Zambia - Oakland Institute

FIGURE 1: COPPER PRICE HISTORY
Source: http://upload.wikimedia.org/wikipedia/en/thumb/7/7d/Copper_Price_History_USD.png/800px-Copper_Price_History_USD.png
Economic
The last few years have seen steady growth with real
GDP growing at 6-8 percent between 2005 and 2010.
At the same time there is concern that there are great
inequalities in terms of the distribution of Zambia’s
GDP, and that despite this steady growth, poverty
remains a serious problem.
The performance of Zambia’s GDP is directly
proportional to copper production/prices. Development
assistance also makes a large contribution to
Zambia’s economy – with USD 1.27 billion in 2009. 10
There is a recognition that Zambia needs to diversify
its economy and not be so reliant on favorable copper
prices to sustain growth. As a result, greater economic
diversification has been a cornerstone of Zambia’s
macroeconomic planning (currently focused on
strengthening agriculture, tourism, manufacturing,
and hydropower sectors). At the same time, there are
numerous calls for Zambia to benefit more favorably
from the mining industry. As a result of the WB/IMF
Structural Adjustment Programmes (SAP) of the
early 1990s, taxes and royalties from mining activities
contribute little to government coffers and government
revenues from the mining industry are far lower than
many other SSA countries. The SAPs have also ensured
that very little of the profits of the mining industry stay
in the country, with limited multiplier effects from
Zambia’s prime natural resource.
TRADE BALANCE
Zambia’s main exports are copper (64 percent of total
export value in 2008) and cobalt, although agricultural
exports and electricity are becoming bigger earners. 11
Zambia is an importer of crude oil and fertilizer.
Processed foods are also routinely imported (often
from South Africa). As of 2008, Zambia’s main import
partner was South Africa at 52.8 percent of imports,
with UAE at 8.9 percent, and China at 6.9 percent. 12
The need to import crude oil and fertilizer is seen as
a constraint to large-scale agricultural development
in the country and puts Zambia at a comparative
disadvantage relative to its neighbors, many of whom,
have easier and cheaper access to these inputs.
FOREIGN DEBT
Historically, Zambia’s economy has often been
crippled under the burden of heavy debt repayments
to international lenders. This cycle began in the 1970s
when the socialist Zambian government borrowed
heavily to offset the drop in copper prices (and thus
revenues) and never quite recovered. However, Zambia
has benefited from debt service relief under the Heavily
Indebted Poor Countries initiative (HIPC) – nearly USD
6 billion in debt relief. In July 2005, all outstanding
debts were relieved, and a huge economic burden for
Zambia was removed.
The Oakland Institute UNDERSTANDING LAND INVESTMENT DEALS IN AFRICA: ZAMBIA | 7