Zambia

Life in Zambia 2002

 

Since the 1920s Zambia's rich Copper mines provided the colonial powers and foreign mining companies with much wealth. A former British colony, Zambia eventually gained independence in 1964 under the leadership of Kenneth Kuanda who stayed in power for 27 years.

During the 1970s and 1980s Zambia supported the struggle against apartheid and in doing so the country incurred vast expense. New roads and rail links to Tanzania had to be built as the country abided international sanctions and did not trade with South Africa. In addition, Zambia had to defend itself against military incursion from South African forces who damaged considerable amounts of infrastructure. Zambia also hosted many exiled South African freedom fighters and refugees.

The Zambian economy is dependent on agriculture and exports of copper and cobalt. The economy is especially vulnerable to shocks, such as drought or changes in commodity prices. In the early 1970s the price of copper fell just at the time when Zambia's expenses increased. Along with the expensive struggle against apartheid, the cost of essential imports like oil increased, so Zambia's had to borrow money to make ends meet. By the 1980s copper prices did not recover and Zambia had to borrow more money just to pay the interest on earlier loans and so the vicious cycle of debt began.

In 1991, the one party state under Kaunda came to an end with the election of Frederick Chiluba, who promised democratic and accountable government. Chiluba inherited an empty treasury and a massive foreign debt


Debt and Zambia


Zambia has very heavy debts and a severe budget deficit.

The country needs to spend more than it currently earns, but over the past 10 years the Zambian government have spent almost double as much on servicing the debt than on health and education services

In 2000 debt repayments took US$ 170 million while spending on health amounted to US$ 76 million and spending on education was US$ 70 million.

Over the years, the Zambian government has negotiated different ways of dealing with this huge amount of debt. In 1987, President Kaunda simply stopped meeting the agreed upon debt servicing, arguing that it was not in the interests of the people of the country. This, however, did not please the creditors (ie G8, IMF and World Bank), and for the next few years Zambia was isolated - little or no funds at all were flowing into the country. In 1989, the government backed down and has ever since been meeting its regular debt repayments.

The World Bank and IMF have agreed to cancel some of Zambia's debts on condition that it follows the Heavily Indebted Poor Countries Initiative (HIPC) which favours economic programmes known as Structural Adjustment Programmes (SAPs). Under SAPs countries rebalance their economies and cut budget deficits, which means cutting back on government expenditure in health and education and promoting the export sector to earn foreign exchange to pay the debt. In order to encourage industrial development, the IMF and World Bank demand that the government give credit to large export industries rather than small farmers.

Debt repayments and Structural Adjustment Programmes (SAPs) have hurt the poorest in Zambia and have diverted government resources away from essential services such as health and education and assistance to small farmers. Between 1991and 1993 in Zambia, public expenditure halved as a share of Gross Domestic Product.

In the words of Jubilee Zambia

"Zambia's total debt is clearly unpayable….the debt burden is economically exhausting. It blocks future development….it is politically destabilising…it hurts the poorest in our midst"

The Heavily Indebted Poor Countries Initiative (HIPC) which was launched by the creditors in 1996 promised to bring an end to the debt crisis by reducing the debt to a 'sustainable' level where countries would not fall into arrears. However, this definition of 'sustainable' is not based on human development needs. HIPC has failed to bring Zambia out of the debt crisis; six years later debt repayments are still greater than government spending on health and education combined

Debt campaigns advocate a development approach to debt relief which would properly analyse how much resources a country needs to put into basic services before calculating how much can be spent on debt repayments. Furthermore, campaigns point out that right now, the creditors are in control of the debt crisis, they make the rules, they do not consider whether debt undermines human rights and as such a fair and transparent process is needed to deal with debt

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