ZAMBIA

COUNTRY OVERVIEW

LOCATION AND SIZE.

A landlocked state located in southern Africa, east of Angola, Zambia has an area of 752,614 square kilometers (290,584 square miles) and a total land boundary of 5,664 kilometers (3,520 miles). Comparatively, Zambia is slightly larger than Texas. Zambia's capital city, Lusaka, is located in the southern center of the country's territory.

POPULATION.

The United Nations Economic Commission for Africa estimated Zambia's population at 9,133,000 in 2000, a notable rise from the 1995 level of 8,081,000. In 2000 the birth rate stood at 41.9 births per 1,000 population while the death rate was 22.08 deaths per 1,000. With similar annual growth rates, the population will stand at 13,201,000 in 2015 and 21,965,000 in 2050. Zambians of African descent constitute 98.2 percent of the population, and 1.1 percent are European. In 1998, 39 percent of Zambians lived in urban habitats—one of the highest levels of urbanization in Africa.

The HIV/AIDS epidemic is a considerable problem in Zambia with 19 percent of the working age population infected. It is estimated that 99,000 Zambians died from AIDS in 1999 whilst those with HIV infection who were still alive at the end of 1999 numbered 870,000. These deaths and levels of infection are not only important in themselves but have extremely negative social and economic costs. The drawn-out nature of death from AIDS means that many of the population (predominantly women) who could be productively employed have to provide long-term care for the dying. In addition, by 1999 the cumulative number of orphans created since the epidemic began in the mid-1980s reached 650,000. This raises the problem of the development and guidance of Zambia's children.

OVERVIEW OF ECONOMY

The mining of copper dominates Zambia's national economy. A central legacy of the colonial period (1899-1964) was the exploitation of Northern Rhodesia's (modern Zambia) vast copper deposits, first, by the British South Africa Company (BSAC) who administered the territory until 1924 and, second, by the British government. The need for copper miners meant that a high percentage of Zambia's male workforce was, often forcibly, encouraged to leave their subsistence farms and work in the mines. This led to the neglect of the agricultural sector and Zambia's reliance on copper exports—a trend that continued to affect the national economy by 2001.

At independence in 1964, Zambia's economy was highly skewed; most regions outside of the "line of rail" (the railway that serviced the mining sector) were highly underdeveloped. However, the newly elected United National Independence Party's (UNIP) policy of actively developing the economy meant that the manufacturing and agricultural sectors increased in importance, and the supply of health and education services to the population dramatically improved.

The UNIP, led by President Kenneth Kaunda, promoted a brand of so-called "humanist" socialism which was the ideological justification for the creation of a large number of parastatals in Zambia. The important reasons for this policy were the Unilateral Declaration of Independence (1965) by the neighboring white-supremacist Rhodesia (modern Zimbabwe), which threatened Zambia's supply lines, and the fact that the foreign owners of Zambia's enterprises often invested their profits abroad. In addition, parastatals were seen by the Zambian government as a mechanism to develop and diversify the economy.

By the late 1970s, parastatals employed a third of the official workforce and consisted of over 330 enterprises whose activities criss-crossed Zambia's economy with areas such as mining, transport, agriculture, construction, tourism, trade, and finance. Partly due to the parastatal system, Zambia's manufacturing output rose by more than 160 percent between 1965 and 1975, and the level of domestic power generated grew by more than 350 percent. However, the parastatals, and the economy as a whole, continued to rely on colonial structures in that they were dependent on foreign capital, expertise, technology, imports, and markets. In addition, parastatals (along with the government and civil service) were rife with corruption and inefficiency as many could not function without large government subsidies. This simply meant that the Zambian form of parastatals was inherently unsustainable.

In order to continue to subsidize state spending on parastatals and social services, UNIP continually borrowed from the International Monetary Fund (IMF) to support the economy's balance of payments deficits. By the early 1980s the IMF began to impose conditions of free market reform for continued lending. These reforms consisted of the stabilization of the economy and a degree of economic liberalization. However, the effects of these reforms on the incomes and employment of Zambia's workers were negative. By 1987, widespread social protest and discontent persuaded Kaunda to drop the IMF-sponsored reform.

In 1991 the UNIP government was defeated during multiparty elections by the Movement for Multi-Party Democracy (MMD). The MMD immediately institutionalized a radical program of free market reform in order to secure continued external aid and to satisfy Zambia's business class. Parastatals were privatized, the kwacha was devalued, and the exchange rate was liberalized. As well as reducing consumer incomes, these reforms caused a considerable amount of financial uncertainty, and a number of domestic banks collapsed. Moreover, even though the government had benefitted from increased revenue through the privatization of 85 percent of its parastatals by 1998, the national balance of payments remained in deficit.

In comparison to Zambia's traditional reliance on copper and cobalt at independence, by the 1990s the economy had significantly diversified. In 1999, non-traditional exports such as processed foods, copper rods, and textiles constituted 39.4 percent of export earnings. However, the growth of the national economy and government revenue was still determined by the unstable prices of primary commodities, particularly copper and cobalt, in world markets.

CRIME.

It is important to note that Zambia is a key transhipment point for the global illegal drug trade. A significant quantity of heroin and cocaine bound for Europe and for distribution throughout the rest of Southern Africa passes through Zambia. This illicit trade is supported by the fact that Zambia is a regional money-laundering center that acts as an excellent facility for those dealing in drugs to disguise the illegal source of their profits.

DEBT.

External debt is a huge drain on Zambia's economy. Due to government subsidies of parastatals and investment in public health and education, by 1980 Zambia was one of sub-Saharan Africa's most indebted countries; it owed $3.261 billion. By 1997, the national debt had risen to $6.758 billion. This increased indebtedness was predominantly caused by an annual average government deficit of 10.72 percent of GDP between 1989 and 1998. Although the national balance of payments had been improving over the latter half of the 1990s, by 2000 the government remained fully dependent upon external aid in order to function.

POLITICS, GOVERNMENT, AND TAXATION

Like most of sub-Saharan Africa's countries, Zambia was a false creation of European imperialism during the "scramble for Africa" during the late 1800s. The territory of Zambia (formerly Northern Rhodesia) cut across dozens of ethnic groupings, chiefdoms, and languages and pulled these different societies together under an increasingly centralized colonial state. Colonial rule in Zambia (1899-1964) was a period of "divide and rule" where different chiefdoms were played off each other by the BSAC and the British government, respectively. (Although specific African leaders would often use colonial power to achieve their own ends).

When vast copper reserves were discovered in the mid-1920s the country was mobilized to mine this valuable mineral to enrich the colonial powers, whilst the rest of the economy was neglected. As Marcia Burdette noted in her Zambia: Between Two Worlds, the colonial administration transformed Zambia into "a mineral-exporting enclave with a vast underdeveloped hinterland." Due to the growing nationalist militancy of the African population, independence was achieved in 1964. Zambia's post-colonial politics can be divided into 3 periods, each of which corresponds to the establishment of a new republic and constitution.

THE FIRST REPUBLIC.

The First Republic (1964-1972) was formed at independence in 1964. In multiparty elections in 1964 the United National Independence Party (UNIP) defeated its main rival, the African National Congress (ANC). The socialist-"humanist" orientation of the government (led by President Kenneth Kaunda) was bolstered by a large revenue supplied by high international copper prices, which allowed the opening of health and education services to the black population. The UNIP could boast a considerable success; by 1972 Zambia's hospitals had grown by 50 percent and health clinics doubled, whilst the availability of education services also dramatically increased. In order to administer the growing public sector the civil service expanded dramatically and acted as a mechanism for the UNIP ruling elite to award the party faithful. Due to the lack of a significant business sector, civil servants became the nation's upper class.

THE SECOND REPUBLIC.

The Second Republic (1972-1990) was established in 1972. Known as the "one party-participatory democracy," it was a one-party state ruled by the UNIP. All other political parties were banned, and Kaunda's dominant role in the UNIP and the government assured him an uncontested rule. However, the Second Republic ran into serious difficulties due to corruption within the civil service, government, and parastatal sector, and declining government revenue caused by the falling price of copper. The government began to borrow heavily to support the vast state expenditure and the country became highly indebted.

Discontent grew throughout the country over the 1980s because of rapidly declining incomes and rising prices, partly caused by an IMF economic liberalization program (which was subsequently dropped in 1987). The culmination of worker militancy, student protests, and growing opposition within the ruling class was the formation of the Movement for Multi-Party Democracy (MMD) led by Frederick Chiluba (a key trade union figure). Mounting economic crisis and political pressure led Kaunda to sign a new constitution in 1990, putting an end to one-party rule.

THE THIRD REPUBLIC.

The Third Republic adopted a multi-party parliamentary democracy. Peaceful presidential and parliamentary elections were held in 1991 wherein Chiluba received 76 percent of votes cast. After this defeat Kaunda stepped down from office and ended his 27 years of leading the country. Relatively free and fair elections were held again in 1996 and the MMD won a landslide victory for the second time. In 2001, the MMD continued to pursue free market economic reform. The global dominance of free market capitalism since the 1990s and, perhaps, the success of the pro-business MMD has led the UNIP to drop its socialist orientation and adopt "capitalism with a social conscience."

The Zambia Revenue Authority (ZRA) was set up in 1994 to increase government revenue—which had been historically low—and to reduce the economy's growing dependence on external aid, which is essential in supporting Zambia's most basic necessities. The ZRA had reported considerable success in its role. For example, value-added tax (VAT) was introduced in 1995 and by the turn of the century it constituted 20 percent of all tax revenue. In order to provide increased incentives for domestic and international business the levels of these various revenue-collecting mechanisms had been progressively reduced in the 1990s. Nonetheless, even in light of these pro-business tax reductions, ZRA revenue collections still grew from K421 billion in 1994 to K954 billion in 1997.

INFRASTRUCTURE, POWER, AND COMMUNICATIONS

Of Zambia's 66,935 kilometers (41,500 miles) of roads, relatively few are of good quality and paved except for those routes linking Lusaka to main border posts. 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), which is not part of 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).

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.

The state-owned Zambia Telecommunications Company (ZAMTEL) is the national provider of telecommunication services (predominantly telephone lines). ZAMTEL is planned to be partially privatized. Although generally adequate, Zambia's telecommunications can be unreliable, particularly during rainy seasons. A cellular telephone service is available in Lusaka and

other built-up areas. Fax machines are widely used, and the Internet is becoming an increasingly popular means of communication for those few who are fortunate enough to have access.

ECONOMIC SECTORS

Zambia's economic sectors reflect 3 key constraints. First, the influence of colonial rule created a reliance on mining (in particular, copper) and a failure to fully exploit the agricultural sector. Second, the small size of the population means that domestic markets are limited. Third, its landlocked status reduces the competitiveness of exports as they are subjected to the tariffs of neighboring countries and high transportation costs.

However, for such an underdeveloped country, Zambia has been relatively successful in diversifying its economy. Although copper exports continue to be of primary importance, the export of cash crops such as cotton and tobacco, as well as refined sugar, provide a high level of revenue and employment. However, all of these goods are highly sensitive to fluctuations in international market prices. The manufacturing sector produces a large quantity of textiles for export and there is a growth in the production of cut flowers. Within the industrial sector, the mining of gems and other minerals, as well as the production of cement, engineering products, and chemicals, helped balance out the economy's reliance on the mining of copper and cobalt.

AGRICULTURE

Zambia's main agricultural exports are cotton, sugar, and cut flowers. Agricultural exports increased significantly between 1993 and 1998 from US$27.2 million to US$89.7 million. However, Zambia's agricultural sector has historically lacked significant infrastructure and productive investment. This means that the sector is highly underdeveloped whilst offering considerable potential if large investment was supplied. For example, neighboring Zimbabwe, which is of a comparable size and climate to Zambia, exported US__BODY__,157 million of agricultural goods in 1998. The key problem with Zambia's failure to fully exploit its agricultural production to a similar extent as Zimbabwe is that agricultural imports have significantly outweighed agricultural exports throughout the 1990s. This represented another imbalance on the national balance of payments and a serious drain of foreign currency reserves that have to be used to pay for imports.

COTTON.

Cotton is one of Zambia's most important cash crops. Although it is partly produced on large commercial farms by expatriates and some African commercial farmers, like most of Zambia's cash crops, the vast bulk of cotton output comes from small subsistence farmers. Even though the price of cotton plummeted between 1998-1999, export earnings from this crop rose from US$22.8 million to US$41.4 million, partly due to companies holding back 1998 stocks in the hope that prices would rise. The production of cotton also supports Zambia's large domestic textile industry.

Another key cash crop is tobacco. In 1998 Zambia exported US$9.5 million of tobacco, an impressive rise from the 1988 level of US$3.8 million. However, like most primary commodities, tobacco exports are subject to the continuing change and instability of international market prices. In 1960 1 metric ton of tobacco fetched US$8,391; by 1999 this had fallen to US$2,922. Also of note is the farming of coffee. In 1999 coffee provided US$8.7 million in exports; these earnings would have been higher if the world market leader, Brazil, had not almost doubled its normal output.

SUGAR.

Sugar is a dominant agricultural export, accounting for 70 percent of all export earnings in the processed food sub-sector in 1999 (other key goods in this sub-sector are stock feeds, marigold meal, mealie-meal, and wheat flour). Sugar exports have increasingly benefitted from initiatives by the European Union which, under the Lome Convention, agreed to buy 13,000 metric tons from the Zambia Sugar Company in 2000. However, processed food exports suffered a decline from the 1998 level of US$49.4 million to US$33 million in 1999. This is because of serious instability in the Democratic Republic of the Congo which was the recipient of roughly 40 percent of Zambia's processed food exports.

A recent agricultural development of huge significance is the production of floricultural goods (mainly cut flowers). Despite low prices at Dutch auctions in 1999 (the Netherlands is the key trading point for flowers in Europe), Zambia's floricultural products fetched US$42.8 million in export earnings. In addition, in 1999 horticultural production (mainly fruit and vegetables) earned US$23.8 million. However, there appears to be a certain imbalance here as Zambia exports vast amounts of fruit and vegetables whilst remaining a net importer of food for domestic consumption.

The major food crops produced in Zambia for domestic consumption are cassava, maize, and wheat. Maize used to be one of the most important food goods in Zambia with 1,845,000 metric tons being produced in 1989, but by 1998 this had declined to 650,000 tons. However, over the same ten-year period the consistent growth of cassava production (from 290,000 tons to 817,000 tons) and of wheat (from 10,000 tons to 70,000 tons) partly canceled out the decrease of maize output. Nonetheless, the total domestic production of these 3 basic food crops was 608,000 tons less in 1998 than in 1989. This decline of domestic food production often means that Zambians have to pay more for their essential nutritional requirements with a negative knock-on effect on the standard of living.

INDUSTRY

MINING.

National copper and cobalt reserves are by far the most important factor in Zambia's national economy. Zambia is the world's fourth largest producer of copper and, due to the ongoing civil war in the cobalt-rich Democratic Republic of the Congo, it has been the leading producer of cobalt in the late 1990s. In 1996 total copper exports amounted to US$568 million and cobalt exports US$193 million.

Copper is subject to the constant fluctuation and uncertainty of international market prices. In 1960 the price for a metric ton of copper was US$3,271; at its height in 1970 it was US$5,629. Yet from the mid-1970s onwards it consistently declined to only US__BODY__,519 by 1999. For example, even though Zambia produced 12,700 tons more copper in 1993 than in 1988, it received US$219.4 million less in export receipts. But, in total, copper production has steadily declined from a 1970 high of 700,000 metric tons to only 250,000 tons in 1999. More importantly, it is estimated that, at the ongoing level of production, the nation's economically viable copper reserves will be exhausted by 2010.

By 2000 the giant parastatal mining company, Zambia Consolidated Copper Mines (ZCCM), had been fully privatized. The private sector successors (principally the mining giants Anglo America, Avmin, and the Glen-core/First Quantum consortium) had begun to invest hundreds of millions of dollars in Zambia's mines. In combination with the fact that Zambia has the largest non-exploited underground copper reserve in the world, private sector investment means that the mining sector may continue to provide considerable export earnings to the national economy well into the 21st century.

In the 1960s and 1970s Zambia also mined and refined a significant amount of lead and zinc. The high point for the production of these minerals was in 1974 when 27,000 tons of lead and 58,000 tons of zinc were produced; however, by 1993 these levels had dropped dramatically to 3,000 tons and 5,000 tons, respectively. Yet, lead and zinc in combination with gold, silver, and platinum provided US$12.3 million in export earnings in 1998. (In 1999 this fell to only US$3.3 million, but this was due to the modernization and rehabilitation of mines.) The export of gemstones has grown in importance and provided US$13.8 million of exports in 1999 to the main market of East Asia.

MANUFACTURING.

Unusual for an economy in sub-Saharan Africa, Zambia exports more manufactured goods than it imports—with US$180 million exported in 1997 and US$116 million imported (although as a whole the economy generally remains in deficit). The principal manufacturing exports are textiles, engineering products, and building materials.

Zambia's textile industry is considered to have vast competitive potential in the region due to relatively cheap labor costs and a high level of domestic cotton production. But the dumping (the sale of a good on a foreign market at a price below marginal cost) of foreign textiles on the Zambian market by regional competitors has negated the growth of domestic textile production. Zambia's export earnings from textile products (80 percent of which is cotton yarn) declined from US$42.4 million in 1998 to US$37 million in 1999. This is principally due to a fall in the price of cotton yarn over this period as the quantity of exports remained stable. The principal destinations for textile products were the EU countries, which consumed 80 percent, and regional African countries with 15 percent.

In 1999, the main engineering products manufactured in Zambia were copper rods (73.4 percent), electrical cables (13.7 percent), and copper wire (11.2 percent). The export of these engineering products declined by 26.7 percent between 1998 and 1999 to US$23.2 million. This is mainly because of a fall in international demand due to the slow recovery of the industrialized economies in East Asia after the 1996-97 world financial crisis. Similarly, the export of building manufactures (such as cement and roofing sheets) declined in 1999 to US$10.2 million. Again, this was due to the ongoing civil war in the Democratic Republic of the Congo, traditionally the main destination of these goods.

SERVICES

TOURISM.

Zambia has a great deal to offer adventurous tourists. It provides a sample of relatively "untouched" Africa with authentically wild national parks, stunning scenery, and the Victoria Falls and Zambezi River (2 of Southern Africa's main tourist spots), which it shares with Zimbabwe.

Zambia's tourism sector has benefitted from the serious social and political instability in neighboring Zimbabwe (which was traditionally a preferred destination). As a consequence, and also due to considerable public and private investment in tourist facilities, the level of tourists visiting Zambia rose from 87,000 in 1980 to 362,000 in 1998. This created an increase in tourism receipts from US$20 million to US$75 million, although it should be noted that Zambian nationals vacationing abroad spent US$59 million in 1998.

FINANCIAL SERVICES.

In the 1960s the Zambian government nationalized several non-bank financial institutions (such as insurance companies) and set up the Zambia National Commercial Bank to compete with existing private commercial banks. But due to political interference and the inefficient allocation of loans, this system of public banking was unsuccessful. With the aim of improving efficiency in the banking sector through the discipline of free market competition, Zambia liberalized interest rates between 1992 and 1995. This created a considerable amount of financial turmoil and instability. In 1995, Zambia's third largest bank, Meridien Bank, collapsed along with 2 other local banks. In addition, due to a new regulation requiring banks to have at least US$140 million in working capital, and because of the insufficient experience of domestic banks in operating in a liberalized economy, 5 other banks had their licenses withdrawn by the Bank of Zambia (the central bank) by 1998.

Despite free market reform, by the late 1990s there was still considerable evidence of political leaders and their allies defaulting on loans and interfering in the affairs of Zambia's banks. In addition, not only has new regulation and economic liberalization failed to significantly increase confidence in the banking sector (which remains fragile as 30 percent of total loans are non-performing), the Economist Intelligence Unit maintained in 1997 that "too many banks [are] chasing the little profit available." This has led to the increased domestic dominance of huge multinational banks such as Barclays and Citibank, thereby displacing less powerful national banks such as the National Savings and Credit Bank of Zambia and the publicly owned Zambia National Commercial Bank.

INTERNATIONAL TRADE

From 1991 Zambia became a net importer of goods, importing US$83 million more than it exported in 1998. The national balance of payments generally remained in deficit throughout the 1990s. In order to address this imbalance the government relied on external aid to prop up the economy; this in turn has led to a deeper indebtedness and a rise of annual debt repayment levels. In 1993, Zambia's main imports were US$144 million of crude oil (it is refined domestically into petroleum oils), and US$30 million in fertilizer. The main sources of Zambia's imports in 1996 were South Africa (US$303 million), Saudi Arabia (US$107 million), the UK (US$81 million), neighboring Zimbabwe (US$67 million), and Japan (US$19 million).

Historically, Zambia's main exports are copper and cobalt, which in total provided US$761 million in export earnings in 1996. However, there has been a huge expansion of non-traditional exports (NTEs) such as sugar, cotton, copper rods, textiles, cut flowers, gemstones, and cement since independence in 1964. In 1999, the European Union was the largest market for Zambia's NTEs, which

consumed US$117.4 million (38.54 percent) of total NTE earnings. Within the EU the largest market was the Netherlands which accounted for US$40.6 million of such goods as cut flowers and live fish. The UK was the second largest EU market and imported US$37.4 million of specialty vegetables, cotton yarn, and coffee. Germany consumed US$21.3 million in cotton yarn and cut flowers.

The Common Market for Eastern and Southern Africa (COMESA) was Zambia's second largest regional market for NTEs in 1999 and imported US$81.8 million. Some of the principal NTEs sold in this region were sugar, petroleum oils, cement, food, and electricity. The main 3 markets and their percentage of COMESA's imports were the Democratic Republic of the Congo (41.93 percent), Malawi (18.66 percent), and Zimbabwe (12.86 percent). However, due to war in the Democratic Republic of the Congo and social unrest in Zimbabwe, 1999 exports to these countries fell. The key market for Zambia's copper rods, gemstones, and tobacco was East Asia, accounting for US$10.3 million.

MONEY

Since the liberalization of the kwacha in the early 1990s Zambia has suffered from a permanently high level of inflation. In part due to the influx of imports to modernize Zambia's recently privatized copper mines, the kwacha lost 40 percent of value to the U.S. dollar in 2000. Zambia's inflation has resulted in its coinage being more valuable as pieces of metal than at face value. In consequence, notes are the population's source of cash. Due to expensive and scarce credit facilities, Zambia's domestic trade is generally undertaken using cash.

Zambia has a single stock exchange, the Lusaka Stock Exchange (LuSE). The LuSE opened in 1994. By 1997 it had benefitted from increased trading volumes, and its capitalization value was US$502 million. At the outset of 2000 it listed 15 companies. The national Securities and Exchange Commission (SEC) regulates Zambia's stock market.

POVERTY AND WEALTH

Zambia is a country defined by extreme poverty. By 2000, over 70 percent of the population lived on less than 1 dollar a day (the figure 10 years before was 50 percent) and 64 percent of this income was spent on essential food. This is in a country whose public expenditure on health as a percentage of GDP fell from 2.6 percent in 1990 to 2.3 percent in 1998, and where external aid per capita fell from US$119.7 in 1992 to US$36.1 in 1998. In addition, the daily per capita supply of calories fell from 2,173 in 1970 to 1,970 in 1997, and the daily supply of protein declined by 19.2 percent and fat by 27.1 percent over the same period. Consequently, 3 in 5 of Zambian children were malnourished by 2001. Along with the impact of the HIV/AIDS epidemic, these factors have contributed to a declining life expectancy for the average Zambian from 47.3 years in the early 1970s to 40.1 in the late 1990s.

There are vast disparities in living conditions between Zambia's rural and urban habitants. For example, whilst 64 percent of the urban population have access to safe water, only 27 percent of the rural population are so fortunate. Moreover, 46 percent of the urban population live below the poverty line compared to a massive 88 percent in rural areas. In more general terms, the disparity of wealth between Zambia's rich and poor is also considerable.

The poorest 60 percent of the population share 25.2 percent of the nation's wealth, whereas the wealthiest 10 percent benefit from 39.2 percent of the wealth. Incomes have not grown as fast as inflation which, in combination with the introduction of user fees for health and education services, means that a majority of Zambians cannot afford to provide themselves with even basic social services.

WORKING CONDITIONS

Of a labor force of 4 million the average Zambian works for 45 hours a week. However, this official figure does not take account of those who work outside of the official sector and embark upon such activities as subsistence farming on small plots of land and petty trading. Zambia has been a member of the International Labour Organisation since independence in 1964, yet it only ratified Conventions 87 (Freedom of Association and Protection of the Right to Organize) and 98 (Right to Organize and Collective Bargaining) as late as 1994. Zambia's trade unions are obliged to join the highly centralized Zambia Congress of Trade Unions (ZCTU). The ZCTU is a very powerful organization and by withdrawing its support from the UNIP in 1990, it almost assured the MMD's electoral success in 1991. Six of 7 ZCTU leaders joined the 1991 MMD government, including President Chiluba who had been the ZCTU's chairman. However, the ZCTU is highly critical of the MMD, in particular its pro-business policies such as the liberalization of the economy which has resulted in a decline of living standards for Zambia's workers. There is also tension within the ZCTU. In 1995 3 of its twenty affiliate trade unions broke away with the intention of setting up a competing center body.

COUNTRY HISTORY AND ECONOMIC DEVELOPMENT

1899. The British South African Company (BSAC) assumes control over Zambia (then Northern Rhodesia).

1924. British government takes over Zambia's administration.

1964. Zambian independence and the beginning of the First Republic. The United National Independence Party (UNIP) wins multi-party elections, and Kenneth Kaunda becomes president.

1965. Unilateral Declaration of Independence in Rhodesia (modern Zimbabwe) threatens Zambia's supply routes.

1972. The one-party state of the Second Republic is formed.

1987. A series of riots against declining incomes ends an IMF-sponsored free market reform program.

1990. Kaunda agrees to the formation of the Third Republic.

1991. Multi-party elections are won by the Movement for Multi-Party Democracy led by Frederick Chiluba. The MMD embarks on a program of IMF-sponsored free market reform.

1996. The MMD wins a second round of elections.

2000. The former parastatal Zambia Consolidated Copper Mines (ZCCM) is fully privatized.

FUTURE TRENDS

The Zambian government projects that the privatization of the giant mining parastatal (ZCCM) will lead to the increased efficiency of copper production, improved export earnings, and a subsequent influx of foreign exchange in order to correct the economy's sizeable balance of payments deficit. The proposed privatization of other major parastatals in the telecommunications, electricity, and transport sectors is expected to produce similar results. In part due to this adaptation of free market reform, Zambia's external creditors seem likely to write off US$670 million of debt in 2001, continue to reschedule the repayments of a large proportion of debt, and extend the level of credit available to the government by US$4.5 billion in order to prop up the economy. However, signs of a global recession in early 2001 indicate that the world market for Zambia's exports may become less profitable. This will have a severely negative impact on the country's population and the growing non-traditional export sector, and make the repayment of outstanding debt unfeasible.

DEPENDENCIES

Zambia has no territories or colonies.

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—Liam Campling

CAPITAL:

Lusaka.

MONETARY UNIT:

Zambian kwacha (K). One Zambian kwacha is equal to 100 ngwee. Coin denominations include 1, 2, 5, 10, 20, and 50 ngwee and notes include 1, 2, 5, 10, 20, 50, 100, and 500 kwacha.

CHIEF EXPORTS:

Copper, cobalt, lead, and zinc.

CHIEF IMPORTS:

Crude oil, manufactured goods, machinery, transport equipment, and foodstuffs.

GROSS DOMESTIC PRODUCT:

US$3.325 billion (1999). [CIA World Factbook estimates GDP at purchasing power parity at US$8.5 billion (1999 est.).]

BALANCE OF TRADE:

Exports: US__BODY__.057 billion (1998). Imports: US__BODY__.140 billion (1998). [CIA World Factbook reports exports to be US$900 million (f.o.b., 1999 est.) and imports to be US__BODY__.15 billion (f.o.b., 1999 est.).]