The Socio-Economic Impact of Privatisation in Zambia: Experiences and Lessons

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Mwansa, Mulumba
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It has generally been argued that Zambia's economic crisis originated from the catastrophic impact of the dual shock - the sudden skyrocketing of the oil prices in 1973 and the onset of a severely declining trend in copper prices in 1974. The truth, however, has been that the fundamental cause of Zambia's economic problems has been the highly unbalanced, internally underdeveloped and fragile economic structure that has been the highly vulnerable to external forces (see Chapter 2). The dual shock only served to expose this vulnerability in 1975 and later years as never before.The Government of Zambia was quite aware of the country's undesirable economic structure from the beginning. They knew that self-sustaining and self- propelling growth of the economy in the long run could be achieved only by transforming the prevailing structure. This is evidenced by Dr. Kaunda's (the then president) effort to embark on a privatisation programme (see Chapter 2).In 1991, when the Movement for Multiparty Democracy (MMD) took the reins of government, they were eager to implement and strictly adhere to aggressive structural adjustment policies designed by the International Monetary Fund (IMF) and the World Bank to lift Zambia out of economic decline. Some of the key measures include restructuring of the Civil Service, Privatisation of State Industries and the phasing out of subsidies on the social sector.The government's response to the IMF and World Bank proposal, Structural Adjustment Programme (SAP) promoted economic liberalisation and reduced government expenditures and activities. The aim of the policy is to lay the foundation for subsequent sustainable growth. Common results of the policy, however, have been increased poverty, unemployment and social displacement.The unfortunate fact is that Zambia could not, with its economic turmoil, refuse to accept set conditions which were the only way to qualify for World Bank/IMF loans. Zambia had to undertake programmes, which among others include:Reduction in government spending on public services, Currency devaluation, Privatisation of state run enterprises, Withdrawal of subsidies to national industries, Deregulation and trade "liberalisation". There is currently growing consensus in Zambia that SAP has had a major impact on employment levels and the labour market. In particular, the implementation of privatisation and then, generally, the public service reform programmes and poverty on the part of those who remain unemployed after retrenchment.Clear measures for gauging the success of privatisation need to be established. Ideally the success of privatisation need to be established. Ideally, the primary indicator of privatisation should be the decline in the ratio of assets employed by the private sector. Hence, employment should be used as a proxy. The other measure of privatisation should be the change in performance of privatised enterprises.Given commitment, privatisation can be achieved. To be of maximum benefit, however, the process should be taken with an overall programme of reforms, of which full liberalisation is the most important. We notice that privatisation programmes have not addressed the need to ensure competition and effective regulation of monopolies; this is a major policy weakness.This paper is not a mere critique; it is an insight or indeed a visitation into the policies Zambia has embarked on. It is very thorough, albeit exhaustive.
Privatisation-Law and Legislation-Zambia , Economic Policy-Zambia