Zambia: thinking the unthinkable.

Author:Ford, Neil

Zambia has been saying what many African countries would like to say but don't because they worry about the consequences--that privatisation is creating unemployment, suffering and delivering few, if any, benefits. The country, as Neil Ford reports, is now reviewing its privatisation policies.


Zambian President Levy Mwanawasa has informed the IMF that his government is reassessing its commitment to the country's privatisation programme. Although the country had only to continue complying with its plans for economic reform until the end of last year in order to qualify for massive debt relief, the government has reconsidered its position as a result of the impact of the programme upon living standards and employment. A compromise solution may yet be hammered out but Zambia's dilemma illustrates the problems facing the many African countries taking IMF medicine.

It could be thought that the government is considering abandoning its privatisation programme because it has made little progress in selling stakes in parastatals over the past few years, but this would be wrong. A total of 257 out of 280 state owned companies have been sold off since 1992. However, many of these were loss-making commercial ventures and several key utilities, such as telecommunications firm Zamtel and power company Zambia Electricity supply Corporation (Zesco), remain in government hands. The government is also committed to privatising the Zambia National Commercial Bank (Zanaco).

President Mwanawasa's reformist credentials have so far been strong. Upon assuming power, he promised to reduce the level of fraud and increase economic transparency. He ordered an audit of Zanaco--the first ever carried out at a state owned company--after it recorded a loss of 65bn kwacha during the 2000-01 financial year on the back of bad debts, including those owed by Zambia National Oil Company (ZNOC) and copper and cobalt mining firm Roan Antelope Mining Corporation. The bank has now been placed under the supervision of Central Bank of Zambia governor Caleb Fundanga.


Rising inflation and the gradual depreciation of the Zambian kwacha during the past two years have hit the economy hard. Dollar use has grown as a result of currency fluctuations, so the government has introduced fines for shopkeepers caught doing business in foreign currency in order to increase demand for the kwacha. Falling copper prices and Anglo-American's decision to halt production...

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