By the mid-1980s zambia was the most indebted nation in the developing world. In 1991 the Chiluba government came to power after democratic multi-party elections. The government was committed to extensive economic reform, privatised many state enterprises, attracted foreign direct investment and maintained sounds macroeconomic policies. Free market principles based on the Washington Consensus were endorsed, contributing to a period of transition, contraction and then gradual expansion in the latter half of 1990, continuing through to the first half of 2006.

Today the economy is robust. Inflation is at its lowest level in 30 years. Foreign currency reserves hit record highs. International debt obligations owed to rich Western countries were forgiven. Record levels of foreign investment are flowing and record tourism is demanding a national airline. How could this happen in sub-Saharan Africa? The world looks at sub-Saharan Africa as the stepchild left to figure out how to survive on its own, yet there are real success stories like Zambia.

The structural reforms in Zambian society have been deep and wide. Implemented throughout the 1990s, social, economic and political liberalisation happened at the same time. More importantly, the political structure of Zambia exists in a framework of a presidential representative democratic republic with a constitution and three branches of government: the executive, legislative and judicial.

The executive branch consists of the president who serves as head of state, elected by popular vote for a five-year term. The president appoints the vice president and his Cabinet from members of the National Assembly. The National Assembly makes up the legislative branch containing 150 seats, whose members serve five-year terms after being elected by popular vote. The judicial branch consists of the Supreme Court, whose justices are appointed by the president and serves as the final court of appeal, and the High Court that has unlimited jurisdiction to hear civil and criminal cases. The political institutions of government provide the checks and balances, rule of law, and capacity to develop prescriptive policy fundamental for sustainable socioeconomic development.

Although incumbent President Levy Mwanawasa suffered a minor stroke recently, he is expected to run with great fanfare in the upcoming elections. However, local leaders express concern that appropriate mechanisms are not in place to ensure free and fair elections. In a country where nationalism runs high, opposition leaders are known to call each other brothers and show support for the greater good of Zambia: “One Zambia, One Nation” is the country anthem. Will they continue to call each other brothers after 28 September, uniting around a new president with the opportunity to improve the lives of 11 million Zambians or will they reverse the democratic footprint and economic success achieved in the past decade? Political activism runs deep in Zambian culture, the people will demand a representative government who will find local solutions to deal with local challenges.

Although plagued by corruption, the government’s macroeconomic management and fiscal austerity has led to strong, consistent economic growth. In 2005 GDP growth peaked at 5 percent. Inflation fell from 30 percent in 2000 to under 9 percent in the first half of 2006. The multilateral donor community, including the IMF, World Bank and Paris Club, eliminated over $5bn of debt with further write-downs expected in 2006. According to the IMF, resources from debt relief provided under the Multilateral Debt Relief Initiative (MDRI) will be used accordingly as annual debt-service savings are realised. Spending on priority agriculture and infrastructure projects identified in the government’s National Development Plan is gradually increasing. Global demand for commodities such as copper allowed the Bank of Zambia to accumulate foreign currency reserves, reporting a record $357mn in the first half of 2006. Global demand for commodities and deeper engagement with the world economy will contribute to an estimated 6 percent GDP growth in 2006.

Agriculture continues to be central to the Zambian economy, with more than 67 percent of the workforce in agriculture, forestry, and fisheries. High transportation costs, weak market infrastructure, uneven production and inconsistent quality, and cyclical drought make growth in agriculture challenging. Economic diversification is fundamental to Zambia’s continued development. The multilateral donor community, private enterprise and civil society must work together to strengthen Zambia’s economy. They should continue to promote greater access and openness to the global trading system and international capital markets; provide technical assistance on economic and social policy; finance infrastructure for sustainable management of natural resources and food security; and promote public-private partnerships as a business model for sustainable economic growth.

Record levels of foreign direct investment have led to infrastructure spending on roads, bridges, energy, education and healthcare. China is scheduled to invest in a major bridge-building project in the copper belt, connecting the DRC and Zambia, which is aimed at promoting trade. International markets have gone so far as to label the kwacha (Zambian currency unit) a tradable currency. The African Development Bank is considering issuing kwacha-denominated debt, a shot of adrenaline in the arm of economic reform. A country surrounded by chronic conflict and geopolitical instability, Zambia’s economic success should be praised by the international community and emulated by its neighbours in the South African Development Community (SADC). Political and socioeconomic stability are interdependent; without one, the other is not possible.

Privatisation assisted government

The steps forward in privatisation and budgetary reform has created a favorable investment environment. Privatisation of national copper mines, railways, electricity, telecommunications and banks largely helped the government continue the reform programme. The Zambian Investment Center (ZIC) continues to attract foreign investment. The government no longer subsidises the losses created by the industrial sectors, resulting in a competitive business environment aimed at stimulating economic growth. Although markets are relatively open, the regulatory environment continues to foster rent-seeking behaviour by special interest groups in local politics and business communities. Corruption and accountability continue to be at the forefront of reform.

Copper the main export

In 2005 Zambia’s major trading partners included South Africa, the United Kingdom, Switzerland, Tanzania, DRC, Zimbabwe, Japan and China. Agriculture accounts for over 70 percent of GDP, industry 6 percent, and services 9 percent. Major industries include copper mining and processing, construction, foodstuffs, beverages, chemicals, textiles, fertiliser and horticulture. According to the World Bank, 2005 GDP/PPP was $10bn, per capita/PPP $900. Total exports were approximately $1,95bn, with copper making up the bulk of the total and cobalt, electricity, tobacco, flowers and cotton also contributing to overall export growth. Total imports including machinery purchases, transportation equipment, petroleum products, fertiliser, foodstuffs and clothing, amounted to $1,93bn. Although growth is robust by historical standards the newly elected president and parliament face serious challenges.

Among these challenges are reducing poverty, equalising economic growth, increasing access to primary education and healthcare, improving public services and food security, and controlling infectious diseases such as HIV/AIDS, malaria and TB.

With nearly half the population living in urban centres, the densely populated communities are breeding grounds for chaos and civil unrest. Over 90 percent of the population subsists on less than $1 a day. Nearly 1 million people are HIV-positive or have AIDS. Only 16 percent of the population has been tested and an estimated 100 000 people died of the epidemic in 2004, resulting in over 500000 child orphans. Life expectancy is just under 40 and over 50 percent of the population is unemployed. If Zambia fails to confront the HIV/AIDS epidemic it will have a direct negative effect on economic growth.

HIV/AIDS a major obstacle

HIV/AIDS stands as one of the largest obstacles to sustainable development in Zambia. Most evidently, the disease jeopardises significant health-related improvements attained during the past decade. Focused on improving access to education and healthcare, the newly elected president can give hope to the people of Zambia for a brighter future. Engagement with the international community, civil society and private enterprise, aimed at developing programmes to eradicate and control infectious diseases, will improve the quality of life of all Zambians.

Zambia has the opportunity to be a model for sustainable socioeconomic growth in sub-Saharan Africa: a place where people want to visit, companies want to invest and governments want to trade.

This article was first published in Business in Africa Magazine (International Edition), September 2006. To subscribe click here