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World > Africa > Zambia > Economy (Notes)

Zambia - Economy (Notes)


ECONOMY
Over 70% of Zambians live in poverty. Per capita annual incomes are currently at about one-half their levels at independence and, at $627, place the country among the world's poorest nations. Social indicators continue to decline, particularly in measurements of life expectancy at birth (about 38 years) and maternal mortality (729 per 100,000 pregnancies). The country's rate of economic growth cannot support rapid population growth or the strain which HIV/AIDS related issues (i.e., rising medical costs, decline in worker productivity) place on government resources. Zambia is also one of Sub-Saharan Africa's most highly urbanized countries. Almost one-half of the country's 10 million people are concentrated in a few urban zones strung along the major transportation corridors, while rural areas are underpopulated. Unemployment and underemployment are serious problems.

HIV/AIDS is the nation's greatest challenge, with 16% prevalence among the adult population. HIV/AIDS will continue to ravage Zambian economic, political, cultural, and social development for the foreseeable future.

Once a middle-income country, Zambia began to slide into poverty in the 1970s when copper prices declined on world markets. The socialist government made up for falling revenue by increasing borrowing. After democratic multi-party elections, the Chiluba government (1991-2001) came to power in November 1991 committed to an economic reform program. The government was successful in some areas, such as privatization of most of the parastatals, maintenance of positive real interest rates, the elimination of exchange controls, and endorsement of free market principles. Corruption grew dramatically under the Chiluba government. Zambia has yet to address effectively issues such as reducing the size of the public sector and improving Zambia's social sector delivery systems.

Zambia's total foreign debt stood at about $7 billion when Zambia reached the Highly Indebted Poor Countries Initiative (HIPC) completion point in April 2005. In December 2005, the U.S. and Zambian Governments signed an agreement for cancellation of $280 million in bilateral debt. Once debt cancellation under HIPC is completed, almost $6 billion in debt will be eliminated.

The IMF conducts periodic economic reviews under a three-year Poverty Reduction and Growth Facility. In November 2006, the Fund commended Zambia's macroeconomic stability and continued fiscal discipline, but noted lags in the implementation of some reform measures. In 2006, the rate of inflation dropped into single digits for the first time in recent history. The Zambian economy has historically been based on the copper-mining industry. Output of copper had fallen, however, to a low of 228,000 metric tons in 1998, after a 30-year decline in output due to lack of investment, low copper prices, and uncertainty over privatization. Following privatization of the industry, copper production rebounded, reaching almost 400,000 metric tons in 2004 and 440,000 metric tons in 2005. Improvements in the world copper market have magnified the effect of this volume increase on revenues and foreign exchange earnings.

The Zambian Government is pursuing an economic diversification program to reduce the economy's reliance on the copper industry. This initiative seeks to exploit other components of Zambia's rich resource base by promoting agriculture, tourism, gemstone mining, and hydro power.


Facts at a Glance: Geography - People - Government - Economy - Communications - Transportation - Military - Climate - Current Time - Ranking Positions
Notes and Commentary: People - Economy - Government and Political Conditions - Historical Highlights - Foreign Relations - Relations with U.S.



Facts at a Glance
Geography
People
Government
Economy
Communications
Transportation
Military
Climate
Current Time
Ranking Positions


Notes and Commentary
People
Economy
Government and Political Conditions
Historical Highlights
Foreign Relations
Relations with U.S.





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