CONTENTS | ANB-BIA HOMEPAGE | WEEKLY NEWS
by Fred Chela, Zambia, February 1999
THEME = STRUCT.ADJUST.
Total dependence on foreign aid is a retrogressive step and
effectively
causes the economy at home to stagnate. But for a country such as Zambia,
some aid is still all-important, so what happens when this aid is suddenly
"frozen"?
It's the poor who feel the pinch - not government leaders
The past 20 months have been agonizing for Zambia's economy. The 20 month-old freeze on aid, affects mainly the lower wage earners. The poor grapple with the high cost of living, and NGOs and human rights organisations have done little to come to the help of the poor. The local currency, the Kwacha, is deemed valueless. Small denomination banknotes are rejected as "useless piece of paper", particularly denominations of Kwacha 10, 20 and 50.
Indeed, there were some NGOs which have made it their business to actively support the freeze on aid! Yet, their members are living in the lap of luxury with their pockets bulging with dollars. These are the same people who frequent Zambia's most luxurious hotels, with little regard as to how ordinary Zambians are faring. Indeed, the average citizen openly condemns those NGOs and opposition parties which conduct their meetings in five star hotels, whilst the poor continue to languish in squalor in the townships. It's now reckoned that 70% of Zambia's population are in this situation, prompting President Frederick Chiluba to apologise for some "economic mistakes", but pleading for "forgiveness and time to make amends".
Where does all this stem from? Indisputably, Zambia's on-going US $6.5 billion external debt which chokes the economy, while the state "conscientiously" and painstakingly implements the International Monetary Fund's and the World Bank's prescribed Structural Adjustment Programme (SAP). The Catholic Commission for Peace and Justice (CCPJ) says Zambia's external debt burden has done desperate harm to the country's economy. The CCPJ has gathered more than 1,000 signatures nationwide, to voice a protest against the debt burden with the international community, and to make clear that the IMF -imposed SAP economic mechanism is detrimental to the survival of the general populace.
Zambia's Finance minister, Edith Nawakwi, says that money spent on debt-servicing, could be meaningfully spent on improving social services like education and health. Father Peter Henriot S.J. affirms that servicing the US $6.5 billion debt, "gobbles up all foreign exchange earnings and throws Zambia back into the cycle of agonizing poverty". The Catholic Bishop of Ndola Diocese, Bishop de Jong, describes Zambia's debt burden as "as good as sentencing Zambians to eternal servitude. This is far much worse than colonialism".
It's disconcerting to note that despite expressing regrets over the ever-existing poverty, some NGOs, like Afronet and the Zambia Independent Monitoring Team (ZIMT), joined with former Zambian president Kenneth Kaunda's United National Independence Party (UNIP) in calling for donor organisations to freeze aid to Zambia, because, of what they called "bad governance". Donors denied Zambia aid for almost two years and what was the result? Grinding hunger and poverty.
The NGO have richly deserved the public's reproach because of the stance they have taken vis à vis freezing aid. Don't forget that Afronet's chief executive, Ngande Mwanajiti, and ZIMT's president, Alfred Zulu, led a high profile "charge" in Paris, last year, lobbying for freezing aid to Zambia. The intention was to force the Zambian government to change the country's Constitution and hold fresh elections, thus allowing Dr Kaunda to participate in the elections.
This led to international donors cancelling balance of payment support from April 1997 to January 1999. Zambia, despite the donor freeze, endured and obligingly serviced the external debt from the country's meagre foreign exchange earnings and internal resources. It was only direct investment from the private sector that salvaged the country from complete economic collapse.
Diplomatic representatives from other African countries concede that Zambia has done everything possible to implement IMF policies, yet it has been subjected to what can only be described as "continual humiliations" from the donor organisations.
The Bank of Zambia's governor, Dr Jacob Mwanza, says that Zambia's economy in 1998 did not perform as expected, registering only a 1.97% growth. And this in a critical year for the economy since the advent of liberalising the economy. In the 1998 budget, former finance minister, Ronald Penza, had predicted a 5% Gross Domestic Product growth. It was hoped inflation could have been reduced to 9%, from the 18% of December 1997. Unfortunately, inflation rocketed to 30.8% and the Kwacha depreciated by 40%. Soaring inflation, a depreciating Kwacha and high bank interest rates, precipitated a chain reaction in spiralling prices in consumer goods.
The Bank of Zambia's deputy governor, Dr Abraham Mwenda, has however, attributed the country's poor economic performance to the decline in agricultural production - an offshoot of the El Nino weather phenomenon which unleashed devastating floods in northern Zambia and afflicted the southern part of the country with crippling drought. "After all, there's nothing you can do about natural calamities," says Dr Mwenda. He goes on to say that the East Asian economy crisis last year, had a negative impact on Zambia's economy, because demand for copper from Asian countries declined, triggering a fall in copper prices on the international market.
The delayed privatisation of the Zambia Consolidated Copper Mines, led investors to hold back on their planned investments in the economy, the mining sector in particular.
But there is hope for the future, especially in the mining industry, with the privatisation of the mines proceeding apace. Once this is complete, expected investment projects will take place. Also, Finance Minister Nawakwi predicts inflation to scale down to 15% by the end of the year, while she projects a 4% growth in the economy.
Hopefully, all this will do something to alleviate the plight of the poor.
END
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