GDP (2001 est.): $3.6 billion.
Annual growth rate (2002): 3.0.
Per capita GDP (2001): $302.
Natural resources: Copper, cobalt, zinc, lead, coal, emeralds, gold, silver, uranium, hydroelectric power, fertile land.
Agriculture: Products--corn, sorghum, rice, groundnuts, sunflower seeds, vegetables, horticultural products, tobacco, cotton, sugarcane, livestock, coffee, and soybeans.
Industry: Types--mining, transport, construction, foodstuffs, beverages, chemicals, and textiles.
Trade (2000): Exports--$871 million: copper, cobalt, lead, and zinc. Major markets--Japan, Saudi Arabia, India, Thailand, South Africa, European Union (EU), U.S. Imports--$1.253 billion: crude oil, refined petroleum products, manufactured goods, machinery, transport equipment, foodstuffs. Major suppliers--South Africa, Saudi Arabia, U.K., Zimbabwe.
Major donors--Donor coordination is good, with various donors taking the lead in coordinating areas of their comparative advantage. The Poverty Reduction Strategy Paper (PRSP) and the National Economic Diversification Program are important focal points for donor collaboration. The U.S. Agency for International Development (USAID) has been the leader of the Parliamentary Reform Subgroup of donors in the context of donor collaboration in support of democratic governance. Overall development assistance to Zambia has averaged $310 million a year (1997-2001). The World Bank is Zambia's largest donor. Other key multilateral donors include the International Monetary Fund (IMF), EU, UN agencies, and the African Development Bank. The United Kingdom and the United States are Zambia's first- and second-largest bilateral donors, respectively.
Zambia's major donors and their principal areas of collaboration with USAID include The World Bank (privatization, PRSP, agriculture, tourism, health, and wildlife sectors); Germany and the EU (tourism, small and medium business development); Norway and the International Fund for Agricultural Development (rural agribusiness development); Norway and the Netherlands (Public-private Agricultural Forum); Japan, Denmark, Sweden, the U.K., Ireland, Netherlands, Canada, and UNICEF (health sector); U.K., Japan, Norway, and other bilateral donors (HIV/AIDS activities); and U.K., Denmark, Norway, Japan, Netherlands, Ireland, Finland, the World Bank, and UNICEF (basic education). The U.S.-Japan Partnership for Global Health is active in 11 program areas. USAID also collaborates with 13 other donors in supporting Zambia's Basic Education Subsector Investment Program.
Economy of Zambia
Zambia is one of Sub-Saharan Africa's most highly urbanized countries. About one-half of the country's 10 million people are concentrated in a few urban zones strung along the major transportation corridors, while rural areas are underpopulated. Unemployment and underemployment are serious problems. Per capita annual incomes are currently at about one-half their levels at independence, and at $302, place the country among the world's poorest nations. Social indicators continue to decline, particularly in measurements of life expectancy at birth (about 35 years) and maternal and infant mortality (95 per 1,000 live births). The high population growth rate of 2.3% per annum makes it difficult for per capita income to increase. The country's rate of economic growth cannot support rapid population growth or the strain which HIV/AIDS related issues (i.e., rising medical costs, decline in worker productivity) places on government resources.
The Chiluba government (1991-2001) came to power after democratic multi-party elections in November 1991 committed to an economic recovery program. The government was successful in some areas such as privatization of most of the parastatals, maintenance of positive real interest rates, the elimination of exchange controls, and endorsement of free market principles. It remains to be seen whether the new Mwanawasa government will be more aggressive in implementing economic reform and undertaking further privatization. Telecommunications, electricity, and transport parastatals still need to be privatized before the economy can compete regionally and internationally. Furthermore, Zambia has yet to address effectively issues such as reducing the size of the public sector, which still represents 44% of total formal employment, and improving Zambia's social sector delivery systems.
After the government privatized the giant parastatal mining company Zambian Consolidated Copper Mines (ZCCM), donors resumed balance-of-payment support. The final transfer of ZCCM's assets occurred on March 31, 2000. Although balance-of-payment payments are not the answer to Zambia's long-term debt problems, it will in the short term provide the government some breathing room to implement further economic reforms. The government has, however, spent much of its foreign exchange reserves to intervene in the exchange rate mechanism. To continue to do so, however, would jeopardize Zambia's debt relief. Zambia qualified for HIPC debt relief in 2000, contingent upon the country meeting certain performance criteria, and this should offer a long-term solution to Zambia's debt situation. In January 2003, the Zambian Government informed the IMF and World Bank that it wished to renegotiate some of the agreed performance criteria calling for privatization of the Zambia National Commercial Bank and the national telephone and electricity utilities.
The Zambian economy has historically been based on the copper-mining industry. Output of copper had fallen, however, to a low of 228,000 tonnes in 1998, continuing a 30-year decline in output due to lack of investment, and more recently, low copper prices and uncertainty over privatization. In 2001, the first full year of a privatized industry, Zambia recorded its first year of increased productivity since 1973. The future of the copper industry in Zambia was thrown into doubt in January 2002, when investors in Zambia's largest copper mine announced their intention to withdraw their investment.
Lack of balance-of-payment support meant the Zambian Government did not have resources for capital investment and periodically had to issue bonds or otherwise expand the money supply to try to meet its spending and debt obligations. The government continued these activities even after balance-of-payment support resumed. This has kept interest rates at levels that are too high for local business, fueled inflation, burdened the budget with domestic debt payments, while still falling short of meeting the public payroll and other needs, such as infrastructure rehabilitation. The government was forced to draw down foreign exchange reserves sharply in 1998 to meet foreign debt obligations, putting further pressure on the kwacha and inflation. Inflation held at 32% in 2000; consequently, the kwacha lost the same value against the dollar over the same period. In mid- to late 2001, Zambia's fiscal management became more conservative. As a result, 2001 year-end inflation was below 20%, its best result in decades. In 2002 inflation rose to 26.7%.
The agriculture sector represented 20% GDP in 2000. Agriculture accounted for 85% of total employment (formal and informal) for 2000. Maize (corn) is the principal cash crop as well as the staple food. Other important crops include soybean, cotton, sugar, sunflower seeds, wheat, sorghum, millet, cassava, tobacco and various vegetable and fruit crops. Floriculture is a growth sector, and agricultural nontraditional exports now rival the mining industry in foreign exchange receipts. Zambia has the potential for significantly increasing its agricultural output; currently, less than 20% of its arable land is cultivated. In the past, the agriculture sector suffered from low producer prices, difficulties in availability and distribution of credit and inputs, and the shortage of foreign exchange.
There are, however, positive macroeconomic signs, rooted in reforms implemented in the early and mid-1990s. Zambia's floating exchange rate and open capital markets have provided useful discipline on the government, while at the same time allowing continued diversification of Zambia's export sector, growth in the tourist industry, and procurement of inputs for growing businesses. Some parts of the copperbelt have experienced a significant revival as spin-off effects from the massive capital reinvestment are experienced.