Economic and Political Structure
General
Zambia’s population is roughly 11.5 million with an annual growth rate of just under 2%. The country logged a GDP growth rate of just over 5% in 2005 with agriculture contributing 15%, manufacturing 10%, construction 9% and mining 8%. The official language is English with the natives speaking 72 tribal languages the primary of which are Nyanja, Bemba, Tonga, Lozi, Lunda, Luvale and Kaonde.
Economic and Political Structure
Zambia is a peaceful democratic nation with a number of opportunities for economic development. Zambia has had the good fortune of not being wrought by ethnic or political violence. Yet, despite its peace and stability, the country has not been able to take advantage of internal and external economic opportunities in the same way that other African nations such as Botswana, Tanzania and Kenya have. Over the last 10 years the government has instituted a series of reforms which are helping to spur developments in the economy and improving infrastructure.
Zambia is governed by a multi-party democratic system with three distinct powers of government - the legislative, executive and judiciary arms. The people elect both the President and the Parliament with the President appointing members to the Cabinet. The current president, Levy Mwanawasa, was elected in January 2002 and re-elected to a second term in September 2006.
Despite progress in privatization and budgetary reform, Zambia’s economic growth in 2005-06 remained somewhat below the 6-7% per year needed to notably reduce poverty. Cooperation continues with international bodies on programs to reduce poverty, including a new lending arrangement with the International Monetary Fund (IMF) in the second quarter of 2004. A tighter monetary policy will help cut inflation, but Zambia still faces challenges with high public debt.
Until 1990, the government of Zambia owned a 51% stake in all major companies operating in Zambia hindering the independence of the economic structure within Zambia. Although moderate attempts were made to begin privatizing the state-controlled companies, global events such as the 1970’s oil crisis and copper market crash prohibited their success. In 1991, the new government slowly began transforming Zambia to a free market system. Although that transition is still incomplete, its beginnings have had a positive impact. Privatization of government-owned copper mines has relieved the government from covering losses generated by the industry and greatly improved the chances for copper mining to return to profitability and spur overall economic growth. As Zambia moves wholly to a free market system, its economy should continue to improve.
Additionally, significant economic opportunities exist in manufacturing, telecommunications, transportation, energy, retail and other areas all of which are showing growth and receiving attention from the government.
Mining
Mining has and continues to be the economic life bread of the country with copper and cobalt accounting for over 70% of export earnings. Copper output has increased steadily since 2004, due to higher copper prices and the opening of new mines. Zambia is the 4th largest exporter of copper in the world and holds 6% of its known reserves. Reserves of other minerals such as gold, nickel, lead-zinc, iron and manganese are also mined. A large supply of precious gems, such as emeralds, aquamarines, topaz, opal, amethysts, rubies, garnets and diamonds, are also present and have yet to be exploited. Overall, the privatization of the mining sector is spurring rapid development.Â
Land Utilization
Agriculture is the predominant employment industry for the people of Zambia, employing over 50% of the total labor force. Huge opportunities for expansion of this sector exist as only 15% of the arable land is under cultivation. Additionally, the majority of farmers have yet to evolve from subsistence farming to the production of cash crops. Cotton and corn are the two largest cash crops produced in Zambia with others including tobacco, coffee, horticulture / floriculture. The World Bank has estimated that subsistence farmers in Zambia could increase their income by up to 25% by growing cotton and by as much as 55%-100% by growing corn.
In total, there are 19 national parks and 34 game management areas covering 65,000 square kilometers. Despite its natural assets, the country only attracts 600,000 tourists annually. Furthermore, of the countries in Southern Africa, Zambia has the lowest rate of contribution of tourism to GDP at 4% relative to 10% for Botswana, Tanzania, Namibia and South Africa. Correspondingly, the tourism sector only accounts for 3% of employment relative to 12% for fellow countries. The UNDP hypothesizes that improved management of Zambia’s wildlife resources could generate up to an additional $1 billion annually in economic development.
Infrastructure
Improvements in infrastructure not only offer economic opportunities themselves but will improve Zambia’s ability to capitalize on other economic areas such as tourism, agriculture and mining. The country has been wrought by poor communication networks, an underdeveloped road system, intermittent and unreliable power generation, confined and inadequate health care facilities and an insufficient education system. However, with the support of the government and the private sector significant advances are being made. What follows is a brief overview of transportation infrastructure - the other areas will be discussed in later sections.
Of Zambia’s 41,500 miles of roads, relatively few are of good quality and paved except for those routes linking Lusaka to main border posts. Although paved roads exist throughout Lusaka and leading out to major cities such as Livingstone, the majority of the country is covered by unpaved and often unmarked roads which are only reliably and safely reached by four wheel drive vehicles. The situation is complicated during the wet season when heavy rainfall makes many of the roadways impassable. The lack of a defined road system has hindered economic development in rural areas which constitute the majority of the country. The government has embarked on an ambitious road rehabilitation plan, earmarking almost $1 billion to improvements in the road network over the next 10 years.
The publicly-owned Zambia Railways (ZR) controls most of the 2,169 kilometers (1,345 miles) of national rail infrastructure. Rail routes to regional seaports are very important because Zambia is landlocked. The railway track linking Zambia to the seaport of Dar es Salaam in Tanzania is jointly run by the Tanzania-Zambia Railway Authority (TZRA) and ZR. Other seaports used for Zambia’s imports and exports are Beria in Mozambique, Durban in South Africa, and Walvis Bay in Namibia. Lusaka International is Zambia’s primary airport; the main secondary airports are based at Ndola, Livingstone, and Mfuwe. All of these airports are run by the publicly-owned National Airport Corporation (NAC).
Telecommunications
The telecommunications sector is also undergoing notable advancements though it still has much room for improvement. Facilities are aging but still among the best in Sub-Saharan Africa. At present, there is an average of 3 ground lines per 100 people with Lusaka and the Copperbelt accounting for almost 80% of the fixed lines in Zambia. This means that most of rural Zambia is out of touch - only 0.3% of rural households own a telephone. That being said, as in much of the developing world, mobile telecommunications is spreading exponentially faster than ground lines. Mobile use is increasing throughout the country as mobile towers are placed in rural areas. Improvements in telecommunications will have a profound impact on the economy.
Energy and the Environment
Zambia has suffered from an unsophisticated energy sector resulting in intermittent and unreliable electricity. The country’s abundance of water has resulted in hydroelectricity being the primary source of power generation. There are close to 2,000MW of hydroelectric generating capacity present. Additionally, Zambia is estimated to have over 30 million tons of coal reserves which currently provide 9% of the country’s power. In 1997 the government established the Energy Regulation Board which continues to take steps to improve the reliability and growth of the energy sector. Overall, the country is a net exporter of energy.
The state-owned Zambia Electricity Supply Corporation (ZESCO) produced 8.16 billion kilowatts (kWh) of electricity in 1998 using hydropower. Of this, 1.2 billion kWh was exported. However, the use of commercial energy within the country declined by an annual average of 1.7 percent between 1980 and 1997, whereas the use of traditional fuels as a percentage of total energy use rose from 37.4 percent in 1980 to 73.1 percent in 1996. This increased reliance on traditional energy sources, mainly wood, means that Zambia’s environment is threatened by deforestation which, in turn, creates soil erosion and a subsequent decrease in arable land. Developing a sustainable energy infrastructure will drive economic and social benefits throughout the country.
Healthcare
While healthcare infrastructure continues to be insufficient, important advances are being made. Last year, the government was able to introduce free health care in rural areas providing millions of people who could not afford it access to health care, and making Zambia only 1 of 30 African nations to provide this service. In order to meet demand, the country needs to recruit and train a notable number of new healthcare workers. At present, the country has only 1 doctor per 14,000 people. HIV/AIDS remains the country’s foremost health crisis with an estimated 1 in 6 adults infected with the HIV virus. The country faces other health epidemics including malnutrition, malaria, cholera, typhoid fever and other diseases.Â
