Presently, Zambia averages between $7 billion and $8 billion of exports annually. About 60.5% of Zambians live below the recognised national poverty line, with rural poverty rates standing at about 77.9% and urban rates at about 27.5%. Unemployment and underemployment in urban areas are serious problems. Most rural Zambians are subsistence farmers.
Zambia ranked 117th out of 128 countries on the 2007 Global Competitiveness Index, which looks at factors that affect economic growth. Social indicators continue to decline, particularly in measurements of life expectancy at birth (about 40.9 years) and maternal mortality (830 per 100,000 pregnancies). The country’s rate of economic growth cannot support rapid population growth or the strain which HIV/AIDS-related issues place on the economy.
Zambia fell into poverty after international copper prices declined in the 1970s. The socialist regime made up for falling revenue with several abortive attempts at International Monetary Fund structural adjustment programmes (SAPs). The policy of not trading through the main supply route and line of rail to the sea – the territory known as Rhodesia (from 1965 to 1979), and now known as Zimbabwe – cost the economy greatly. After the Kaunda regime, (from 1991) successive governments began limited reforms. The economy stagnated until the late 1990s. In 2007 Zambia recorded its ninth consecutive year of economic growth. Inflation was 8.9%, down from 30% in 2000.
Zambia is still dealing with economic reform issues such as the size of the public sector, and improving Zambia’s social sector delivery systems. Economic regulations and red tape are extensive and corruption is widespread. The bureaucratic procedures surrounding the process of obtaining licences, encourages the widespread use of facilitation payments. Zambia’s total foreign debt exceeded $6 billion when the country qualified for Highly Indebted Poor Country Initiative (HIPC) debt relief in 2000, contingent upon meeting certain performance criteria. Initially, Zambia hoped to reach the HIPC completion point, and benefit from substantial debt forgiveness, in late 2003.
In January 2003, the Zambian government informed the International Monetary Fund and World Bank that it wished to renegotiate some of the agreed performance criteria calling for privatisation of the Zambia National Commercial Bank and the national telephone and electricity utilities. Although agreements were reached on these issues, subsequent overspending on civil service wages delayed Zambia’s final HIPC debt forgiveness from late 2003 to early 2005, at the earliest. In an effort to reach HIPC completion in 2004, the government drafted an austerity budget for 2004, freezing civil service salaries and increasing a number of taxes. The tax hike and public sector wage freeze prohibited salary increases and new hires. This sparked a nationwide strike in February 2004.
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.