The background of the Zambia economy had changed dramatically since independence in 1964 to date. These changes have been witnessed through various governments; the UNIP government under Kenneth Kaunda, MMD government under Frederick Chiluba, the patriotic (PF) government under Michael Sata, and Edgar Lungu.
Initially, the economy of the country was a liberal one just after independence in 1964. The UNIP government nationalized major industries and declared the country a socialist state under one party rule in the early 70s.
The economy became a state controlled one and most industries did not run up to expectations of the majority. Lack of re-investment in the industries led to low production and inefficiency. The dependence on copper by the Zambian economy had a devastating effect on the economy when there was a fall of prices in the commodity on the world market.
Zambia at independence was among the richest countries in sub-Sahara Africa. With copper, the countries major export, enjoying high rates on the market, the country had the necessary resources for development. But lack of investment in the sector, eventually led to low levels of copper output. The country started experiencing high levels of unemployment and underemployment.
Revenue from other sectors of the economy could not offset the status quo. The country had food shortages which lead to riots in the 1990s. The UNIP government was forced to hold multiparty elections in 1991. The party lost to the MMD (Movement for Multiparty Democracy), and Frederick Chiluba became President.
Under the Chiluba government, the economy of the country underwent massive economic reforms. State industries including the huge state conglomerate, ZCCM were privatized. ZCCM (Zambia Consolidated Copper Mines) was sold as separate entities.
The privatization process brought the much needed foreign investment in the country. But a lot of companies which were a drain on national resources like Zambia Airways (the national carrier) and UBZ or the United Bus Company of Zambia were liquidated, putting a lot more people on the streets. Some lucky companies were just downsized.
The rising copper prices had led to a renewed interest in the Zambian mines. The Chinese acquired several businesses in the country especially in the mining sector. New and old mines stated pushing upward total copper production.
The economy had been growing at a rate of 5 per cent since 2009. The Lumwana copper mine in Solwezi was a big contributing factor in the increase in copper output.
President, Michael C. Sata emphasized the need for economic diversification if the country was to sustain the GDP growth. The tourism and agriculture sectors had all shown increased growth. These areas had potential to turn round the country’s economic fortunes.
New hotel chains were opened in the country increasing bed capacity in the hospitality industry. Among such ones were The Royal Zambezi Sun hotels in Livingstone, Protea hotels in Lusaka, Livingstone and Chingola. Zambia had been recording increases in the flow of tourists. This translated into an increase in the number of inbound tourists for two successive years.
Beginning early 2015 the country started facing economic pressures as a result of falling international copper prices and strengthening US dollar against major convertibles.
For example during the first quarter of 2015, commodity prices generally declined. The average price of copper fell to US $5,940 per metric tonne from US $6,445 per metric tonne in the fourth quarter of 2014.
This resulted in Zambia’s copper production falling drastically by the end of August 2015 to 441,584 tonnes from the targeted 808,000 tonnes.
Consequently, the annual inflation rate performed badly as well. The rate jumped to double digits from October 2015 to January 2016 as follows:
With this uncertain economic outlook, Zambia’s economic performance from 2016 and beyond remains to be seen.
Commentary on the Zambian inflation rate. Check the current and updated figures here!
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Zambian curios are found with street artists and artisans, who are a source of Zambian handicrafts.
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