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An Easy Look at Zambia’s Poverty Reduction Strategy Paper 2002-2004

2. Zambia Today - Poverty & the Economy

Before discussing solutions, let’s look at the problems facing Zambia today. This section looks briefly at why the nation has got poorer over the past thirty years, and the effects on Zambians.

Zambia’s Poverty

In any economy, you produce things to sell outside the country (export) for hard currency, and use the income to buy (import) what you need. Zambia’s economy has mainly depended on export earnings from the copper. Today’s problems started in the 1970s, when copper prices fell, whilst the price of oil (a major import) rose. Suddenly, Zambia earned less and spent more.

Government saw that depending on copper was not reliable, and wanted to strengthen the national economy. The choice was either to increase earnings from exports or decrease spending on imports. Government decided to try to reduce the need for imports by developing local industries to produce these items. This proved to be the wrong choice.

The problem was that we tried to produce goods that were already being produced more efficiently elsewhere. We did not develop in agriculture, tourism and other industries where Zambia has natural advantages, and could build constant international demand for our products. The new industries did not do well, and Government poured in subsidies to keep industries going. We spent huge sums on industries that were failing, and still ignored the best opportunities for economic development.

To make it worse, Zambia borrowed funds from international partners to maintain living standards and to develop new industries, but these loans were not repaid. This is the international debt, quoted at US$ 6.5 billion in the PRSP, which now hangs over us. Our economic growth was the second lowest in Southern Africa in the 1980s, and the lowest in the 1990s. We have consistently been amongst the lowest in the world, even compared to war zones and countries with no obvious economic advantages at all.

This failed industrialisation strategy was Zambia’s path to poverty. The international community had supported this strategy with their advice as well as loans. Their participation in the PRSP process shows that they accept their share of responsibility for economic failure. In Zambia’s case, there were also special costs arising from the prolonged liberation struggles in the region, particularly South Africa and Zimbabwe, which contributed to our debt burden and resulting poverty.

We might like to believe that low economic growth at least makes us a little bit richer. But if the economy grows by less than the population, we have all got poorer! And that is exactly what has happened in Zambia. Since independence, the economy grew very little, whilst the population has grown from 3 million to 10 million. The result is that we now earn about half as much per person as we used to in the 1960s and early 1970s.

The People’s Poverty

Poverty is not just statistics – it’s about people. In Zambia, poverty forces three-quarters of the population to survive below the poverty line. Poverty is not just having no cash. We also look at “human poverty”, which means low life expectancy, lack of decent education, and poor access to basic needs, including secure food supply, health care, education, water, sanitation and housing.

In Zambia, 73% of the population are poor or extremely poor. In the rural areas, 71% of people live in extreme poverty, twice as many as in urban areas (36%). In 1998, around two-thirds of households reported that they have changed their diet or reduced on food because of their economic problems. This shows us that most households are failing to survive in a decent way.

Child poverty is increasing, often related to HIV/AIDS. We find children working, street children, orphans and child-headed households, who are all very vulnerable. Over a million Zambian children now classified as “orphans or vulnerable children”. One in every three primary aged children do not attend school, either because they are unable to find fees or are busy working for cash or in the home.

Women are also vulnerable to extreme poverty, and households headed by women face great problems. This is because women have less education, less formal employment and more domestic responsibilities, which all prevent them from earning a good income.

The poor have been made even poorer by HIV/AIDS. AIDS mainly hits adults who should be the chief earners in their households. Instead, they become dependents themselves. Zambia has growing numbers of dependents, and fewer people to depend on.

The PRSP provides opportunities for employment or business for people who are waiting for a chance to work. But PRSP also recognises that in some households, there is no one ready to respond. In a household of grandparents and grandchildren, no one is fit to work, and sometimes no one has been to school. The PRSP will increase access to education, health and welfare so that over time, each household can improve its capacity to participate in new opportunities.

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