened. Several people were arrested, but freedom of expression and association remained guaranteed.

To begin with a little geography, Zambia is a landlocked country in southern central Africa. The predominant landscape is one of high plateau covered with wide expanses of bush, some of it developed for agriculture but most of it still virgin land. Population density is one of the lowest in Africa at ten per square kiLome, yet Zambia is the third most highly urbanised country on the African continent, with half its population living in towns and cities, a proportion which is steadily rising. The major focus of settlement and economic activity is the line traced by the railway which runs south from the Copperbelt, where Zambia borders on Zaire, through Lusaka, the capital, to Victoria Falls on the border with Zimbabwe. Lusaka is a planned city built where this north-south route crosses the east-west route from Malawi through to Angola.

Copper, the mainspring of Zambian history

Zambia's recorded history is comparatively recent and is bound up with what is still the country's main source of foreign earnings, its rich mineral deposits, particularly of copper. In the last century, in order to secure these for itself, and to prevent influence over the land north of the Cape being gained by its empire-building European rivals, the British, government in 1889 gave a company formed by the South African mining entrepreneur Cecil Rhodes a charter to: administer the territories which became Southern and Northern Rhodesia, now Zimbabwe and Zambia respectively. In the 1920s administrative responsibility was taken over by the British colonial office, and intensive exploitation of the copper mines began, to satisfy a worldwide demand created by the rise of the electrical and motor vehicle industries. A legislative council represented settler interests but excluded Africans, who were treated purely as a labour reserve. Overall control of Northern Rhodesia was, however, retained by London, and Europeans resented the fact that Britain took millions of pounds out in taxes on the mining companies but put almost nothing back in for development. Africans, for their part, were not keen to see settlers taking control, as they feared a mass alienation of land such as that which had occurred in Southern Rhodesia. Despite their concerns, the two Rhodesias and Nyasaland (now Malawi) were federated under settler control in 1953.

Independence

The African population took no share in the economic and political advantages of the new arrangement, and organised opposition to white interests crystallised in the late 1950s under a young radical, Kenneth Kaunda. He led the newly formed United National Independence Party (UNIP) in a campaign of civil disobedience which forced the colonial authorities to promulgate a new Constitution giving Africans a majority in the legislature. In 1963, the Federation was dissolved and, in the following year, Northern Rhodesia achieved independence as the Republic of Zambia, with Kaunda as its president.

The government of the new republic took over the mineral rights still held by the company originally formed by Rhodes, but the country's great mineral wealth had made little contribution to internal development, and the educational structure and social services were woefully inadequate. It was particularly vital to the economy that mineworkers should be contented, and peaceful industrial relations were bought at the price of a large wage rise in 1966, followed by increases for other urban workers. Subsistence farmers and the unemployed, although far greater in number, were neglected, and many migrated to the towns in search of work or a better living.

Sanctions against Southern Rhodesia following its unilateral declaration of independence, and the struggle to throw off colonial rule in Mozambique, which Zambia covertly supported, left the country economically blockaded and a prey to subversion from the south, and as the resulting political tension rose in 1972 President Kaunda declared one-party rule by UNIP. Soon after, the civil war in neighbouring Angola closed the route to the Atlantic hitherto used for carrying half of Zambia's copper exports, and at the same time the world copper price fell sharply. In 1975, for the first time, the UNIP leader urged the country to look for economic security in farming rather than mining, as food prices rose and unemployment and popular discontent grew. The closure of the export route through Rhodesia, and the open hostility of the lan Smith regime in that country to the Zambian government, were invoked as the main reasons for Zambia's economic difficulties. Yet when both these factors had been removed, by 1980, the economy continued to decline and living standards to fall, and political opposition from both business interests and workers mounted.

Repression

A failed coup attempt in 1980 was followed by reshuffles of cabinet ministers and UNIP officials, and by strikes and rioting in protest at food shortages. In July 1981 among the workers' leaders arrested and imprisoned was the chairman of the Zambia Congress of Trade Unions, Frederick Chiluba, who ten years later was to become President. Consolidating his power, Dr Kaunda won a fifth election in 1983 and turned increasing attention to the repression of internal dissent and alleged external conspiracy. Meanwhile the economic crisis continued unabated and, at the behest of the IMF, which was called in in 1983 to help with economic reforms, the Government adopted further austerity measures, such as removal of the subsidy on refined maize meal, the staple food, in 1986 and a steep increase in the price of fuel in 1987. The popular outcry was such, however, that these attempts at introducing realistic pricing were rescinded and the government announced it was breaking with the IMF but would continue with its own restructuring programme. IMF-style policies nevertheless reappeared in the Fourth National Development Plan 1989-93, only to be reneged on once again as elections approached in 1991.

A new era

This brief overview brings Zambian history up to the point where years of political and economic stagnation suddenly gave way to a new era. With such a legacy as this, the picture now is a very mixed one, but to start with the good news, after 27 years during which power was increasingly concentrated in the hands of one man, and 19 years of one-party rule, Zambia has become a democracy. This is largely the doing of a wide grouping of different interests which came together in 1991 as the Movement for Multi-party Democracy (MMD). The announcement of large increases in the price of maize meal in that year provoked an unprecedentedly violent outbreak of hostility not just to UNIP's economic policies but to the ruling party as a whole, and its President in particular. An earlier promise of a referendum on whether to change over to multi-party rule was abruptly shelved when President Kaunda saw that he had lost the political initiative, and the constitutional changes required for the holding of multi-party elections were quickly set in motion. Many UNIP members, including MPs, defected to the MMD, and nine other new parties also came into being. After lively campaigning on all sides, with the opposition challenging UNIP's control of the media and uncovering evidence of preparations for ballot rigging, freely contested presidential and general elections were held on 31 October 1991. The MMD swept to victory, taking 125 of the 150 seats in the single-chamber National Assembly, and its leader, the veteran trade unionist Frederick Chiluba, took 76% of the presidential vote and went in triumph to State House as Zambia's second President. Kenneth Kaunda had no seat in parliament but stayed on as UNIP leader; last year, however, he was replaced in an internal party leadership contest and has now retired to private life.

The new government came to power on a surprisingly low turnout of 45.4%, owing in part to shortcomings in voter registration and provision of polling booths, but foreign observers pronounced the campaign and the polling free and fair. The new Cabinet contained representatives of all the various interests backing the MMD-except that women are hardly represented at any level of government-and was welcomed internationally as a credible and competent team. There were some misgivings that the size of the MMD's parliamentary majority might mean continued domination by a single party, but a free and critical press has not been reluctant to perform the role of an extraparliamentary watchdog. Some of the reporting of alleged corruption and malpractice in official circles, particularly in a newspaper recently set up by private business interests, The Weekly Post, is harder-hitting than would be possible under the libel laws of certain longer-established democracies in the industrialised world. The MMD itself, as can be seen from the interview with President Chiluba in this Report, actively encourages democratic debate, even though it often makes life difficult for the Government. Of the 14 or so minor political parties, only the Social Democratic Party seems to stand any chance of emerging as a third force in Zambian politics.

Bankruptcy

We said the picture is a mixed one. The bad news is that by the time President Kaunda and UNIP fell, after a final attempt to buy votes by extravagant spending, they had reduced the Zambian economy to a state of total bankruptcy. Under the policy described as 'humanism', whose stated aim was to loosen the grip of 'exploitative international capital' on the economy, the UNIP government had acquired a stake in almost every branch of economic activity, from copper mining to (literally) hairdressing, and the resulting parastatal congLomtes were run and staffed by large numbers of people on the State payroll. This overgrown civil service, however, was underpaid, unmotivated and inefficient. In any case, most of the population were still employed in the informal sector and the tax base was consequently very small. Extravagant domestic expenditure was financed largely from exports of a single commodity, copper, the price of which rose and fell in line with world demand, so that economic planning became impossible except in the very short term. Deficits were paid for with the help of government borrowing from the central bank, in other words the government printed money to pay its bills. An overvalued currency, the kwacha, helped to make exports unattractive; when it was devalued, imports of manufactured goods, including spare parts for mining and other industries, in their turn became prohibitively expensive. Infrastructure became more and more dilapidated, and inflation soared out of control. Little help could be looked for from the country's foreign donors and creditors, as the abandonment of economic reforms in the last period of UNIP rule had ruined Zambia's reputation as a responsible partner in development cooperation.

Economic reform

Putting the economy back on its feet has clearly been the Government's main priority since it came to power. The economic reform plans it announced soon after taking office were firmly in line with World Bank and IMF prescriptions and feature a well-known mix: price liberalisation, involving the removal of price subsidies; the privatisation and restructuring of the many parastatals; promotion of the private sector and individual initiative, and encouragement for local and foreign private investment; more open trade; financial discipline, with tight fiscal and monetary policies, and tax reform. The Government embarked on these ambitious reforms with a speed and aggressiveness that took many by surprise and raised fears of worse economic hardship to come, and the President and Ministers were soon on the road appealing to Zambians throughout the country to bear the pain in the interests of future prosperity.

Although sacrifices are being asked for, the reform programme includes a social component, as the path to growth is seen as Iying through the alleviation of poverty. A social welfare programme channelled through nongovernmental organisations operates; 80% of its expenditure in 1992 was in the provinces, and went to projects in the education, health and water supply sectors, as well as to canal construction as part of a labour-intensive public works programme. The very poor are being offered food for work; several programmes are already under way, including building projects in Lusaka, Ndola and Livingstone and farming schemes in rural areas. However, an unforeseeable complicating factor which came into the equation in the very first months of the new Government's term of office both curtailed the intended spending on social welfare and increased the day-to-day difficulties faced by the ordinary people.

Drought

At the beginning of 1992 Southern Africa experienced its worst drought in living memory. In Zambia there were heavy crop losses in six of the nine provinces, and the government appealed to international donors to help it feed the population until the next harvest. Maize, the staple food, was particularly urgently needed, as 70% of agriculture is maize production (as a result of this, of course, there was very little by way of other crops which could be eaten instead). Vegetable oil, pulses and milk powder were also requested, and the outside world, including the European Community, responded rapidly with shipments over and above their normal food aid deliveries. As an emergency step, the Government bought maize at market prices for distribution to the needy, acquiring some 245 000 t out of its own resources by May 1992. The international aid community provided some US$ 200m in drought assistance, plus balance of payments support to help bear the high cost of moving the maize to Zambia. The EC's aid, for example, was transported by sea to Dar es Salaam and Port Elizabeth and thence by rail. The distribution effort put Zambia's transport sector under heavy strain but has proceeded smoothly up to the present time. A small amount of food aid was reported lost through alleged theft, but the total was only 0.2% of all shipments. Some 30 000 t of maize were given away free to very poor population groups, sometimes in return for work, but the bulk was sold in order to generate counterpart funds which were used to buy further quantities from the commercial market. To protect farmers with crops of their own to sell, the Government undertook not to undercut the commercial price for maize.

As well as losing their crop and a year's income, many small farmers had to consume their seed corn and had difficulty affording fresh seed or fertiliser for the next season. Adequate quantities for the growing season, which began in November, were imported either through a donor-assisted programme or by private companies under open general licence for sale on the open market.

Hardship

This huge drought-relief effort was all conducted against the background of the IMF-approved economic reforms, which of course included liberalising the markets for fertilisers, as for other goods. The effect of this on the ground can be gauged by a small example, the experience of an agricultural supply depot funded by the EC in Machisompola, a rural area in Central Province. The manager of this reported that last year he had sold 8000 bags of fertiliser to local farmers, but this year, over the same period, only a little above 1500 bags. This must in large part be due to the fact that the fertiliser price had quadrupled in that time. The same depot had bought only 6000 bags of maize from local farmers in 1992, whereas in 1989, a year when there was no drought, it had bought 16 000 bags. The effects on farming families' purchasing power of price deregulation and loss of income were serious enough already; but at the same time the Government went ahead with the removal of subsidies on food agreed with the IMF as part of the structural adjustment programme-and at a faster rate than the IMF had required. As these had traditionally eaten up from 20 to 25% of the total budget, the effect on the fiscal deficit will be gratifying to Government and the donors, but the hardship it has caused in rural areas -and in the towns and cities-can be easily imagined. Critics of the speed of structural adjustment say this part of the programme should have been postponed until the economy as a whole had been made more stable. The opposing theory is that the Government decided it had better act fast on this issue while it was still popular. The Government itself argues that economic instability is overwhelmingly due to inflation, and that as food subsidies contribute to that inflation they have to be removed.

The position now in relation to the drought and food supply is that rainfall this year has been satisfactory and a decent harvest is expected - where farmers have been able to afford to plant a crop in the first place, that is. The Minister of Agriculture, Dr Guy Scott, says there is enough food in reserve, even before the harvest is brought in, to feed the population till August. But to play safe, the Government has once again asked the donors, including the EC, to be prepared to send substantial amounts in food aid.

Farming the land

The rural land on which half Zambia's population lives is one resource whose huge potential has hardly been tapped. In normal years, the country feeds itself and has a healthy surplus for export to its neighbours. Zaire takes vegetable crops and beef, Rwanda and Burundi sugar and maize; output in Zimbabwe is limited by land availability, and the South African decision to stop subsidising maize growing opens a large possible market in a country which is also more prone to drought. Cotton, horticultural produce and tobacco find international markets, and there is scope for producing and selling more coffee. According to the Minister of Agriculture, who in his time has been a successful exporter of strawberries, all that the commercial farmers need to be able to expand is the removal of government controls: 'Getting that sector to take off is fairly straightforward. It's a matter of what you don't do rather than what you do.' For peasant farmers the picture is more complicated. 'The previous government basically ran small holder agriculture as a very expensive form of social welfare, as a way of giving everybody an income,' the Minister says, and the focus was almost entirely on maize. Inputs, marketing, transport, milling and distribution were all subsidised. To rationalise, diversify and expand now requires finance, and, away from the main consumer centres and transport routes, especially in tribal reserves where disputes could arise as to title and succession, smallholders' land has no value as collateral for loans. The crop itself has some value as security, and the Government is working on schemes to encourage contract growing by small farmers for the financial institutions which lend them the start-up money. But Dr Scott wants to see traders, bankers, farmers or anyone but the State identifying and exploiting the opportunities. 'If the system is not constantly interfered with,' he says, 'I think it will tend to happen.'

As for commercial farmland, a recent study estimates that 400 000 hectares of cleared, good-quality land, accessible by road and with power lines, is already suitable for use-this is mostly previously productive farmland which was sold off cheap by settlers who left on independence and is now occupied by people without the resources or know-how to utilise it fully. All it needs is to be ploughed and it could be brought back into production, before there would be any need to clear huge new farms in the virgin bush. The Government itself inherited large amounts of such land from its predecessor and is quite prepared to let anyone acquire it, including white farmers from Zimbabwe and South Africa who have already expressed interest.

Privatisation

An important aspect of Zambia's economic recovery programme is the reform of the parastatals. Under President Kaunda some of these largely state-owned congLomtes had become enormous. Two of them, the Industrial Development Corporation of Zambia (INDECO) and the Zambia Industrial and Mining Corporation (ZIMCO), the holding company which partly owns Zambia Consolidated Copper Mines, together accounted for 80% of all production in the country. ZIMCO has some 135 subsidiaries and associated companies and interests not just in mining and industry but in commercial transport and energy supplies, hotels and land, finance companies, communications and farming. Its chairman during the UNIP period was none other than the Head of State himself. Even before the MMD took office, it had become apparent that the State had neither the capacity nor the money to run, still less to modernise, the enormous and run-down bureaucratic structure which the parastatals created. A technical committee on privatisation used to report to ZIMCO; in a memorable phrase, President Chiluba said asking ZIMCO to privatise the economy was like asking a fish to drain its own pond, and responsibility was transferred to the Ministry of Commerce and Industry.

The Zambia Privatisation Agency was set up by Act of Parliament in July last year, with a board consisting of leading private-sector operators and three government officials. According to an economist on the Agency's secretariat, many of the 150 or so parastatals were basically not badly run and showed a profit or at least broke even, so there is a lot of potential which should interest private shareholders, especially as there will be no political interference in the companies' operations from now on. A first tranche of small companies with between 30 and 150 employees has been offered for sale, and 180 competing tenders, mostly local but including some from Botswana and South Africa, were being evaluated at the time of writing. The policy is to encourage wide share ownership, so parts of the larger parastatals are being publicly floated and a stock exchange may be set up in 1993 meanwhile commercial banks are authorised to trade in shares. As for the timescale, some 30 companies are due to be privatised in 1993, followed by 20 or so per year thereafter, leading to a situation. when MMD's present term of office ends. where the State's interest in the productive economy is reduced from X0"/O to 20%. After seven or eight years everything should have been sold off, except for a few utilities which the agency describes as 'natural monopolies'.

White elephants

As in other countries, of course, there are no buyers for nationalised assets which do not perform, and in Zambia one of the most conspicuous white elephants which the Government cannot hope to get rid of till it becomes a great deal fitter is the national airline. Last year Zambia Airways' operating deficit required Government transfers which came to some one per cent of GDP. The airline at one time had unrealistic ambitions to he a major regional carrier, and is heavily overstaffed. Pay strikes by its employees this year and last have severely tested the Government's resolve to hold inflation down by wage restraint.

Another encumbrance on the Government's hands is Zambia Consolidated: Copper Mines (ZCCM). This parastatal. which mines cobalt, zinc and lead as well as copper, is the second largest copper company in the world in terms of production and employment (after Chile's CODELCO), but output has dwindled steadily for several years as world demand for copper has fallen (fibre optics are more suitable for many applications) and the grade of recoverable ore has deteriorated. For years the company has been unable to reinvest, and its mines are overmanned and run down. According to the Deputy Minister of Mines, Dr Matthias Mpanbe, a large injection of capital will be required over the short and medium terms to keep ZCCM viable. But where is it to come from? Dr Mpanbe himself wondered last year what foreign investor could possibly be interested in, to use his expression, 'such a monstrosity'. The only solution, he now says, is to divest it of all activities not related to mining, so its management time and capital can be put to more profitable use. At the time of writing, it was reported that the Anglo American Corporation, already a minority shareholder, was tipped to buy a majority holding this year, but at a fraction of the several billion dollars the Government had hoped for. As there are no other contenders, Anglo American can dictate terms, and they are also likely to include heavy job reductions. Although that will dent the Government's popularity still further, it has little choice but to accept.

The high cost of rationalisation

Recent events in another area of the economy illustrate the difficulty the Government faces in trying to reduce the public-sector wage bill without alienating the trade unions which played a large part in bringing it to power. In October 1992 the government withdrew its annual grant of 600 million kwacha to Zambia Airways, which had up till then been the only company to escape the decision to stop subsidising the parastatals. The airline said it would have to cut 800 jobs, but it was reported to have no funds to pay for retrenchment packages for those made redundant or cover wage increases for the 1200 employees left. In January the pilots announced that inflation had so eroded their salaries that they could no longer afford to house and feed their families, so they called a strike. Management dismissed 31 of the pilots, a move which looked very like pre-sell-off asset stripping, as the pilots selected for sacking were precisely those not involved in flying the airline's one DC-IO, which operates the more lucrative long-haul routes. The other pilots came out in sympathy and refused to fly any of the aircraft, so the company had to charter 'planes from foreign companies to move stranded passengers and goods. This exercise cost millions of kwacha-far more, according to critics of the dismissals, than it would have cost to meet the pilots' original demands. After a few days' of the ruinously expensive stoppage, the board had no alternative but to reinstate the pilots unconditionally and announce a pay review, whereupon normal service was resumed. Social peace was restored, but the underlying problem of overmanning remained unresolved.

Part of the problem is the high cost of the retrenchment packages for those who lose their jobs in the public sector. The figure for 1993 was put in December at 2.5 billion kwacha, with lump sum pension payments to retired civil servants at 13.4 billion-a heavy charge on the budget.

Union backing

The attitude of the trade unions to the economic reforms will be crucial. The Zambia Congress of Trade Unions (ZCTU) represents about 75% of workers in formal employment, mainly in the public service and parastatals. It was instrumental in setting up the MMD, though it is not formally linked to it or any other political party. It differs, for example, with the MMD on privatisation: while supporting the policy in general, it thinks that certain strategic industries, such as mining, should remain under state control as long as they are so important to the economy. ZCTU's leaders are as enthusiastic for democracy as the Government is, which is no doubt why its Secretary-General, Alec Chirwa, says ZCTU is aggrieved that Government did not consult it properly over the content or implementation of the economic recovery programme. Its members are suffering from the job cuts, and it suggests that a way of taking the pressure off them would be to widen the tax base -at present fewer than half a million workers are in the formal sector-so that personal taxation and sales tax could be cut. MrChirwa also says unions, employers and government should sit down together and set up the social security scheme which Zambia lacks, and believes that the Government avoids acting on ZCTU's suggestion that a poverty datum line be established out of a fear that if it were, most of the population would be found to be below it and would have to be helped. The social safety net is already minimal; the country simply cannot afford to pay for anything more extensive.

Make or break

1993, people inside and outside the country say, will be make-or-break year for Zambia. Thousands more will lose their jobs, inflation will eat into already meagre pay packets, a debt service requirement of US$1.2 billion a year cripples the treasury. The Government gets full marks from the IMF and the donors for its courage in the face of daunting difficulties-praise for implementation of the necessary solutions is more muted. The Government still enjoys some respect at home for its honesty about the hardships still to come, even if the lamentable 13% turnout in the local elections last November suggests that voters are growing disillusioned. If organised labour withdrew its support, or at least its understanding, life for the Government could become very hard indeed.

But is this likely to happen? As Alec Chirwa puts it on behalf of the trade unions, 'If we tore each other apart, we would only sink deeper into our problems with the economy,' and, as far as the Government's credibility is concerned, 'The eyes of the world are on the performance of this government, so we should try as much as possible to support it, so that, if it succeeds, it could be used as a model for other parts of the world, particularly Africa. If this government fails, then you can be sure that in future nobody will pay attention to any government which comes out of the support of labour.' Robert ROWE

An interview with President Frederick Chiluba

'Democracy is not the preserve of developed countries it is a fundamental human right'

In October 1991, in Zambia's first multi-party elections for over 20 years, the Movement for Multi-party Democracy won both a parliamentary majority and the presidency of the country. The MMD's leader, Frederick Chiluba, had been a prominent trade unionist, and as chairman of the Zambia Congress of Trade Unions under President Kaunda had been detained for opposition to the previous regime. In 1990, Mr Chiluba had emerged as one of the leaders, and then chairman, of the alliance of trade unionists, church leaders, businessmen, students and former politicians who overthrew the one-party system on a promise of democracy and a free market economy.

Zambia's first year and a half of this programme has seen general elation followed by some disillusionment at the government's record. While the daily struggle to make a living is made harder by high inflation and interest rates and rising unemployment, crime figures are soaring, there have been allegations of police brutality towards suspects in custody, and some civil servants, local councillors and members of parliament and Cabinet have been accused of incompetence or corruption.

Speaking at the opening of the National Assembly's 1993 session, President Chiluba took a tough line. In the transition to democracy, he said, some leading figures in the country had taken advantage of his style of democratic rule, but this would be a year of discipline. He had a mandate from the Zambian people and would formalise and implement their will, he said; he was not interested in winning popularity contests-there was too much to be done. On the attitude of the media, he said that they had changed from an attitude of extreme subservience to one of 'free-wheeling and rumour-mongering beyond all boundaries of ethics and reason.'

The Courier talked to President Chiluba just after his return from the parliamentary opening ceremony.

· Mr President, since The Courier last came to Zambia three years ago, under rather different circumstances, the process of democratisation has come into place. What have been your priorities in setting up democracy in this country?

-Well, first of all, one has to ask the question: what is democracy? And the answer is that it is very difficult to define. A lot of countries of the world have different models, and we have learned that it may mean different things to different people, but I think I would like to ask the question, what ends does democracy serve? And when we define what ends our democracy is to serve, we have to put in place institutions to make sure that democracy works. So we begin by saying that we want to ensure participation of the people in decision-making. We want to ensure that with democracy the human rights of people, which obviously emanate from the term humanity, are observed in the place, and that calls for a constitution which will embody the rights of the individual person, the right to own property, the right to life and the right to dispose of whatever property one has, freedom of speech, freedom of expression, freedom of the individual person in many spheres of life. This is also interrelated to the liberalisation policy we have set in place in the economy.

We are instituting the rule of law to ensure that there is peaceful resolution of conflict. Multiethnic, multitribal Africa has been famous for many civil wars and we do believe that in the approach to that we have to be extremely careful, perhaps, to preach a politics of a consociational nature, so that we take account of the various demands which are in place in society. To this end, we have also realised that if democracy is to work, the government must deliberately allow for the existence of dissent, and therefore there are many pressure groups: the churches, the trade unions, you name them, they are deliberately, together with the help of the press, almost making it impossible for government to sit down, it has to keep on its feet-and it's all deliberate. But we do realise that, if democracy is to work, that deliberate policy must be fully enforced and it must be supported deliberately by government as well.

That is why from the very inception we realised that we had won such a landslide that the opposition did not actually qualify, according to convention, to be called the loyal opposition. They had not reached the stage, in terms of facts and figures, to be recognised, but I deliberately asked Parliament to recognise them and Parliament did so. Under normal circumstances, unless they had about 30% of the seats in the House, they would not qualify. They had between about 18 and 20% of the seats, but in spite of that we went ahead. We want to encourage this. It is very difficult in Africa, with the tradition of the one-party system, to leave things to the ideas of other people, but we wanted to ensure that we deliberately bring in opposition, so that it plays its role-and, in order to really get policy which is fully accepted in all areas of our activities, the opposition had to play a very, very important role. And they have been playing an important role, small as they are, they are very vocal and, with the help of the press, they have meant that we have had to seek a lot of consensus on many matters, so that they are not seen to be party matters, they are national affairs.

· The press is extremely lively in Zambia and has given you a rough ride in two areas that I can thin'´ of: the behaviour of the police and the calibre of public officials. Are these areas where you think there is still some ground to be made up ?

-Well, in more areas than those two. The police, 1 think, with the background of their training and the difficulty of the legacy we have come from have been a little slow in adjusting. But our general policy is that the police force in a democratic society is not one of repression, and generally the whole area of policy in there has totally changed. But you see, we have taken over a police force that is logistically almost completely unable to perform. Transport, the radio network and things like that are almost nonexistent, they are totally or terribly dilapidated. So, they have tremendous difficulties. And, with opening our borders with this democratic climate now in the country, we have received a lot of people from outside who have added to our worries and it is a real problem. So the police are not deliberately doing what they are doing, I think it is the lack of ability to adjust in time, but the general policy has changed. They are slow to cope because of some of these difficulties. You mentioned the calibre of public officials?

· Yes, I am thinking of a charge that I saw somewhere that some officials, even government ministers, are putting personal economic recovery before the economic recovery of the country.

-No, no, I think again it is just a matter of perception. I think that in our policy framework and even in our implementation, we have said that while we address the full structural adjustment programme, there are social aspects and the impact of the adjustment itself falls squarely on our people. They are the ones really who are paying for this and, as a result, we have created the Ministry of Community Development, which is aimed at taking care of these groups of the most vulnerable people. We also pay attention to things like medical care and schools, which were all broken down. The problem has been the scarcity of resources, and therefore it is what you call the process of making a choice between one or the other and you can't have them both at the same time. So it is really a matter of perception, rather than a general policy or the bad calibre of the civil servant. Our Ministers, our civil servants understand this and they try extremely hard to fulfil this. The Ministry of Community Development is precisely aimed at ensuring that the blind, the handicapped, the needy people in various areas are cared for and cared for very well, so I don't think that it's the calibre or any discrimination or any such. The calibre is right, the policy is right, it is just the scarcity of resources.

· Your country, Mr President, has embarked on a very tough structural adjustment programme. In some areas, like the removal of the subsidy on maize, your government is going faster than the IMF stipulates but in other areas there has been some slippage. Are you happy with the speed of progress?

-In fact I think we have moved faster than could have been the normal case, and I have sometimes been afraid that, if we move a little faster than our people could cope with, we may endanger the whole programme. I believe sincerely that the help we get from the international community, we have to utilise, but, at the same time, we have to act in a very politically mature manner to enlist the fullest support of our people. So far, in all the elections, after the main parliamentary and presidential elections, we have won a number of by-elections and a convincing victory in the local government elections; that gives us hope, but at the same time I look at that as a challenge from the people. They are saying: We still appreciate what you are doing but do not create problems for us because you cannot move. That indication of the mandate given to us, the legitimacy and authority we obtained from the people, must be interpreted into carrying out such projects and programmes as will ensure their fullest participation and support and that the people become the beneficiaries of the same programmes, so we have moved a little faster sometimes than I thought, and I think we are realising that the faster we move the greater the distance may be between us and the people, and that way we may endanger the very process. So, I think we are trying to be systematic and not slowing down but just stabilising our pace.

· It is certainly true that in the local elections, which you referred to, the MMD was very strongly endorsed but, at the same time, the turnout was extremely low.

-It was indicative of the conditions of life, the standards of living which have dropped remarkably. Staple food prices have risen so high that people have felt sometimes that we do not care with these free market policies, we just ask them to fend for themselves. But really it is a bit of a difficult situation, we are not asking the people to fend for themselves, we are asking the people to continue to put in an effort: they have sacrificed too much to abandon the programme. We just have to go ahead. We are paying for the sins of the past 27 years and there is no way we can rectify or remedy the situation of 27 years of mismanagement in a year or two, we just have to continue to pay the price. In any case we have paid too much of a price to ever go back, we just have to go forward and that was in fact my message in parliament today.

· Since your government took power, you have built up an enormous fund of goodwill internationally, and during last year's very severe drought the bilateral donors and international organisations helped your country very extensively, including the EEC. What are you looking for from the international donors in the future ?

-Well, I must generally say that I am very grateful on behalf of my government and the people of this country for that kind of goodwill from the international community. Really, without them the drought would, I think, have wreaked havoc in our country. But, because of that goodwill, we managed to pull through with their resources, their helping us put back the infrastructure, the roads and everything-and especially in the area of balance of payment support, they have been tremendously wonderful and good. We still are stuck with huge amounts of external debt which we find it very difficult a) to service and b) even to pay, and I continue to say the reason for this accumulation of debts was that there was a lack of accountability. There was a lack of participation by people, there was a lack of openness and transparency. All these things we have now put in place; surely the international community could extend their goodwill to this area since now democracy has come and since now no debt will be swept under the carpet unseen, with so much freedom of the press at work. I believe the international community would be promoting transparency and accountability in Zambia. The international community would be helping the continent of Africa in its generality to see that democracy is the key to development. Democracy with very weak economic institutions cannot work, its fragility would I think turn into frailty and collapse, and I believe the international community could consider, even going beyond the agreed terms, trying to help write off the amounts that are outstanding. I know that most of them are on commercial terms, but if there is any way the international community, the governments I mean, could be kind enough to do it one way or another and seek to assist us in this area, they will be giving us a lot of relief and we can start all over again. We will have so much breathing space, we will have nothing hanging over our shoulders and we will be able to push forward and develop some strong basis on which we can build.

· Next week, Mr President, the Preferential Trade Area is holding a big meeting here, and your country is also active in the SADC. Is greater regional integration a possible way of solving some of your country's problems, particularly the economic problem ?

- Yes, indeed, in fact part of the reason why African economies are still in this kind of shambles is the fact that there is a lot of nationalism even in the economies. Now, in a small country and a relatively small market like this, some of the stuff which we produce and which may require to be sold outside requires bigger markets-and bigger markets come by cooperating with countries within regions. I mean we should learn from America, Canada and Mexico and, even bigger still, learn from the EC, where a lot of barriers which existed are gone. Businessmen and women and citizens all over Europe today feel they have a broader area within which to operate, within which to make the forces of demand and supply work and, the bigger the market, the larger the scope for trading and the larger the possibility of the economies growing. This is why in Zambia we always say: 'It is important that we do not restrict ourselves either domestically to the home front or even to three or four countries, to a thing called the SADC, or the PTA. Why not pool together, open up these whole areas and broaden the scope of trade by offering your goods to larger markets, and that might turn into specialisation of production and division of labour? It could mean a lot of improvement in the quantity and quality of the goods produced. I am sure that would make for job creation, because production would be on a large scale.' The possibilities of advancement really would be in place.

· You obviously have an enormous task on your hands guiding the destinies of this country. What is it that keeps you going ?

-I have a resolve. You know, when I stepped into this thing, long before when I was just a trade unionist, I was hooked up into trusting and believing in the freedom of man here, especially in a country that is a member of the United Nations and a believer in its charter of human rights. I did believe there was something missing and I believed the dignity of the Zambian could easily be better than it was. It was talked about, but in practice people were really slaves and I felt that the time would come when true dignity, the integrity of the people, could be seen-and their freedom did not have to come from political leaders. People were born free. Even if the constitution may either confirm or confer that, people must be allowed to feel that they are free and use that freedom to develop themselves.

Further, I believe strongly that people must not feel that without government they could not live, in other words government must not be on their shoulders, it must not be a big policeman over them. Rather, it must be a respecter and protector of their rights. And I felt very strongly, I still feel and this is my life investment in this, that this country and the people of this country must be truly and honestly free to practise freedom and rights without interference from the government. Now, I know there is sometimes a thin line between liberal democracy and anarchy, because of the insistence on individual rights. But I am talking about rights within the law, where one observes that there is a boundary between his freedom and his neighbour's. Overstepping it would be to injure the neighbour's freedom. So, one has to recognise that. The rule of law will ensure that that does not happen.

I have a strong desire, a strong ambition, a strong dream to build a democratic state in the country, to free the people from unnecessary controls and let them take their own personal initiative to develop their talents, to decide their own lives. I have a strong feeling that we are not any different from people in Europe. We are not any different from people in America. I am sure the hour has come for my country and the hour has come for Africa to democratise. Democracy is not the preserve of developed countries, it is a basic, fundamental human right, it is a necessity.

Inverview by Robert ROWE

An interview with Rodger Chongwe, Minister of Legal Affairs

Freedom from fear

Since October 1991 Zambia has been committed to democratisation. Democracy depends for its survival on transparency and the rule of law. The Courier asked the Minister responsible for establishing that legal framework what democratisation had meant to Zambia.

-I think for Zambians democratisation has meant that they are able to express themselves without fear, that they are able within the limits of the law to do whatever they want to do without any consideration that there might be some intelligence officers to stop them. Our journalists, members of the various political parties, NGOs, and pressure groups are in a position to express themselves without hindrance. One thing that has satisfied Zambians is the fact that even the smallest man, if he says something to the press, what he says is given prominence and is reported in the press, and this is something we never had before.

Within the political arena itself, we have 125-plus Members of Parliament who belong to my own political party, they are free in the House even to differ with the Government, a thing which was never heard of in the past. The opposition is free to say whatever they want to say. There is freedom in the issuing of permits, where permits are required to hold public meetings. There is no pressure from the politicians who are in power or otherwise to restrict or to refuse permission for people to hold meetings. At least 1 haven't received any reports at all.

So, broadly, I think there are positive signs that Zambia has opened up, but we do feel that perhaps we should be doing more in the area of human rights, and this is why we have a task force which has been formed in this Ministry to look again at the Constitution to see what provisions can be amended-and the decision to do so is going to be left to the people of this country. So, we are opening up and we are very happy with what has happened here in the past 14 months.

· What parts of the Constitution need amendment in the area of human rights?

-Well we would like Chapter 3 of the Constitution which sets out the liberties of the person to be looked at by the Constitution task force. There are two main reasons for this. First, the 1964 Constitution, which we got from Britain, had in it a Bill of Rights, and when that Constitution was changed in 1973 the provisions on human rights which were in the 1964 Constitution were repeated in the 1973 Constitution. These are the ones that are, by and large, reflected in the 1991 Constitution.

But the human rights scenario has changed very much since 1964. The two Covenants of the United Nations, the International Covenant on Civil and Political Rights and the other one dealing with economic, social and cultural rights, were written in 1966 and they came into force ten years later in 1976, so that at the time the first Constitution of Zambia was written all we had were the provisions on human rights as set out in the Universal Declaration on Human Rights. We were denied the chance to include the new perception and conception of human rights set out in the two Covenants.

Also, since 1985 we have been talking about the right to development, and on the African continent we have a regional human rights charter, the African Charter of Human and Peoples' Rights, which was adopted in June 1981 and which came into force in 1986.

We would like the task force to include these new concepts of human rights in our future Constitution. I'll give you an example. Article 23 of our Constitution bars discrimination, but nonetheless it allows Parliament to pass legislation which discriminates if the Act of Parliament concerned deals with private law. In other words, in questions of marriage, of custody of children, of inheritance which affects women, Parliament would be perfectly entitled under Article 23 of our Constitution to pass a piece of legislation which has a discriminatory effect on the people of Zambia. We would like that not to appear.

Also the journalists in this country want us to specifically spell out within the constitutional framework what the rights of journalists are, and the trade unionists have also asked us to include workers' rights specifically in the Constitution.

And more recently we have been told that in the Constitution we should set out the directing principles of State policy, to say that the State is bound to provide certain economic, social and cultural rights in accordance with the resources available to it.

· You inherited from the previous government a situation where violations of human rights, particularly against the person, took place. Are you satisfied that that has been entirely expunged ?

-No, we are not, but what we are satisfied about is that where the violation is detected some remedial measures are being taken by the current Government. One of the problems that we face in this country is that the people who are supposed to enforce these laws are the people who actually worked for the previous Government, and they have with them a culture which is perhaps completely different from the way the new Government looks at things. But we hope that with the passage of time this is going to change. It will take time, because we are dealing with the police who have been working for the Government over a long period of time. It's the same with the prison officers, the bureaucrats, the civil servants, so it will take time for them to react to certain situations differently and in conformity with our new conception of respect for the rights of the people.

· Zambia held local elections fairly recently and the turnout was disappointingly low. Is there a need for civic education in the country? With a very young population, most or many of the people called upon to vote will perhaps not have been familiar with what was expected of them in a democracy.

-I think there are two reasons for the low turnout. First, since 1980 adult Zambians who are registered voters have been barred from participating in local government elections, because the Local Government Registration Act of 1980 gave the franchise solely to the officials of the then political party. Then when the law changed, even educated people were seen asking whether they had the right to vote, and you had to say to them: Look under our new laws you also have the right to participate.

Secondly, in this country, people are more interested in the parliamentary and presidential elections. Maybe the solution lies in timing the local government elections together with the parliamentary and presidential elections. But it appears to me that that is impossible under our present setup, because the councillors serve for three years and the Members of Parliament for five years, so we never have local government and parliamentary elections taking place at the same time.

Yes, I agree with you that we should have more civic education, because it is important that people participate fully at the local government elections in electing their representatives. I think they are much more important than, perhaps, our parliamentary elections, because the people in my constituency are much more affected by what happens locally-for example, they would like to have good roads in the area, they would like to have good schools to which their children could go, they would like to have clinics, they would like to have hospitals. These are the demands of the people at the local level.

· One has the impression from abroad that politicians under the old regime were suspected and indeed proved to have been corrupt, but that something of the same suspicion has hung over the present government. I wonder if the culture of good governance still has to be fully established in Zambia ?

-I think you are right. Under the old regime, the only person who was trusted in this country as the person who could take decisions, who could meet foreign representatives without being bribed, was the President of the State. Anybody else was suspect. The new government took over under that background.

Now, we have said that a Minister can negotiate and sign contracts, a Minister can make statements on policy issues affecting his Ministry instead of the President doing so. This is something new in Zambia and there is always a question asked: 'Is that statement which has been made by a Minister not being made to satisfy the people his statement affects- or has he been paid?' The reason is the suspicion that was the mainstay in this country for years under the one-party system of government. But with time I'm quite sure that the situation is going to change, that the people of Zambia will realise that not all Ministers, politicians and, particularly, civil servants are corrupt, that civil servants and Ministers can make decisions affecting the people of this country without receiving any bribes from other people.

Meanwhile I'm quite sure you read in the newspapers that there is corruption in the Chiluba Government. If a Minister signs a contract-it might be a freight contract to bring maize from South Africa to this country-and he signs another contract to bring maize from the port of Dar es Salaam, if there is a difference between the tariffs of, say, one dollar, some none will say: 'You see, there is this difference... I think the one dollar is for the Minister.' But they are two different contractors altogether. It's because people can't picture that one company could charge a little bit more than another company. And in any case we are talking about the operations of companies in two different countries. But because of where we have come from, we are always suspicious that someone somewhere must be getting a cut.

· Is that partly because many members of Government have private business interests ?

-I don't know. I think that even if we didn't have any private business interests the very fact that we are in a position to freely negotiate and sign these contracts on behalf of Government would still give rise to suspicion. Anyway these business interests are different in most cases from what a Minister is called upon to deal with in Cabinet. Some ministers or deputy ministers were accountants before they came into government, others were traders, and others were members of the clergy or lawyers. Our Vice-President was a lawyer, with his own firm on the Copperbelt. It is very difficult to corrupt or bribe a person who was a lawyer and who signs contracts on behalf of the Government.

Maybe if you had your own transport company before you came into government, when you are negotiating a transport agreement for the transportation of goods which have been ordered by the State you have a tendency to try to make sure your company gets the contract, but under our rules you have to declare your interests to Cabinet-in fact you have to write to the President to inform him in which companies you have an interest, so that if a situation like that arises everybody knows exactly where you stand.

· You are trying to steer these legal reforms through a very difficult economic situation. Do you think the economic recovery programme is making democratisation difficult in any way?

- The structural adjustment programme is not making the process of democratisation difficult. Far from it. What it is actually doing is that it is making the process of promotion and protection of human rights much more difficult, because of the growing poverty amongst the people, because of underdevelopment. Underdevelopment is the major cause of the violation of rights. And there is also ignorance. Those, really, are my own fears, and those are the things that we have to watch.

Now, people who are poor will become poorer under the structural adjustment programme, and so they may commit crimes. And we as a government will be forced to use methods to curb those crimes which will not be consonant with accepted human rights norms. You might want to introduce very draconian measures in order to cut down on crimes, or you might even get dangerous statements from the man in charge of the police, saying: 'There are so many bandits around here-you shoot on sight'- something of that nature.

· That has been heard, in fact.

-Yes. Now, obviously it's not really the democratic process which is at stake, it is the rights of the people which are at stake, because in the process innocent people are likely to be shot dead, and you might be forced to erect barriers, what we call in this country roadblocks, and thereby deny the people their privacy because they are going to have to be searched. So, because of the rise in the crime rate, the Government is forced to take desperate measures to contain the situation, and those measures will not be consonant with accepted human rights norms.

· This must be a matter of some concern to yourself, in view of what you said in your first answer.

-It is of concern to us, because we realise that it might come, and it is a result of the economic measures that the Government is taking.

· Is this something that the country's donors and creditors, then, should take into cognisance ?

-I think that the donor countries should be much more humane in regard to the manner in which the structural adjustment programme is being applied. They should try by all possible means to ensure that those poor who are very badly affected by the programmes are given some welfare assistance, so that they are not adversely affected-and I think that if we can do that, then it will reduce malnutrition in the poor community and will reduce the instances of petty crime- and even major crimes of armed robbery and murder. Interview by R.R.

Biting the bullet: the challenge of beating inflation

One of the unwanted legacies of the Second Republic which the new Chiluba Government is having to cope with as it struggles to carry through its economic recovery programme is severe inflation. Over the 27 years of UNIP rule, inflation became deeply embedded in the Zambian economy. At independence it stood at between 7 and 8%, then in the mid-1970s it started to accelerate and for the last five years has been going at a rate described as very high by economists or even as hyperinflation in some of the economic and political circles where it bites hardest. A paper on inflation produced by the Ministry of Information at the end of 1992 says that from 1964 to 1991 the inflation rate as measured by the consumer price index for the low-income group increased by an average of 27% a year. The rate now is something like 200%.

The Ministry of Information paper puts the blame fairly and squarely on excessive government spending. 'Except for the 1960s and early 1970s' it says, 'the government has all along spent more on goods and services than its revenues allow.' The chronic budget deficits this created have averaged 12% of GNP since 1975. Furthermore, for the last several years-and even now under the IMF-backed structural adjustment programme-the deficit has been calculated without including debt interest payments as current expenditure or grants as current revenue; since payments exceed grants, the deficit is actually worse than it looks on paper.

In his first budget speech after the handover of power, the Minister of Finance, Emmanuel Kasonde, pledged that the government would from now on aim to balance its budget without borrowing from the banking system. The practice of not including the interest payments, however, already unbalanced the budget, on top of which there were other payments 'below the line', such as large wage increases wrested from the State by the civil service, the military and the staff of the state-owned Zambia Airways. Last year, too, parts of Zambia suffered severe crop losses from the drought which hit southern Africa, a national emergency was declared and the IMF created a separate drought budget, which was to be financed by the proceeds of selling the maize sent in as food aid by foreign donors. But in a context of high inflation, drought relief bills had to be paid before any revenue came in, and that simply added to the inflationary pressure.

Overspending

The budget consequently unravelled. At the start of 1992 the projected expenditure was 90 billion kwacha, consisting of roughly 80 billion in revenue plus grants to make up the remaining 10 billion, so that there would be no need to borrow from the banking system. This arrangement, however, made no provision for covering the large payments which had to be made on existing government borrowing from the public in the form of treasury bills; and the extra drought-related expenditure was not covered by any revenue either. By October, the Government had to enter a supplementary appropriation of 60 billion kwacha to finance overspending. In the event, at the end of the year spending stood at about 120 to 130 billion kwacha. How was this paid for? In effect, the Bank of Zambia was asked to write a cheque.

Part of the blame for this sorry state of affairs has been laid at the door of a government whose members had no experience of the realities of running a country, and which consequently took a number of ill-advised spending decisions. But revenue collection is a problem too. Consultants have been called in to computerise the tax administration system and the Minister of Finance has appointed a task force to make the system perform properly. One consultant who formerly worked for the US revenue service estimates that by making the system more efficient and improving compliance it should be possible to increase tax revenue by up to 50%. The very large parastatal system, for instance, only reluctantly pays tax, as many of the industries concerned run at a loss (and of course their heavy borrowing from banks to cover those losses also steps up the inflationary pressure).

Exchange and interest rates have also played their part. The developments outlined above took place against the background of a plunging exchange rate: in January 1992 there were about 90 kwacha to the US dollar-by December the rate was 360 to the dollar, and this of course pushed up the cost of imports which had to be paid for in foreign exchange. As the currency has depreciated against the dollar, there has been no incentive for anyone to hold on to the kwacha or kwacha-denominated assets. The resulting flight into foreign exchange itself adds to inflation.

Negative interest

Bank interest rates in Zambia have been negative, in other words lower than the rate of inflation. This obviously discourages investment in the country, since money can be invested at positive rates elsewhere, especially when there are no exchange controls. The exchange controls in place for years have not worked properly since the early 1980s. This has skewed income distribution, leaving the few who could export their money much richer in kwacha terms, while most people became much poorer. International financial statistics show that people giving Zambia as their place of residence hold something like US $450 million outside the economy, which at current exchange rates is more than the entire local money supply. With declining or stagnant real incomes, there has been massive excess kwacha demand for all kinds of resources, including foreign exchange: 'too much money chasing too few goods', in the classic phrase.

Some commentators put further blame for inflation on excessive wage demands by workers in the State monopolies. However, the trade unions, although they form the main power base of the governing Movement for Multi-party Democracy, and despite large pay rises in the parastatals last year, have not managed to maintain their members' real purchasing power. And although the much-needed cuts in the. civil service payroll have been delayed for political reasons, real wages for those still on the payroll have fallen too. If they cannot even cushion their own earnings against
the effects of inflation, it is difficult to see where or how the alleged pressure from the monopolies is being applied.

Nor can imported inflation be blamed for the present situation. In the 1970s the oil price shock was transmitted directly into higher domestic consumer prices in Zambia, but for some time now, relative to Zambia, the rest of the world has been deflating-so where would Zambia be importing inflation from? There is, however, some argument for saying that disruptions to Zambia's import and export routes through neighbouring countries have raised the corresponding costs and thus fuelled inflation.

Drought

As far as the role of the drought is concerned, droughts are known to occur in Africa from time to time, so plans can be laid for dealing with their results. But Zambia when last year's drought struck had no foreign exchange reserves to buy food, there was no real carryover of maize from previous seasons and there was no dynamism left in the agricultural sector, as farmers had for years been taxed through exchange rate pressures on purchases of inputs and discouraged from efficient production by the system whereby the State buying agency paid the same price for maize in every part of the country and whatever the season. An indication of the seriousness of the situation came from President Chiluba in December, when he told a meeting of Zambia's donors in Lusaka that his Government expected the economy to show a decline of 10% in 1992 as a result of the problems faced by agriculture in the drought year.

So what are the consequences of inflation ? In January this year the Government organised a conference to discuss this very issue and possible ways forward. It was attended by Ministers, opposition politicians, bankers, employers, trade unionists, academics, diplomats and guest speakers from the World Bank and the IMF. The Minister of Finance, Mr Kasonde, singled out the impact inflation had on investment in the economy as its most damaging effect. As businesses could only guess what exchange rates, wages and prices would be in six months or a year, they could not engage in medium- or long-term planning, so investment became too risky. Uncertainty about government policy also destroyed investment incentives. Secondly, negative real interest rates made unproductive investment in physical inventory (buildings, land, equipment and supplies) more profitable than saving money, so there was a shortage of funds available for investment. High nominal interest rates, even if negative in real terms, could cause serious cash flow problems for companies which did want to invest and could get loans.

A tax on capital

All these points were echoed by the Chairman of the Zambia Association of Chambers of Commerce and Industry, David Frost, who pointed out in an interview for The Courier that it was manufacturers rather than traders who were suffering. In practical terms, because of the high cost of replacing inputs industrialists were struggling to produce their goods with old, inefficient machinery, kwacha loans were available only on short, overdraft terms and in an inflationary situation it was too risky to borrow in foreign exchange; the resulting costs of inflation had to be passed on to consumers-and they were increasingly unable to buy as their own purchasing power dwindled. Mr Frost called inflation a tax on capital, and said that if it were not brought down to below 10% Zambia's manufacturers would simply turn into traders servicing local needs and would be replaced by manufacturers from the country's competitors, particularly South Africa.

Minister Kasonde also warned that the increasing tendency to conduct transactions in foreign exchange rather than in the local currency, whether legally or not, merely aggravated inflation, since it left even more spare kwacha in the system chasing too few goods and services, resulting in even higher prices-and, indeed, immunising those parts of the economy operating in foreign exchange against any Bank of Zambia monetary policies.

On this subject, The Courier was told by a specialist on a macroeconomic technical assistance project being run for the Zambian Government by Harvard University that, at least from the point of view of industry, dollarisation is not necessarily a bad solution. When Brazil, for example, was in a similar situation some years ago, price stability was achieved by turning the whole economy over to dollar transactions, so that inflation in the local currency, although it remained a nuisance, did not affect the activities of manufacturing industry. The Brazilian economy, however, was and is more outwardly oriented than that of Zambia. And in Zambia most of the population cannot acquire dollars (or pounds or rend) in the first place.

The hardest hit are, indeed, the genuinely poor. Each increase in price directly and immediately reduces their purchasing power. As the President has put it, 'There is nothing that will help the most vulnerable groups more than the bringing down of the rate of inflation.' How, is the question.

Budget pledges

The basic cure is acknowledged to be making sure that the Government does not spend more than its revenues allow. This entails either increasing revenue or reducing spending, or both. There is no proposal to increase taxation, but the Government has given several undertakings on expenditure in the 1993 budget.

Firstly, it says that all expenditure will be financed by domestic revenues. Second, there will be no new borrowing, even on a temporary basis, from the Bank of Zambia; the Bank will not process any Government transaction unless the revenue to pay for it has already been deposited. Treasury bills, too, have been floated, so money financing is over. The intention is apparently to borrow shortterm from the non-bank public, for example Zambia Consolidated Copper Mines, which has large foreign exchange inflows available for deployment, through Government borrowing, elsewhere in the economy. Third, any supplementary spending in 1993 will have to be paid for-in advance-by increased revenues or lower spending elsewhere. And perhaps the hardest promise to keep will be the fourth one, an undertaking, if revenues rise owing to inflation, not to adjust spending upwards as well.

Low money growth is also promised. Here there is certainly room for improved performance, as last year the targeted reduction from 130% to 25% was not achieved. According to the Bank of Zambia, this was because increased copper production during the year had led to greater export earnings than expected. The Finance Minister also told the inflation conference that positive real interest rates (as a stimulus to saving and productive investment) would be brought about, ideally by a seduction in inflation but, if necessary, by an increase in nominal rates.

This constitutes a very dry recipe for economic stabilisation, yet the Harvard project goes even further and advocates actually running a sharp budget surplus, so as to free resources for paying off Zambia's huge external debt. Even balancing the books, let alone producing a surplus from a cash budget while inflation runs at 200%, is a tall order, since by the end of the year the initial appropriations are likely to have fallen to between a third and a quarter of their value, but the macroeconomists say it has been done in other countries in Bolivia, for example, in 1985, inflation of 20 000% was reduced virtually to nothing in a year by a government which simply did not spend money it did not have.

Social costs

As to the social costs of this course of action, observers agree they can hardly be worse than the social costs of continuing with the ruinous economic policies of the last 20 years. The Finance Minister said he recognised that many workers faced serious difficulties and that promises of future improvements in real wages might seem hollow today. There would therefore be measures to increase workers' take-home pay, to be financed through spending restraint throughout the budget, not by borrowing as before, and the Government called on workers to show wage restraint in return. To offset this sacrifice by the labour force, the Government also called for voluntary price restraint in the markets, urging producers who faced no effective competition not to exploit their market power.

So the priorities for this year's budget, which was presented to Parliament on 29 January, are to attack inflation and stimulate new local and foreign private investment. Dramatic cuts were made in taxes and duties, and government departments were warned that they would not be bailed out if they overspent their allocations. President Chiluba made a personal commitment to fighting inflation by voluntarily taking a cut of 100 000 kwacha (about US $270) in his monthly salary of 300 000 kwacha, and calling on all Zambians to enlist in the battle. It seems unlikely that many workers, particularly those at risk of redundancy from cost-cutting and privatisation, will be able to follow his lead in surrendering income, but he reminded his countrymen that the medicine applied during the past year, although it had already yielded results, was still inadequate. 'Painful as the therapy is, 'the President said' 'we have taken too much pain to give up now.' It is too early to say how successful the cure will ultimately be, but one encouraging sign is that although inflation stands at 200% now, when the MMD took power at the end of 1991 it was at a peak of 400%. Movement may be slow, but it is in the right direction.

R.R.

Poverty for many, wealth for some

by Clifford SILWIMBA

An attractive feature of Zambian life under the new government is the freedom of the press. Opinions of all kinds are expressed in a range of newspapers and magazines, which make a speciality of publishing contributions from their readers commenting on government policies and performance. Many of these writers describe the economic hardships ordinary members of the public are having to go through and wonder if things could not be differently ordered. As a bow to this very distinctive tradition, and to air a dissenting political view, The Courier here publishes an abridged commentary by a freelance journalist based in the Zambian capital, Lusaka.

On the surface, Zambia is supposed to be doing well economically. The country is rich in minerals and other natural resources. Mining statistics for 1990, for instance, are quite impressive i. Turnover by the mining corporation stood at K60.54 million, representing a growth of 103% over the previous year's turnover of K29.79 million. Although lead and zinc production declined by 8684 tonnes to a total of 16 004 t, finished copper production for the year was 448 468 t which was 32 823 t more than in the previous year. The annual average price for copper, which is the country's main foreign exchange earner, was £1639 (K45 810) per tonne.

Although these figures look impressive, the majority of both urban and rural dwellers in Zambia remain pathetically poor. The new Movement for Multi-Party Democracy (MMD) government, which has been in power since October 1991, is unable to deliver the promised goods to the people because allegedly, it inherited an empty state treasury. In short, the economy had been plundered.

Consequently, feeder roads in the rural areas remain impassable because no repair work or maintenance has been done for years.

Most bridges have long been washed away-as a result, relief food meant for the starving millions is stuck in urban and peri-urban areas, unable to reach the intended beneficiaries. This state of affairs, coupled with the devastating effects of the 1992 drought, has reduced most families in rural Zambia to mere beggars.

The new government claims to have brought 'democracy and a new culture' to Zambia in contrast to Kaunda's socialist dictatorship. To ordinary Zambians, however, such talk is little more than political rhetoric.

They want food, shelter, clean water and suffficient supplies of medicine in hospitals and rural health centres. At the moment, diseases such as malaria, dysentery and cholera are big killers. In November 1992, almost 400 people died of cholera in Kitwe, a city in the Copperbelt. Most victims die quietly in rural Zambia where half of the people still live.

Whereas the fallen Kaunda government tried to resettle people back in the rural areas at public expense, the MMD government has stated openly that there is no money in the state treasury for such ventures. Whereas the Kaunda administration tried to distribute 'free' millie meal to low income groups in both rural and urban areas, using the coupon system, the present government has put a stop to 'free' food, and has more than quadrupled the price of the staple food itself-from K225 per 25 kg bag to well over K1000.

Most Zambians have also come to realise that life is harsh in the urban areas, where jobs are scarce and food prices prohibitively high. In an effort to please the International Monetary Fund and the World Bank-two of the major donors-the government has instituted measures aimed at reducing the size of the workforce in the civil service and the para-statal companies. This is called retrenchment. In the process, thousands of workers have lost their jobs. The only alternative for many is to go back to their villages empty-handed. They have nothing with which to start a new life in the village. It is poverty at its starkest.

Despite raging inflation, the salaries for ordinary workers still in employment are very low. House servants, hospital cleaners and farm labourers earn between K3000 and K7000 a month and most civil servants earn less than K 15 000 a month. In sharp contrast, the new government, apparently closing its ears to public criticism, has raised the salaries of cabinet ministers from the K15000 set by the ousted Kaunda administration to K320 000 a month. Members of Parliament receive not less than K250 000 a month in salary and tax-free allowances. To ordinary citizens, cabinet ministers and parliamentarians have formed a new 'leisure class'. They have and enjoy the best that Zambia offers while the majority are living in abject poverty. This apparent selfishness on the part of the leaders has surprised and annoyed a lot of observers-especially members of the Zambia Congress of Trade Unions, university students, church leaders and the workers who are being retrenched in accordance with the dictates of the structural adjustment programme tailored by the IMF and the World Bank.

The country's President, Mr Frederick Chiluba, had a tough task at a recent press conference, when he tried to justify the high salaries awarded by his administration to ministers and parliamentarians. He said this was done to avoid corruption- but many people saw no logic in this answer. The question is- just how much money is enough to prevent corruption? And which category of worker is not prone to corruption? Time alone will tell! C.S.

Small farmers: planting the seeds of prosperity

Small farmers play a vital part in Zambia's domestic economy, as they account for 70% of the country's food production. In its May-June 1990 issue, The Courier reported on a development project for small and medium-scale farmers being run jointly by the Government of Zambia and the EC Commission in Central Province. This project, centred on the mining town of Kabwe, was set up in 1988, at a time when farming resources throughout the country were concentrated on maize production in the interests of what the government of the Second Republic imagined would be a cheap way of ensuring food security. Since then, last year's drought showed how little economic security there was in relying so heavily on a single crop. At the same time, in the political arena, a new spirit is at work and new policies are being applied in agriculture as in many other areas of national life. A return visit to the smallholder development project this year gave an opportunity for an interesting comparison between the old approach and the different attitudes now prevailing in the management of the Zambian economy.

At the hand-over of power from the old regime in 1991, smallholder farming in Zambia was in an unsustainable condition. Farmers would take loans for the purchase of necessary inputs such as seed and fertilisers; such loans were in theory repayable when the harvest came in, but control was lax and when, as frequently happened, the loans were not paid back. the cooperatives providing the supplies were simply indemnified by the government. This was, to put it mildly, not a prescription for efficient management, and at the transfer of power the system had virtually collapsed. The cooperative delivering to smallholders in Kabwe, for example, was in a state described by project coordinator Karl-Heinz Voigt as 'chaos' with the supply depots completely empty. To make matters worse, once the cooperatives stopped being compensated by government for bad debts, they went into other businesses, such as transport, where the returns on outlay are more immediate. Many farmers were in a state of apathy, their morale sapped by lack of incentive-and by low, fixed prices. A change of direction was clearly needed.

The smallholder development project covers approximately 34 000 sq. km. of land around the town of Kabwe, which lies north of Lusaka on the road to the Copperbelt. ln the immediate vicinity of the town there are large commercial farms, many of them run by expatriates, but further out are large expanses of less intensively developed land on which an estimated 35 000 small farmer households live. The project's targets are to increase food production by these farmers, raise their income and make them economically stable, increase the value of their marketable products and help rural entrepreneurs integrate small and medium-scale farmers into a liberalised market system. On the macroeconomic level, there is also assistance for the Government in defining a minimum government support strategy in agricultural and veterinary extension.

Only two years ago any approach involving participation by farmers themselves in decision-making would have been seen as a challenge to the Government's assumed right to dictate agricultural policy. Since the advent of the MMD, however, a group approach to development has been chosen as it is effective, practicable and stimulates competition between farmers in a grouping of shared interests. Whereas under the old maize development project, farmer groups in each village consisted only of the headman, his deputy and four others nominated by the headman, farmers now organise themselves into groups and associations known as cattle clubs on any basis they choose, be it ties of family, language, religion, political viewpoint or any other consideration; the only essential criterion is, of course, that they should trust each other. Thirty per cent of farmers in the project area are organised in such groups and clubs, and the project aims to encourage more.

Voluntary grouping has the advantage that the groups are self-policing and exclude anyone known locally to be unreliable or dishonest. lt also encourages loan repayment. No outright grants are made, only loans, and the lowest credit cell is the farmer group, whose members are therefore jointly liable for repayment of the debt. If any individual defaults, no further loans are made to anyone in the group. The groups themselves decide which of their members is most in need of a loan, and the loan itself, which has to be approved by the district agricultural adviser attached to the project, Traugott Hartmann, is in the form of a piece of equipment, the cost of which is recovered from the farmer concerned over a period of three years. Cash loans are not made under the programme.

A good example of the group approach at work can be seen in the Kabwe South Rural District area, where Ivy Mainza heads a group farming land in the village of Kafunda. The traditional crop there had been maize grown from hybrid seed; but with this variety fresh seed had to be procured each year and was too expensive, so the project introduced perennial, open pollinating varieties requiring no replacement, and the farmers maintain a maize seed garden from which they can now meet their own needs without external inputs. As a move towards diversification, the group leader also set up a soya seed garden, using two varieties (one of them developed by a local research station, Magoye) which produce pods without the inoculum needed to stimulate growth in earlier types. Although it is not traditional to the area, soya grown in the district with seed from the garden is popular with farming households because it crops well and is a rich source of protein.

The garden is laid out on land which the group members cleared themselves. For this and other work on their farms the group obtained an ox cart with a credit from the project. At first sight this looks like a low-technology solution, but there are good reasons. Under the old system, grants were given for the purchase of oxen but were not repayable, and suspicious numbers of grant-aided oxen would die of neglect or disappear. Tractors bought with credit were not a success either, as a stock of fuel had to be kept and farmers did not generally have the skills, tools, parts or incentive needed to keep the machines in repair, so that many tractors now lied unused and rusting. An ox cart can also be used for transportation purposes, such as taking farmers children to hospital or their surplus produce to market, where a tractor would not be so cheap or practical.

The project has therefore gone back to promoting animal traction, but loans arc given only for the purchase of equipment (ploughs, ridgers, reapers and so on), not animals. And only a farmer whose group ' certifies that he owns or can get the use of draught animals (from a relative, for example) is eligible for an equipment loan. The project supplies a very practical four-in-one piece of equipment which ploughs, ridges, reaps and weeds, and is made by a small company in Zambia using local materials, so that there is a spin-off benefit for Zambian light industry too.

Animals, of course, require veterinary care, and this is where the 160 cattle clubs come into their own. Each club has a crush pen or spraying race where cattle are treated against tick-borne and other diseases. Again, a low-technology approach is adopted. These enclosures can be built using poles cut from the abundant trees growing wild in the bush, whereas to build a cattle dip would cost ECU 12 500. Technical information about spraying, as with all training and knowhow, is disseminated through clubs and the larger extension groups into which they and farmer groups are organised.

Most of the farmers concerned by the smallholder development project operate only at subsistence level, but there is some cash crop cultivation. As well as maize and soya, farmers in Kafunda village, for example, grow cotton, sunflowers, groundnuts, tomatoes, okra, cabbages, kale, rape, onions and Chinese leaf for sale. EC microproject assistance has gone towards vegetable-growing projects specifically for women. Members of a women's group near Chibombo have received help with inputs for half a hectare of fund-raising garden each, and one of them grows 20 boxes of tomatoes a year on her patch. These ladies have also worked with an EC-funded domestic science adviser who has taught them ways of incorporating soya beans into their diet, the methods of preparation being quite different from those for maize.

At a nearby farm there is an example of EC assistance towards onward processing of farm produce, albeit at a basic level. There a farmer, Mr Kayeka, has obtained a credit from the project to buy and set up a diesel-engined hammer mill, where he grinds maize into mealie meal for his own use and for other farmers in his area. His customers pay in kind or in cash, and the mill has to run for six hours a day to cover maintenance and loan repayment costs. A 5-kg bag of maize which would take two days to mill by hand now takes three minutes, an advance which is especially welcomed by women, as hand pounding is traditionally a female task. Outside harvest time, Mr Kayeka can store three tonnes of maize in a granary also funded by a loan from the project.

Before making credits available for the 20 hammer mills so far installed, the project coordinator and his team carried out a survey to determine where it would be most effective to locate them, so that farmers would have one within a reasonable distance but there would not be so many that they ceased to be commercially viable. There are plans for 40 more mills. Maintenance services are not well developed, but the project coordinator hopes that some entrepreneur will realise that there is a living to be made out of keeping the mills in working order.

It would be unrealistic to pretend that since the change of government all the problems of small-scale farming in Zambia were on the way to being solved by schemes of this type. Project leaders have to urge members of farmer groups constantly to press their representatives for information and action, as 27 years of spoon-feeding by the previous regime have made many farmers slow to identify and fight for their own interests. They also have no experience of marketing except at an informal level, and government policy is now to liberalise the agricultural marketing system completely so that traders, cooperatives, processors, transporters, wholesalers and retailers can operate without government interference. The price of maize, the main staple, has been deregulated, but in the new pricing environment it is the large farmers who are expected to capture a larger share of the maize market, as they have better access to storage facilities, transport and credit and are nearer the main consuming centres than smallholders.

To help the latter, therefore, the Kabwe project has recently recruited a marketing adviser, whose job will be to help set up a market information service, so that small farmers can make betterinformed judgments as to when and where to sell their crops and buy inputs, and traders will know where marketable surpluses are available for purchase. This is a radical departure from the old marketing arrangement, under which crops were bought at guaranteed prices by the State-funded cooperatives. The challenge of operating in a free-market system is one which some small farmers will be better able to face than others. Recognising, in fact, that entrepreneurs eventually have to stand on their own feet, the Kabwe Smallholder Development Project plans to pull out after three years and leave the local farmers to apply what they have learned as they see fit. It will be up to them to show whether Zambia has the grassroots human resources to match its huge agricultural potential. R.R.

AIDS-a shadow hanging over Zambia's future

Hardly a day passes but Zambia's newspapers report the death of yet another person who had been making a useful contribution to the public life of the country. It may be a businessman, a banker, a member of the armed forces, a mining engineer, a politician, a lawyer; many of them have died relatively young, and death is often said to have occured 'after a long illness'. It is an open secret that most of the people who die of this unspecified disease are victims of AIDS (acquired immune-deficiency syndrome) or AIDS-related conditions.

Those who figure in newspaper obituaries, of course, are only the comparatively prominent members of society. But there is disturbing evidence that AIDS is a threat to all classes and social groups in the Zambian population, and on a scale that is only now becoming clear. A recent report by the Zambian Ministry of Health and the World Health Organisation said that there had been a steady increase in the number of new cases of infection by HIV (the human immunodeficiency virus, which is responsible for AIDS) over the past seven years, and quoted several alarming figures. In the urban population-and Zambia is a highly urbanised country-the highest recorded HIV-positive figures were among patients who already had another sexually transmissible disease: 54% of new attenders at STD clinics proved to have the virus. Of women attending antenatal clinics, the proportion found to be HIV-positive rose from 12% in 1988 to 24% in 1990 (the current figure from the Ministry of Health is 40%). Medical workers estimate that 50% of the children of infected women also have HIV; their sexual partners are, of course, also likely to be infected. Ten per cent of would-be blood donors tested HlV-positive in 1987, rising to 18% in 1990. The figures for semi-urban and rural areas are also rising, but are generally lower, owing to more traditional morality and lower mobility outside towns and cities.

The figures for AlDS-related fatalities have, however, to be regarded as erring on the side of caution, as reporting mechanisms are faulty, and many deaths are ascribed to opportunistic diseases rather than to the underlying AIDS condition. This is particularly true of tuberculosis, the incidence of which has risen sharply over the past year. Secondly, many sufferers, when they realise that conventional medicine has no cure for AIDS, turn to traditional healers in rural areas, and their eventual deaths from AIDS are not recorded as such.

According to Elizabeth Mataka of the Family Health Trust, a voluntary, nongovernmental organisation working on AIDS prevention and care, the situation is critical, and every Zambian has lost a relation, a neighbour, a friend or a colleague to the disease. Nor has the full seriousness of the situation yet become apparent. As AIDS has a long incubation period, and prevention campaigns did not start until the late 1980s, cases appearing now are manifestations of infections which occurred as far back as the 1970s. Most cases contracted before the late 1980s have yet to show. Mrs Mataka says health workers' worst fear is that up to 25% of the population could be infected, most of them without knowing it.

In fact AIDS is increasingly regarded as not just a medical but also a socioeconomic problem. The social impact of the epidemic is to be seen, for example, in the rising infant mortality rate among children of infected women. Most of the children affected die by the age of one, their condition exacerbated by poor nutrition, difficult living conditions and the inadequacy of healthcare services. All HIV carriers in the country, in fact, tend to develop full AIDS symptoms earlier than their counterparts in developed countries, as the general state of public health is poor.

As adults die, more children are being orphaned, so that the burden of caring for them falls on grandparents or other family members who may not have the resources to cope. A study carried out by the Family Health Trust in the Matero East district of Lusaka found that 10.2% of children questioned had lost one or both parents, the usual figure in peacetime being two to three per cent; further questions showed that the difference was accounted for by AIDS. The survey also uncovered resulting problems of lack of education, crime and vagrancy among orphaned children. As far as care for AIDS sufferers and unattached children is concerned, family culture in Zambia is very supportive of sick or needy relatives, but caregivers themselves may be, or later become, infected, and when they in their turn fall ill both they and those they were looking after become a burden on a dwindling family base or the underdeveloped social services.

In the economic sphere, not only is health spending having to rise; the labour force is being weakened and reduced, a fact which trade and industry are now becoming alive to as productivity and profits fall through absenteeism and loss of skilled workers. The cost of training staff who may soon after fall ill and ultimately die is one which fewer and fewer companies can afford to pay.

AIDS prevention efforts in any country must, of course, address the reasons for the spread of the disease. In Zambia these are similar to those found elsewhere, though for cultural reasons, it is claimed, sexual transmission is predominantly through heterosexual, not homosexual, contact. A further explanation is said to lie in sociocultural practices such as the ritual cleansing of a recent widow through sexual intercourse with her dead husband's brother, and the belief among some older people that sex with young partners, whom they pay, carries less risk of infection (here it is precisely the younger partner who is usually put at risk).

Zambia has a National AIDS Prevention and Control Programme, and recognises the need for a multisectoral, grassroots approach by several Ministries at once. The Government, however, is unable to bear the full cost of the programme, which for 1992 was expected to reach ZMK 80 million (some ECU 200 000 at current exchange rates), and international donors such as the European Community have become involved. Several years ago the EC provided HIV test kits and financed a seminar for health workers on identification and treatment, but the main contribution has been the allocation of just over ECU I million for a three-year project to establish an organised national blood transfusion system, which has so far not existed. It is hoped that an additional ECU 1.5m will be available under LomV.

The NAPCP, and public health bodies organised into an Anti-AIDS Project, have produced AIDS information messages, some in local languages, for public display, as well as printed material and educational plays. The slant of the messages is positive: while warning of the dangers, they seek to promote hope, encourage safe life styles and teach compassion for sufferers. AIDS prevention has been incorporated into the school curriculum, and to protect the rising generation the emphasis is being placed on getting the message through to children before the age of 16. Other target groups for information and education work have included 'street-kids' (homeless children living on their wits in urban centres) and employees in the workplace.

A pioneering example of this last type of approach is the policy of Barclays Bank in Zambia, which used to make HIV testing a condition of employment.

The Bank soon realised that this served no purpose, as antibodies to HIV do not appear until some three months after infection, so a negative result does not necessarily prove that the subject is free of the virus, and in any case staff could become infected at any time after the test. The emphasis therefore shifted to preventive education and supportive counselling, and the Bank now employs its own health adviser, as well as contributing generously to the nongovernmental organisations which, incidentally, handle 90% of AlDS-related care work in the country.

The challenge is enormous, but measurable progress is being made. The Ministry of Health/WHO report said that, thanks to public information campaigns, 99% of women throughout the country were now aware of HIV, 89% of them knew it could be transmitted through sexual intercourse and 62% believed it was preventable. Condoms are consequently in higher demand and in 1992, for the first time, funds were allocated from the national budget for procurement of supplies of condoms, which are tested for safety and distributed all over Zambia using the existing drugs distribution system. The number of pregnancies among schoolgirls is falling, as is the incidence of STD. This suggests (though it does not prove) that HIV infection too may now be retreating; but if so, the resulting fall in the number of AIDS cases will not occur for some years yet, owing, as explained above, to the long incubation period of the disease.

Programmes of counselling, homebased care and orphan care are now in place. Elizabeth Mataka of the Family Health Trust reports that a home-based healthcare programme for AIDS sufferers in Lusaka which started in 1987 had cared for 5030 patients at home by August 1992. The purpose of such programmes is not only to teach proper care and nutrition in the home but also to relieve pressure on Zambia's hardpressed hospitals. This is the way forward as far as care is concerned, according to the NGOs: even if no extra money is available, they want the Government to second personnel to help them in their vital work. The NGOs also want industry to give them more financial support, stressing that the future of the country's expanding private sector depends not just on the success of the structural adjustment programme but on companies having healthy employees. R.R.

Profile

Land area: 752 614 km²

Languages: English (official language of government and business), Nyanja, Bemba, Tonga, Lozi and other local

Population:

-number: 8.21 million (mid-1991 estimate)
-spread: 50% urban, 50% rural (1990) - density: 114 per 1000 ha
- growth rate: 3.63% per annum

Main towns (1990 census): Lusaka (the capital, 982 362); Kitwe (439 201); Ndola (376 311); Chingola (186 769); Mufulira (175 025); Kabwe (166 619); Luanshya (147 747); Livingstone (84 116)

Infant mortality: 76/1000 live births (1990)

Life expectancy at birth: 54.4 years

Doctors per inhabitant: 1 /7150 (1984)

Access to safe water: 76% of urban, 43% of rural population

Adult literacy: total 73% - men 81 %, women 65% (1990)

School enrolment rate: primary 80%, secondary 20%, higher 2% (1989)

GNP per capita: US $420 per annum (1990)

Real GDP per capita: US $767 per annum (1989)

Official development assistance per inhabitant: US $54 per annum (1990)

Main exports: Copper (85% of total exports in 1991), zinc, lead, cobalt, tobacco

Main imports: Machinery and transport, fuels, lubricants, energy, manufactured goods, chemicals, food

Main trading partners (estimates, 1990):

Exports to: Japan, France, Italy, India

Imports from: UK, Japan, West Germany, USA, Saudi Arabia, South Africa

External debt: US $7 billion ( in mid-1991 external debt was twice GNP)

Debt service ratio: 13.5% of exports of goods and services (1991)

Currency: Kwacha (378 kwacha = US $1 in February 1993, with inflation estimated at approx. 200% per annum)

Sources: World Bank, UNDP.

Map (Zambia)

EC - Zambia cooperation

by Dr Nikolaos ALEXANDRAKIS

Zambia acceded to independence from Britain in 1964, contradictorily inheriting both the highest per capita income of any black African state and only about 100 university graduates. Copper accounted for almost all of the country's foreign exchange earnings and most of Zambia's manufacturing industry is oriented towards supplying the mining industry.

The paternalistic and inefficient political and economic pattern of the first 27 years after independence obviously led to too much state regulation as well as providing too little or wrongly directed investment. This, compounded by the very high costs of transport and a soaring defence budget, (a consequence of the country's landlocked situation and commitment to being in the forefront of Southern African emancipation), and the continued plummeting of copper prices, turned Zambia into one of the world's most indebted nations-8 million people owing external creditors more than US$7 billion.

Such was the inheritance of the newly elected democratic government, which came into power in 1991 after a peaceful electoral process. The new regime-a coalition of prominent businessmen, a new generation of politicians, technocrats and labour leaders-was therefore confronted with the need to undertake a very radical programme of reforms. This they are doing at a remarkable pace.

In a framework of a distressing external debt burden, enhanced donor aid is crucial to support the current ambitious economic restructuring process, aimed at diversifying away from the fortunes of copper, hence building up a sustainable and diversified new economic foundation.

EC assistance to Zambia

1. Programed Aid

Lom

Having become a signatory to the 1st Lomonvention in 1975, Zambia was the beneficiary of ECU 47m under Lom, allocated to:

-Agricultural sector: projects in the field of livestock development, feeder roads directly geared to agricultural development objectives and needs and training requirements in the dairy and livestock sector.
-Economic and social infrastructure: site and service schemes in rural townships and rural health clinics.

All activities under Lom have been completed.

LomI

The National Indicative Programme was designed to be consistent with Zambia's 'Third National Development Plan (1979-83)', the objectives of which placed particular emphasis on rural development, employment creation, food production and import substitution:

-Rural development: to achieve selfsufficiency in food production, to improve the quality of life in rural areas and to stimulate production of industrial crops for national manufacturing and processing;
-Economic and social infrastructure: to reduce external dependency in the energy sector, to develop a transport strategy by improving existing roads and developing new links and by upgrading rural landing strips. Also included was the development of water supply schemes, medical facilities, sites and services for housing and small-scale industries in rural and smaller urban areas;
-Geological surveys and research: to assist in the preparation, drawing and printing of geological maps;
-Microprojects: to assist local communities in self-development, thereby strengthening grassroots participation in development activities;
-Training and technical assistance: staff development, technical assistance and equipment, special attention being given to in-country programmes in vocational and technical training, science education, management, communications and in-service training;
-Supporting activities: to cover the undertaking of necessary supporting studies, trade promotion and credit to small and medium-sized industries.

Under LomI, ECU 58m were allocated. Generally the projects have reached their completion, the total closure of the Convention being expected shortly.

LomII

The integration of the EC's assistance into national development strategies and programmes was the objective under LomII. Emphasis was laid on the notion of a focal sector, where EC support could be more appropriately integrated. Implementation requirements were reinforced by the establishment of a timetable of commitments mutually binding for Zambia and the EC. Agriculture and integrated rural development was again the sector concentrated on as far as the NIP was concerned, 90% of the total resources having been initially devoted to it. In 1990 the LomII NIP was augmented by ECU 12m from a Special Debt Programme, bringing the final figure to ECU 92m.

Among the activities that should be outlined are the Smallholder Development Projects in the Copperbelt and Central Provinces, which aim at increasing yields and total production of smallholders through the introduction of improved technical packages for rain-fed agriculture. To better support the production aspects, the projects also include the improvement of infrastructure, inputs, credit, marketing and social facilities.

Import support programmes constituted the major bulk of the EC's assistance under LomII:

-Supply of inputs to Nitrogen Chemicals of Zambia (NCZ): import of chemicals, catalysts and spare parts for the rehabilitation of the factory at Kafue;
-Foreign Exchange Facility I: sectoral import programme in agriculture;
-Foreign Exchange Facility II: essential inputs for the agricultural sector.

The residual funds from these programmes were later used as additional resources for a General Import Programme (GIP) undertaken under an Import Support & Special Debt Programme aimed at, among other things, assisting Zambia in clearing her arrears to the IMF, hence creating the conditions for re-starting structural adjustment disbursements from the World Bank and the IMF.

The projects on education and training are also worthy of mention:

-Zambia mathematics & science teacher education: aimed at upgrading lower secondary Science and Mathematics teachers, enabling them to teach at senior secondary level, hence improving the standard of science education in Zambia; - Zambia Centre for Accountancy Studies: aimed at developing an indigenous Zambian accountancy profession in a cost-effective manner.

Implementation of LomII projects is still on course, secondary commitments reaching 86% and disbursements 67%.

LomV

The NIP for LomV was signed in February 1991, the EC having made available to Zambia the total sum of ECU 111m, comprising:

-National Programmable Resources: ECU 95m;
-First instalment from Structural Adjustment Facility: ECU 16m.

In recognition of Zambia's democratisation process, her strong commitment to adjustment and the consequent need for donors to increase and speed-up their financial support, it was possible to double the first instalment of the Structural Adjustment Facility to ECU 41.5m (including 10% of the programmed resources) and fix disbursement targets for the second instalment at ECU 27m in 1993 and ECU 14m in 1994.

As focal areas for LomV cooperation, two priorities have been identified: -Assistance to the productive sector, with special emphasis on rehabilitation and maintenance of the road system, the promotion of non-copper exports and the improvement of the livestock sector;

-Improvement of the social infrastructure and services, taking special account of the impact of the adjustment process on the living conditions of the poor and vulnerable groups of the population.

These priorities are being addressed through the development of the following activities:

-Rehabilitation of the roads sector: contribution to the national programme for the rehabilitation of trunk roads and rehabilitation and maintenance of feeder roads in areas of high agricultural production;
-Export development: improvement of non-traditional export performance by alleviating supply and market constraints which are faced by the high-potential agricultural, and relatively well-based industrial sectors;
-Improvement of animal health: reinforcement of the planning and monitoring capabilities of the national veterinary department and supporting the private sector's efforts;
-Microprojects: continuation of the microprojects support programmes which were implemented in
LomI and III;
-Social sector support: improvement of district health care, improvement of blood safety at provincial level and improvements in the quality of primary education, hence contributing to mitigating the effects of structural adjustment on the most vulnerable groups of society.

Outside the focal areas, the following activities are being designed and/or implemented:

-Natural resources conservation: the preservation of wildlife, including the reorganisation and restructuring of the Department of National Parks and Wildlife Service;
-Training of accountants: continuation of assistance to the Zambia Centre for Accountancy Studies (ZCAS), started under LomII, within an overall programme to indigenise accountancy training and the profession;
-Support services: technical assistance and consultancy services to help the Government of Zambia in developing specific policy changes in the areas affected by structural adjustment, and to facilitate the acquisition of new skills and technologies for the productive sector;
-NIP's contribution to structural adjustment: 10% of the NIP was utilised to reinforce the first instalment of the Structural Adjustment Facility.

The urgent need to reorganise the economy naturally makes structural adjustment assistance one of the main priorities in EC/Zambia cooperation. With this in view, the following programme has been agreed upon between the Government of Zambia and the EC:

-Framework: to support Zambia's efforts to diversify the economy away from copper' improving economic efficiency and establishing a more stable macro-economic environment. These policies will aim at improving the mobilisation and utilisation of domestic resources and restoring internal and external balances by pursuing appropriate fiscal, monetary and trade policies;
-Objectives: provision of foreign exchange for imports to support the adjustment programme and to reinforce the measures laid down in the NIP. The resulting counterpart funds are to be allocated to the central budget mainly in order to allow increases in the agreed budgeted expenditure, particularly for education and health;
-Strategy: The volume and the nature of the EC's support to the Zambian Structural Adjustment Programme results in a critical mass which requires a concomitant effort to ensure efficient utilisation. Hence, the EC's inherent strategy is being developed along the following lines: improvement of the analysis of the short-term evolution of the Economic Recovery Programme (ERP); improvement of the influence of medium/ long-term adjustment objectives on short-term policies; monitoring the social impact of adjustment; improving public finances management; supporting monetary sector reform and monitoring.

2. Unprogrammed A;d

SYSMIN

A Sysmin loan amounting to ECU 55m was awarded to Zambia in 1982 and another amounting to ECU 28m was awarded in 1986. These were aimed at rehabilitating the production facilities owned by Zambia Consolidated Copper Mines (ZCCM) in order to improve costs of production. The resulting counterpart funds (CFs) have been integrated into a Social Fund aimed at improving living conditions of the population in the mining areas.

In view of Zambia's eligibility for Sysmin III funds, a grant of ECU 60m was awarded in 1992. The purpose of the inherent programme is to support the current structural adjustment programme, by assisting in the diversification away from dependency on copper, hence reinforcing the LomV balance-ofpayments support. The consequent GIP will come in support of trade liberalisation and of the development of the nontraditional productive sector. The resulting CFs are intended to be used for covering expenditure in the social sectors, for budget lines directly linked to the privatisation process now under way, or for paying off public debt vis-is the banking sector, thereby allowing an easing of credit availability to the private sector.

Emergency aid and aid for refugees

Under Articles 203 and 204 of LomII, Zambia was granted the funding of a major Solid Refuse Disposal Programme in Lusaka, included in the overall national programme aimed at controlling a cholera epidemic in the capital and with funding for the upgrading of the Petauke-Ukwimi Road.

Food aid

At the end of 1990, Zambia was deemed to be ineligible to receive more food aid from the EC, because of nonpayment for deliveries to parastatals during previous operations. Nevertheless, considering the severe drought that devastated the country at the beginning of 1992 (probably the worst to afflict the region this century) and the democratisation process being undertaken, the EC decided to come to the support of Zambia, making the following available:

Food Aid	Maize	Oil	Pulses	Milk
Programme				powder
(tons)
Normal
1 992	5,000	2,000	-	78
Special
1992	100,000	1,750	712	-
Total	105.000	3,750	712	78

The total value of the current food aid operation amounts to ECU 39m, a part of which has been donated to Zambian NGOs and the World Food Programme for free distribution.

Financial table

3. Regional cooperation

As one of the 19 members of the Preferential Trade Area for Eastern and Southern African States (PTA), Zambia is a co-beneficiary of the framework of cooperation agreed between the EC and the PTA. This cooperation is focused on activities leading to economic integration in the sub-region, in particular addressing the issues of obstacles to trade, transport and cross-border investment, with emphasis on trade facilitation.

Zambia is also a co-beneficiary of EC cooperation with the Southern African Development Community (SADC), which acts on behalf of its member states as regional coordinator in the programming of EC cooperation. In this framework, the areas of concentration are transport and communications, food security, agriculture and natural resources.

4. European Investment Bank (EIB)

Under the Lom, II and III Conventions, the EIB accorded to Zambia and Zambian companies a total of 12 loans at concessional rates amounting to ECU 71.6m of which ECU 42m was out of the EIB's own resources with a significant interest subsidy financed by the EDF. Risk capital operations utilising EDF risk capital funds under EIB management, amounted to ECU 29.6m.

Under LomV, the EIB earmarked an amount of ECU 35m for the possible financing of projects and programmes in the sectors of industry, agro-industry, tourism, mining, energy, transport and communications. N.A.