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Features of the Economic Development of Zambia

Introduction

The Millennium Summit of September 2000 marked the official kick-off the worldwide effort to help fight poverty, hunger and disease within a fifteen-year period. Some countries have managed to achieve success in some of these areas but several of the goals might never be accomplished in many others (The Mail 2010). Eradication of poverty was set to be the first goal by the UN to be achieved by 2015 (UN Department of Public Information, 2008). Though Zambia is making some strides in the achievement of this goal, UN statistics show that it remains to be one of the poorest countries in the world (Chooma 2007). This paper will look at the likely flaws in the implementation of strategies geared towards achieving this goal first by the financing institutions and then by the Zambian government.

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Poverty in Zambia

According to Chooma (2007), poverty levels in Zambia have fallen from 75% to 68%.However, still 43% of the population is said to live under extreme poverty. These facts are intriguing owing to the fact that Zambia was one of the initial countries to embrace multi-party democracy in Africa, a step seen by world financiers as critical towards self- sustainability. It is then likely that economic reforms forced on Zambia had significant flaws, a view supported in an article by Suri (2004). He says that “sweeping trade liberalisation , deregulation , dismantling of the public sector and massive privatization has led to a drop in Zambia’s UN human development rankings from a still poor 130(which made it one of the most developed countries in sub-Saharan Africa in 1990) to 163 in 2001” (Suri 2004; Rich 1994).

The MDG’s

At the time the MDG’s were being launched, many third world countries were still wallowing in debt due to the Structural Adjustment Policies initiated by the World Bank and the IMF many years earlier. These policies were put in place to ensure debt recovery from countries loaned by the two financing institutions (Shah 2010). It is evident that the after effects of such policies initiated about two decades ago are directly having effect on Zambia presently.

The reliance on the IMF and World Bank to help settle previous debts has led to newer debts. This has “required poor countries to reduce spending on things like health, education and development, while debt repayment and other economic policies have been made the priority. In effect, the IMF and the World Bank have demanded that poor nations lower the standard of living of their people” (Shah 2010).

Balance of trade

The balance of international trade between nations is also critical to ensure that both parties benefit. However, many third world countries have lost out in favor of the rich nations such as the US and UK in dictating terms of trade. Zambia, like many countries in its league ends up importing more than it exports. Statistics from the U.S Census Bureau show that the balance of trade between the two countries stood at 20% in favor of the U.S (U.S Census Bureau 2009).

The reason for this is that Zambia continues exporting raw materials like copper and cobalt at cheaper rates dictated by the U.S and importing finished products at a higher price. This situation is ensured by the continued use of the Dollar in the exchange market and maintaining dependency by forcing the poor countries to open up their markets (Shah 2010).

While the rich nations and the financing institutions hold a fair blame for the hurdles experienced in pursuit of the MDG’s, third world countries have their share of blame for making poverty endemic. Zambia is no exception (World Development Movement n.d).

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Corruption

Corruption is a vice that is generally known to derail development and equitable distribution of resources. U4 Anti Corruption Resource Centre notes that so far, only one person has been convicted out of the 70 cases being investigated by the Taskforce on Corruption. It is possible to assert that there is little or no political will to tackle this vice thus investors and donors are likely to shy away from development projects as there will be less or no accountability from the Zambian government. Seniors political officials can still hold public office despite accusations of corruption leveled against them, a perfect example is Katele Kalumba who ran for, and won the Chief Executive Officer’s seat of the ruling MMD Party despite being a suspect of grand corruption (U4 Anti Corruption Resource Centre n.d)

Zambia has also failed to take full advantage of the African Growth Opportunity Act (AGOA) introduced by the U.S for sub-Saharan countries to export to tariff-free. Only five percent of Zambia’s exports benefitted from this Act (Agoa News 2004)Given an opportunity like this, any country would want to press for more in order to reap maximumly. However Zambia continues to struggle with political in-fights and debt repayment, factors that pull down any effort to move forward (Mclure 2003).

Culture of dependency on aid

The continued culture of dependency on donor institutions and the developed countries has done more harm than good to the Zambian people. Zambia is said to have a staggering debt of U.S$ 2 billion as at August 2009, up from U.S $500 million five years earlier. This is despite a US$ 7.1 billion debt being written off in 2005 by the Bretton Woods institution (Voices of Africa 2009) Debt can only arise from loans and this shows that Zambia is yet to put down strategies to make sure that borrowing from outside is reduced. It is thus conventional to say that Zambia has perfected the art of borrowing and debt repayment rather than working towards economic independence.

Conclusion

Zambia as a country has a long way to go to achieve economic freedom and self- sustainability. Zambian policy makers must work out on strategies to avoid dependency on donor monies. Waiting for the rich developed countries to chart the way forward for Zambia and other nations in its league will evidently bear no fruit, since the rich countries benefit from her dependency. Finding the right way is only possible when there is political will to combat corruption, distribute resources fairly and reduce on government spending on no-essential commodities.

There should be increased cross border trade between the African countries to avoid setbacks when the rich nations close their markets for goods from these nations. Such kind of trade is likely to be Otherwise, Zambia is definitely one of the countries where attainment of the first MDG by the year 2015 will remain just a dream.

List of References

AGOA News., 2004. Zambia’s AGOA Exports to Rise – US Envoy. Web.

Chooma, B., 2007. Zambia’s Progress in Poverty Eradication. Web.

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McClure, P., 2003. A Guide to the World Bank. World Bank Publications. Web.

Rich, B., 1994. Mortgaging the Earth. U.S.A: Beacon Press. Web.

Shah, Anup., 2010. Structural Adjustment—a Major Cause of Poverty. Web.

Suri, S., 2004. DEVELOPMENT: If the IMF Could Do This to Zambia… Web.

The Mail., 2010. UN Summit on the Millennium Development Goals. Web.

UN Department of Public Information., 2008, GOAL 1: Eradicate extreme poverty and hunger. Web.

U.S Census., 2009. Bureau ,Trade in Goods (Imports, Exports and Trade Balance) withZambia. Web.

U4 Anti-Corruption Resource Centre., n.d. Political corruption in Zambia. Web.

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Voices of Africa., 2009. Zambia’s debt swells to US$2b. Web.

World Development Movement., n.d. Zambia: Condemned to debt – How the IMF and World Bank have undermined development. Web.

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