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ZAMBIA: Where are the workers?
27 Feb 2008 20:31:50 GMT
 Source: IRIN
LUSAKA, 27 February 2008 (IRIN) - International investors are toasting Zambia's fast-growing economy, but economists and social rights activists point out that it is yet to make a serious dent in poverty.

The economy has recorded an annual growth of five percent for the past five years, inflation is in single digits and the kwacha has appreciated against foreign currencies. But the benefits seem hard to find in the working-class districts of the capital, Lusaka.

"It seems this economic growth is only known by the government; they tell us the economy is growing but to us life is still the same, prices of everything on the market are still the same, we are still poor, and we are still looking for jobs," Lusaka resident Agness Banda told IRIN.

"In my view, I think the only difference is that while, in the past, things were being hiked almost every day, now they have remained the same. But what we want is for the prices to start going down, not just to remain unchanged. We should see the benefits for us to believe [the economy is growing]."

Zambia's growth has been fuelled by record copper prices on the world market. Copper accounts for over 80 percent of the country's total foreign earnings.

Last month, the Global Economics Weekly, an international business research publication, ranked Zambia as number one among the 10 most improved countries in the world, ahead of Argentina, Ghana and Russia, among others.

But while the macro-economic figures shine, the social indicators that reflect whether Zambians are really having a better life have remained stubbornly negative. The poverty rate, as measured by the government's Central Statistical Office, has been stuck at 68 percent for years; despite all the foreign investment, only 400,000 formal-sector jobs exist for a population of 11.7 million.

"There is no emphasis on equitable distribution of wealth from this growing economy," said Ivy Mutwale, acting executive director of the Civil Society for Poverty Reduction, an umbrella advocacy group. "The areas that government must invest in are those that directly benefit the poor ... by putting the most money into health, education, water and sanitation, infrastructure development and agriculture, among others."

President Levy Mwanawasa's administration has been widely praised by western donors for its pro-market policies, which offer foreign investors generous conditions. This is particularly true of the mining sector, where royalty tax is an exceptionally low 0.6 percent, firms are exempt from customs duty, and there is no ceiling on the amount of dividends or profits that can be repatriated.

Oliver Saasa, a consultant economics professor at the University of Zambia, said the impact of copper earnings had been negligible because of the lack of social investment.

"We can't sustain economic growth on mining alone, especially with the kind of policies we have. There is need to change the pattern of our resource allocation; we must start targeting those sectors that provide for the poorest - who are in the majority - such as agriculture," Saasa told IRIN.

A new approach

Zambia's economy was in the doldrums in the 1980s, when copper prices slumped under the weight of a global recession. The government's response was to borrow to sustain spending, and built up a huge foreign debt. The International Monetary Fund and World Bank finally cancelled Zambia's US$7.2 billion external debt in 2005 as a reward for sticking with economic reforms, freeing resources previously used to service the debt.

"It may take some years before our economic growth starts having real impact on the ground, because it all depends on where you start from," Saasa explained. "Our economy had remained at a very low level, and we were growing at a minus. Therefore, an annual growth of five percent may only graduate us from minus to zero."

Rather than raising wages as Zambia's unions have demanded, the president of the Economics Association of Zambia, Mwilola Imakando, has called for continued fiscal discipline and strategic spending.

"All the funds that are raised through taxation and other incomes should not go towards expenditures, but be channelled to infrastructure and rural development. We need to invest in proper infrastructure, such as good road networks and electricity, to open up the productive rural areas for investment," Imakando told IRIN.

Zambia is both a highly urbanised country, and dependent on subsistence agriculture. The government has encouraged food production by subsidising farming inputs like fertiliser, seeds and chemicals for small-scale farmers, but analysts say marketing of the crop is poor.

"People in rural areas may be the last ones to benefit from our current economic growth, although they are in the majority, because of the poor roads, which hamper their accessibility to the market," commented Imakando. "We [must] begin to prioritise areas of investment as a country because, at the end of the day, everything remains half-done and people can't enjoy the benefit of half-done work."

While the agricultural support programme could have gone some way towards winning rural support for Mwanawasa's government in his second and final five-year term, analysts say the failure to translate economic growth into job creation has hurt him in the urban areas.

The man who stands to gain is Michael Sata, the populist leader of the Patriotic Front. He scooped all urban parliamentary and local government seats in Lusaka and the central Copperbelt province in the 2006 general poll, an election marked by his threats to throw Chinese businesses out of the country for their alleged exploitation of Zambian workers.

This year the veteran politician has emerged victorious in parliamentary by-elections in both these provinces, pushing a political programme centred on slashing taxes, creating more jobs, and improving housing.

"Sata is a man of the people and is naturally a hard worker," said Jerry Mwiinga, a Lusaka resident. "He may not be in State House [Zambia's presidential residence] but I would still vote for him because he identifies with our problems, he understands our suffering and he can make things move."

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© IRIN. All rights reserved. More humanitarian news and analysis: http://www.IRINnews.org


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