This brief report describes the socio-economic malaise in Zambia. The country has no strongly diversified economy. Copper has provided 90% of its foreign exchange earnings, but is declining due to aging mines, reduced copper output and managerial problems. Other problems are transportation and distribution systems collapse, and declining public health and education in both urban and rural areas. Zambia also has a large foreign debt and faces a skilled manpower shortage, while government policy to reduce urban unemployment through rural resettlement has failed.
Foreign aid has been a crucial role in Zambia’s survival, but this has become counter-productive. Yet despite socio-economic problems, Zambia has made progress, notably in agriculture.
President Kaunda abandoned an IMF recovery plan intending to end subsidies but two years later axed subsidies on basic commodities. Food subsidy cuts together with currency devaluation sparked riots. The Central Bank introduced a two-tier foreign exchange rate system to attract more hard currency. Public utilities and social service enterprises would be partly privatized. Mining shares were offered to the public. Selling shares in parastatals would raise revenue for the government budget and help to expand social services.
