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.