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ZAMBIA
Economy

Economy

General

The economy has always depended heavily on copper mining, but the fall in the price of copper on the world market since the 1970s has left it very vulnerable. The government has tried to achieve greater diversification, but so far with little success. Between 1968 and 1991, an economic policy was implemented, which led to the state taking a leading role in many sectors through participation in company capital or the establishment of state-owned enterprises.

In the mid-1980s, Zambia came to an agreement with the IMF and the World Bank, which was conditional on substantial savings. In 1987, the agreement with the IMF was broken, but in 1990 negotiations with the IMF and the World Bank resumed.

It was not until 1991, when President Kaunda stepped down, that Zambia, under the leadership of the new president and former trade union leader Chiluba, embarked on a large-scale privatisation of more than 200 state companies. His policy was praised by the World Bank and the IMF, but met with much criticism both at home and in the donor countries for his authoritarianism and the accompanying curtailment of political freedoms. Moreover, this liberalisation and structural adjustment of the economy hardly translated into economic growth.

Zambia has huge balance of payments deficits and a high external debt (5.9 billion dollars in 2002). The trade deficit amounted to USD 233 million in 2002.

In general, donors and investors have a good opinion of the government's macro-economic policy. Partly because of this, Zambia has had average economic growth of around 6% since 2001.

In 2005, Zambia reached the so-called Completion Point of the HIPC initiative, which led to a considerable reduction in debt. In the medium to long term, the priority is to diversify the economy, with agriculture as the main sector, and to invest in the private sector. The overall objective of the envisaged economic policy is and remains poverty reduction. In 2017, over 54% of the population lived below the poverty line and 15% were unemployed. Economic growth was 3.4% and GDP per capita was $4,000 ( 2013).

Agriculture, livestock and fisheries

Agriculture is the second most important sector, but heavily neglected. 55% of the population is employed in agriculture, which contributes 7.5% of the Gross National Product (GNP) (2017). Only 16% of potentially cultivable land is used for agriculture, with maize as the main product. Three types of farms are found in Zambia: a small group, often European, of farmers who operate large farms, which mostly produce cash crops such as maize, meat, sugar, tobacco and sunflower seeds. These farms produce about half of all food on the market. Then comes a somewhat larger group of farms, run by Zambians who work partly for trade and partly for their own consumption, and the group of small farms (90% of all farms are smaller than 10 hectares) who produce exclusively for their own consumption and grow the traditional food crops such as maize, cassava, millet and groundnuts. The best areas of Zambia to farm are parts of Eastern, Western and Southern Province.

Livestock farming is mainly concentrated in the south and west, where the Tonga, Ngoni and Lozi are traditional pastoralists. Meat exports are small. Milk production increased during the 1980s. Although almost half of the country is covered with forest, commercial exploitation has hardly taken off.

The rivers and lakes are rich in fish, but fishing is still in its infancy.

Industry

The rate of industrialisation is low, but this sector, including mining, still contributes 35% (2017) of GDP. The main activities are food and beverage, textile, chemical and light iron production. There is hardly any production for export.

The industry is increasingly in trouble due to expensive imports of machine parts and fuel.

As a result, industries everywhere are closing down or running at reduced capacity. Along the so-called 'line of rail' there are many empty factories and enterprises.

Mining

Copper has been the most important mining product since time immemorial, and is found in the so-called 'Copperbelt', on the border with the Democratic Republic of Congo. In 1995, the mining crisis caused Zambia to drop from fifth to tenth place on the list of the world's leading copper producing countries. It is the fifth largest exporter of copper in the world.

The crisis in Zambia's mining industry since the end of the 1980s has not only been caused by the spectacular fall in the world market price of copper, but is certainly also the result of obsolete operating equipment, insufficiently trained technical staff, chronic transport problems and the gradual exhaustion of copper reserves by the year 2010.

In 1999, a bid by South African mining giant Anglo American for the last major mines of the state-owned ZCCM (Zambia Consolidated Copper Mines) was accepted. The agreed price of 90 million dollars was a pittance according to critics. The South African company has committed itself to a capital investment of $200 million.

Other important mining products are zinc, lead and cobalt, of which Zambia and Congo are the largest world producers.

Energy

The energy distributed by the Zambia Electricity Supply Corp. comes almost entirely from hydropower. The three main power stations are the Kafue Gorge power station, the Victoria Falls power station and the Kariba North power station.

Zambia exports electricity to neighbouring countries, while oil has to be imported.

Trade

The main export products are: copper (65% of total exports), zinc, cobalt (6% of total exports), lead and tobacco. The main customers are: China, South Africa, Democratic Republic of Congo and South Korea.

Imports include machinery, transport equipment, chemicals, fuels and foodstuffs. The main suppliers are: South Africa, Democratic Republic of Congo, China and Kuwait.

Traffic

Zambia's road network is in reasonable condition and passable throughout the year. All the provinces are connected by paved and unpaved roads (totalling almost 75,000 kilometres). The main transit routes are the north-south Copperbelt Highway via Lusaka to Livingstone, and the east-west route to neighbouring Malawi and Tanzania. The TANZAM Highway, which continues to Dar es Salaam in Tanzania, is significant for the economy as it is one of the most important connections to the sea.

Zambia Railways operates the railway from Livingstone via the Copperbelt to Banguela on the Angolan coast. The Tanzania Zambia Railway Authority operates the TAZARA railway line, which runs from Zambia to Dar es Salaam in Tanzania. The total length of railway lines in Zambia is 2157 kilometres.

Due to natural conditions, the use of rivers and lakes for transport is limited. Only part of the Zambezi, from Livingstone to Senanga, is navigable (a total of 2250 kilometres).

The national airline is Zambia Airways, which operates domestic and international flights. Lusaka is the most important international airport.


Sources

Else, D. / Zambia
Lonely Planet

Posthumus, B. / Zambia : mensen, politiek, economie, cultuur
Koninklijk Instituut voor de Tropen / Novib

Zuidoost-Afrika
The Reader’s Digest

CIA - World Factbook

BBC - Country Profiles

Last updated May 2024
Copyright: Team The World of Info