2. Development and poverty context
Zambia presents a mixed picture. It has done well to avoid the civil conflict or severe repression that have characterised most of its neighbours over the past two to three decades. Yet, outside of disintegrated states, it has been one of the worst performers in the world over the past generation as measured by the growth of poverty, declines in some of the key indicators of human well-being, and falling per capita incomes. Economic growth has stagnated, savings and investment have lagged, and the economy has barely diversified; safety nets have lapsed; publicly-provided services have deteriorated and are unable to respond adequately to severe challenges such as HIV/AIDS; widespread corruption has pernicious political and economic effects; there are structural problems in public finances (principally related to the civil service wage bill) which, through government borrowing, result in real interest rates that are crippling business; and a crisis of legitimacy currently faces the government as a result of allegations of fraud in the 2001 election now being considered by the Supreme Court. Looking to the future, most Millennium Development Goals are unlikely to be met in Zambia.
While the risks and challenges are severe, reversing these trends can be done: Zambia is rich in agricultural and mineral resources and has many educated and skilled people; and other countries of the region (notably Uganda and Mozambique) demonstrate that progress can be made in turning around decades of decline. Four factors are critical to poverty reduction. There is widespread agreement that sustained broad-based economic growth is a central requirement for rising living standards and falling poverty in Zambia. In broad terms it is possible to define what needs to be done to try to bring this about, but how to achieve some of the required measures, when they run counter to the incentives facing key players, is very problematic. The broad mass of the population, and poor people in particular, need better and more equitable access to services, markets and assets if they are to improve livelihoods and provide for basic needs. Most markets (for instance for labour, finance and land) are very deficient and market linkages are weak, and services (for instance health and education) are non-existent or very weak. Rural areas are especially poorly served. The PRSP’s emphasis on the ‘inability to participate in decision-making and in the life of the community’ as a feature of poverty is well-justified, given the widespread problems in Zambia with the effectiveness and accountability of a range of political, social and economic institutions. And fourth, the slide of many people into poverty and destitution over recent years highlights the need for safety nets, but the current reality is that they are generally weak and underfunded, not least because of the political weakness of beneficiary groups.