a tripartite report - Unctad

ZAMBIA
Zambia’s economic performance in the 2000s suffered from a mix of domestic and international unfavourable
hit by the pull out of the Anglo American Corporation from the copper industry, and the massive drought in 2002,
however GDP and agricultural exports were boosted by improved copper price and a good maize harvest in 2004.
Despite progress in privatization and budgetary reform, Zambia’s economic growth remained somewhat below
reforms, and HIV/Aids led to a shortage of labour on rural farms, with families having to sell land and capital equip-
ing
targets set by the IMF for Highly Indebted Poor Countries (HIPCs)’s debt relief, by the start of 2003 Zambia had
received only 5 per cent of the debt service reduction committed to it.
The most urgent issues for the Zambian economy were thus debt relief, combating HIV/Aids, and a further reduction
of its dependency on copper with the encouragement of private sector investment into export oriented
agriculture, light manufacturing, small scale mining, and tourism.
Source: Drawn from three analytical papers: (i) Zambia – Economic History [Biz/ed Virtual Developing Country] (http://www.bized.
co.uk/virtual/dc/back/econ,htm); (ii) Zambia (http://www.eoearth.org/article/Zambia?topic+=49460; and (iii) Economy of
Zambia (http://en.wikipedia.org/wiki/Economy_of_Zambia.
As stated by Lipimile (2005) 112 , the adoption of
economic liberalization in Zambia in 1991 had
witnessed the adoption of three key inter-related
economic policy thrusts under the Structural Adjustment
Programme (SAP): (i) deregulation; (ii)
commercialization; and (iii) privatization. Lipimile
(2005) had earlier noted “that following Zambia’s
independence in 1964, except in sectors subject to
State restriction such as water, electricity, railways
and postal services, the private sector operated
1968, most of the large private companies were
nationalized by the Government. The Government
instituted socialist economic policies which resulted
in market distortions, economic instability, ris-
vate
enterprises. The Government began instituting
economic reforms in 1991 and, at that point, it
was recognized that competition was an essential
ingredient”. 113
Deregulation meant that quantity licensing, statutory
protection of monopolies of parastatals, and
structural barriers to entry to the Zambian market
had to be removed. The economic policy thrust of
commercialization had objectives at both macro
and micro levels. It entailed the reduction of public
expenditure and removal of subsidies from parastatals,
as well as the requirement that parastatals
and quasi-Government enterprises should not
wastefully devote resources to maintaining ser-
95
Even though the privatization programme was begun
in 1988/89 114 , it was only pursued in earnest
after 1991 when the declining Government budget
could not provide the investment capital needed
-
the enterprises was therefore the only viable option
for their survival. According to Lipimile (2005),
therefore, the privatization programme was thus
clearly a ‘damage control’ exercise, undertaken
during a period of extreme economic stress in an
effort to enable enterprises to survive. The passing
of the Privatization Act in 1992, and the establishment
of the Zambia Privatization Agency
the heavy burden placed on the Government
budget by the State-owned enterprises was unsustainable,
and that the survival of the enterprises
could not be assured unless they were placed in
private hands. The bulk of the enterprises, which
then numbered around 150, were insolvent and
many were technically bankrupt, being plagued by
Creditors were threatening loss-making enterprises
with receiverships. Some 38 enterprises had
already been forced into liquidation before the privatization
programme was launched, with notable
ones being in the milling industry (United Milling)
and the road and air transportation services sector
(United Bus Company of Zambia, and Zambia
Airways). Privatizations peaked in 1996 when 125
transactions were completed. Some of the enter-
ZAMBIA