Introduction

At periodic intervals, the JCTR Economic and Social Development Research Project prepares an “up-date” on current conditions in Zambia. We rely upon Government statistical reports, United Nations documents, and our own regular research into living situations in the country. The up-date is not always very optimistic, but it is essential to get an accurate picture of what is happening to the economy in terms of what is happening to the people – this is the basic perspective of social justice that guides the life and work of the JCTR. If you would like further information on this report and related issues, please contact us.

1. Economic Conditions

The performance of the domestic economy in 1999 was a bit better than 1998 but still very poor in terms of overall development that would bring widespread improvement in the lives of Zambians. Stringent economic reform measures mandated by the World Bank and the IMF are not bringing the vibrant economy promised. The major negative influence on the economy was the delay in the privatisation of the mines (ZCCM), which resulted in (1) uncertainty in the overall Copperbelt economy, (2) financial drain on the government which had to pay an estimated US$ one million per day to keep the mines operating and also lost tax revenues, and (3) donor withdrawal of balance of payment support because the “target” of privatisation had not been met.

Key elements of economic conditions include several minor achievements in economic indicators:

· Inflation for 1999 was 20.6%, down from 30.6% in 1998, but up from 18.6% in 1997.

· Gross domestic product grew by 2% in 1999, up from the negative decline of 2% in 1998. GDP per capita is below US$ 300.

· Agricultural sector production was up by over 13%, while mining production continued to fall with copper production declining to 260,300 metric tonnes (compared with over 400,000 metric tonnes a few years ago).

· The Kwacha continued to decline, but not as dramatically as with the 64.5% decline in 1998; this year the Kwacha fell by 14.7%, from the start of the year K2400 per US dollar to K2700 per US dollar.

· Exports fell, mainly in metals, but also in non-traditional exports (down 8%) which went down largely because of depressed prices, slower global economy, and civil strife in neighbouring states of Democratic Republic of Congo and the Great Lakes Region.

2. External Debt

· Zambia continues to be a Heavily Indebted Poor Country, with a total external debt stock of US$ 6.5 billion (in per capita terms, over US$ 650 for every Zambian woman, man and child).

· Of the total debt stock, 52% is owed to multilateral institutions such as the World Bank and the IMF, and 41% is owed to bilateral creditors, the largest amounts being owed to Japan, Germany, United States and France.

· Debt servicing last year was over US$ 133 million, sixty per cent of combined amounts designated for health and education expenditures.

· Because of decline in Balance of Payment support from creditors, most of the debt servicing came from domestic revenue sources, a fact that resulted in downward pressures on social expenditures.

· Zambia should be eligible for some modest HIPC debt relief by the end of 2000, if it meets all the macroeconomic targets (like privatisation and civil service reform) and shows forward movement on the Poverty Reduction Strategy Paper (PRSP) process.

3. Social Indicators

· Zambia is one of the poorest countries in the world, ranking 156 out of 174 nations in the UNDP Human Development Report 1999, having fallen consistently over the past few years, from 136 in 1996, to 142 in 1997, to 146 in 1998.

· Of 79 countries for which data is available between 1975 and 1997, Zambia is the only country where the value of the Human Development Index is lower than it was in 1975.

· According to the 1996 and 1998 Living Conditions Monitoring Surveys (Government’s Central Statistical Office), head-count poverty levels have increased from 69.2% to 72.9%. Rural poverty in some areas of the country is close to 90%.

· Estimated 1999 population is 10.1 million, growing at a high annual rate of 3.1%. Nearly half the population is below the age of 15 years, and close to 40% live in urban areas.

· Life expectancy has continued to decline, now around 37 years (compared with 42 years at Independence in 1964 and 54 years at the end of the 1980s). Malaria, malnutrition and AIDS are major factors affecting life expectancy.

· Of the total population, 80% are not expected to survive to age 60, the highest percentage among 167 countries for which estimates are available.

· Under-five mortality is 202 out of 1000 live births, the 12^th highest rate among 194 countries.

· One third of the primary school age group (7-13) are not in school, and 75% of the secondary school age group (13-18). Girl children are especially deprived.

· Over 600,000 children are orphans; a projection in the next few years of 1.6 million makes Zambia the most orphaned country in the world.

· Malnutrition heavily marks society, with more than one half of the Zambian children stunted and almost 25% underweight.

· Formal sector employment is very low, less than 12% out of the total work force.

· Over 20% of the adult population is HIV-infected, with as many as 35% of the sexually active in some urban areas. The prevalence of HIV/AIDS is much higher among better educated and higher earning groups, with a consequent dramatic impact on the development potential of the country.

4. Cost of Living

· The monthly survey by the Jesuit Centre for Theological Reflection shows the cost of a basket of food for a family of six in Lusaka was K263,370 for January 2000 (January 1999, K240,920).

· This basket does not include housing, electricity, water, fuel, transport, clothing, education, health care, recreation, etc.

· Simple housing in high-density (compound) areas is between K50,000 and K100,000.

· Civil service salaries (including teachers and nurses) are on the average below K200,000. Government claims that efforts to raise salaries have been blocked by threats from the IMF.

1 March 2000

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