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Zambia's Debt

“How are we going to uplift the majority of the people, for example in a country like Zambia, who are at subsistence level, to participate and become part of the modern free market economy?… The indigenous people remain as poor as before, they are not the ones who can buy the companies, they are not ones who are investing and you say we have a free market economy, a free market economy for whom?”—Mutumba Mainga Bull, Zambian historian and former Minster of Health

In 1964, Zambia became independent after 75 years of British colonial rule. The economy was heavily reliant on copper, cobalt and zinc mining, which employed almost half the workforce and accounted for 80 percent of Zambia’s export earnings.

Zambian president Kenneth Kaunda then nationalized the mines, expanded the economy's manufacturing and agricultural sectors and imposed import tariffs to keep out foreign competition. The government provided free health care and education. As noted in T-SHIRT TRAVELS, within six years of Zambia's independence, 85 textile manufacturers employed 10,000 workers. Further development would be expensive, however, and the Zambian government was running out of money. As world oil prices climbed, copper prices plummeted, and Kaunda turned to the International Monetary Fund (IMF) and the World Bank to borrow money in 1973. As a condition of borrowing the money, structural adjustment programs were imposed by these institutions. The government had to agree to impose very strict economic programs on their countries in order to reschedule their debts or borrow more money.

Disgruntled with inflation and chronic food and fuel shortages, Zambians voted Kaunda out of office in 1991 and elected Frederick Chiluba president. The new government eliminated subsidies to farmers, cut tariffs on imports and charged "user fees" for health care and public schools.

When government officials opened Zambia's economy to foreign trade in 1992 in exchange for loans from international donors, secondhand clothing poured into the country. Wholesalers could sell affordable clothing without paying production or labor costs or tariffs. Within eight years, Zambia's clothing industry was out of business.

When Structural Adjustment Doesn't Work

Nearly 40 countries south of the Sahara have adopted "structural adjustment programs," or free market reforms, prescribed by lenders like the World Bank and the IMF, which reduce spending on public services and increase privatization to attract foreign investment and loans. Instead of generating income for the country, though, Zambia is more in debt than ever before. Since 1992, Zambians have lost more nearly 100,000 jobs. Less than ten percent of Zambians work full-time in the formal sector; many of the jobless sell secondhand clothes and other goods in markets, and eight out of ten Zambians live on less than a dollar a day. Prostitution has increased dramatically since 1992, especially in urban areas.

By 2000, Zambia had sold more than 300 state-owned businesses to private investors, including almost all the mines, but this was still not enough to reduce its $6.6 billion debt. Today, the annual payment on the debt is three times what the government spends on education, and Zambia still spends more on debt servicing than on health care.

As a result, the population has become more impoverished, illiterate and malnourished in the 30 years since it gained independence from Britain. One quarter of the workforce is sick on any given day. There are more than one million orphans in the country and over 70,000 homeless children.

Archival photo of Zambian mine workers standing in a group.
Copper mine workers on Zambia
Copperbelt in the 1950s
Photo: Zambia National Broadcasting Corporation

Workers stand beside the cotton spinning mills filled with rows of spun cotton.
Cotton spinning mills, Gatooma,
Northern Rhodesia
Photo: Cambridge University Library

Members of the World Bank sit side by side along tables at a meeting.
Donor / World Bank Consultation
Meetings in Lusaka, July 2000
Photo: Zambia National Public Broadcasting.

Young children sit huddled together wearing jackets.
Photo courtesy Amy Vedder /
Wildlife Conservation Society

Sources

"U.S. Offers Conditional $500m Debt Write-off," The Times of Zambia, February 5, 2004.

"Zambia: Germany gives U.S. $207 million in debt relief," IRINNews.org, May 6, 2003.

Jeter, Jon. "The Dumping Ground," Washington Post, April 22, 2002.

Jeter, Jon. "Less than $1 Means Family of Six Can Eat," Washington Post, February 18, 2002.

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