A copper-bottomed recovery: the surge in copper prices has provided a welcome boost to Zambia's export earnings. Now the priority is to use the windfalls to diversify and strengthen the country's economy. Stephen Williams reports.

Author:Williams, Stephen
Position::Zambia
 
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Should President Levy Mwanawasa fail to secure a further presidential term when Zambians go to the polls later this year, there is little doubt that the cause will be either ill health or dreadful bad fortune. This is because Zambia's economy is booming with manufacturing, jobs, tourism and foreign direct investment all showing significant upturns, and most Zambians can feel reasonably optimistic over the country's progress and satisfied with the government's performance.

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The one major uncertainty over a further presidential term for Mwanawasa is the health of the 57-year-old president, who suffered a mild heart-attack last April and is reportedly suffering from diabetes and high blood pressure. But with Zambia's economy performing relatively well and inflation and interest rates under control, investment showing strong growth, particularly in the mining, agriculture and tourism sectors, the mood in the country is distinctly upbeat.

Nevertheless, as if to prove the old adage that you can not please all the people all of the time, the country's labour unions have become increasingly vociferous in calling for pay rises for their members. They argue that it was only through the sacrifice of workers by agreeing to hold down wages that the country was able to turn around its debt-strapped economy thereby allowing government to demonstrate the fiscal prudence required to qualify for the Highly Indebted Poor Country (HIPC) initiative completion last year.

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The unions now say that the freeze on wages, that has helped control Zambia's inflation rate, should be relaxed. If government fails to do so, they warn, they will actively campaign against the ruling party at the next general elections due to be called before the end of the year.

Zambia's inflation rate had actually declined to 15.9% at the end of December 2005 from 17.5% at the end of December 2004 despite several setbacks in 2005, including the partial drought that significantly reduced food supplies and the higher price of oil and petroleum products. But single digit inflation has been the government's goal for a long time and last April that goal was at last achieved with annual inflation declining to 9.4%, the lowest rate in more than 30 years.

Nevertheless, neither the country's finance minister, Ng'andu Mangande, nor the Bank of Zambia's governor Caleb Fundanga are under any illusion that the real challenge will be to anchor inflation at these...

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