Economy of Zambia

Zambia is one of Sub-Saharan Africa's most highly urbanized countries. About one-half of the country's 16 million people are concentrated in a few urban zones strung along the major transportation corridors, while rural areas are under-populated. Unemployment and underemployment are serious problems. National GDP has actually doubled since independence, but due in large part to high birth rates and AIDS per capita annual incomes are currently at about two-thirds of their levels at independence. As of 2015 the GDP per capita stands at $4,300.[8] Zambia is one of the fastest growing economies in Africa and its capital, Lusaka is the fastest growing city in the Southern African Development Community (SADC).[9]

For the first time since 1989 Zambia's economic growth reached the 6%-7% mark (in 2007) needed to reduce poverty significantly. Copper output has increased steadily since 2004, due to higher copper prices and the opening of new mines. The maize harvest was again good in 2005, helping boost GDP and agricultural exports. Cooperation continues with international bodies on programs to reduce poverty, including a new lending arrangement with the IMF in the second quarter of 2004. A tighter monetary policy will help cut inflation, but Zambia still has a serious problem with high public debt.

Economy of Zambia
Lusaka
Lusaka is the capital and largest financial district in Zambia
CurrencyZambian kwacha (ZMW)
calendar year
Trade organisations
WTO, SADC, COMESA
Statistics
GDP23.137 billion (2017)
GDP rank105th (nominal) / 120th (PPP)
GDP growth
2.9% (2015), 3.8% (2016),
3.9% (2017e), 4.1% (2018f) [1]
GDP per capita
$1,342 (2017)
GDP by sector
agriculture: 8.6%, industry: 31.3%, services: 60% (2015 est.)[2]
12.5% (2016)[3]
Population below poverty line
60.5% (2010)
Labour force
6.906 million(2015)
Labour force by occupation
agriculture: 85%, industry: 7%, services: 9% (2004)
Unemployment13.3% (2014 est.)
Main industries
copper mining and processing, construction, foodstuffs, beverages, chemicals, textiles, fertilizer, horticulture
Increase 85th (2017)[4]
External
Exports$6.316 billion (2015 est)
Export goods
copper/cobalt 64%, cobalt, electricity; tobacco, flowers, cotton
Main export partners
 China 25.5%
 DR Congo 13%
 South Africa 6.4%
 South Korea 4.9%
 India 4.3% (2015)[5]
Imports$6.798 billion (2015 est)
Import goods
machinery, transportation equipment, petroleum products, electricity, fertilizer; foodstuffs, clothing
Main import partners
 South Africa 34.5%
 DR Congo 18.2%
 Kenya 9.7%
 China 7.2%
 India 4.4% (2015)[6]
Public finances
$21.73 billion (2019)
Revenues$3.643 billion (2015)
Expenses$5.189 billion (2015)
Economic aidrecipient: $640.6 million (2002)
B+ (Domestic)
B+ (Foreign)
B+ (T&C Assessment)
(Standard & Poor's)[7]
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars.
2006Zambian exports
Zambian exports in 2006

Economic policies soon after independence

GDP per capita (current), % of world average, 1960-2012; Zimbabwe, South Africa, Botswana, Zambia, Mozambique
GDP per capita (current), compared to neighbouring countries (world average = 100)

The British South Africa Company (BSAC, originally set up by the British imperialist Cecil Rhodes) retained commercial assets and mineral rights that it acquired from a concession signed with the Litunga of Barotseland in 1892 (the Lochner Concession). Only by threatening to expropriate the BSAC, on the eve of independence, did the incoming Zambian government manage to get the BSAC to relinquish the mineral rights. The Federation's government assigned roles to each of the three territories: Southern Rhodesia was assigned the responsibility of providing managerial and administrative skills; Northern Rhodesia provided copper revenues; and Nyasaland provided the Black labour.

After independence, Zambia instituted a program of national development plans, under the direction of a National Commission for Development Planning: the Transitional Development Plan (1964–66) was followed by the First National Development Plan (1966–71). These two plans, which provided for major investment in infrastructure and manufacturing, were largely implemented and were generally successful. This was not true for subsequent plans

The Mulungushi Economic Reforms (1968)

A major switch in the structure of Zambia's economy came with the Mulungushi Reforms of April 1968: the government declared its intention to acquire equity holdings (usually 51% or more) in a number of key foreign-owned firms, to be controlled by a parastatal conglomerate named the Industrial Development Corporation (INDECO). By January 1970, Zambia had acquired majority holding in the Zambian operations of the two major foreign mining corporations, the Anglo American Corporation and the Rhodesia Selection Trust (RST); the two became the Nchanga Consolidated Copper Mines (NCCM) and Roan Consolidated Mines (RCM), respectively. The Zambian government then created a new parastatal body, the Mining Development Corporation (MINDECO). The Finance and Development Corporation (FINDECO) allowed the Zambian government to gain control of insurance companies and building societies. However, foreign-owned banks (such as Barclays, Standard Chartered and Grindlays) successfully resisted takeover. In 1971, INDECO, MINDECO, and FINDECO were brought together under an omnibus parastatal, the Zambia Industrial and Mining Corporation (ZIMCO), to create one of the largest companies in sub-Saharan Africa, with the country's president, Kenneth Kaunda as Chairman of the Board. The management contracts under which day-to-day operations of the mines had been carried out by Anglo American and RST were ended in 1973. In 1982 NCCM and RCM were merged into the giant Zambia Consolidated Copper Mines Ltd (ZCCM).

Unfortunately for Kaunda and Zambia, the programs of nationalization were ill-timed. Events that were beyond their control soon wrecked the country's well-laid plans for economic and national development. In 1973 a massive increase in the price of oil was followed by a slump in copper prices in 1975, resulting in a diminution of export earnings. In 1973 the price of copper accounted for 95% of all export earnings; this halved in value on the world market in 1975. By 1976 Zambia had a balance-of-payments crisis, and rapidly became massively indebted to the International Monetary Fund (IMF). The Third National Development Plan (1978–83) had to be abandoned as crisis management replaced long-term planning. A significant part of the problems encountered by Kaunda were due to the way in which policies of nationalization or as it was more commonly known Africanization was implemented. There was a strong movement to replace managers of European ancestry with those seen to be of native African descent. While this was undoubtedly a desirable long term goal in bringing equality to the population it repeatedly led to the over promotion of unskilled and/or inexperienced managers, engineers etc. An example of this would be Zambezi Sawmills where the senior managers were replaced and the engineers fired. It quickly transpired that a years training in managing logging of softwoods in Finland is not good preparation for logging tropical Teak and basic mechanical training does not qualify a person to maintain a 50yr old steam train used to move lumber. This was a prime example of how an understandable desire to achieve "africanization" could be taken too far, too fast and destroy the assets being nationalized.

By the mid-1980s Zambia was one of the most indebted nations in the world, relative to its gross domestic product (GDP). The IMF was insisting that the Zambian government should introduce programs aimed at stabilizing the economy and restructuring it to reduce dependence on copper. The proposed measures included: the ending of price controls; devaluation of the kwacha (Zambia's currency); cut-backs in government expenditure; cancellation of subsidies on food and fertilizer; and increased prices for farm produce. Kaunda's removal of food subsidies caused massive increases in the prices of basic foodstuffs; the country's urbanized population rioted in protest. In desperation, Kaunda broke with the IMF in May 1987 and introduced a New Economic Recovery Programme in 1988. However, this did not help him and he eventually moved toward a new understanding with the IMF in 1989. In 1990 Kaunda was forced to make a major policy volteface: he announced the intention to partially privatize the parastatals. Time, however, was running out for him. Like many African independence leaders Kaunda tried to hang on to power but unlike many he called multiparty elections and lost them (to the Movement for Multiparty Democracy (MMD))and abided by the results. Kaunda left office with the inauguration of MMD leader Frederick Chiluba as president on 2 November 1991.

Chiluba's economic reforms

Zambia's Economic System of Government is Unitary because of that the Frederick Chiluba government (1991–2001), which came to power after democratic multi-party elections in November 1991, was committed to extensive economic reform. The government privatised many state industries, and maintained positive real interest rates. Exchange controls were eliminated and free market principles endorsed. It remains to be seen whether the Mwanawasa government will follow a similar path of implementing economic reform and undertaking further privatization. Zambia has yet to address 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 International Monetary Fund 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.

Copper

The Zambian economy has historically been based on the copper-mining industry. The industrialization of the copper industry is owed partly to Frederick Russell Burnham, the famous American scout who worked for Cecil Rhodes.[10] By 1998, however, output of copper had fallen to a low of 228,000 tonnes, continuing a 30-year decline in output due to lack of investment, and until 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. However, surging copper prices from 2004 to the present day rapidly rekindled international interest in Zambia's copper sector with a new buyer found for KCCM and massive investments in expanding capacity launched. China has become a major investor in the Zambian copper industry, and in February 2007, the two countries announced the creation of a Chinese-Zambian economic partnership zone around the Chambishi copper mine.[11][12]

Today copper mining is central to the economic prospects for Zambia and covers 85% of all the country's exports, but concerns remain that the economy is not diversified enough to cope with a collapse in international copper prices.

In January 2013, the Zambia Environmental Management Agency (ZEMA) approved 27 mining and exploration licences, with more rumoured to be confirmed.[13]

Inflation

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, fuelled 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%. However, in 2007 inflation hit 8%, the first time in 30 years that Zambia had seen single digit inflation.

On January 27, 2011, it was reported by the Central Statistical Office that inflation rose to 9%.[14]

Agriculture

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, pearl millet, cassava, tobacco and various vegetable and fruit crops. Floriculture is a growth sector, and agricultural non-traditional 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.

Growth

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 Copper Belt have experienced a significant revival as spin-off effects from the massive capital reinvestment are experienced.

Salaula (second-hand clothing imported from the West)

Standard economic theory and empirical data indicates that second-hand clothing import can have positive effects in a country like Zambia (one of the least developed countries in the world). The salaula market reduces the proportion of income that a family has to spend on clothing. It also helps to keep employments like repairs and alterations in business and forces tailors to proceed into more specialize production of styled garments.[15]

There is a downside to such imports, however; the massive importation of used clothing from the developed world has resulted in a near-total collapse of the Zambian indigenous textile industry. In the face of cheap used clothing, tailors' specialized production may be irrelevant - customers will buy the least expensive clothing available, irrespective of style. Those who might otherwise work at textile mills or clothing factories are left jobless, or else make significantly less money in the salaula resale business.

Data

The following table shows the main economic indicators in 1980–2017.[16]

Years 1980 1985 1990 1995 2000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
GDP in $
(PPP)
8.0 Bln. 10.6 Bln. 13.3 Bln. 13.5 Bln. 17.6 Bln. 26.6 Bln. 29.6 Bln. 33.0 Bln. 36.2 Bln. 39.9 Bln. 44.5 Bln. 47.9 Bln. 52.6 Bln. 56.1 Bln. 59.8 Bln. 62.2 Bln. 65.3 Bln. 68.9 Bln.
GDP per capita in $
(PPP)
1,356 1,526 1,655 1,461 1,659 2,212 2,393 2,587 2,761 2,951 3,197 3,342 3,555 3,679 3,802 3,836 3,908 3,996
GDP growth
(real)
3.9 % 1.2 % −0.6 % 2.9 % 3.9 % 7.2 % 7.9 % 8.4 % 7.8 % 9.2 % 10.3 % 5.6 % 7.7 % 5.0 % 4.7 % 2.9 % 3.7 % 3.6 %
Inflation
(in Percent)
11.7 % 37.4 % 109.6 % 34.9 % 5.1 % 18.3 % 9.0 % 10.7 % 12.4 % 13.4 % 8.5 % 8.7 % 6.6 % 7.0 % 7.8 % 10.1 % 17.9 % 6.6 %
Government debt
(Percentage of GDP)
... ... ... ... 261 % 76 % 25 % 22 % 19 % 21 % 19 % 21 % 25 % 27 % 36 % 62 % 61 % 62 %

See also

References

  1. ^ "World Bank forecasts for Zambia, June 2018 (p. 154)" (PDF). World Bank. Retrieved 6 September 2018.
  2. ^ https://www.cia.gov/library/publications/the-world-factbook/geos/za.html
  3. ^ "The Monthly Volume 162" (PDF). Central Statistics Office. Archived from the original (PDF) on 2016-11-13. Retrieved 2016-11-26.
  4. ^ "Ease of Doing Business in Zambia". Doingbusiness.org. Retrieved 24 November 2017.
  5. ^ "Export Partners of Zambia". CIA World Factbook. 2015. Retrieved 26 July 2016.
  6. ^ "Import Partners of Zambia". CIA World Factbook. 2015. Retrieved 26 July 2016.
  7. ^ "Sovereigns rating list". Standard & Poor's. Retrieved 26 May 2011.
  8. ^ "The World Factbook - Zambia". CIA. Retrieved 2015-12-25.
  9. ^ "SADC Country Profile Zambia".
  10. ^ Juang, Richard M. (2008). Africa and the Americas: culture, politics, and history : a multidisciplinary encyclopedia, Volume 2 Transatlantic relations series. ABC-CLIO. p. 1157. ISBN 1-85109-441-5.
  11. ^ [1]
  12. ^ "China's Trade in Africa Carries a Price Tag". New York Times. August 21, 2007.
  13. ^ Zambia: Approved Exploration Licences to Boost Mining, Africa: AllAfrica.com, 2013
  14. ^ Zambia Annual Inflation Accelerates to 9% in December, State Agency Says, Bloomberg L.P.: bloomberg.com, 2011
  15. ^ Hansen, Karen Tranberg. 2004. Helping or hindering? Controversies around the international second-hand clothing trade. Anthropology Today 20 (4):3-9.
  16. ^ "Report for Selected Countries and Subjects". Retrieved 2018-09-04.

External links

Atlas Mara Bank Zambia Limited

Atlas Mara Bank Zambia Limited (AMBZL), commonly referred to as Atlas Mara Bank Zambia, is a commercial bank in Zambia. It is licensed by the Bank of Zambia, the central bank and national banking regulator. AMBZL was established on 1 December 2016, when BancABC Zambia Limited merged with Finance Bank Zambia Limited.

Bank of Zambia

The Bank of Zambia (BoZ), is the central bank of Zambia.

Copper in Africa

Copper is one of the world's most important industrial minerals, and Africa is an important world producer. While output is traditionally dominated by Zambia, South Africa and Katanga Province in the south of the Democratic Republic of the Congo, many African nations contribute to copper production, and many African nations have undeveloped ore resources.

Cobalt, another important industrial metal, is often mined in conjunction with copper.

Energy in Zambia

Zambia is potentially self-sufficient in sources of electricity, coal, biomass and renewable energy. The only energy source where the country is not self-sufficient is petroleum energy. Many of the sources of energy where the country is self-sufficient are largely unexploited.

Geology of Zambia

The geology of Zambia formed beginning in the Proterozoic eon of the Precambrian. The igneous and metamorphic basement rocks tend to be highly metamorphosed and may have formed earlier in the Archean, but heat and pressure has destroyed evidence of earlier conditions. Major sedimentary and metamorphic groups formed in the mid-Proterozoic, followed by a series of glaciations in the Neoproterozoic and much of the Paleozoic which deposited glacial conglomerate as well as other sediments to form the Katanga Supergroup and rift-related Karoo Supergroup. Basalt eruptions blanketed the Karoo Supergroup in the Mesozoic and Zambia shifted to coal and sandstone formation. Geologically recent windblown sands from the Kalahari Desert and alluvial deposits near rivers play an important role in the modern surficial geology of Zambia. The country has extensive natural resources, particularly copper, but also cobalt, emeralds, other gemstones, uranium and coal.

Indo-Zambia Bank Limited

Indo–Zambia Bank (IZB), whose full name is Indo–Zambia Bank Limited, is a commercial bank in Zambia. It is licensed by the Bank of Zambia, the central bank and national banking regulator.

Intermarket Bank

Intermarket Bank is a commercial bank in Zambia. The bank is one of the commercial banks licensed by the Bank of Zambia, the national banking regulator.

Land reform in Zambia

Land reform in Zambia refers to the process of land reform in Zambia.

List of Zambian provinces by Human Development Index

This is a list of Zambian provinces by Human Development Index as of 2017 without the 2011 created Muchinga Province.

List of companies of Zambia

The Republic of Zambia is a landlocked country in Southern Africa, neighbouring the Democratic Republic of the Congo to the north, Tanzania to the north-east, Malawi to the east, Mozambique, Zimbabwe, Botswana and Namibia to the south, and Angola to the west. The capital city is Lusaka, in the south-central part of Zambia. The population is concentrated mainly around Lusaka in the south and the Copperbelt Province to the northwest, the core economic hubs of the country.

The Zambian economy has historically been based on the copper-mining industry. The discovery of copper is owed partly to Frederick Russell Burnham, the famous American scout who worked for Cecil Rhodes.

Lusaka Stock Exchange

The Lusaka Stock Exchange (abbreviated to LuSE) is the principal stock exchange of Zambia. Founded in 1993, it is located in Lusaka. The LuSE is a member of the African Stock Exchanges Association.

Rail transport in Zambia

Rail transport in Zambia is primarily provided by two companies:

TAZARA Railway

Zambia Railways LimitedZambia Railways operates a number of rail lines, including the Mulobezi Railway; as of the early 2012, it was still in operation, but in poor repair.

Revenue stamps of Rhodesia

Rhodesia, now divided between Zambia and Zimbabwe, first issued revenue stamps in 1890, and Zimbabwe continues to do so to this day.

Revenue stamps of the Federation of Rhodesia and Nyasaland

The Federation of Rhodesia and Nyasaland was a short lived semi-independent state in southern Africa that existed from 1953 to the end of 1963. The state comprised the former self-governing colony of Southern Rhodesia and the British protectorates of Northern Rhodesia and Nyasaland. It issued its own revenue stamps from around 1953 to 1955, and these were withdrawn after the federation ceased to exist.

In 1953 or 1954 a numeral design simply inscribed RHODESIA AND NYASALAND REVENUE and the value was issued. Nine values were issued in all, ranging from 6d to £5. None of these are common, and the high values are particularly scarce. In 1955, the Federation issued three excise stamps for use on cigarette packets. These are quite rare as they were usually torn when used.

Standard Chartered Zambia

Standard Chartered Zambia, officially Standard Chartered Bank Zambia Plc, is a commercial bank in Zambia and a subsidiary of Standard Chartered. It is licensed by the Bank of Zambia, the central bank and national banking regulator.

Susman Brothers

Susman Brothers was a business partnership that united brothers Elie Susman and Harry Susman after they crossed the Zambezi river in 1901. The brothers were Jewish businessmen from Rietavas, western part of Russian Empire, now Lithuania. They founded, owned, and operated several large businesses in Africa. Elie Susman, the younger of the two, was the founder of Susman Brothers. However, it was not until 1907 that the business name of "E. Susman" was changed to "Susman Brothers".Retail stores in Northern Rhodesia (now Zambia) date to the Susman brothers. Their business empire lasted over a century by overcoming logistical difficulties, physically challenging obstacles, and political changes. They developed an extensive trading, transport and ranching network, which stretched from Botswana to the Democratic Republic of the Congo. Though they operated in many different places, their main focus was always the country now known as Zambia.

Taxation in Zambia

The Zambia Revenue Authority a body under the Ministry of finance in charge of collecting taxes on behalf of the Zambian Government.

Income in Zambia is taxed on the source principle or deemed source basis in some instances. Residents are taxed on domestic source of income and certain types of foreign income, non-residents are normally taxed on Zambian source of income. Zambia has the following direct taxes: Company Income Tax, Personal Income Tax, Withholding Tax, Presumptive Tax and Property Transfer Tax.

Company Income TaxThe general rate is 35 percent for both resident and non-resident companies. For companies involved in agriculture, manufacture of chemical fertilizer and non-traditional exports, the rate is 15 percent while that for mining is 30 percent and 40 percent on bank profits above K250 million

Personal Income TaxAll individuals are liable to tax on personal income after deducting personal relief at a graduated rate from 0 percent for incomes of K39600 per Annum (K3300 per month) and below. The rest at rates of 25 percent, 30 percent and 37.5 percent.

Turnover TaxThe rate of 4 percent (from Jan 2019) is charged on business income for small scale businesses below a turnover threshold of K800 million per annum

Property Transfer TaxThis is charged at the rate of 5 percent of the open market value realised from the sale of any land and building and shares issued by a company incorporated in Zambia

Withholding TaxWithholding tax of 10 percent on rental income (final tax) and 20 percent on dividends, interest payments, royalties, commissions, management and consultancy fees and payments to subcontractors. Payments made to non-residents are also subject to withholding tax at 20 percent in all cases except where there is a double taxation agreement in effect

Zambia also charges Indirect taxes: Import Duty, Excise Duty and VAT (Value Added Tax). VAT rate is at 16%, with some items being exempted or zero-rated.

Zambia National Commercial Bank

"Zanaco" redirects here; for the football club, see Zanaco FC.Zambia National Commercial Bank, commonly referred to by the name "Zanaco", is a commercial bank in Zambia. It is licensed by Bank of Zambia, the central bank and national banking regulator.

Sovereign states
States with limited
recognition
Dependencies and
other territories

This page is based on a Wikipedia article written by authors (here).
Text is available under the CC BY-SA 3.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.